Illinois mortgage rates are finally moving back down. You are likely going to be paying $300 to $500 less per month for the same house than you would have last month. All the mortgage rules still apply for buyers – plan for it, shop wisely, and be ready to refinance down the road.
The first and most important thing is understanding the mortgage process and what the numbers mean that lenders throw your way. For example, what does interest rate even mean? At its most basic, an interest rate is what you pay a lender to borrow money to buy a property – that is how the lender makes money on the deal. So, if the lender wants a 7.5% interest rate for a 30-year loan on a $500,000 property, you will pay just over $3,600 per month for principal and interest.
Be prepared to shop around. That sounds obvious, but a lot of people don’t do it. They should, because it is the key to saving big on a loan. The bottom line is that borrowers who get more quotes save more money – sometimes 200% over the life of the loan. That is hundreds of dollars every month.
Always be ready to ask for a better deal. Most people don’t try to negotiate their loan rate. However, those that do almost always get a better deal. You can’t do better if you don’t ask. Remember that it’s not just about the interest rate, there are also loan processing fees that go along with your mortgage.
Another popular way to get a lower mortgage rate is to “buy down” the rate. You do this by paying an upfront fee called a “point.” You would do this if you want a lower monthly payment and are going to be in the new home long enough to recoup your upfront buydown payment. Normally, lenders allow buydowns of .25 points at a time. Basically, you pay $1,000 to reduce a $100,000 mortgage one full point. In the current market, that $1000 buydown would save you $60 per month.
Whether you are trying to save more money at the beginning of your home loan or across time, there are steps you need to take to get the best deal. One of the absolute best steps is to make sure you understand the whole process and get quality advice from your chosen professionals. If you want more information about saving on your home purchase, visit AddressNIllinois.com and ask for clarity.
