PEORIA, Ill. (WMBD) — With a low housing inventory and an increased interest rate, it seems like it may not be the best time to buy a home. However, a 6% interest rate is low in comparison to 40 years ago, when interest rates were up in the teens, and the 2000s were steadily at 8%.
“Even though we have low inventory, there are great opportunities, and sellers, it’s a great time if you’ve been thinking about getting a new home, find a professional to help you get that home marketed, so you can get to your next stage as well,” said Robin Simpson, the president of the Peoria Area Association of Realtors.
With an interest rate of 6%, mortgage applications have increased.
“Mortgage applications were up about 7% for the first week of February,” said Senior Mortgage Banker at Flat Branch Home Loans Adam Lofgren.
For those whose interest rates are higher than 6%, it may even be a good time to look into refinancing.
People wanting to become first-time owners can utilize grants that are available to offset any higher expenses.
“The most popular one is a program through IHDA, which is the Illinois Housing Development Authority, called Opening Doors. It’s a $6,000 grant that goes towards the down payment and closing costs. It’s only forgiven over five years. So you only have to be there five years to have it fully forgiven,” said Lofgren.
Lofgren brought up the Opening Doors Homebuyer Assistance Program that was first launched in December of 2020. The program helped more than 7,100 first-time and repeat homebuyers with $43 million in Rebuild Illinois capital funds.
Under Opening Doors, IHDA will provide a 30-year 1st mortgage with a fixed interest rate and $6,000 in down payment and/or closing cost assistance. The down payment assistance is forgiven after five years, and no monthly payment is due from the borrower.
As for why there is such a low housing inventory, there are a few possible reasons. The Vice President of CEFCU’s mortgage department said, “We have seen where some people have just decided to stay in their homes longer. It could also be that the millennials, the younger generation, there’s just more of those. So a lot more people than seeking home buying versus renting.”