Chicago mortgage rates are at a 3 year low. It’s the perfect time to purchase a new home, or refinance your current home to a lower rate. So why are so many young Chicagoland professionals deciding to rent, instead of buy? Three reasons: price, flexibility, and market distrust are driving the decisions that millennials are making, and they’re not all correct. Let’s take a look at them and see what we can find out.
First up is price. I understand that purchasing a new home can be terrifying. I’ve done it, it’s a scary process when you have to worry about your down payment, your mortgage payment, and the other bills that are associated with buying a new home. It can seem easier to just pay in first month, last month and your security deposit, right? Well, that’s a really short-sighted view on the subject. Purchasing a home at the current lower mortgage rates can actually let you have a lower monthly payment than rent in an average of two years, according to Zillow. Their study actually even incorporated all of the costs of buying and renting, including upfront payments, closing costs, anticipated monthly rent and mortgage payments, insurance, taxes, utilities, maintenance and even renovation costs on your home, if you purchase a “fixer-upper”. This information may not be enough to sway new purchasers, though, because of the second point…
Flexibility. The ability to pivot quickly when the market changes is a trade-off for the security of knowing what your monthly payment will be for the next 15-30 years. A lot of Chicago millennials are jaded after being burned by all of the contracts that they end up in, from cell phone plans to student loans. Many just don’t see the inherent value in owning their home instead of renting. These preconceived notions about being bound into deals are blinding people to how much a home can help your bottom line. Your home, if you make your payments on time and build equity in your home, is the best weapon that you have against rising debt. There are tax breaks associated with home ownership. Using a cash-out refinance or a debt consolidation can bail you out of debt problems. Getting a fixed-rate mortgage gives you cost certainty, versus the rising price of rent nationwide. There is a lot of flexibility in knowing your payment, and being able to budget around it every month.
The last reason, market distrust, is obvious. While the market has been steady for months, we are not that far away from the 2008 collapse, where many of these people either lost money or watched their parents do so. This can naturally lead people not to trust that the market will continue to grow. That’s healthy, though. You never want to assume that the market will do ANYTHING, let alone bank on it. What you CAN bank on, though, is a fixed-rate mortgage. That lets you know exactly what you’re going to pay every month for the next 30-years. Locking into a fixed-rate mortgage lets you ride out changes in the housing market with confidence.
Call us today at (773) 770-4727 or visit www.thehomeloanexpert.com/chicago if you’re interested in refinancing or purchasing a new home in Chicago. Nobody makes it easier than The Home Loan Expert to purchase your new home.