Leasing a fabulous apartment in the city is a lot like dating Mr. Right Now. It’s fun, it’s pretty easy and there are practically no strings attached. You can basically move in with nothing but a mattress, a table, your favorite bottle of Trader Joe’s ridiculously inexpensive wine and start having fun. Buying, on the other hand, is a lot like going to the court house and signing a marriage license. Sure, you could get out of it if you really wanted – a la Britney Spears in Las Vegas or Elizabeth Taylor in seven of her eight marriages – but most people who take the plunge are ready for real commitment. They liked what they saw on the exterior, checked out the mechanicals, toured the neighborhood restaurants and decided they wanted what was on the menu. Forever. Well, maybe not forever, but at least for the next 3-5 years, as is usually the minimum recommended for most real estate investments.
Like both dating and marriage, leasing and buying have their ups and downs. When you lease, you’re usually not committed for more than a year. Which is great because your apartment might sound amazing now, but you could come to find out that you hate the neighborhood, the closet space is unacceptable, the coin laundry is not your style, or that there are centipedes the size of birds waiting to stalk and attack you in the basement. Seriously, it could happen. Or, you could move in and absolutely love the apartment and pour all of your energy into it. You buy all the right furniture, you paint the walls these gorgeous earth tones and get the cutest sheers so the light filters through the windows, just so. You could hang full-length mirrors and buy stunning glassware and keep fresh flowers in the vase by the door and it would be flawless. But it would also be temporary. By the time you’d finished perfecting your space, your landlord could already be arranging for the next tenants to move in and before you know it you’re out on your ass. Ouch.
So, maybe one day you realize that – not unlike some of our past relationships – you’re tired of pouring your energy (and money) into something that really isn’t giving you anything back in return. Then what do you do? Well, if you’ve finally found a neighborhood that you love and plan to live in for the next handful of years then I suppose, in a perfect world, you’d want to buy. But the real question then becomes: can you afford it?
Below is a breakdown prepared by Larry Steinway of The Federal Savings Bank for one of my listings at 828 W. Waveland, unit #1S. It’s a jaw-droppingly handsome, 4 bed/2.5ba duplex down within walking distance to Wrigley Field. The very best, top-of-the-line appliances and finishes in this unit. It’s even wired for sound! Larry calculated that with a 20% downpayment, the mortgage payment on this home would be $3,191.52 (which INCLUDES the assessments and your own garage spot!) for a 30-year fixed loan. You split that up with a few roommates and you’re looking at $798 a month. I suspect that’s less than your rent right now.
But I know what you’re thinking, “Um, yeah Grace, however that 20% downpayment is a ton of money.” And I agree – especially for a first-time homebuyer that’s a huge chunk of change. In my experience, most first-time homebuyers are looking at properties somewhere between $200,000 – $400,000. So let’s use this listing at 1104 W. Webster instead (courtesy of Sara McCarthy of Coldwell Banker, of course) as another example.
1104 W. Webster is a 2bed/1.5ba simplex in an ideal location. It’s been recently updated and the unit itself is adorable. It’s listed for $325,000. Say you bought it for list price. At 20% ($65,000) down for a 30-year fixed loan, your monthly payment would be roughly $1,655/mo. If you had a roommate, that’s only $827 a month. And the best part is it’s NOT a rent payment. You are actually paying off your very own home so that someday, when you sell, you should have a little equity and, with any luck, an investment you are super happy you made when you were young.
Still, maybe you think 20% down is a little steep for you. There are also options available to purchase for 5% – 10% down as well. Call or email me if you’d like to talk over those options. Because, unlike the hundreds of scary dates we may have been on, or all the dumpy apartments we may have lived in, homeownership is a decision that we can always, always, always be proud of.
To play around with mortgage payments and different scenarios, check out this link: http://www.mortgagecalculator.org/ And remember, you can always buy or sell with Grace 🙂