Q.  Sticky situation - Wanting to buy - Graduating and starting a job downtown this summer

I graduate in May and will be starting my new job in June. I’ll be making 60k, and my husband is currently working and makes 40k. We have 0 debt and about 30k in savings. We’re renting a place right now, and I REALLY want to buy come summer. I feel like I’m just throwing money out the window by renting. And ideally I would like to buy a condo in the city, probably with a list price of around 250k (this is what the calculators tell me I can afford). I really like the thought of living in the city, but I could put that dream on hold. But I do want to be in a safe area with public transport to downtown (and not too long of a commute.) My husband and I have almost no credit history, but what's there is fine. I am feeling so small in such a big situation, and want to know if I am being ridiculous thinking I could ever borrow at a decent interest rate at this point in my life? If not, what are my other options besides renting? Or is renting not as bad as I think?

Yesterday, 17:35 - Chicago - Home Buying - 7 answers

1. A.The fact is overtime the market appreciates.  You also need to consider your planned length of stay in your new home.  If you think you are going to settle in and stay for 5+ years you can take good advantage of interest tax deduction and the fact that over the last half century Chicago median home value has doubled roughly every 14.5 years.  Chicago also is a relatively cheap market compared to many other large metropolitan areas (the chart below shows Media House Value/Median Household income, data from city-data.com from 2006 estimates)
   

2. Mortgage for $250k at 6.25% interest for 30 years = $1,539
   

3. Mortgage for $250k at 5.25% interest for 30 years = $1,380
   

4. Savings of  $159/month if place is priced same, which is the equivalent of $26k price difference at 6.25% interest.  So you would need prices to drop about 10% if the interest rate is 1% higher next year for you to get the same monthly payments.
   

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6. I feel we will have moderate appreciation in most areas of Chicago over the next 12 months, in the 3-5% range.  See chart at bottom for 10 year historical data.
   

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