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I would say that the question depends a lot on precisely where you want to live in the meantime. I'm not familiar with the real estate situation in Chicago, but I'm guessing you will see drastically different RE markets in Joliet vs Gary area vs Evanston vs the loop vs the Magnificent Mile.
If you know the neighborhood you want to be in, you should look at all the costs and benefits of renting vs buying since this is not going to be your long term home.
So look around see if anybody is renting out their condos, and at what price, check what is covered utilities and otherwise. See if anybody is selling a similar unit in the building, what is its cost (it might be nicer too though), costs to own a unit include the interest on the mortgage (principal payed down is your equity), PMI if applicable, HOA/condo fees, Homeowners insurance, and property taxes. Look at several condos and rental apartments/condos for rent and then do the following:
Make a spreadsheet for each month what the costs are, and probable assumptions added into it, like rent going up 4% a year, HOA/condo fees going up at the same rate, of course if there is a glut of condos for rent that would be unlikely. I'm guessing no appreciation on property in the 5/6 year horizon, but I don't know the Chicago market so that might be possible.
Then you get your total costs, add in closing costs and 6% Realtors fees to the owning column, and you have a good estimate of the cost side.
The benefits to owning are that you can upgrade the unit, paint it, do other stuff with it as long as the HOA, and city allow it. You can stay there as long as you like as long as you keep maying the mortgage and the taxes.
The benefits to renting are that you can leave when the lease is up, no need to wait up to a year for a buyer. Most likely you can save more money which you can use for a downpayment on a house. Of course there is always the risk of either a condo conversion, or that the landlord wants to upgrade the place, or move in.
I think if your goal is for a house you should really look at it from a financial perspective, not this idea that it is always better to buy than rent. That way you can actually afford the house you want when it comes time to do it.
Of course this presumes that you are saving the money. I would just keep renting until the money you are putting over into saving per month plus rent is enough to cover the cost of owning per month, given what you have saved can be used for a downpayment.
One last thing to note is that if you're renting it may be easier to move to closing, as you don't have to wait to sell the condo to close, just start looking at houses near the end of your rental term. Though you can always try for the 2 mortgages for a while idea, but I wouldn't recommend it, it puts you in a more desperate situation as a seller.
I would say that the question depends a lot on precisely where you want to live in the meantime. I'm not familiar with the real estate situation in Chicago, but I'm guessing you will see drastically different RE markets in Joliet vs Gary area vs Evanston vs the loop vs the Magnificent Mile.
If you know the neighborhood you want to be in, you should look at all the costs and benefits of renting vs buying since this is not going to be your long term home.
So look around see if anybody is renting out their condos, and at what price, check what is covered utilities and otherwise. See if anybody is selling a similar unit in the building, what is its cost (it might be nicer too though), costs to own a unit include the interest on the mortgage (principal payed down is your equity), PMI if applicable, HOA/condo fees, Homeowners insurance, and property taxes. Look at several condos and rental apartments/condos for rent and then do the following:
Make a spreadsheet for each month what the costs are, and probable assumptions added into it, like rent going up 4% a year, HOA/condo fees going up at the same rate, of course if there is a glut of condos for rent that would be unlikely. I'm guessing no appreciation on property in the 5/6 year horizon, but I don't know the Chicago market so that might be possible.
Then you get your total costs, add in closing costs and 6% Realtors fees to the owning column, and you have a good estimate of the cost side.
The benefits to owning are that you can upgrade the unit, paint it, do other stuff with it as long as the HOA, and city allow it. You can stay there as long as you like as long as you keep maying the mortgage and the taxes.
The benefits to renting are that you can leave when the lease is up, no need to wait up to a year for a buyer. Most likely you can save more money which you can use for a downpayment on a house. Of course there is always the risk of either a condo conversion, or that the landlord wants to upgrade the place, or move in.
I think if your goal is for a house you should really look at it from a financial perspective, not this idea that it is always better to buy than rent. That way you can actually afford the house you want when it comes time to do it.
Of course this presumes that you are saving the money. I would just keep renting until the money you are putting over into saving per month plus rent is enough to cover the cost of owning per month, given what you have saved can be used for a downpayment.
One last thing to note is that if you're renting it may be easier to move to closing, as you don't have to wait to sell the condo to close, just start looking at houses near the end of your rental term. Though you can always try for the 2 mortgages for a while idea, but I wouldn't recommend it, it puts you in a more desperate situation as a seller.
that's a real good advice, valid points.
I think it's important these days to have a fairly large downpayment so you won't encounter any problems in your mortgage financing process
Do what feels right to you. I've opted for a single family home in Joliet over a condo as a single, first-time buyer. I am a social worker and have dogs, and I must admit, it took forever to find something affordable in a safe area of Joliet. (Joliet is sketchy, and I am moving from Naperville.) Without dogs, I would have done a condo... there are some affordable ones in nice areas. Also, some assessments cover utilities. You won't lose any money.
I'll quote my dad on this one. "When you buy a condo, your buying walls. When your buying a single family home, your buying walls and land." Quote is self explanitory.
When I was searching for places...some of the condos included blanket insurance in the HOA fees. That seems like a good deal then. Of course condo fees will only go up...
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