While you consider working with that Chicago mortgage company to apply for a home loan, housing prices are only going up. The cost of waiting to buy a home is enough to make you cringe. With interest rates at an all-time low, and the housing market on the rebound, now is the best time to buy. Waiting may only make it harder to achieve your dream of owning a home.Take a look at some numbers and see how bad it may get if you continue to sit on the sidelines when it comes to buying your dream home.Cost of Housing – Most lenders want to see that you can afford to put 35% of your income toward your housing costs. This means when you attempt to get a loan, they compare your income to housing prices to see what you can really afford. In January of 2015, in order to afford a median-priced home, buyers had to earn $36,576. By July, that number had gone up to $44,160. As housing prices go up, so will income requirements.
Housing Prices – With interest rates so low, it’s still a buyer’s market. However, home prices are steadily on the rise. In the past year, prices have gone up over 6% in a variety of markets. Expectations are for them to rise another 5.4% in the next 12 months, and 3.2% every year for at least the next 5 years. That means while you are saving up, your dream house can go up almost 10% over the next 2 years. That doesn’t sound like much when you are talking about clothing or other small items, but when it comes to thousands of dollars, that’s a significant increase.
Paying Someone Else’s Mortgage – As you save up for your down payment, you’re already paying on someone else’s mortgage with your rent money. That’s money that you may as well burn. It may be tax deductible at the end of the year, but that is only a portion of what you pay overall. In the meantime, since it isn’t your property, you could lose everything by missing one monthly payment, or if and when the landlord decides to sell the property or increase the rent.
Down Payment Options – Most people are trying to come up with a down payment while they wait. A 20% down payment is pretty standard, and it is reasonable to assume that most renters don’t have that waiting around in their bank account. However, first time home buyers may find that they have different options that may reduce the down payment that they are required to put down on a new home.
There are also other options. For example, you might choose something a bit smaller and more affordable than you originally planned. Even if it is not the home you truly dreamed of, it is an investment. As you develop equity in your home, the housing market will be on the rise. If you choose to sell your home later on in order to buy something bigger, at least you will have something to work with for your down payment. On top of investing your money, you can also enjoy significant tax breaks as a homeowner.
To learn more about your options and specific numbers that apply to you and your income, contact a Chicago mortgage company like A and N Mortgage today.