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Check out the latest average mortgage rates in Illinois for conventional and non-conventional mortgages. You can compare them to current national rates as well as historical interest rates for both Illinois and the United States.
Current Mortgage Rates in Illinois
|Mortgage Type||Avg. IL Rate||National Rate|
|30-Year 5/1 ARM||3.88%||3.36%|
|30-Year 3/1 ARM||3.81%||–|
|30-Year 7/1 ARM||3.99%||–|
|30-Year 10/1 ARM||4.05%||–|
Last update: 1/30/2020
Source: Consumer Financial Protection Bureau, Federal Reserve Bank of St. Louis
Non-Conventional Mortgage Rates in Illinois
|Mortgage Type||Avg. IL Rate|
|FHA 30-Year Fixed||3.81%|
|FHA 15-Year Fixed||3.81%|
|VA 30-Year Fixed||3.83%|
|VA 15-Year Fixed||3.80%|
Last update: 1/30/2020
Source: Consumer Financial Protection Bureau
Several assumptions about home value, down payment, and credit score were made to determine the average mortgage rates you see above. These assumptions are consistent for all mortgage types and all mortgage rate data was collected directly from the CFPB.
First, a home value of $226,800 was used which is the national average according to Zillow’s Economic Data. Second, a 10% down payment was assumed, dropping the actual mortgage amount to $204,120. Third, rates were based on the national average credit score ranging from 680 and 699.
Historical Mortgage Rate Trends in IL
Source: Federal Housing Finance Agency Monthly Interest Rate Survey
Note: Adjustable mortgage rates excluded due to insufficient data.
Historical Mortgage Rate Trends in the U.S.
Source: Freddie Mac
How to Shop for a Mortgage
1. Review Your Financial Situation
If you want to apply for a mortgage, it’s essential to review your financial situation such as your credit score, debt, and income. Lenders consider these when deciding whether to approve you for a mortgage and they have a big impact on your interest rate. If you have a high credit score and income, then you are more likely to get a lower interest rate.
2. Learn About Different Mortgage Rates, Types, and Terms
Before shopping for a mortgage, be sure to know how they work and the different terminology that you’ll see during the application process. For example, there are various mortgage types, including conventional and non-conventional (FHA or VA) mortgages, and which is best for you will depend on your situation.
Lenders offer fixed-rate loans as well as adjustable-rate mortgages (ARM), and there are several different ARM types including 5/1, 3/1, 7/1, and 10/1. Furthermore, mortgage terms are usually 15 or 30 years, but it may be possible to get a 10- or 20-year term depending on the lender.
3. Seek Prequalification
Either before or during your house search, you should seek prequalification from one or more mortgage lenders in your area or online.
This will allow you to get an idea of if you are eligible for a mortgage or not, what amount you may be able to borrow, and what your rate will be around. This is an important step because it adds certainty to your home application and outlines a range of home values that you can afford.
Typically, no hard credit pull is required for prequalification so your credit score won’t be affected.
4. Compare Multiple Lenders to Find the Best Rate
The next step is to compare different mortgage lenders to find your best option. Certain lenders may offer lower rates or more benefits than others, so it’s important to shop around.
Be sure to consider rates, fees, benefits, repayment terms, down payment requirements, and other customers’ experiences when comparing options.
5. Seek Preapproval
Once you know which mortgage lenders you want to go with and have a house in mind, it’s time to make a bid. Before making a bid, you should seek a letter of preapproval from your preferred mortgage lender.
A letter of preapproval is a powerful component in a bid. It shows the owner that you mean business, and it’s also a more formal approval for a home loan.
6. Negotiate Your Mortgage Terms & Lock in a Rate
If your bid was accepted, it’s time to move forward with taking out your mortgage. You should try to negotiate your interest rate, closing costs, and terms as best as you can to secure the most beneficial loan for yourself.
Basic Mortgage Rate Definitions
Mortgages can be confusing, so we put together a few basic definitions to help you understand some of the terminology you’ll come across during the application process.
Conventional Mortgage – A mortgage loan or home loan offered by a bank, lender, or financial institution, excluding loans backed by federal programs such as the FHA or VA.
Non-Conventional Mortgage – A mortgage loan or home loan offered by a federal agency such as the Federal Housing Administration or Veterans Administration.
Annual Percentage Rate (APR) – The total annual cost of borrowing including interest charges, closing costs, interest rate discounts (points), and fees.
Interest Rate – The cost of borrowing paid as a percentage of a loan amount.
Origination Fee – A percentage of your total loan amount charged to you when you first take out the mortgage.
Fixed-Rate Loan – A mortgage or home loan with an interest rate that does not change throughout the repayment term.
Adjustable-Rate Loan – A mortgage or home loan with an interest rate that changes throughout the repayment term. Changes are based on the market rate.
Points – A generic term for a percentage point when talking about mortgages. One point is equal to 1.0% of the loan amount. Lenders may allow you to “buy points” so you can lower your interest rate in exchange for more money upfront.
Down Payment – An amount paid upfront on a home sale, thus reducing the amount borrowed with a mortgage. Typically, new home buyers will pay a down payment between 10 to 20 percent of a home’s purchase price.
Prequalification – A process where home buyers contact a mortgage lender, provide financial information, and learn the likelihood of being approved for a loan.
Letter of Preapproval – Documentation from a lender stating the mortgage amount that a borrower is approved for. Other terms such as loan type, program, interest rate, and preapproval period may be listed. Keep in mind that this isn’t a guarantee of approval, but is a strong indicator that you will be approved.
Other Helpful Mortgage Resources
Author: Andrew Rombach