Buying a home is one of the biggest decisions a person can make, and there are many factors to consider besides the price of the home. Another significant expense to consider when purchasing a home is the closing costs you will pay.
Closing costs are the final fees paid to complete a real estate transaction, such as taxes, lender fees, and title insurance. To help you prepare for the final steps of the home buying process, this Redfin article will detail closing costs in Illinois, who pays them, and what you can expect to pay as a buyer and seller.
What are the average closing costs in Illinois?
In addition to a down payment, homebuyers also need to pay closing costs to get the keys to their new home. As a general rule of thumb, you can expect closing costs in Illinois to be 2%-5% of the purchase price. But it’s important to remember that this is just a range and the total amount will depend on many factors, such as the buyer’s loan program or negotiations with the seller.
For example, if you buy a home in Naperville, which sells for an average of $620,000, closing costs may range from $12,300 to $30,750. Or, let’s say you want to buy a home in Chicago, where the average sales price is $365,000. Closing costs for a home here can range from $7,300 to $18,250.
Who Pays Illinois Closing Costs
In most areas, including Illinois, both the buyer and seller will pay closing costs. However, the amount of closing costs for each party will vary based on how much they need to pay. Keep in mind that it’s common for the buyer to pay closing costs out of pocket, while the seller’s closing costs are deducted from the home sale proceeds.
Buyer Closing Costs in Illinois
For Illinois home buyers, closing costs can be expected to be 2%-5% of the home’s purchase price. If you pay a security deposit (usually 1%-3% of the home price), this amount will be deducted from your closing costs. Let’s take a closer look at some common closing costs that buyers pay:
- Assessment fee: Home appraisals typically range from $300 to $500 and are usually paid separately at the time of service. However, if not, you will need to pay a fee at closing.
- Inspection fees Home inspections in Illinois generally cost between $300 and $500, with costs varying based on local rates and the specific characteristics of the property. If you did not pay for the inspection at the time of service, you will need to pay it at closing.
- Loan origination fee: Your lender may charge a fee to create your loan. It’s important to understand what this fee covers and whether it can be negotiated to avoid high fees.
- Loan processing fee: Lenders may also charge a fee for loan processing, including underwriting and related services. Similar to the origination fee, check with your lender to understand its purpose and possible exemptions.
- Loan discount points: If you purchase discount points to lower your interest rate, you’ll pay a one-time fee at closing. These points can lower your rates by 0.25% to 0.5%, but consider your long-term homeownership plans before paying the reduced rate.
- Private Mortgage Insurance (PMI): If the down payment is less than 20%, PMI may charge an upfront fee at closing, depending on the loan type. It is usually part of your monthly payment, but some loans offer the option of paying it as a one-time fee.
- Title Insurance: Title insurance is a one-time fee paid as part of the closing costs. Buyers often carry both lender and owner title insurance.
- Home Insurance: In Illinois, your annual homeowners insurance premium may be part of your closing costs.
- Homeowners Association Dues: For homes in HOA-managed communities, you may be required to pay one month’s dues upon closing, which may vary by property and cover maintenance and operating expenses.
- property tax: Buyers may have to pay property taxes upfront as part of Illinois closing costs.
Illinois seller closing costs
Seller closing costs will vary per transaction in Illinois, but here are some common fees and costs sellers incur:
- Real estate agent commission fees: These fees can be a significant cost for sellers. Commission fees may vary and are subject to negotiation. Sellers should discuss their options with an agent.
- Homeowners Association Fees: The seller is typically responsible for any unpaid HOA fees or assessments prior to the settlement closing date, and they may be required to provide HOA documents to the buyer as part of the sale.
- property tax: The seller is responsible for any property taxes accrued but not yet paid prior to the closing date. These unpaid property taxes are usually prorated based on the months you owned the property.
- Title Insurance: Owner’s title insurance is another common closing cost paid by the seller in Illinois.
- Transfer tax: If you sell your home in Illinois, you may be subject to state-imposed real estate transfer taxes. These taxes are usually calculated based on the property’s sales price or assessed value. Specific rates and regulations can vary widely, so it’s important to understand the requirements in your area and consider these potential costs when selling your home.
Median home sales price data from the Redfin Data Center for July 2024.
