Buying my first house in about a week. Currently at the mortgage shopping process.
It looks like our current options are a 30 year fixed at 3.8125% or a 10/1 ARM at 3%
Personally I’m not too scared by interest rates going back up meaningfully in the long term. Despite the INFLATION fears, we’re still in a relatively low growth environment in terms of GDP and Population, so I think the chances are pretty low that rates are like 8% in 10 years.
House is financially well within our means, probably 2-3x annual household income.
I mean I’m sure you’ve thought of this but I’m not sure I would want to own in Chicago (assuming that’s still where you are). Astronomical property taxes, elevated maintenance given the terrible weather, close to zero appreciation over the past 20 years and not a growing population. If you’re confident you’ll be there for a long time, I guess it doesn’t really matter.
Counterpoints: We really love the city and love our neighborhoods
Being able to walk to multiple bars and restaurants and parks and everything is a huge quality of life issue for us that it’s worth paying the annual property taxes
A city house like this in a neighborhood like this would easily cost like 2-2.5x in Boston, 3x in DC, and LOLx in NY or SF
We don’t think that buying is some massive financial advantage to renting in Chicago, but after 6 years in the same apartment we’ve outgrown it and can’t find the upgrades we want on the rental market.
10 years is a long time for the rate to be fixed. Assuming everything else is the same in terms of origination fees, points, and ability to refinance or pay off early I would take the lower rate. If there is a prepayment penalty then I would just go for the fixed.
If there is a lot of inflation then it is likely in 10 years that your income has grown to a point that the higher payments probably aren’t such a big deal to your budget.
You could even run a model in Excel where you do the 10/1 ARM but make the payment you would have with the 30 year fixed and you probably have a greatly reduced principle balance at the 10 year mark.
A friend of mine just bought in Lincoln Park. It’s a pretty sweet house. It wasn’t cheap, but much cheaper than I would have guessed for the size of city and quality of city Chicago is.
Never seen them split it, they just chainsaw into large round 12-18" chunks as per your specs of whatever will fit in your fireplace/pit. Then up to you to split it, either by hand or with a log splitter. I’d imagine you could save a few more buck if you had your own chainsaw and they could just leave the tree in whatever huge 20’ pieces they took it down in.
Seattle market is so fucked for buyers. I put in my first offer on a house today. The house was listed at $900k and ended up selling for $1.25M. It’s a nice house in a nice neighborhood… but >30% over list price? Apparently our offer was the lowest too! Nice icing on the top
Just needed to vent. I’m sure I’ll get outbid at least a half dozen more times over the next few months…
Seattle market is pretty ridiculous. I mean our #1 Seattle slappy, @MrWookie, decided that living in Portland was preferable. That’s when you know things are bad.
I wouldn’t say it’s a lie exactly, but I’m sure there is some GTO listing price that attracts enough interest without negatively impacting the ultimate sale price in some way. That’s what they are shooting for when listing.
The only new builds I ever see are like the ones below. I hate how they look, the lack of any yard, and often the build quality and/or materials just seems low. I do appreciate that they are more available in desirable neighborhoods, newer appliances/kitchen, and the deck up top. And that’s just how I feel, my partner is a hard no on them.
There may be some new builds in suburbs or towns far out, but I haven’t looked too much at those since proximity to certain areas of town is important and biking to places is something I enjoy.
