See Mortgage Rate Quotes for Your Home
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In Illinois, the average rate for a 30-year fixed rate mortgage is 3.86%. The average rate for 15-year fixed rate mortgages is 3.50%, and 5/1 adjustable-rate mortgages (ARM) average at 3.69%.
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Mortgage rates change on a daily basis, which makes it more difficult to know when you should pull the trigger on a rate offer. To help you make an informed decision on your home loan, we analyzed interest rates in Illinois from a number of different angles: where rates are currently, how they might change, and how they translate into dollar amounts on your monthly mortgage bill.
How Much Do Illinois Mortgage Rates Vary?
According to our most recent data, mortgage rates in the Prairie State varied by 250 basis points. The cheapest rate for a 30-year loan was 3.25%, and the highest came in at 5.75%. To see how much money is at stake when it comes to rates, we applied these numbers to a theoretical home purchase.
Imagine that you're putting 20% down to buy a house worth about $200,000 in the greater Chicago area. At the state's lowest recorded mortgage rate, a 30-year home loan for this purchase would cost you a total of $90,679 in interest. Compare this to an interest bill of $176,138 at the current top rate—that's $85,459 in savings.
Comparing Home Loan Rates by Bank
As a homebuyer in Illinois, you have hundreds of banks and non-bank lenders to choose from. To help you set a baseline for the quotes you'll receive, we collected a sampling of mortgage rates from a few of the state's largest lenders.
For the most part, major banks track one another very closely when it comes to mortgage rates. However, it is possible to obtain significantly lower interest rates if you're willing to dive deeper into the market and compare quotes from more local banks and direct lenders. Of course, your personal results will also depend on the credit score and income details you bring to the application.
Are Mortgage Rates Rising in Illinois?
For 2019, mortgage rates across Illinois and the rest of the country may not rise as much as quickly as previously forecasted. The Federal Reserve's Open Market Committee (FOMC) recently announced that it would "be patient" and adopt a data-dependent approach to future rate hikes.
This represents a deviation from market expectations at the end of 2018, when the FOMC raised the target rate by 25 basis points. Currently set at a range of 2.25%-2.50%, the target federal funds rate represents the cost that banks pay to borrow money for their operations. Due to the impact of the federal funds rate on other consumer loans and deposit accounts, the FOMC's periodic announcements are viewed as indicators of future rate trends across the economy.
For homebuyers in Illinois, the news of a possible stabilization in rates creates some breathing room for a more deliberate shopping process. In times of rising rates, borrowers often rush to secure financing before loan costs get too high. With the FOMC announcing its intent to monitor the market for more information before continuing with future hikes, buyers can take comfort in knowing that mortgage rates are less likely to explode while they're still shopping for the right property and lender.
Comparing Home Loan Rates in Illinois Cities
Illinois cities each have their own selection of mortgage lenders, but our research found that interest rates stay fairly consistent across the state. Whether you get a quote in Evanston or Springfield, local home prices will play a bigger role in your bottom line than any regional variation in mortgage rates.
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As the table shows, the median value of owned homes offers a much more diverse picture of housing costs in Illinois than local mortgage rates, which fell within a narrow range of percentage points. Even if mortgage rates change in the future, it's highly likely that they'll do so simultaneously and not city by city.
Comparing Your Loan Options: an Example in Chicago
While location may not have a big effect on mortgage rates, the type of loan you choose certainly can. While there is no single "right" answer to every situation, understanding the math should give you the tools to choose a mortgage that fits your finances. To see how this works, let's look at another example with numbers based on the current price of a median home in the Chicago metro area.
Consider a home purchase of $250,000. Assuming you provide a down payment of 20% and secure a 30-year loan for the rest at the average rate in Chicago, you would need to cover a monthly cost of $1,043 before taxes and insurance. If you made every payment over the full 30 years, the interest on this mortgage would exceed $173,600.
However, fewer and fewer homebuyers are coming to the table with the traditional 20% down payment—in fact, payments as low as 10% are becoming more common in conventional mortgage scenarios. A smaller down payment lets you buy a house more quickly, but it also means higher costs in the long term. In the example above, a 10% down payment increases the monthly cost by $130 and lifetime interest by over $21,700.
That assumes you'd get the same interest rate with a lower down payment, which is almost never possible—the lower your initial commitment, the more your lender will charge for the loan. If you're more concerned with reducing the overall cost of borrowing, it may be better to choose a shorter 15-year mortgage. While your monthly payments rise sharply with half as many years in the repayment term, both the rate and your total interest will be much lower.
If the average fixed rate for a 15-year mortgage in Chicago is 4.25%, the monthly payments on our $250,000 home moves up to $1,505, a 44% increase from our initial 30-year scenario. However, lifetime interest goes to $70,821—a savings of almost 60%. On top of that, paying off your mortgage in a 15-year plan builds equity very quickly, allowing you to consider additional financing such as home equity loans or HELOCs.