Real Estate Guide | Closing Costs For Illinois

illinois closing costs

Whether you’re buying or selling in the state of Illinois, closing costs can be a big part of your real estate transaction costs.  

These costs are meant to cover a range of fees for services provided by a number of people, vendors, banks and government institutions to both the buyer and seller of a property.  

What Are Closing Costs? 

The term “closing costs” is a broad term for just about any cost outside of the mortgage itself that is necessary to pay in order for a real estate transaction to take place. These costs can include a lot of different services and products.

Because both buyers and sellers need to pay for services in order to purchase or sell a home in Illinois, both members of the transaction will typically incur fees for these services. However, this does not mean that both the buyer and seller will pay the same amount.

Closing costs are unique to each real estate transaction.  

The amount of money that each person pays will be dependent on factors such as:

  • Property taxes
  • Loan type
  • Application fee
  • Private mortgage insurance (PMI)
  • Purchase price
  • Title insurance and title companies’ requirements

If you’re looking for a way to accurately estimate your closing costs, you must first understand all of the factors that go into creating this number.

Closing Costs For Illinois 

In Illinois, closing costs can vary a lot, but most home buyers of a primary residence will typically pay about $2,000 for every $210,000 that a home costs.

This means that a buyer for a house in Illinois can expect to pay a little less than 1% of it’s sale price in closing costs, making it a state with some of the lowest average closing costs in the nation.  It’s important to note, however, that this is an average, and that there are several factors that can increase or decrease this cost.

Closing costs typically come from three different places.  All three are necessary expenses, but it’s important to understand each one and what it entails.

Services

Before purchase, many people choose to hire several different types of inspectors and have repairs made.

In addition, there may be services rendered from real estate attorneys or brokers.  Each of these services comes with a price tag that must be made at some point in the real estate transaction.

Typical example include realtor commissions, repair and maintenance fees, and inspection costs.

Loan Fees

While just about all first-time and repeat home buyers expect to pay their monthly mortgage payment, there are also a set of fees that must be paid in order to process the paperwork for any new loan.  

These fees include appraisal fees and loan origination fees.In addition to these loan origination fees, there may also be fees that have to be paid in order to reduce the interest rate on a mortgage, typically known as paying points.

Loans with little to no down-payment will usually also come with private mortgage insurance that must either be paid up front or every month.  There may be some upfront costs associated with this, however, such as a fee for a title search.

A mortgage lender may also choose to set up an escrow account to ensure that the property insurance and taxes are paid on a regular basis.  This means that a new homeowner will need to pay an escrow deposit for taxes and insurance.

There may also be fees that are associated with insuring the property against mistakes made during the title search process, commonly known as title insurance.  The premium for this insurance is usually paid only once, during closing.

Government Fees

Every real estate transaction will need to be recorded with the county office and have the taxes associated with the property paid in full before it can be transferred to a new owner.  

This usually means that either the buyer or seller will need to pay these taxes during closing.

Who Is Responsible For Closing Costs? 

One of the most common misconceptions about closing costs is that they are “assigned” to either the buyer or seller.  

The truth is that, with very few and limited exceptions, there is no set standard for who pays what during a real estate transaction.  This means that it is possible for the buyer or the seller to pay the vast majority of the closing costs.

In fact, negotiating who pays for various closing costs is an important part of what your real estate agent does.  Just like the selling price, it is possible to haggle over which fees will be paid by who in a transaction.

In markets where inventory is low (typically called a hot market), it is often common to see potential buyers offer to pay for all of the closing costs on a primary residence.  Conversely, if a seller is highly motivated to get their home sold, they may offer to pay all or a significant part of the closing fees.  

This can even include escrow fees or payments, making it possible for a potential buyer to save a lot of money for the first year they are in a home.

Be sure to ask your realtor about cost assistance programs to help pay for closing costs.  While these programs are typically geared towards first time home-buyers or low-income borrowers, there are a lot of different types of assistance available through several different government and mortgage programs.

When & How Are Closing Costs Paid? 

Closing costs can be paid as a buyer or seller goes through the closing process.  

To start, as soon as a property goes under contract, it is likely that both the buyer and seller will be asked to produce an escrow fee or escrow deposits to be set aside as a show of good faith that a transaction will go through.  

Escrow costs are usually applied to the buyer or seller’s side of the closing costs when the transaction reaches the closing table.

The amount of this escrow fee can be negotiated, but it is typical to pay somewhere between $1000 and 1% of the selling price for the home.

While the home is under contract, a number of things happen “behind the scenes”.  To start, the home will usually undergo an inspection for structural issues and pests.  

