Chicago Lofts More Affordable

Since the height of the housing boom, both the price of a Chicago loft and the mortgage rate associated with it have droped significantly. What this means is nearly a 20-25% savings to today’s home buyer.

We have Andrew Luett from Luett Mortgage Group here to help us with Chicago mortgage rates and Mike Hulett of Lofthunt.com to help with prices on a Chicago loft.

Mortgage rates have dropped significantly in these past few years. According to Andrew, they were at a high in 2006/2007 where they averaged about 6.4% over the two years. They’re currently at around 5%. Mike is seeing properties selling cheaper. A particular Bucktown loft that sold for $417,000 near the top of the market is worth about $370,000 in a fast sale today.

Assuming an 80% loan to value on the a home loan based on the $417,000 “old” price at the 6.4% “old” rate, you’d see a payment of almost $2,100/month. At an 80% loan on today’s $370,000 price and 5% interest rate environment, you’d see a payment close to $1,600/month. This is a $500/month or 25% savings to today’s first time home buyer. It is a tremendous amount of savings.

The total savings for today’s first time home buyer is incredible. We know that mortgage rates will go up in 2010 when the Fed is no longer supporting mortgage bonds. Further, we’re already seeing recovery in the housing market and a supply shortage that will push mortgage rates higher. All told, if you’re looking at buying a first home, I don’t know when you’ll get a better opportunity. Believe it or not, there are still great options and great first time home buyer programs for Chicago mortgage loans.