One of the big questions (well comment really, though it masks a question) of this marketplace is this:
“I want to buy in at the bottom”
When most folks, heck it could be you, say this what they are often asking is “is it safe for me to buy and not lose any money?” The line of questioning drives to the concern that prices have not stopped falling for homes in most areas of the country and likely in the Chicago market to be sure.
However, the bottom line price is not the only factor to keep in mind. In fact, if you plan to live in your home for awhile, it may make more sense to buy today at a higher purchase price, but lower interest rates, than to buy a year or two from now at a lower purchase price. That’s because a mortgage is likely to be significantly more costly, in terms of interest rates your payments could be no different or even higher than acting now.
Let’s look at an example with the following presumptions. $350,000 purchase price. 5% interest rate today. With those figures and a 20% down payment you have a loan of $280,000 and a monthly payment of $1503. However, if you wait a year or so and the price moves down to $300,000 on the surface you are winning. However, if interest rates rise to 6.5% while the price is dropping, the monthly payment on the home is $1516. It’s virtually the same! And you have spent a year or so continuing to rent someone else’s home.
Since it is very likely that interest rates will increase fairly significantly, fairly soon, it may make sense to be looking more than casually. If you find a home at the right price and monthly payment, act now! Get a great rate and your choice of home, rather than waiting for the inventory left after the market is “picked over”.
If you want to talk to a great Real Estate professional about how to get into this market, contact the loan officer whose name appears on the left hand side of this page. He or she will be happy to make an introduction to someone you can trust.
