June 1, 2013 — This past week the news was a buzz about the recently released data from S&P/Case Shiller Home Price Index indicating home prices were on the rise. Some are calling today’s real estate market “hot” while others are advising caution.
Joan Jensen, president and CEO of Central Credit Union of Illinois, helps us interpret this latest news and to help prospective buyers navigate the changing real estate market. She says that while home prices nationwide have increased more than 10% over the past year, Chicago’s home prices have risen less than 8%. While recent news is certainly encouraging, home prices in Chicagoland fell six straight months from September 2012 to February 2013. Joan advises prospective home buyers not to get caught up in the headlines, but rather stay focused on the realities. In Chicagoland, you can still take your time to find affordable property with a low mortgage rate.
” Good News–The real estate market is recovering nationwide and mortgage rates remain low. But, the Chicago market is rising more slowly. So, you have time to find the right house for you.
Bad News–The Chicago home market recovery is spottykind of like Swiss cheese. Some neighborhoods are taking very long to stabilize and recover. Generally, the more home prices declined during the recession, the longer the neighborhoods are taking to stabilize and recover. Stay cautious when considering buying in these areas.
Take Your Time–Don’t be in a hurry to buy. Take time to research a neighborhood before you part with your money. Don’t buy with the intent to make a quick profit. It could be years before some neighborhoods see significant increases in the value of homes.
Put Your Best Face Forward–To qualify for the best possible mortgage rates get your financial house in order by:
1. Paying down your credit cards; 2. Delaying major purchases and avoid taking on new debts; 3. Building up your savings to pay your down payment and closing costs; 4. Checking your credit report and credit score. 5. Getting pre-approved for a mortgage and calculate how much house your can afford. Most lenders want your monthly mortgage payment to be no more than 28% of your monthly income. And your total monthly debt to income ratio to be no more than 36%.
Start Looking–Pick out neighborhoods that meet your needs and begin looking at what is available. Get a feel for what your money can buy.
If the Price is Right, Make a Deal–Consider buying a foreclosed or short sale home. These can be “best buys” if they meet your needs and pass a professional home inspection with no major repair problems.
REMEMBER! Be patient, take your time, don’t get caught up in the headlines and keep looking until you find the right house at the right price. Then make your move.