Chicago Mortgage Rates

Living in Chicago

Known as the Windy City thanks to the gusts coming off Lake Michigan, Chicago remains a very popular city in the United States. In 2018, over 57.6 million people visited Chicago to see the city’s notable attractions, like Navy Pier, Skydeck Chicago and the infamous Bean — officially known as Cloud Gate — in Millennium Park.

With so much to offer in terms of culture, sports, food and more, Chicago also remains a popular place to live. Home prices continue to rise slightly, with the median sales price in the city of Chicago at $310,000 for April 2019. This marked an increase of 0.8% from the same time in 2018. Inventory also increased 2.4% year over year in April 2019.

Early in 2019, bad weather kept home sales slow, with listings remaining on the market for an average of 84 days until contract, a 3.7% increase from this same time last year. However, that is expected to change in the coming weeks. In looking at these factors, Tommy Choi, president of the Chicago Association of REALTORS, predicted in the organization’s April 2019 Market Snapshot that the market will be evenly balanced for buyers and sellers going into summer.

The rules and costs of buying a home in Chicago

When purchasing a home in Chicago, there are certain regulations that must be followed to ensure the legality of the purchase. In doing so, you can feel confident that the home you buy doesn’t harbor any surprises.

Home seller and buyer laws

Although Chicago and the state of Illinois do not require a licensed attorney to be present at a mortgage closing, Illinois does require a lawyer be involved in writing all legal documents necessary for the sale. The bank or lender may hire a lawyer for this purpose, while real estate agents use many standardized forms drawn up by lawyers.

Disclosure is one of the key components of a home purchase. After all, you want to make sure you are getting exactly what is advertised. In Chicago, disclosure is required per the Illinois Residential Real Property Disclosure Act. Every home seller is required to complete a Residential Real Property Disclosure Report, which asks for information on the following:

  • Material defects in specified structures, components and systems
  • Any unsafe conditions
  • Flood history and risk
  • Environmental issues
  • Boundary line disputes
  • Municipal code violations

Also, per The Illinois Radon Awareness Act, the home seller is required to provide two informational pamphlets outlining radon hazards to the homebuyer prior to signing any contracts.

For homes built before 1978, the EPA requires the home seller to provide the following information regarding lead-based paint:

  • An EPA pamphlet on lead-based paint hazards.
  • Any known information regarding lead-based paint or lead-based paint hazards found in the home.
  • Language in the home sales contract that includes a “Lead Warning Statement,” plus confirmation from the seller that they have complied with all disclosure requirements regarding lead-based paint or lead-based paint hazards in the home.
  • A 10-day period to evaluate the home for lead-based paint or lead-based paint hazards in the home. The parties may agree to change this time period, but must do so in writing. In addition, homebuyers may waive inspection.

As a judicial foreclosure state, Illinois —and therefore Chicago — handles all foreclosures in court. In the event you are unable to pay your mortgage on time as agreed, the lender may file a foreclosure lawsuit in court. Once you are served with the complaint in the lawsuit, you will have 30 days to file an answer or any motions related to the case. Throughout the time the case is moving through the court, you have the opportunity to obtain a loan modification or work out other arrangements with the lender.

Four to six months after the original complaint is filed, the judge will rule on the complaint. If there has been no progress toward resolving the foreclosure, the judge may enter a judgment of foreclosure, leading to the sale of the property.

With regard to real estate in the event of divorce, Illinois is an equitable distribution state. This means that marital property isn’t considered equally owned by both spouses and thus will be divided equitably in the event of divorce, not necessarily 50/50. If a couple does not agree, the court will determine which party receives specific real and personal property based on factors such as:

  • The age, health, income and financial circumstances of each spouse
  • Length of the marriage
  • The contributions of each spouse
  • Custody arrangements of minor children
  • The tax consequences of any property division

Taxes

Buying a home requires the payment of real estate transfer taxes. When purchasing a home in Chicago, there actually are three sets of taxes that must be paid. First, the state of Illinois requires taxes in the amount of $1 per $1,000 of the purchase price. This tax is usually paid by the seller. Second, Cook County requires taxes in the amount of $0.50 per $1,000 of the purchase price. Again, this tax is usually paid by the seller.

The city of Chicago also requires taxes on a home purchase. The city portion is $7.50 per $1,000 of the purchase price, and a supplemental tax for Chicago Transit Authority (CTA) is $3 per $1,000. For these taxes, the buyer usually pays $7.50 per $1,000, while the seller usually pays $3 per $1,000.

In Cook County, home to Chicago, the median property tax is $3,681 per year for a home worth the median value of $265,800, according to Tax-Rates.org. This is one of the highest median property taxes in the country.

You may be able to reduce your property tax bill by filing for a property tax exemption with the Cook County Assessor’s Office. Exemptions are available for eligible homeowners, seniors, veterans and disabled persons. Contact the Cook County Assessor’s Office or go to the website for full details and to apply for an exemption.

Conforming loan limits

In the state of Illinois, including Cook County where Chicago is located, the maximum conforming loan limit is $484,350 for one-unit properties.

