Closing costs will generally range from 1½ -3% of the purchase price depending on a number of factors. These factors include whether you are purchasing a new construction or resale property, lender fees, tax prorations, and funding tax escrows, amongst others.
The following estimates apply to the city of Chicago, but will be similar for most of the suburbs. Almost all of these costs are paid at the time of closing.
COST OF SECURING AND SERVICING THE LOAN
- Points: Charges to obtain the loan usually paid to obtain a lower interest rate. Chicago is mostly a zero point market. Presently, lenders are also charging an additional .75% fee on all condo purchases.
- Appraisal Fee and Credit Report: This cost is usually $350 for condominiums and single family homes and approximately $500 for two-four unit buildings.
- Loan Assumption: The cost to assume an existing loan. Most loans are not assumable so this charge is rarely incurred.
- Underwriting Fee/Processing Fee: The lender will charge an underwriting fee/processing fee. The charge is usually around $350.
- Re-Inspection Fee: If the property is new construction or a new conversion, the lender will assess this fee to cover the cost of any additional inspections by the appraiser. This fee ranges from $75-$125.
- Document Service Fee: A charge from the lender to cover the cost of preparing mortgage documents for closing. This charge is approximately $150.
- Tax Service Fee: Lenders charge a one time service fee for setting up the tax escrow account to handle real estate taxes. This fee is usually between $70 and $100.
TITLE AND RECORDING CHARGES
- Title Insurance: The lender will require the purchaser to pay for a loan policy. The cost of this policy is approximately $250.
- Recording Fees: The purchaser will pay the cost of recording documents with the Recorder's Office. Approximate cost for recording a deed and mortgage is $90.
- Endorsement Fees: The title company issues certain specific endorsements for the benefit of the lender on the loan policy. These endorsements verify the specific address, location, or condition for the property, or the actual amount, rate, and terms of the mortgage. Following are the most typical of these fees:
- Location $80-$100
- Flood Insurance $80-$100
- Condominium Unit $80-$100
- EPA $80-$100
- ARM $80-$100
- Balloon $80-$100
ESCROW CHARGE (if any)
- Loan Escrow: Lenders require escrow closings for their loans. Typical cost is between $200-$400.
- Cash Transactions: For cash transactions, either party may request an escrow. The parties often split this charge.
MISCELLANEOUS
- Transfer Stamps: The city of Chicago transfer taxes are paid by the purchaser in the amount of $7.50 per $1000 of purchase price.
- Attorney: The purchaser will select an attorney to represent them in their real estate transaction. The cost of an attorney is usually $400-$700.
- Property Inspection Fee: The buyer will select an inspector to perform an inspection for the property under contract. The cost of the inspection is usually between $300-$450 for a condominium and $350-$500 for a single family home.
- Survey: Most contracts for single family homes or multiple unit buildings require the seller to provide a survey. The seller usually pays for the cost of the survey, but in some circumstances, this may be a buyer cost. The cost of a survey is between $250-$350. Surveys are not required in the sale of a condominium.
- Homeowner's Insurance:
- Single family home and multi-unit: The lender will require the buyer to pre-pay an insurance policy (with mortgagee clause) for the first year. The cost of this policy varies depending on individual insurance companies and the content of the home.
- Condominiums: The condo association will purchase insurance on the building. The buyer will need to purchase condo insurance to cover their individual unit. At closing, the buyer will need to show proof of both coverages.
- Prepaid Interest: At closing, the lender will collect per-diem interest from the date of closing through the last day of the month. The first full mortgage payment will not be due until the following month. For example: if a buyer closes on April 25, the first mortgage payment will be due on June 1.
- Prorations: At closing, certain prepaid expenses relating to the ownership and maintenance of the property will be prorated between seller and purchaser. For example, in condominiums the monthly assessment may be prorated depending on the date of the closing. All prorations are handled by the real estate attorneys.
- Condo Move-In Fees: Some condo associations charge a condo move-in fee that may or may not be refundable. Costs range from $50-$250.
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