Stand back, all my darling practical piggies, because I'm going to do math for you again and it's going to be fabulous.
Today's delicious math is performed with the end goal of explaining why you really do need to shop around for your mortgage, and why you need to do so before you start shopping for a home with a Realtor.
See, if you're buying a home and I'm representing you, my job is to negotiate the lowest possible price. We Realtors do pretty well at the whole negotiation thing. According to MRED's MLS, the final sale prices of homes in Chicago over the past year have been about 10% less than their final list prices. 10% is nice. I got 25% off for one of my buyers this year and felt pretty darned pleased with myself for doing so, but it was a special & extreme circumstance.
But the true cost of a home isn't just the purchase price. What about the closing costs and interest payments that you'll rack up over the life of your loan? Unless you're paying cash only, you're going to be paying out quite a bit more for the privilege of borrowing someone else's money. I do everything I can to get you the lowest purchase price, but how much you actually pay? That's up to you.
By planning ahead, saving a good down payment and working the details of your mortgage you could save 9% on the total money spent after just 5 years in your home. By year 10 that savings is up to 21%. If you stayed in the home for the full life of the loan you would save 35%. That's more than you'd save in any sort of negotiations over the actual purchase price, and definitely more than the piddly 2.5 to 3% you'd purportedly save on just the purchase price by going without an agent at all. (more…)
From my browser to yours comes the 2nd installment of the StrawStickStone weekend links!
- Journey to the center of the earth: MentalFloss (a personal favorite of mine) ran an excellent article this week about air rights and underground rights for homeowners.
- Introducing "Generation Rent." HuffPo has a great article about the surge of young adults who are moving to/staying in the city and choosing convenience & renting over the suburban homeowner lifestyle. Faced with uncertain career prospects and rising energy costs, the foot-friendly cities are giving rise to a new generation with very different cultural values.
- Why yes, Realtors can help with Rentals. A recent "Real Estate Matters" column from the Tribune serves as a great reminder that Realtors are in the housing business, not just the home sales business.
- What's included in your mortgage's APR? I had a great conversation with one of our office's in-house mortgage lenders this week about the hidden fees that can be rolled into your mortgage. Sometimes those fees can mean the difference between a good loan and a great one. Find out what makes up the difference between your interest rate and your APR with some guidance from AmericanLoanSearch.com.
- Early property tax bills in the mail for Cook County. Cook County Treasurer Maria Pappas has announced that 2nd installment property tax bills for 2011 will be in the mail this month and due August 1. In previous years the bills have always been late, with due dates sometime in the fall. The bills have been late for so long, in fact, that most bank have come to expect an October or November due date, as have most title companies. This sudden burst of punctuality will mean that most escrowed property tax accounts will come up short, and that any property tax prorations included in home sales for the first half of this year will have been incorrect. Stay tuned for StrawStickStone's take on the mess this coming Wednesday, but for now find out more at the Sun-Times article.
- Rowing for cancer survivors. A former tenant that I placed in two apartments is on a quest to fund her non-profit. Jenn Gibbons is founder and coach of Recovery on Water, a Chicago based not-for-profit rowing team for breast cancer survivors. Jenn formed the group in response to research that physical activity helps reduce the chance of breast cancer recurrence. This summer she is rowing the circumference of Lake Michigan solo to help raise money for ROW. Follow her adventure and make a contribution to the cause at Row4row.org.
Do you have a link to a real estate or Chicago-related item that you'd like me to share here? Let me know!