Mortgage rates in Illinois are finally falling again. You’ll likely pay $300 to $500 less per month for the same home than you did last month. For buyers, all mortgage rules still apply – plan, shop wisely, and be ready to refinance down the road.
The first and most important thing is to understand the mortgage process and what the numbers that lenders present to you mean. For example, what does the interest rate actually mean? Essentially, an interest rate is the amount you pay a lender to borrow money to purchase a property – this is how the lender makes money from the deal. So if the lender wants a 7.5% interest rate on a 30-year loan on a $500,000 property, you’ll pay just over $3,600 per month in principal and interest.
Be prepared to shop around. This sounds obvious, but many people don’t do it. They should, because it’s the key to big savings on a loan. The bottom line is that borrowers who get more offers save more money – sometimes 200% over the life of the loan. That’s hundreds of dollars every month.
Always be prepared to ask for a better deal. Most people don’t try to negotiate their loan rate. However, those who do almost always get a better deal. You can’t make it better if you don’t ask. Remember that it’s not just the interest rate that matters, but there are also loan processing fees associated with your mortgage.
Another popular way to get a lower mortgage rate is to “buy down” the interest rate. You do this by paying a fee called a “point” upfront. You would do this if you want a lower monthly payment and want to stay in the new home long enough to recoup your upfront payment. Typically, lenders allow buybacks of 0.25 points each. Basically, you pay $1,000 to reduce a $100,000 mortgage by one full point. In the current market, this $1,000 buyback would save you $60 per month.
Whether you want to save more money initially or over time, there are a few steps you need to take to get the best deal. One of the absolute best steps is to ensure you understand the entire process and receive quality advice from the professionals you choose. If you would like more information about saving when buying a home, visit AddressNIllinois.com and ask for clarity.
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2024-01-01 14:46:46
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