buyers

Great news, Morris! USDA has extended you until 2020! After several years of living 6 months to 6 months, we now have you

Single family housing loans are made possible through guarantees provided by the United States Department of Agriculture, Rural Development.

locked up for 6 years. It wasn’t long ago that I wrote about this.… but it will be a while until I have to again. This is good for both buyers and sellers interested in Morris.

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List to Sold Percentage

by Jim Ludes on February 11, 2014

in Buyers,Statistics

A question that comes up frequently when working with buyers is, “how much can I reasonably expect to get off the price of this home?” While I stress that each house on the market represents an individual, unique opportunity, there is a way of generalizing for the masses. One can see by the attached charts (one for median and one for average: both for Grundy and Will County) what the sale price to list price percentages do. I tell folks that sales tend

to hover around 96% of final list price. So, forget what it originally hit the market at or all the potential price drops along the way, but look solely at the price today. On average/median one can reasonably assume to get 4-5% off that. No, of course, some will be more and some will be less. A good market analysis will show you where a house should sell for and if it’s priced okay, well or poorly. A subsequent offer should work off a true market value more than a listing price….. but since it’s often asked…… it’s now answered.

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Mortgage Amortization

by Jim Ludes on February 10, 2014

in Buyers

Sample amortization table ($200,000 purchase with 20% down and a 4.25% interest rate)

Something to consider when purchasing a house is how much you will actually pay for it. This is explained to you at closing by your legal council, but if you read it here first, you will dull the shock factor. Amortization shows the percentage of your payment that is going towards interest and the part that is going toward principal (the amount you borrow). Let’s use round(ish) numbers on a pretend house. $200,000 for a place that you put 20% down on at a nice interest rate of 4.25%. Not concerning ourselves with taxes, insurance or association fees that would leave your monthly payment at $787.10. What we’re looking at though is how much of that payment is PAYING OFF your loan and how much is going to interest.

What you see in the amortization table (a full version available here) is that you will be paying off $220.44 of the loan in the first month (while paying $566.67 in interest for the privilege of being loaned the money). In the final payment, as logic would have it, you will pay $781.55 toward principal and only $2.78 in interest (assuming you paid once per month, only the minimum, every month for 360 months). At month 165 you will have the most even split. $393.63 to principal and $393.47 to interest is what you’ll pay three months shy of 14 years in. tarting with this payment, every month for the duration of the loan will pay more principal than interest.

Scarier than this is the total amount that you’ll pay! In borrowing the $160,000 remaining dollars (after the $40,000 is put down; 20% of $200,000) you will pay a total of $283,353.23! That’s the price of doing business. When you borrow- you have interest. Some people may believe that $160,000 times 4.25% is $6,800 in interest….sadly, this is not the case. There are ways to pay less and we can tackle them down the road.

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Distressed properties are foreclosures and short sales. Yesterday we looked at a national chart compared to local data. We’ll do it again today and again the numbers will show Will County is consistent with the graph, but Grundy is not. Months supply is an indicator of how many properties are available compared to the rate people are buying them. Smaller numbers show buyers are gobbling them up (seller’s market) and higher months mean they are not (buyer’s market). 6 months is generally thought to be the line in between.

The nationally provided graph shows that the months supply of distressed homes is between 6 and 8.9 months. That holds true for Will County at 8.8 months, but not Grundy which is at 11.2. Good to know if you’re in the market for distressed property.

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