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Today's mortgage and refinance rates in Illinois

Buying a home in Illinois

According to Zillow, the typical home value in Illinois is lower than the typical value of $259,906 across the US. The typical home value in Illinois is $215,891, and Zillow expects the value to increase to $229,000 by September 2021.

First-time homebuyer programs in Illinois

If you're looking for financial assistance, the Illinois Housing Development Authority has a few down payment assistance programs to choose from:

  • Access Forgivable: Borrow up to 4% of the price of your home, up to $6,000. Your loan may be forgiven after 10 years.
  • Access Deferred: Borrow up to 5% of the home price, up to $7,500. You'll pay off the loan when you sell the home, refinance your loan, or completely pay off your mortgage.
  • Access Repayable: Borrow up to 10% of your home price, up to $10,000. You'll make monthly payments to pay off the loan.

The Federal Home Loan Bank of Chicago may give you a $6,000 grant toward your down payment, closing costs, home buyer education programs, or repairs that come with buying a home.

Historic mortgage rates for Illinois

By looking at the average mortgage rates in Illinois since 2010, you can see trends for 30-year fixed mortgages, 15-year fixed mortgages, and 5/1 adjustable mortgages:

Seeing how today's rates compare to historic Illinois mortgage rates may help you decide whether you'd be getting a good deal by getting a mortgage or refinancing now.

30-year fixed rates

You'll pay a higher interest rate on a 30-year fixed mortgage than on a shorter-term fixed-rate mortgage. The 30-year fixed rates used to be higher than adjustable rates, but recently 30-year terms have been the better deal.

Monthly payments are relatively low for a 30-year term, because you're spreading payments out over a longer period of time than you would with a shorter term.

You'll ultimately pay more in interest with a 30-year term than you would for a 15-year mortgage, because a) the rate is higher, and b) you'll be paying interest for longer.

15-year fixed rates

A 15-year fixed-rate mortgage is more affordable than a 30-year term in the long run. The 15-year rates are lower, and you'll pay off the loan in half the amount of time.

However, your monthly payments will be higher on a 15-year term than a 30-year term. You're paying off the same loan principal in half the time, so you'll pay more every month.

Adjustable rates

With an adjustable-rate loan, your rate stays the same for the first few years, then changes periodically. For example, your rate is locked in for the first five years on a 5/1 ARM, then your rate increases or decreases once per year.

ARM rates are at all-time lows right now, but a fixed-rate mortgage is still the better deal. The 30-year fixed rates are comparable to or lower than ARM rates. It could be in your best interest to lock in a low rate with a 30-year or 15-year fixed-rate mortgage rather than risk your rate increasing later with an ARM.

If you're considering an ARM, you should still ask your lender about what your individual rates would be if you chose a fixed-rate versus adjustable-rate mortgage.

Refinancing your mortgage in Illinois

Rates are at historic lows right now, so it could be worth it to switch your current mortgage for one with a lower rate — especially if the new rate would be significantly lower.

You don't necessarily need to refinance with the same lender you used for your initial mortgage. A different company may offer you a better deal this time around. Shop around for a lender who will offer the lowest rate based on your credit score and debt-to-income ratio, and the one that charges relatively low fees.

How to get a low interest rate on your mortgage

Here are some tips for landing a good interest rate on your mortgage:

  • Save for a down payment. With a conventional loan, you may be able to put down as little as 3%. But the higher your down payment, the lower your rate should be. Rates should stay low for a while, so you probably have time to save more.
  • Increase your credit score. Many lenders require a minimum credit score of 620 to receive a mortgage. But the higher your score, the better your rate will be. The most important factor for boosting your score is to pay all your bills on time.
  • Lower your debt-to-income ratio. Your DTI is the amount you pay toward debts each month, divided by your gross monthly income. Most lenders want to see a DTI of 36% or less, but an even lower DTI can land you a lower rate. To improve your DTI, pay down debts or consider opportunities to increase your income.
  • Choose a USDA or VA loan. If you're eligible, you might consider a USDA loan (for low-to-moderate income borrowers buying in a rural area) or a VA loan (for military members and veterans). These mortgages typically have lower rates than FHA or conventional loans — and you don't need a down payment.

Improving your financial situation and choosing the right type of mortgage for your needs can help you get the best interest rate possible.

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