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.

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!

If you are looking to sell your home in the Chicago area, we encourage you to contact one of our top-rated real estate agents to get you a free instant home estimate & quote. Learn more about our home selling guarantee and see why we're endorsed by Barbara Corcoran from ABC's hit TV show Shark Tank.

Alternatively, if you’re a prospective homebuyer we invite you to use our state-of-the-art property search for Chicago real estate listings, including an interactive map search, to find homes for sale near Chicago, IL. These listings are updated daily from the MLS.

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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?

The specific closing costs you’ll need to pay depends 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 real estate agent to help guide you through the process of selling or buying your home.

According to Rocket Mortgage, the average closing costs in Illinois can make up about 3 – 6% of the price of the home. This means that if you take out a mortgage worth $400,000, you can expect closing costs to be about $12,000 – $24,000.

What Are the Average Closing Costs in Illinois? 

  • Average Closing Costs (Including Taxes) - $6,529.74
  • Average Closing Costs (Excluding Taxes) - $4,893.99

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.

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