Can’t afford to move? You’re not alone
Here’s a bit of depressing news concerning the Chicago housing market: A new report from Zillow says that more than a third of Chicago-area owners with a mortgage have so little equity that they can’t afford to move.
Crain’s Chicago Business recently wrote a feature story about this distressing study. According to the story, more than 34 percent of Chicago-area owners with a mortgage either had negative equity or just the tiniest bit. Negative equity is particularly troubling: It means you owe more on your mortgage than what you home is worth.
According to the Zillow study, these homeowners have so little equity that if they sold their homes they wouldn’t leave with enough money to cover the down payments they would need to buy a new home.
How does this impact the local housing market? When there is a large number of homeowners who can’t afford to move, it reduces the number of residences for sale. That makes it difficult for buyers who today are struggling to find homes for sale in the Chicago area.
Zillow reported that among the 30 largest cities in the United States, Chicago had the highest share of owners who don’t have enough equity to generate the down payments they’d need to move.
It’s difficult to say when this problem might lessen. But if you need to move and you’re worried that the equity in your home won’t cover your next down payment, know that you do have some options. Certain loan programs, including those insured by the FHA or backed by Fannie Mae, require smaller down payments. You don’t have to come up with the traditional 20 percent down to buy a new home.
When it’s time to sell, be sure to work with a mortgage lender who can help you find low-down payment programs that can help when the value of the home you are trying to sell has dropped.
And, as always, work with a REALTOR® who knows your neighborhood. This professional will market your home to the greatest number of possible buyers and will help you grab the highest possible sales price for it.