Getting a good mortgage rate can save you tens of thousands of dollars over the life of a home loan. Knowing where to find the best rates in Illinois, only by a few tenths of a percentage point can make a big difference in your monthly payments. While it is important to know what kind of rate you can expect now, having an understanding of where they may be later in the year can help you plan your move for a time that is both convenient for you, and saves you the most money.
What are Today’s Mortgage Rates in Illinois?
Rates on a home loan change fairly quickly, what you might see available today may not be available tomorrow. In general, mortgage rates are hovering around 3.6% on a 30 year fixed home loan, which is close to where they have been for the last six months. Rates have actually dropped significantly since the close to the end of 2015, down from a high of about 3.9% on a 30 year fixed loan. Shorter term loans will always offer a lower rate than a 30 year loan, but your monthly payments will be higher. 15 year home loan rates are at about 2.8% at a fixed rate, which is the lowest they have been since May 2013.
The general trend has been a reduction in interest rates since the end of 2013, which makes getting a mortgage today more affordable than what it was this time last year. It is important to note that the 3.6% 30 year fixed rate, and the 2.8% 15 year fixed rate are both for conventional loans. Rates for jumbo loans, which in most areas of the county includes mortgages over $417,000, are slightly higher.
What Should You Do to Get the Best Mortgage Rate in Illinois?
Most of the time, your local bank will be able to get you pretty close to the best rate on a home loan. Some smaller banks may charge a little more for upfront fees, while larger national banks may charge slightly under what you might expect in fees. In order to get the best rate, it can be helpful to shop around among banks in your area, and mortgage-specific brokers. You local bank will usually have tighter borrowing requirements due to them only offering a couple different types of loans, while mortgage specialists can work with different income and credit situations, since they have access to other loan brokers, and charge slightly higher fees.
In order to get the best rate, your credit score will have to be fairly high. Anything above 700 is excellent and should qualify you for the best rate available. If your credit score is just under 700, you can usually still get a loan, albeit at a slightly higher rate. Most banks will advise potential home-buyers to wait until their credit score improves if your score is under 600, since some federal loan guarantee programs will not accept applicants with very low scores.
One thing to keep in mind while you are looking for a mortgage is the amount of closing fees, which can be up to 3-4% of the loan. Usually, you can roll these fees into the loan itself, but it can be worth it to take a slightly higher mortgage rate in exchange for no upfront fees, if you do not plan on living in the home for a long time. You can also buy points to reduce your mortgage rate, which can save you a lot of money if you plan on staying in your home for more than five years.
What’s the Outlook for Illinois Mortgages in 2016?
Mortgage rates, just like the rate on savings accounts, CDs, bonds, etc., are all tied to the Federal Reserve’s prime interest rate. In December 2015, the Federal Reserve raised it’s prime rate for the first time in nearly seven years. To most outsiders, this makes it look like the Fed believes that the worst of the post-2008 economic crisis is over, and that the American economy can handle a higher prime rate. While the interest rate will generally not rise by more than .25% at a time, that rising rate will immediately be applied to new mortgages, usually within the same business day.
It does look like mortgage rates will rise at least somewhat in 2016. While we will not be returning to the outlandish rates of the 1980s anytime in the foreseeable future, you may want to think about applying for a home loan sooner rather than later. The good news for home buyers is that when rates go up a little bit, home prices generally will not go up with them. If you are on the fence about buying a home in 2016, it does not hurt to start looking early in the year, while the market is down, so that you know exactly what you want when more inventory becomes available later in the year. This lets you lock in your interest rate quickly, before rates rise any higher.
2 Point Highlight
While we will not be returning to the outlandish rates of the 1980s anytime in the foreseeable future, you may want to think about applying for a home loan sooner rather than later.
In general, mortgage rates are hovering around 3.6% on a 30 year fixed home loan, which is close to where they have been for the last six months.
