What Are Closing Costs in Illinois?
You've found your dream home, the seller has accepted your offer, your loan has been approved and you're eager to move into your new home. But before you get the key, there's one more expense you need to take care of--the closing costs.
Also referred to as a settlement, the closing of a real estate transaction is the process of passing ownership of property from seller to buyer. Closing costs are the fees associated with finalizing the process, these include realtor commissions, home appraisal, taxes, title-related fees, filing fees, and other costs due at the time of closing your real estate transaction.
- Who Pays Closing Costs in Illinois?
- How Much Are Closing Costs in Illinois?
- What Are the Average Closing Costs in Illinois?
- How To Reduce Your Closing Costs
- When Do You Pay Closing Costs?
- Closing Cost Fee Glossary
Who Pays Closing Costs in Illinois?
Both buyers and sellers pay closing costs, but usually, the homebuyer is responsible for most of them. As a homebuyer, you are encouraged to negotiate with the seller to help cover closing costs, but there’s no guarantee they will agree.
Another reason why it pays to have a top-notch negotiator on your side!
When the seller pays some of the closing costs, it’s called “seller concessions.” These concessions can help cash-strapped homebuyers but there are limits on the amount that sellers can offer to pay toward closing costs. Sellers can only contribute up to a certain percentage of your mortgage value, which varies by loan type, occupancy, and down payment.
How Much Are Closing Costs in Illinois?
According to Rocket Mortgage, the average closing costs for buyers in Illinois can make up about 3–6% of the price of the home. That means if you take out a mortgage worth $400,000, you can expect closing costs to be about $12,000–$24,000.
The specific closing costs you’ll need to pay in Illinois depend on the type of loan you take and where you live. If you’re buying or selling a home in Illinois, you’ll want an experienced Illinois real estate agent near you to help guide you through the process of selling or buying your home.
What Are the Average Closing Costs in Illinois?
- Average Closing Costs (Including Taxes) - $6,529.74
- Average Closing Costs (Excluding Taxes) - $4,893.99
How To Reduce Your Illinois Closing Costs
As an Illinois homebuyer, when you get to the closing table, you’ll need to pay closing costs to complete the purchase of your home. The good news is, there are ways to reduce those closing costs.
- For example, you can ask the seller to provide a closing cost credit. In reality, you’re wrapping those costs into your mortgage, but it still reduces what you’ll have to pay at the closing table.
- You can also elect to close at the end of the month (or as close to the end of the month as you can). If you close on the 6th you will have to cover 24 or 25 days of prepaid interest. If you were to close on the 28th you would only have to pay two or three days. The closer to the end of the month you close the less money you will need to bring to the table because you will pay less in prepaid interest.
- Lastly, if you’re a veteran or active-duty member of the Armed Forces, you can get benefits through your VA loan.
If you have any questions about this or any other real estate topic, don’t hesitate to reach out to me. I’d love to help you.
When Do You Pay Closing Costs?
In a real estate transaction, the time of closing is defined as when the title of the property is transferred from the seller to the buyer.
You’ve done the due diligence, got through the inspection, and reached an agreement on price, now comes the closing costs. Buying or selling a home in Chicago can be a bewildering process, with a seemingly never-ending list of to-do items requiring attention.
As a buyer, you will sign what seems like endless piles of documents and will have to present a sizeable check for the down payment and various closing costs. It's the fees associated with the closing that many times remain a mystery to buyers who may simply hand over thousands of dollars without really knowing what they are paying for.
This is one primary reason why working with an experienced Chicago area real estate agent is so important – it can literally save you thousands of dollars!
Closing Cost Fee Glossary
As a responsible buyer, you should be familiar with these costs that are both mortgage-related and government-imposed. Although many of the fees may vary by locality, here are some common fees:
Appraisal Fee: This fee pays for the appraisal of the property. You may already have paid this fee at the beginning of your loan application process.
Credit Report Fee: This fee covers the cost of the credit report requested by the lender. This too may already have been paid when you applied for your loan.
Loan Origination Fee: This fee covers the lender's loan-processing costs. The fee is typically one percent of the total mortgage.
Loan Discount: You will pay this one-time charge if you have chosen to pay points to lower your interest rate. Each point you purchase equals one percent of the total loan.
Title Insurance Fees: These fees generally include costs for the title search, title examination, title insurance, document preparation, and other miscellaneous title fees.
PMI Premium: If you buy a home with a low down payment, a lender usually requires that you pay a fee for mortgage insurance. This fee protects the lender against loss due to foreclosure. Once a new owner has 20 percent equity in their home, however, he or she can normally apply to eliminate this insurance.
Prepaid Interest Fee: This fee covers the interest payment from the date you purchase the home to the date of your first mortgage payment. Generally, if you buy a home early in the month, the prepaid interest fee will be substantially higher than if you buy it towards the end of the month.
Escrow Accounts: In locations where escrow accounts are common, a mortgage lender will usually start an account that holds funds for future annual property taxes and home insurance. At least one year advance plus two months' worth of homeowner's insurance premium will be collected. In addition, taxes equal approximately to two months in excess of the number of months that have elapsed in the year are paid at closing. (If six months have passed, eight months of taxes will be collected.)
Recording Fees and transfer taxes: This expense is charged by most states for recording the purchase documents and transferring ownership of the property.
Make sure you consult a real estate professional in your area to find out which closing costs--and how much--you will be expected to pay during the closing of your prospective home. Keep in mind that you can negotiate these costs with the seller during the offering stage. In some instances, the seller might even agree to pay all of the settlement costs.
Contact our top-rated Chicago area real estate agents today, we're here to do all the dirty work for you!
- Negotiate closing costs on your behalf.
- Get you the absolute BEST deal GUARANTEED!
- Guide you through the entire process.
Email us below or call us at (847) 877-9881 to connect with one of our top-rated agents immediately.