Question : true “cost to own” a condo in Chicago/ apply 100k toward principal or invest it?
I was wondering how much would a 2bedroom condo association, taxes and insurance cost per month(average cost) for a 280-300k condo… never owned my own property before and I am considering buying one. My credit is good so I believe I could get a loan at 4-6%=

300k @ 5.50% loan (per month)= 1375interest (first year average)+ 833.33principal (minimum payment) + insurance+ condo+taxes=????

Second Question… by the time I would actually buy it I will have a 100k saved up. I have two choices… apply almost everything toward the principal or invest it and have a safety net in case anything happens to my job… it will provide me with enough payments for a year+ in the worst case scenario but if nothing happens I would be getting more interest then what the loan charges which mean theoretically on paper I would be saving money… will it work in real life??? I understand that there are brokerage fees and other income fees that I would have to pay on the interest…
condo insurance cost

Best answer:

Answer by maladr0it
I’m actually in a similar situation, looking at the South Loop for my first home.

First off, go online and look up an amortization calculator. Your numbers are a bit off as a 300k loan at 5.5% with no money down is about $ 1800 a month, but expect to put down at least 10% (you’ll have to put down at least that much to not get hit with a higher rate) and pay about $ 1500 a month. From here, the costs get harder to pin down. First, you’ll have your assessments, which vary a lot from condo to condo. For that price range, you could pay anywhere from $ 150-450 a month. The upside of higher assessments is typically nicer facilities in your building and, sometimes, included utility costs. As far as utilities go, expect to pay $ 250-400 a month depending on your lifestyle and what is included in your assessments. Insurance will run about $ 800-1000 per year, depending on the coverage you elect and the type of building you buy in. Taxes will typically run .8%-1.2%

Assuming the median values of all of these calculations, you’re looking at about $ 2200 a month in housing costs. Keep in mind this figure could vary greatly.

As for your second question, rule of thumb is to have the equivalent of 3 months expenses in the bank to cover unexpected costs. This means total expenses, not just housing costs. If you think you have a real risk of losing your job and being unemployed for more than 3 months, you should probably reevaluate your decision to buy property. There will be closing costs, but you’ll likely be able to get those taken care of by the seller in this market. I’d say, after everything is said and done with your down payment, closing, etc. put 3 months of expenses in a savings account and invest the rest as you see fit. If you think you can get a return better than your mortgage rate, then it would make sense to invest there and let your money appreciate. In the current market, however, even the high-yield internet banks are only giving around 3%, so investing for a higher rate of return will put your money in either a riskier or less liquid position. If you’re ok with that and are getting a higher rate, then go for it. One thing to keep in mind is that if Chicago housing market does start to become more attractive, you could end up selling your condo. If the market does appreciate heavily, the more principle you have invested means the more profit from your sale.