Best Refinance Mortgage Lenders in Illinois

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Contributor, Benzinga
June 10, 2020

Do you wish you could change your monthly mortgage payment, insurance expenses or use some of the equity you’ve built in your home to pay off debt? You can! 

Qualifying for a refinance in Illinois is easy and can set you up for a better financial future. Turn to our guide for the best refinance mortgage lenders in Illinois for more information. 

Refinance Calculator

Best Refinance Lenders in Illinois

The best mortgage company for you will vary depending on the type of loan you need and your preferred application process. If you aren’t sure where to start, consider a few of our favorites below. 

Current Illinois Refinance Rates

When you refinance your mortgage loan, you’ll take on an interest rate that’s on par with current rates. Interest rates change over time, so it’s worth the effort to track how interest rates are changing in your area and to refinance when rates are low.

Learn more about what you might pay for your mortgage loan in Illinois if you took it out today. We update this information regularly to ensure that you have the best possible data. 

Loan TypeRateAPR
30-year fixed N/A N/A
15-year fixed N/A N/A
7/1 ARM (adjustable rate) N/A N/A
5/1 ARM (adjustable rate) N/A N/A
Rates based on a loan amount of $180,000 and property value of $225,000.
See more mortgage rates on Zillow

Refinance Process

Refinancing a mortgage loan might seem like a long, drawn-out and confusing process. However, the truth is that you can break down the mortgage process into a few simple steps. Most homeowners find that refinancing is much easier than getting their original loan. Knowing what to expect can help make the process less stressful.

First, you need to figure out what you want to get out of your refinance. Some questions you might want to ask before you decide which type of refinance you want can include:

  • Can I manage my current monthly payment? Do I need a lower payment?
  • Do I need to take cash out of my home equity?
  • Is my current loan type still meeting my needs?

After you decide which type of refinance you need, you’ll start searching for a lender. The best place to refinance a mortgage loan will vary depending on where you live and the type of loan you need. Some of our favorite lenders in Illinois include:

  • Quicken Loans®: Quicken Loans is the premier mortgage and refinance lender for buyers looking for a simple, streamlined process. Quicken Loans’ Rocket Mortgage® platform can help you learn more about the many types of refinances available to you and apply through a faster process. You can even apply for your online mortgage refinance in as little as a few minutes.
  • Figure Home Equity: If you’re looking to get cash out of your home’s equity, consider a home equity line of credit (HELOC) from Figure. Figure offers a completely online application and it specializes in quick closings.
  • Veterans United: If you have a VA loan, consider refinancing through Veterans United. Veterans United works with a full team of veterans for every branch of the service and can provide you with personalized advice on which refinance option is best for you. 

After you choose which lender you want to work with, submit an application using the company’s unique process. The specific application you’ll need to complete will vary depending on the lender you choose. Most lenders will ask you for the following documents:

  • Your 2 most recent W-2s
  •  Your 2 most recent bank statements
  • Your 2 most recent paystubs

You may need to provide additional documentation that proves your income if you’re self-employed, like a profit-and-loss sheet from the last quarter or your full tax return.

After you apply for your new loan and get an approval, your lender will begin closing on your new loan. Most closing processes for refinances involve 2 steps:

  • An appraisal: Just like when you got your original loan, an appraisal provides you with a general ideal of what your home is worth. Lenders require appraisals on most refinances because they need to know that they aren’t issuing you too much money. Though some refinances skip the appraisal aspect, an appraisal is always required if you take cash out of your property.
  • Underwriting: During underwriting, your lender goes through your financial information with a fine-toothed comb to be sure that you qualify for your new loan. Your lender will usually run a credit check, verify your income and read through your bank statements to ensure that you aren’t using a loan for your closing costs.

