Understanding Closing Costs on the North Shore

Key Takeaways

• Financing
• Buyers
• Sellers
• Written by Mark Nesci, Broker Associate with Baird & Warner

Demystifying Closing Costs

One of the most common questions I hear from both buyers and sellers is, "What are closing costs, and how much will I have to pay?" Understanding these expenses upfront is crucial for a smooth transaction.

What Are Closing Costs?

Closing costs are the various fees and expenses paid by buyers and sellers at the culmination of a real estate transaction. They cover the services required to finalize the sale, transfer ownership, and secure financing.

Costs for Buyers

Buyers typically pay between 2% and 5% of the purchase price in closing costs. These often include:

• Loan Origination Fees: Charged by the lender for processing the mortgage.
• Appraisal Fee: Required by the lender to confirm the home's value.
• Title Insurance: Protects against future claims to the property's title.
• Recording Fees: Paid to the local government to record the change of ownership.
• Prepaid Expenses: Such as property taxes and homeowners insurance placed in escrow.

Costs for Sellers

Sellers usually cover the real estate agent commissions, which is typically the largest expense. Other seller costs may include:

• Title Search and Insurance: Often, the seller pays for the buyer's title insurance policy in Illinois.
• Transfer Taxes: State, county, and sometimes municipal taxes on the transfer of property.
• Prorated Property Taxes: Paid up to the day of closing.
• Attorney Fees: In Illinois, it is standard practice to use a real estate attorney for closing.

How My Background Helps

With my background in mortgage banking, I can help you anticipate these costs accurately from the very beginning, ensuring there are no surprises at the closing table. We can also explore strategies to negotiate closing cost credits when appropriate.