an interesting time to buy... You may be able to work around the 20 % down.... I think what is most important is, are you ready to buy, do you know exactly what style, what type, what size of property you
are looking for, if you are looking in Chicago is it a condo, a townhouse, high rise, mid rise, low rise,
close to what????? where is work, do you need one or two garage spaces?, balcony, have you considered the monthly assessment fees that come with a condo, and they are very very different
many include a lot but all include different items, do you have pets, some do not accept pets.....
Here is my suggestion to you, you already know that your credit score is good and you are financially prudent, connect with an experienced understanding local Realtor, who will be able to provide you with
information about all those properties that meet your needs in buildings that fit your taste....
Remember that when you purchase a condo the lender will include the assessments and taxes with the
purchase price to provide you the loan.... so you want an agent who will provide you with all that information... I can e-mail you those condos or townhouses for your review so that you get a good feel
for what you can buy in your price range. There is also the question of elevator building or not,
balcony, in unit washer and dryer, so get all your preferences on a page and connect with a local
experienced Realtor, it may also take you some time to find the place you will fall in love with.
Hope this helps, and congratulations that you are thinking about buying a home! Exciting :)
Good Luck to you
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Buy now, with less than 20% down.... which will allow you to lock in an historically low interest rate, and to save, as you put it, quite a bit of money.
Once you've saved enough... you can apply a big chunk to your mortgage to get under that 20%, and have the PMI removed, while still maintaining that ridiculously low interest rate.... if you decide that's what you want to do with your savings.
No one can predict if the differences in price versus the other related savings/costs will be better for you now or later. A move up in rates over the next 12 months can change the entire matrix more than these other expenses, but again, no crystal balls available for use.
Paying down the principal every month is another excellent way to reduce your end cost.
If you buy now, and if rates stay low, and if you can still save money to apply to principal, you could refinance in the future, take out the PMI and get the best of all worlds.
Lots of ifs. One thing I can say with certainty about the last 12 months- waiting has not been good for very many people when you look just at rates, terms and pricing, if they were ready willing and able buyers- but that is history not the future.
Trust your instincts, and make decisions you can live with after you review all the choices. Then you will buy when you are ready, and feel comfortable with the outcome. This is your home first, an investment second.
As you have already heard buying now can be cheaper than renting. While you have found a lender that will give you a loan without PMI I would still talk with additional lenders. I am part of the partner exchange with Guaranteed Rate and I work closely with Mary Kay Laurent at 773-516-6859 (also licensed in California.). She is simply amazing with first time buyers. Starting April 1st this year for FHA the MIP will be going up for people who are not currently locked in.
While you could wait until you have 20% down, prices depending on neighborhood are going up. Your alternative to waiting can be paying an additional one or two mortgage payments a year to principal buying down the mortgage. As unemployment goes down the Fed has said they will begin to raise interest rates.
I am in total agreement with you and your husband, purchase seasonably and within a budget for you and your husband which will also allow you both to save for your futures.
Happy house/Conod hunting.
First of all - what you are doing is amazing!
You are super financially responsible and wise - and this is just the beginning of your life together!
Buying with 20% down is the best.
This way you get the best rate and no PMI winning combination.
However, the rates might come up in the future.
You won't be writing off your mortgage interest and real estate taxes while you are renting either...
Programs without PMI usually have a little higher rate (which could be offset by the mortgage broker because your credit scores are good), so you can solve the 20% issue.
The faster you buy, the faster you pay off, and the faster your property will start gaining value.
I say go ahead and buy (prior to spring season, if possible).
I also noticed that many buyers overlook the opportunity of paying off their mortgage faster (which saves a great deal of money). For example, if you make one extra principal payment a year (prior to December 10th, so it goes on books same year), they save 7 years on your mortgage term. Two extra payments = 14 years of term shaved off. It sounds like your family just might take advantage of this option.
Hope this helps,
Beachfront Realty, Inc.
I would buy now with 10% down. You can always pay down the principal or refinance later to remove the PMI. Depending on which Chicago neighborhood you are considering, it can be as much as 50% cheaper to buy than rent. I think truila has a rent vs. buy calculator for you to use. I'd be happy to schedule a meeting at my office to show you your options.
You do not need 20% to purchase a home, but by putting down less than 20% your costs/payments will be higher.
Compare payments/costs w/ 20% Down
10% Down w/ PMI
10% Down w/ Lender or Borrower Paid PMI
There are options out there for you.
Feel free to contact me should you need any assistance.