A conforming loan meets all terms and conditions as outlined by government-sponsored entities Fannie Mae and Freddie Mac. Only loans that meet conforming loan limits are eligible for purchase by Fannie Mae and Freddie Mac. Loans that exceed these limits are known as jumbo loans and tend to have higher interest rates.

Programs for homebuyers in Chicago

To help potential buyers purchase a home, there are a variety of programs available at the local and state level.

Chicago Home Buyer Assistance Program

The Chicago Home Buyer Assistance Program, established by former Mayor Rahm Emanuel and the Chicago City Council, is intended to assist individuals and families with grants to help cover down payments and closing costs. The program is available for purchasing a home or refinancing an existing mortgage, and applies for single-family homes, town homes, condominiums and owner-occupied properties with up to four units. Qualified applicants receive a grant for up to 7% of the total loan amount, based on income, to help pay the down payment and/or closing costs.

Who qualifies:

To qualify, applicants must:

  • Meet income and credit score requirements based on the type of loan they have
    • Those applying for an FHA, VA or USDA loan must have an annual income no more than $88,435 and a minimum credit score of 580
    • Those applying for Fannie Mae/Freddie Mac loans must have an annual income of no more than $131,775 and a minimum credit score of 640
  • Regardless of loan type, all qualified borrowers must pay the lesser of $1,000 or 1% of the home purchase price at the closing
  • First-time homebuyers must complete a homebuyer education course

Learn More

HomeIllinois

1st HomeIllinois, an Illinois Housing Development Authority program, is available to qualified first-time homebuyers in Illinois, veterans or those who have not owned a home in the last three years, unless they are purchasing in a targeted area. This program combines a 30-year, fixed rate mortgage with a $7,500 down payment assistance grant.

Who qualifies:

To qualify, applicants must:

  • Purchase an existing one- or two-unit property in Cook County (Marion, St. Clair and Winnebago counties also qualify) priced no more than $336,706.20 for one unit and $431,033.40 for two units
  • Contribute $1,000 or 1% of the purchase price, whichever is greater
  • Complete homeownership counseling
  • Meet certain income and credit requirements

Learn More

IHDAccess Forgivable

Another Illinois Housing Development Authority program, IHDAccess Forgivable offers first-time and repeat homebuyers 4% of the purchase price, up to $6,000, toward down payment and closing costs. That amount is then forgiven monthly over the next 10 years.

Who qualifies:

To qualify, borrowers must:

  • Meet income limits and purchase price requirements
  • Have a minimum credit score of 640
  • Complete homeownership counseling
  • Pay $1,000 or 1% of the purchase price, whichever is greater, toward the loan

Learn More

IHDAccess Deferred

Those who qualify for IHDAccess Deferred will receive 5% of the purchase price, up to $7,500, toward their down payment and closing costs, which will be supplied as an interest-free loan. This loan, in turn, is deferred for the life of the mortgage. It must be repaid if you refinance, pay off your mortgage or sell your house.

Who qualifies:

To qualify, borrowers must:

  • Pay $1,000 or 1% of the purchase price toward the loan, whichever is greater
  • Meet income limits and purchase price requirements
  • Have a credit score of at least 640
  • Complete homeownership counseling

Learn More

IHDAccess Repayable

For qualified borrowers, IHDAccess Repayable offers 10% of the purchase price, up to $10,000, toward down payment and closing costs in the form of an interest-free loan that is repaid monthly during a 10-year period. The program is available to first-time and repeat homebuyers.

Who qualifies:

To qualify, borrowers must:

  • Have a minimum credit score of 640
  • Meet income and purchase price limits
  • Pay $1,000 or 1% of the purchase price toward the loan, whichever is greater
  • Complete homeownership counseling

Learn More

Rate shopping tips

When shopping for a mortgage rate, do your homework to ensure you get the best rate available for you.

Talk to multiple lenders on the same day

Banks and mortgage lenders are competing for your business, which means the information you receive concerning the estimated mortgage rate, annual percentage rate (APR), lender fees, closing costs and other costs may differ. To most accurately compare the offers you get, it’s important that you request this information from lenders on the same day. Rates can fluctuate from day to day so this will ensure you’re comparing apples to apples.

Provide the same information to each lender

It’s also important to give each lender the exact same information so the information they provide in return can be compared on the same level. Have your income records, bank statements and a comprehensive picture of your debts available.

Add up all lender fees for the total costs

Once you receive your loan estimate, check the total amount of lender fees listed. Then confirm this total is correct by adding up all of the individual fees, such as underwriting costs, appraisal fees and discount points. It’s important to take these into account when comparing loan offers to ensure you choose the loan that is truly the best for you.

Know when to lock in your rate

Mortgage rates change frequently, so the great rate you are quoted today may be gone tomorrow. Talk to your lender to see if they have a mortgage rate lock that secures your rate for a specific period of time. This ensures you receive that rate when you are ready to proceed. On the flip side, once you lock in a rate you won’t be able to benefit from a drop in rates.

The information in this article is accurate as of the date of publishing.