Closing Costs in the Illinois Housing Market
Whether you’re embarking on the journey of buying or selling a home in Illinois, it’s crucial to factor in closing costs. These expenses can significantly impact your budget, so it’s essential to understand who pays for them and how much they might amount to. In this guide, we’ll break down the details to help you navigate the Illinois housing market with confidence.
How much are closing costs in Illinois?
Closing costs in Illinois typically average around 2.1 percent of the home’s sale price. For a median-priced home of $287,400, this would amount to approximately $6,035. However, it’s important to note that prices can vary depending on the location within Illinois. For instance, in Peoria, where the median is $155,000, closing costs might be around $3,255, whereas in Chicago, with a median of $350,000, they could be closer to $7,350.
Who pays closing costs in Illinois, buyers or sellers?
Both buyers and sellers share the responsibility for some costs at closing.
Closing costs for buyers:
Lender-related fees: These encompass expenses related to the mortgage application, credit check, and loan origination.
Inspection and appraisal fees: Essential steps to ensure the property’s value matches the loan amount.
Title-related fees: Covering the cost of a title search and title insurance.
Escrow fees: Prepaid monthly fees for items like property taxes or homeowners insurance.
Closing costs for sellers:
Real estate agents’ commissions: Typically 5-to-6 percent of the home’s sale price.
Illinois transfer tax: Paid by the seller in most of the state, but both parties in Chicago.
Buyer’s title insurance policy: Typically covered by the seller.
Prorated property taxes and HOA fees (if applicable): Calculated up to the closing date.
Any concessions to the buyer: Such as covering repair costs.
Lowering your closing costs in Illinois
Both buyers and sellers have options to save on closing costs.
For buyers:
Explore closing cost and down payment assistance programs.
Compare fees and rates with multiple mortgage lenders.
For sellers:
Negotiate with the agent on commission rates.
Consider selling without a Realtor, saving on the seller’s agent commission.
Be selective about concessions and negotiate with the buyer.
FAQs
What are closing costs in the Illinois housing market?
Closing costs refer to the fees and expenses associated with finalizing a real estate transaction in Illinois. These costs typically include fees for services such as property appraisal, home inspection, title search, attorney fees, loan origination fees, and taxes.
How much are closing costs in Illinois?
Closing costs in Illinois typically range from 2% to 5% of the home’s purchase price. However, the exact amount can vary based on factors such as the property’s location, the purchase price, the lender, and the specific services required.
Who pays for closing costs in Illinois, the buyer or the seller?
In Illinois, it’s common for both the buyer and the seller to pay certain closing costs. However, the specific allocation of costs can be negotiated as part of the purchase agreement. Typically, the buyer covers costs such as loan origination fees, appraisal fees, and prepaid taxes, while the seller may cover expenses like title insurance, real estate agent commissions, and attorney fees.
Are there any ways to reduce closing costs in Illinois?
Yes, there are several strategies that buyers and sellers can use to reduce closing costs in Illinois. Negotiating with the seller to cover a portion of the closing costs, shopping around for competitive mortgage rates, and requesting lender credits are common ways to lower closing expenses. Additionally, some loan programs and first-time homebuyer incentives may offer assistance with closing costs.
What should I budget for when planning for closing costs in Illinois?
When budgeting for closing costs in Illinois, it’s essential to consider expenses such as loan origination fees, appraisal fees, title insurance, attorney fees, property taxes, and prepaid homeowners insurance. Working with a real estate agent and a lender can help you estimate these costs more accurately based on your specific situation and the current market conditions.
Conclusion
Closing costs are an essential aspect of any real estate transaction. By understanding the breakdown of these costs and exploring strategies to lower them, you can navigate the Illinois housing market with confidence. Whether you’re a buyer or a seller, taking proactive steps can make a significant difference in your overall financial picture.