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Financing a new home in Chicago (Page 1 of 2)
Chicago is the largest city in the state of Illinois and also the third most populated city in the United States of America, with almost 3 million people. Chicago is located along the southwestern shore of Lake Michigan and when combined with its suburbs and the nine surrounding counties in Illinois, the metropolitan area known as Chicagoland encompasses a population of 9.4 million. Nowadays Chicago is known as a major transportation, business, and architectural center of the US and it is the economic, business, financial and cultural capital of the Midwest. The Chicago area is moderately expensive; the home price median here is nearer the national median than homes in spots such as New York City. Buyers can probably spend about three times their incomes, depending on the part of the area where they’re house-hunting.
Chicago’s suburban real estate market is as vibrant as the city itself. The suburbs have developed both commercial as well as residential real estate at a tremendous pace. A large number of properties are always available for purchase in Chicago’s suburban areas such as Lake County, Kane and DeKalb counties and DuPage and Will counties. There are real estate firms that specialize in one of the suburbs, while others deal with all of them. When financing a new home in Chicago, have in mind that the real estate prices are high. Northern suburbs are considered “elite”.
There are many ways to finance a new home in Chicago. It all depends on your credit history, the price of the property and your income. The next paragraphs give brief explanations on some of the methods for financing a new home in the city of Chicago.
The first thing to understand is the difference between a variable, or adjustable interest rate mortgage and a fixed rate mortgage. With a fixed rate mortgage, the monthly payments remain the same over the period of the loan. The adjustable rate mortgage has a lower introductory interest rate, but it may vary over the duration of your loan. So depending on the interest rates, whether they are lowered or raised each month, your monthly mortgage payments will also change accordingly.
When financing your new Chicago home through a loan, no matter if it is adjustable or fixed rate, you have to consider the length of the loan, in terms of how long you finance your home. The most common terms are 15, 25, 30, 40 and now even 50 year mortgages in some areas. Of course, the longer the period the more you will pay in interest over the duration of the loan.
With a FHA home loan you can purchase a single family home, condo, house, or apartment in one of the neighborhoods in Chicago. This FHA home loan is mostly used by first time home buyers because it allows the purchase of a home with a lower down payment, in some cases as low as 3%. This form of new home financing requires you to have a good credit history and enough income to cover the loan and your other financial obligations.
The Chicago City Mortgage program offers qualified first-time homebuyers 30-year, fixed-interest mortgages at competitive interest rates and a gift of 4 percent of the mortgage amount to cover down payment and closing costs.
The Ripples of 2008 Slowdown are Now Getting Closer to Home
Real estate figures at the start of the year are now in, and the numbers for both low-rise and high-rise units indicate that we are still in for some bumpy ride in the next few months. The unfolding developments in various real estate markets are giving conflicting signals. For instance, high rise condo units are performing pretty well despite the lingering problems bugging other property segments. In a market report that was recently released, the new high rise home property segment registered an amazing 1,107 units sold for the first month of the year. The figure is by far the highest that was ever achieved by the segment for the last 5 years.
Surprisingly, things were not as rosy for low rise home properties. Total sales performance for the property segment for the same period was only 1,145. The figure is the second lowest for the property segment for the last five years and is only higher to the sales figure for the same period last year, which is admittedly the most difficult year for the real estate market. It was during this period that the market and the economy as a whole were mired in countless challenges including high interest rates, recession and high unemployment rate.
Things are no better in major real estate markets as well. The inventory level of low-rise properties in the Greater Toronto Area continues to decline and is now at 7,238 units. This inventory of home units for sale is more than 60% lower than the ideal level of inventory for the real estate market.
On the other hand, high-rise home properties and resale home units are now going for much higher tag prices due to strong pressures on the demand side in major real estate markets. We are seeing the worst situations on both extreme scenarios, which according to real estate experts and industry analysts is unprecedented.
Towards the end of the month under consideration, new condo properties were being sold by an average price of $407,885 which is 5% higher for the same period of the previous year. The January figure is also higher by $9,710 to the average price of the same home properties towards the end of last year. These numbers indicate that almost half of the incremental increase in prices for the entire year happened in a single month.
On the other hand, the average price of newly built single-family home units for Greater Toronto Area was pegged at $474,035 towards the end of January this year. This figure is a jump of $14,462 from December of last year and an incremental increase of $34,436 for the same period of the preceding year. Market experts observed that 42% of the increase can be attributed to the price shift during a single month.
What are the implications of these major shifts in the real estate markets? Real estate experts agree that the inventory levels of single-family home properties are critical factors that define the directions in the real estate markets. What worries experts is the continuing and fast downtrend in the supply variables of most real estate markets. Stakeholders who have front-seat view of the goings-on in the real estate industry believe that the current state cannot be attributed to one specific variable. Real estate analysts agree that the situation is a confluence of several factors that negate whatever upside changes that we are experiencing right now.
While the challenges in the real estate market can be attributed to the global recession that hit major economies last year, experts are not sure how long the condition will last. This prevailing market condition is the main reason why home buyers are not too keen on going back to the market, and this depressed situation in real estate market has led to fewer projects of developers and home builders.