Final answer:
Under Illinois law, a homeowner can terminate their mortgage loan's escrow account once the remaining balance reaches a certain percentage of the original loan amount. Specific percentages are not provided, and homeowners should consult their loan agreement and Illinois law for exact figures.
Step-by-step explanation:
In Illinois, a homeowner can terminate their mortgage loan's escrow account when the remaining balance of the loan is equal to or less than a certain percentage of the original loan amount. While Illinois law specifics are not detailed in the provided reference text, typically, lenders will allow cancellation of the escrow account when the loan-to-value ratio reaches a point where the homeowner has sufficient equity in the property. This often aligns with the point at which mortgage insurance can be cancelled, which, under federal law, is usually when the mortgage balance falls below 80% of the home's original appraised value or purchase price, whichever is less. However, state laws may vary and homeowners should consult their specific loan agreement and under Illinois law for exact figures.
Understanding the relationship between down payment, equity, and mortgage insurance is beneficial in assessing financial options relating to a mortgage. A traditional down payment is around 20%, but there are options to put down as little as 0-3.5%, which however often results in the addition of mortgage insurance to the loan. Equity is the portion of the home's value owned outright by the homeowner, which increases as the mortgage is paid down.