How to Buy a House in Illinois: A Homebuyer’s Guide
Updated: May 21, 2023
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The current average home value in Illinois is around $267K. Compared to the national average home value of $357K, an Illinois home is about 34% cheaper.
Home values increased by over 10% in Illinois from the previous year, while the national average home value increased by approximately 14% during the same period.
Because homebuying entails several different steps, it can feel overwhelming at times. MoneyGeek’s guide helps make the homebuying process easier by taking you through the entire process. We offered advice on how to choose the best location, explained the differences between different types of mortgages and highlighted the importance of home inspections.
Choose an Ideal Location
Where you live can greatly influence the cost of your home and mortgage in Illinois. It’s also important to evaluate your priorities. There may be certain habits or lifestyle choices that are non-negotiable. Your ZIP code determines what kind of amenities are available, the cost of living, recreational activities and neighborhood culture.
Calculate Mortgage Rates
When purchasing a home in Illinois, review the available mortgage types. Different kinds of home loans have different kinds of rates, so you need to pick the best one for your unique situation. Consider factors such as your income, credit history and debt-to-income ratio which can all influence your eligibility and mortgage terms.
Prepare Down Payment Requirements
Depending on which mortgage type you choose, the amount you’ll be required to make as a down payment will vary. For instance, conventional loans require a 20% down payment, while other loans, like VA loans, feature no downpayment for those that qualify. Because of this, it’s important to review the eligibility requirements for each loan type to see if you’re eligible for any savings.
Get Pre-Approved for a Mortgage
Getting a pre-approval letter for your mortgage is an important step. Sellers often require this before you can view their property.
A pre-approval letter contains how much your lender is willing to loan you. Pre-approval is different from prequalification. Whereas pre-approval is an actual commitment, prequalification only shows that you qualify for the loan.
Conduct a Home Inspection
A home inspection is another important aspect of the homebuying process. Conducting a home inspection can reveal possible issues or areas of concern. In the long run, it’s much more costly to ignore these since certain problems can cause long-term damage to your potential home. In some cases, lenders will not finance your mortgage if the property doesn’t undergo a third-party inspection.
Close Your Mortgage Loan
You can proceed to the closing process after the home inspection and appraisal. Ensure that you’ve thoroughly reviewed and are comfortable with the terms of your loan agreement. Closing costs are costs paid to third parties and often include fees for legal work, appraisal and home inspection, document preparation and more.
It’s possible to ask your lender for an estimate of the closing costs so you know what to expect, but typically costs range between 2% and 5% of the total purchase price.
Illinois Homebuying Details
Be mindful of any state-specific homebuying requirements that only apply in Illinois. You might want to ask your real estate agent or lender if there are any additional steps that you need to follow in order to complete the homebuying process.
Seller's disclosure
Illinois law, specifically the Residential Real Property Disclosure Act, mandates all sellers provide a property disclosure form to inform buyers of any possible defects or issues with the home that can affect its value or safety. This only includes areas of concern that the property owner is aware of.
Real estate tax
This is an additional cost on top of your mortgage. It will vary based on the county you live in.
Frequently Asked Questions About Buying a Home in Illinois
Homebuying can be a challenging and exciting process. If you have additional questions about the homebuying process in Illinois, you can review MoneyGeek’s answers to some of the most frequently asked questions below.
Before you purchase a home in Illinois, ask yourself:
- What is the most ideal location for my needs and budget?
- How much can I afford to make as a down payment?
- What types of mortgages am I eligible for?
Homeownership is a significant and nearly life-long commitment. If you’re emotionally and financially ready, it’s perfectly fine to consider purchasing a home in Illinois.
The average home value in Illinois has increased by over 10% in the last year. While this is less than the growth of the national average home value, it appears that a home in Illinois is an appreciable investment.
This depends on the cost of your home. Generally, you’ll want to have a sufficient income to cover your day-to-day expenses and provide a 20% down payment.
Historically, Illinois has reported one of the most expensive real estate and annual property tax rates. Because the property tax rate varies by county in Illinois, you should ask your local real estate agent or provider for more information.
In general, it’s cheaper to buy homes in suburban areas, like Peoria, than in metropolitan cities like Chicago.
sources
- Consumer Financial Protection Bureau. "Get a Prequalification or Preapproval Letter." Accessed October 24, 2022.
- Consumer Financial Protection Bureau. "What Is Mortgage Insurance and How Does It Work?." Accessed October 24, 2022.
- Illinois Department of Commerce and Economic Opportunity. "Housing Assistance." Accessed May 15, 2023.
- Illinois Housing Development Authority. "Getting An IHDA Loan." Accessed October 24, 2022.
- Illinois General Assembly. "Residential Real Property Disclosure Act." Accessed October 24, 2022.
- International Association of Certified Home Inspectors. "Home Inspection Standards of Practice." Accessed October 24, 2022.
- Missouri Economic Research and Information Center. "Cost of Living Data Series." Accessed October 24, 2022.
- U.S. Department of Agriculture. "Single Family Housing Direct Home Loans in Illinois." Accessed October 24, 2022.