Lower home prices and significantly lower mortgage rates combine to help today’s home buyers not only have a smaller loan amount, but a significantly lower monthly payment. These total savings can be as much as 20-25% saved on the cost of a Chicago loft.

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.

According to Mike, a Bucktown loft that sold for $417,000 at the height of the boom would sell today for around $370,000. Andrew shows that the national average for a 30 Year Fixed was 6.34% in 2007, 6.41% in 2006. For the comparisons, we’ll use today’s rates of about 5% on a 30 Year Fixed versus 6.4% to average 2006/2007.

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.

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