Home Loans In Aurora, Illinois 

Aurora is Illinois’ second-largest city. It is home to the architectural works of Frank Lloyd Wright, Ludwig Mies van der Roche, Bruce Goff, and George Grant Elmslie. According to recent Niche’s Best Places rankings, the city ranks fifth in the most diverse suburbs in Illinois. This ranking was based on the degree of racial diversity, income diversity, and age diversity. 

If you’ve been eyeing homeownership in Aurora for quite some time, now may be a great time to act on that dream. For many would-be Aurora residents, the first step is to get a home loan. 

When applying for a home loan in Aurora, you’ll come across the term ‘fixed-rate mortgage.’ It’s important to know what this means and how it affects your home loan. Let’s take a closer look at what fixed-rate mortgages are all about. 

Understanding Fixed-rate Mortgages

Simply put, fixed-rate mortgages have fixed interest rates for the loan duration. When you settle your monthly obligations, the payment consists of partly interest and principal. The amount that gets deducted from the principal is called amortization. 

You can predict your future payments in a fixed-rate mortgage because interest rates are the same. You can even ask your lender to provide an amortization table to see how much goes to the principal over time.

Determining Fixed-rates

Banks start with a risk-free rate or the lowest possibility (even zero) of default. Risk-free rates are often based on treasury bills. T-bills are considered “nearly free from default risk” because the U.S. government backs these bills. 

However, borrowers have different credit profiles. To compensate for the different levels of default risk in borrowers, banks add a “risk premium” on top of the risk-free rate. 

Aside from risk, monetary policies from the Federal Reserve affect interest rates. If the Feds increase their rates, it ripples the economy by making credit more expensive and discouraging companies and individuals from getting loans.

Pros and Cons

In a fixed-rate mortgage, the most significant advantage is that the monthly payment stays the same. Also, changes in future interest rates won’t affect your payments. 

On the flip side, a fixed-rate mortgage’s biggest con can be higher than adjustable-rate mortgages. If the interest rates go down at any time during the loan term, you’ll be unable to enjoy these lower rates since you opted for a fixed-rate mortgage. 

Is A Fixed-Rate Mortgage For You?

Though most are personal factors, such as income and employment stability, there are many factors to consider. 

The general rule of thumb is to get a fixed-rate mortgage if you don’t intend to sell the house within the next 10 to 30 years. Otherwise, it might be better to consider an adjustable-rate mortgage.

Aurora, Illinois Mortgage Lender

Capital Home Mortgage offers both fixed-rate and adjustable-rate home loans for people who want to become homeowners in the city of Aurora. 

As direct Aurora mortgage lenders, we handle every aspect of the home loan process, so obtaining the right mortgage product is generally more streamlined. 

Additionally, we offer competitive interest rates and convenient underwriting policies to ensure on-time approvals. 

Get A Home Loan In Aurora, Chicago

Talk to our mortgage officers today about getting a home loan in Aurora. We offer a variety of home loan programs, including government-backed FHA loans, Conventional loans, and Jumbo loans. GIve us a call at (630) 339-3388 to get started.