The steady climb of rents and home prices have first-time Chicago home buyers feeling a little anxious! If this describes you, you’re not alone. A recent survey published in USA Today shows that home buyers are feeling pressured, and some are making big sacrifices to achieve home ownership.
For example, about 60% of aspiring home buyers said that saving for a down payment is a higher priority than saving for an emergency, or a retirement fund. This is concerning, because an emergency fund becomes even more essential when you’re a homeowner! If the water heater breaks when you’re renting, you call the landlord. When you own a home, that emergency call to the plumber is on your dime.
When you’re in your 20’s and 30’s, you might also feel as if you have plenty of time “later” to save for retirement. But the truth is, it becomes harder to make up for lost time as the years go by! You’d have to increase your saving rate considerably, later in life, to make up for the decade or two where you didn’t save much. Plus, you could be losing out on thousands of dollars in 401k employer-match money, not to mention the gains you could have been making in the value of your investments.
The survey also said that 72% of hopeful buyers prioritize saving for a down payment above other investments. This one we can see! While it would have been nice to grab the initial public offering of Facebook stock, most investments present a degree of risk. In contrast, owning a home, especially using a 30-year, fixed-rate mortgage, provides better financial stability than renting, along with income tax breaks, and the opportunity to build equity. Owning a home may not make you wealthy by itself, but it can improve your long-term financial picture!
How much should you sacrifice to buy a Chicago home? Only what makes sense! Whether you own a home or rent, you’ll still need an emergency fund. Also, your retirement years will come faster than you think! There can be advantages to making larger 401k deposits now, that will lower your taxable income – which in turn, could give you a bigger income tax refund to save towards home ownership! Always keep an eye on the big picture, and look for savings strategies that compliment more than one goal.
StartingPoint Realty – helping first-time Chicago home buyers!
StartingPoint Realty specializes in serving first-time home buyers throughout Chicago and the Northwest suburbs. We provide complete education and guidance during the entire home buying process!
Be sure to attend a free home buying seminar to learn about Chicago home buying! Always feel welcome to contact us for help with your Chicago home buying questions!
Ryan Gable Broker/CEO Starting Point Realty
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