Closing is the last step in the refinance process. Your lender will schedule a closing meeting after issuing you a document called a Closing Disclosure that includes the final term of your loan. You should bring the following documents to closing:

  • A government-issued photo ID, like a passport or driver’s license
  • Your Closing Disclosure
  • A cashier’s check or proof of electronic fund transfer to cover your closing costs
  • A list of contact information for your lender and agent if applicable

When Should You Refinance in Illinois?

There are many reasons why you might want to refinance your mortgage loan. A few of the most common reasons why homeowners refinance include:

  • Taking advantage of a lower interest rate. Mortgage interest rates change over time. If you own more equity in your property or you have a higher credit score now than you did when you originally took out your loan, you might be able to secure a lower APR through a refinance. This can mean thousands of dollars saved by the time you finish paying off your loan.
  • Changing your monthly payment. If you’ve recently run into financial hardship or lost a job, you might be having trouble making your monthly mortgage payment on schedule. Refinancing to a longer term gives you more months to pay off your loan and thus lowers the amount that you owe every month.

You can also take on a shorter term if you now have more income than you did when you applied for your loan. This allows you to pay off your loan sooner and pay less in interest. Taking a shorter mortgage term also usually gives you access to a lower interest rate.

  • You need to pay off high-interest debt. A cash-out refinance is a special type of mortgage refinance that allows you to take a portion of your home equity out in cash. In exchange, you accept a higher loan principal balance from your lender. For example, if you have a loan with a principal balance of $150,000 and you need $10,000 to pay off debt, you could take a cash-out refinance and accept a loan worth $160,000. Your lender would give you $10,000 in cash after you close.

Many homeowners use cash-out refinances to pay off high-interest debt. The average credit card has an annual interest rate between 15% and 27%, while the average mortgage interest rate hovers around 4%. This means that you’ll save a significant amount of money in interest by consolidating your credit card debt into your mortgage debt. 

When Should You Not Refinance?

Refinancing isn’t right for everyone. Here are a few reasons why you might not want to refinance your mortgage loan:

  • Interest rates are higher now. If interest rates are higher now than when you got your loan, you might be forced to lock into a more expensive rate when you refinance.
  • You can’t afford closing costs. Just like when you took out your mortgage loan, you need to pay closing costs when you close on your refinance. Though you might be able to roll your closing costs into the principal balance of your loan, not every lender offers this choice — and it usually involves taking a higher interest rate if they do.
  • You don’t have enough equity to take cash out. Most lenders won’t allow you to refinance 100% of your loan value. For example, if you’ve only been making payments on your home loan for a few years, you might have only a few thousand dollars in equity in your property. Your lender will probably not allow you to take more than 80% to 90% of your available equity when you cash out. Be sure you have sufficient equity to cover your debt or project needs before you begin refinancing. 

Bad Credit Refinance

If you have a low credit score, you might still be able to qualify for a refinance. First, check to see if you qualify for an FHA or VA streamline refinance. These options are simplified refinances that cut the appraisal and credit check portions of the refinancing process. To qualify for a streamline refinance, you must already have an FHA or VA loan. If you want to convert a conventional loan to a government-backed loan, you’ll need to meet credit requirements. You must also have a long history of making on-time payments and you must only be financing your rate or term. You cannot take cash out of your equity without meeting credit requirements.

You might also want to consider refinancing with a non-occupying co-client. As the name suggests, a non-occupying co-client doesn’t live in your home but agrees to take financial responsibility for your loan if you default. If you do fall behind on your payments, your lender can go after your co-client for your remaining loan balance. This provides another layer of protection for the lender, which may allow you to qualify for a refinance with a lower credit score. Of course, you’ll need to find a co-client with good credit who’s willing to sign onto your loan before you can get started.

Find the Right Refinance for Your Needs in Illinois

Like taking out a mortgage loan, refinancing is a major decision that you shouldn’t take lightly. Don’t be afraid to take plenty of time to compare lenders and loan options and monitor interest rates before you decide to refinance. Just a little research now can save you lots of time, stress and money later down the line! 

Get Ready for Take Off

Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.

You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.