How Much Are Closing Costs in Illinois?

Real estate transactions involve expenses beyond the purchase price. These additional fees, known as closing costs, are incurred by both buyers and sellers to finalize property ownership transfer. They represent a substantial financial component of buying or selling a home, separate from the down payment or primary loan amount. These costs cover professional services and governmental charges essential to complete the transaction, such as loan processing, legal services, and official property record transfer. Understanding these costs is important for anyone engaging in Illinois real estate.

Understanding Real Estate Closing Costs

Closing costs compensate the many parties involved in a real estate transaction, including lenders, title companies, legal professionals, and governmental entities. These fees cover the administrative, legal, and financial processes necessary to facilitate property transfer and secure the mortgage.

Categories of closing costs include lender-related fees for mortgage processing, third-party service fees for appraisers and inspectors, property-related expenses like prepaid taxes and insurance, and government charges such as recording fees and transfer taxes.

While some closing costs are traditionally paid by either the buyer or the seller, their allocation is often subject to negotiation between the parties. Industry norms and specific state regulations can influence who typically bears certain expenses. The exact amount of closing costs is not fixed; it varies based on the specifics of the transaction, the property’s location within Illinois, and the terms negotiated during the sales process.

Specific Closing Costs in Illinois

Buyers typically anticipate paying between 2% and 5% of the home’s purchase price, while sellers’ costs can range from approximately 6% to 10% of the sale price, largely influenced by real estate commissions. Illinois’s average closing costs, excluding real estate commissions, for sellers are around 2.94% of the home’s purchase price. For buyers, these costs average about 2.09% of the home’s value, which can be around $5,929 including taxes for an average-priced home.

Buyer-specific costs in Illinois include loan origination fees, typically 0.5% to 1% of the loan amount, charged by the lender for processing the mortgage. Appraisal fees, covering professional home valuation, generally range from $300 to $1,000. A credit report fee, usually less than $50, is incurred for the lender to check the borrower’s credit history.

Lender’s title insurance, which protects the lender’s interest in the property, is typically a buyer’s expense and costs around $525 to $585. Recording fees, to register property transfer with local government, can be around $98 per document in counties like Cook County. Attorney fees for buyers in Illinois, where legal representation is common, typically range from $500 to $1,500 for residential transactions, or can be hourly rates between $150 and $500. Buyers also often pay prepaid expenses, which include prorated property taxes, initial homeowner’s insurance premiums, and, if applicable, homeowners association (HOA) dues.

Seller-specific costs in Illinois often represent a larger portion of the transaction’s overall expenses. Real estate commissions are usually the most substantial cost for sellers, typically ranging from 5% to 6% of the home’s sale price, which is split between the buyer’s and seller’s agents. Illinois imposes real estate transfer taxes at the state level, which is $0.50 per $500 of the sale price. Many counties in Illinois also levy an additional transfer tax, often around $0.25 per $500.

Some municipalities in Illinois may impose their own transfer taxes. For example, in Chicago, the real estate transfer tax is $5.25 per $500 of the transfer price, with the buyer typically responsible for $3.75 and the seller for $1.50. Owner’s title insurance, which protects the buyer against title defects, is customarily paid by the seller in Illinois and can range from $660 to $3,500, depending on property value. Sellers also incur attorney fees, similar to buyers, ranging from $500 to $1,500 for residential transactions. Prorated property taxes are a significant seller expense, as Illinois property taxes are paid in arrears, meaning sellers must account for taxes accrued up to the closing date.

Estimating and Reviewing Your Closing Costs

When applying for a mortgage, you will receive a Loan Estimate (LE). This standardized three-page form provides a breakdown of loan terms, estimated monthly payments, and an estimate of closing costs. Lenders must provide this document within three business days of receiving your loan application.

The Loan Estimate details sections like “Loan Costs” and “Other Costs.” It also summarizes the “Cash to Close,” indicating the total amount needed at closing. This document allows for easy comparison of loan offers from different lenders, helping you evaluate financial implications before committing to a specific loan. While an estimate, it provides a useful baseline for anticipated expenses.

At least three business days before the scheduled closing date, you will receive the Closing Disclosure (CD). This five-page document is the final statement of all costs and credits associated with the real estate transaction. It is important to compare the Closing Disclosure against the initial Loan Estimate to identify any discrepancies or unexpected fees.

The Closing Disclosure provides a breakdown of financial aspects, including the loan amount, interest rate, and itemized closing costs. If significant changes occur to terms like the annual percentage rate (APR) or a prepayment penalty, the lender must issue a new Closing Disclosure, restarting the three-business-day review period. Reviewing this document before signing any final paperwork helps ensure accuracy and avoid surprises. Real estate agents and title companies can also provide insights and estimates; ask questions about any unclear charges.