Illinois is one of ten states that enjoy some of the lowest average rates on fixed mortgages. Perhaps this is due to the high price of real estate in Chicago or the large number of real estate sales the area enjoys, but no matter what the reason, low interest rates are still a nice perk to buying a home in Illinois.
Interest rates on mortgages are such an important factor because most mortgages amount to several hundred thousand dollars. This means that even small differences in the interest rate can cost or save the mortgagor hundreds or thousands of dollars. One of the best ways to get good interest rates on a Chicago mortgage is to build up good credit.
Consequently, even if you aren't ready to buy a house yet, you can prepare for the occasion by gaining and maintaining excellent credit. To do this, you must use credit cards responsibly, pay your bills on time and use smaller purchases build up your credit. The better your credit score is when you apply for a mortgage, the better rate a broker will be able to offer you.
When you are trying to decide on a mortgage, one of the decisions you will have to make is the length of time you want to be given to pay the loan back. This is called the term and it is usually anywhere between ten and thirty years. Longer terms equal smaller payments, but in some instances shorter terms mean lower interest rates. Many people choose the longer term because of the low monthly payments and then make additional payments on their principle so that the loan can actually be paid off earlier than required. For example, just making one extra payment every twelve months can save you years of paying off a loan.
Even though most people need mortgages to purchase something as large as a house, you will need to be prepared to put a down-payment of your own money down the property. The size of that down payment can also affect the amount of interest you pay on your mortgage. For example, the larger you can make the initial payment, the less money you will spend in the long-run. Consequently, you might want to postpone shopping for houses until you can afford a sizeable down payment on the investment.
There are many different kinds of mortgages. In addition to looking for a low interest rate, look for mortgages without a lot of fees attached to them. Fixed rates are a good idea too. Some people are tempted to choose an adjustable rate since there is a chance that interest rates could fall and move the balance in their favor. On the other hand, adjustable mortgages are just as likely to swing in the other direction and make your interest rates higher. In my opinion, it is better to be safe than sorry and stick with fixed mortgages.
