How Much Money Do You Need to Buy a House in Illinois?
A new home can bring a sense of fulfillment, excitement, and security to a family’s life. When considering a new home purchase, many people wonder, “how much money do I need to buy a house?” It’s easy to look at the price of the home and the monthly mortgage payments, but it’s important to also consider other expenses that will impact your finances as a homeowner.
Whether you are looking to buy in Flanagan, Benson, Le Roy, Gridley, El Paso, Bloomington, or elsewhere in the 36 states we serve, the mortgage division of Flanagan State Bank can help you navigate the costs of home ownership in Illinois. For a better understanding of how much money you’ll need to buy a house, we’ve provided this breakdown of local mortgage expenses in Illinois.
Cost of Buying a Home in Illinois
Real estate prices vary in every neighborhood, city, and region, as well as from house to house based on features and size. According to Zillow, home values in Illinois fall between $200,000 and $300,000, with an average value of $236,049.
The price of the house is certainly the largest number to consider when buying a home, but it doesn’t reflect the full financial impact of your home purchase. Start budgeting today for your future home by opening a dedicated savings account for home expenses. We’ve provided this list of Illinois home taxes and expenses that you can expect to incur with your new home purchase.
If you’re not expecting an extra bill on closing day, mortgage closing costs can catch you by surprise. A collection of one-time fees connected to your home loan can increase your loan amount by 2 to 5 percent. You can either pay these fees at the time of closing, or your bank may agree to roll them into your mortgage. If you roll them into your mortgage, you’ll pay interest on a larger loan amount and increase your monthly payments. Closing costs include:
- Appraisal fees
- Home inspection fees
- Loan fees
- Underwriting fees
- Title fees
- Title insurance
- Prepayment of property taxes
- Prepayment of HOA fees
In Illinois, you can expect to pay between 1.94 percent and 2.9 percent of your loan amount in closing costs. Average closing costs in Illinois add up to $5,800. On a $126,000 home in Bloomington, your closing costs would fall somewhere between $2,450 and $3,650. If you are looking for a mortgage lender with fees lower than the average in the area, contact Flanagan State Bank for more information about how we can meet your financial needs.
A yearly expense for homeowners, property tax rates vary by city and county. For example, the property tax rate in Gridley, IL, is $23.35 per $1,000. Tax on a $250,000 home in Bloomington would come to around $6,125 annually. Your local Flanagan lender or real estate agent can help you determine the tax rate in your area.
New homeowners often pay their property taxes for the year as part of their monthly loan payment. The money paid toward property tax is placed in an escrow account and held until property taxes are due.
When you start budgeting for a new home in IL, don’t forget to save for a down payment. Conventional mortgages require a 20 percent down payment to avoid extra fees like private mortgage insurance. If you are looking to buy a $102,000 home in El Paso, plan on providing the bank with a $20,400 down payment. Some specialty loans, like USDA loans, require a smaller down payment or even zero down payment. Check with your local Flanagan mortgage lender for more information about down payments and specialty loan options.
Private mortgage insurance (PMI) is added to mortgages that aren’t supported by a 20 percent down payment. If your down payment is less than 20 percent of your purchase price, your loan will include an additional fee. PMI is paid to your lender to help cover the additional risk the bank assumes when you don’t have a large down payment. PMI is typically calculated as 0.2 to 2 percent of your loan amount and added to your monthly mortgage payments.
You may have paid for renter’s insurance to cover your belongings before you were a homeowner. As a renter, the structure you lived in, whether a house or apartment, was covered by your landlord’s insurance. As a homeowner, you’ll be responsible for insurance that protects your home and finances from fire, theft, and some natural disasters. While the state of Illinois does not require homeowner’s insurance, your mortgage lender does. According to Bankrate, the average annual cost of home insurance on a $250,000 house is $1,092.
While there are many joys of homeownership, most homeowners would agree that maintenance can seem unending. Whether you are keeping up with lawn care, staining the deck, or making repairs, house expenses don’t stop with your mortgage payment. Paying for a home inspection can save you money on maintenance costs down the road.
Before you agree to buy a house, an inspection can give you insight into what repairs are needed currently and what expenses may be popping up in the near future. An inspection can reveal the condition of plumbing, roofing, siding, appliances, and pest damage. Make sure to budget for any repairs that aren’t resolved in the negotiating process.
Before purchasing a new home, research the average utility costs for a home of comparable size in your neighborhood. In Bloomington, the average monthly utility bill is $166, while in Le Roy, it is $141. Budgeting for utilities and living expenses will help you see the big picture of your new monthly expenses.
Let’s Get Started
No two people’s financial situations are the same, so why should all mortgages be equal? Flanagan State Bank offers a variety of mortgage programs to fit your needs. At Flanagan State Bank, we strive to assist borrowers in finding the best loan program for their situation.
If you’re considering buying a home in Central Illinois, FSB offers competitive mortgage rates and affordable payment plans to work within your budget. We also offer a variety of home loans for customers unable to qualify for traditional lending. Contact your nearest location to learn more & get started. We love helping members of our community fulfill their dreams of homeownership.