Today's Mortgage Rates
|Product (Rate Program)||Rate||APR|
Illinois is often said to be a state with two separate identities. There's Chicago, the Windy City, with its reputation as one of the world's great metropolitan areas and all that comes with it. Then there's downstate, whose mix of small towns and rural areas is the very definition of Middle America. But wherever you go in the Land of Lincoln, you'll find that Illinois home loans are largely the same.
Current IL mortgage rates for some of the most popular home loan options are listed above. If you're like most homebuyers, the 30-year mortgage rates for Illinois will probably be of most interest to you; the 15-year mortgage rates are a popular choice for those who are refinancing. Adjustable-rate mortgages (ARMs) can be a good choice for borrowers who don't need to lock in a rate long-term, such as someone who expects to move in a few years, and for financially sophisticated borrowers who know how to take advantage of their features.
Knowing the current IL mortgage rates is a good place to start, but there's more to shopping for a home loan than that. Illinois mortgage rates vary from borrower to borrower, depending on things like credit score, down payment, loan amount and other factors. Rates also vary from lender to lender, so it's important to shop around and know how to compare loan offers to get the best deal.
Here at MortgageLoan.com, we've got the information and tools you need to be a savvy home loan shopper, whether you're looking to buy, refinance or take out a home equity loan. We've got informative articles on just about every aspect of home loans and real estate; listings of Illinois mortgage rates, mortgage calculators to figure out the costs of a loan and access to Illinois mortgage lenders ready to offer you their best deals.
Here are some general tips to get you started:
- Don't focus solely on the mortgage rate. Closing costs can have a big impact on the overall cost of a mortgage. The lowest rate is not necessarily the best deal, particularly if the rate includes discount points.
- The annual percentage rate (APR) helps you compare mortgages that have different closing costs, and is often a better indicator of the cost of a home loan that the mortgage rate itself.
- Not all Illinois home loans are the same. Find the one that's best for you. For some Illinois borrowers, that may be an FHA loan; for others, a conventional mortgage backed by Fannie Mae or Freddie Mac. Or choose between a home equity loan, a HELOC or a cash-out refinance to borrow money. Find the best fit for you.
- So-called "toxic" mortgages, which lured in unwary borrowers with attractive terms full of hidden pitfalls, are largely a thing of the past, after lenders got burned by them in the Big Crash. Illinois mortgage lenders these days are not likely to offer anyone a loan they can't repay. But that doesn't mean you can let your guard down – it's still up to you to understand the loan you are getting and just what your obligations will be.
FHA Loan – Illinois
An FHA loan is the classic mortgage for a first-time homebuyer or anyone else with limited finances or less-than-ideal credit. FHA loan requirements in Illinois allow you to get a loan with as little as 3.5 percent down. Furthermore, you don't have to pay a higher rate just because you're making a small down payment or have a sub-700 mortgage score, as you would on a conventional loan.
While some first-time homebuyers might think it would be better to save up a larger down payment, an Illinois FHA loan allows you to start building equity immediately rather than spending that money on rent. Closings costs are somewhat higher on FHA loans than conventional ones, so that's where a mortgage calculator comes in handy, so you can compare the costs and savings of the two types of loans over time.
30-Year vs. 15-Year Mortgage Rates
These are the two main payment options for fixed-rate loans, though other lengths such as 10- or 20-years are available as well. But the big difference is this: 30-year mortgages are generally used for home purchases, while 15-year loans are primarily used for refinancing.
30-year mortgage rates in Illinois are usually not a great deal higher than 15-year rates – the difference is often about a half a percentage point. Even so, the difference in what you pay in interest is huge. That's because you pay off the 15-year loan twice as fast, so you aren't paying interest for nearly as long, and the loan balance against which interest charges are calculated is paid down much more quickly.
A 30-year mortgage gives you much smaller monthly loan payments, however, since you're paying less against mortgage principle each month. Then after making payments for a number of years, many Illinois homeowners will choose to refinance into a 15-year loan to cut several years off their loan with little to no increase in monthly payments due to the lower 15-year mortgage rates.
It can be tempting to refinance with 30-year Illinois mortgage rates, as the longer loan can result in significantly lower monthly payments. But beware – doing so means stretching your loan back out to a new 30 years, postponing the day you pay off the loan in full and saddling you with a big increase in overall interest costs as a result.
Illinois Home Equity Loans
Existing homeowners who need to raise cash for a one-time expense might look into home equity loans, HELOCs or cash-out refinance mortgages. All are a form of borrowing against your home equity, though with significant differences.
With a standard home equity loan, you borrow a sum of money and immediately begin paying it back. They are usually fixed-rate loans, though you can get them with adjustable rates as well.
A home equity line of credit, or HELOC, works like a credit card secured by your home equity. You're given a line of credit you can draw against as needed, up to a predetermined limit. Illinois HELOC rates are usually lower than for standard home equity because they are set up as adjustable-rate loans, though the rates can adjust higher over time.
A cash-out refinance is when you refinance your mortgage for a higher amount than you currently owe and receive the difference in cash. Illinois home refinance rates are usually lower than rates on home equity loans, but closing costs are greater because you're refinancing the whole mortgage. A cash-out refinance works best if you're borrowing a large sum or if Illinois refinance mortgage rates are lower than the rate you're currently paying.
Adjustable-rate mortgages (ARMs) in Illinois are characterized by a low, fixed interest rate that later resets to a variable rate. The rate is tied to a benchmark financial index and moves up or down with macro-economic trends. ARMs might be best for self-employed borrowers whose income fluctuates with the economy, or borrowers who need a low payment in the first one, three, or five years of the loan.
You can find qualified Illinois brokers in our broker directory. Be willing to consult with several so that you have a few different offers to compare. Prepare for these consultations by considering the following:
- How much loan you can afford. This is more complicated than it sounds, because how much you can afford depends on what type of mortgage or refinance you're considering. If you aren't sure, visit our mortgage calculators to test different mortgage rates, amounts, and loan types.
- How long you plan to own the home. This could determine whether an ARM is more appropriate than a fixed-rate mortgage (FRM), or vice versa.
- Any potential changes to your income level.
You'll also benefit by knowing how market rates differ for the various loan types. For example:
- ARMs usually start with a lower rate than FRMs.
- Second mortgages have higher rates than refinances.
- Mortgages with shorter amortization periods have lower rates than the same loans with longer amortization periods.
You don't have to be a mortgage expert-a good lender should walk you through your options. But knowing more makes you better equipped to make the right decisions.