You might be moving to Illinois from another state or buying your first home in Illinois. No matter what, you should learn about Illinois home loans before you look for a house and a mortgage. This article tells you what you need to know before buying a home in Illinois:
Home prices in Illinois vary a lot from one zip code to the next. In the summer of 2005, the median price of a home in Chicago, Illinois, was $305,000. In Oak Brook, Illinois, the median price of a home was $1.5 million. In 2004, the average cost of a house in Illinois was $179,000.
Illinois has a slower rate of job growth than the rest of the country and is one of the states with the slowest job growth. Also, over the past few years, home prices in Illinois have gone up faster than people's incomes. However, the rate of foreclosures and bankruptcies in Illinois are lower than the national average. The rate of home appreciation is lower than the average rate across the country, but it is close to it.
There are rules about mortgages in Illinois that are set by the law. For example, neither adjustable-rate mortgages (ARMs) nor fixed-rate mortgages with interest rates above 8% can have prepayment penalties. In 2003, Illinois also passed a law called the High Risk Loan Act to stop lenders from being too risky.
The High Risk Loan Act doesn't limit interest rates or closing costs, but it does make it illegal to use some types of loans. Certain rules and limits apply to loans with interest rates that are higher than the Treasuries securities rate by more than 6% on a first mortgage or 8% on a second mortgage. The same goes for loans where the borrower has to pay more than 8% of the total loan amount in points and fees at closing.
High-cost home loans are possible, but lenders must follow certain rules. For example, lenders can't charge early payoff fees after a borrower has owned the house for three years. They also can't set up a payment plan that causes the principal amount to go up, and they have to have a good reason to think that a borrower will be able to pay their mortgage.