The costs for these inspections is usually paid by the buyers, and in many cases the buyer will pay the inspector directly.  It is possible, however, to pay for these inspections at the closing table, and their cost can be paid by the seller.

If the inspections turn up any problems, the repair costs for these issues will also need to be paid.  Again, who pays for these repairs is up for negotiation.

Finally, when the contract is ready to close, both parties will come to closing at separate times. In order to avoid sticker shock at this point in the process, your real estate agent should provide you with an itemized list of the closing costs you will be expected to pay.  These closing costs will need to be paid in cash.

If you cannot pay this major expense out of pocket, then it might be a good idea to ask your realtor about wrapping these costs into your mortgage. 

For a single-family home in Illinois, this will typically add about 1% to the average home price. 

While this will increase the cost of a 30-year, fixed rate mortgage by a few dollars a month, odds are that your mortgage rate is one of the cheapest loans that you can qualify for.

5  Ways To Reduce Your Closing Costs

While it can be next to impossible to completely eliminate paying for closing costs, there are ways to reduce their cost. 

Try these tips, and be sure to ask your realtor for suggestions as well.

1. Know Your Type Of Loan

Mortgages that are more exotic tend to have much higher closing costs due to the increased amount of scrutiny and labor that they require. 

If possible, try to secure a 30-year fixed rate mortgage.

2. Increase Your Credit Score 

Even if you have the minimum credit score required for mortgage, a higher score can help to reduce your interest rate. 

That means less in points, and potentially qualifying for mortgage types that offer lower closing fees.

3. Explore All Options

Explore all of the current mortgage programs available.  Government programs from Illinois and federal assistance are often available to first-time home-buyers regardless of income or the price of their home. 

While getting an interest-free loan is not very likely, there are many programs that will help to contribute towards closing costs and even down payments.

4. Avoid PMI

The fee for mortgage insurance has to be paid every month.  If possible, look for a a safe, 30-year, fixed rate mortgage that does not private mortgage insurance a requirement.

5. Negotiate

For many people, repair costs are one of their largest mortgage expenses.  If you are a buyer, ask your realtor to have the seller to pay for these costs. 

Often they are more familiar with the problem and they can get it fixed much cheaper than you can.

Common Real Estate Closing Cost Terms

There are several terms that are unique to the real estate industry.  Of course, if you come across something that you don’t understand, be sure to ask your real estate agent. 

We are always happy to help explain anything that might be confusing.

Private Mortgage Insurance

This is an insurance policy that many banks require borrowers to pay for if they do not have a sufficiently large down payment.  Premiums for private mortgage insurance are paid by the borrower, but the policy pays out to a bank or lender.

Loan Origination Fees

These are fees that are charged by a lender to cover costs associated with the administration of a mortgage. They tend to vary a lot between banks, so shop carefully.

Realtor Commissions

The realtor’s commission is typically paid by the seller of a home.  It can go to several different realtors if multiple people were involved with the sale of a piece of property.

Filing Fees

Mortgages and property ownership has to be recorded by the local county.  These fees are meant to cover a wide range of costs and taxes associated with this requirement.

Insurance Premium

Practically every mortgage company will require their mortgage holders to have property insurance on their home.  Often, the premium for this insurance must be paid up front for an entire year.  It is usually one of the biggest parts of closing costs for buyers.

Title Search

When a person buys a home, they need to make sure that they own it legally. A title search is a process where the previous owners’ deeds are checked to see if any liens or other encumbrances exist against the property.

Title searches can also check whether the property was ever foreclosed upon. 

Appraisal Fee

An appraisal is a report that determines the value of a property. An appraiser will walk through the property and determine its current market value.

Appraisals are often required when purchasing a home. 

Property Taxes

Every state requires homeowners to pay property taxes. Property tax rates vary from state to state, but generally speaking, the higher the assessed value of a home, the higher the property tax bill will be.

Survey Costs

If you plan to build a new home, you’ll want to know what size lot you’re getting. You may also want to know how high the land rises above sea level.

Surveys are used to measure these things that the bank uses for valuation and risk.

Final Thoughts 

Closing costs can be one of the most expensive parts of buying a house, but it is also possible to do a lot to reduce or defray these costs. 

A skilled realtor should be able to help you negotiate these fees and get the best deal possible on a new home.  Asking the right questions is always important when purchasing or selling a home.

If you’re thinking of buying or selling a house, give me a call today at.  We have years of experience buying and selling Illinois Real Estate, and would love to help you with your property.

About the Author:

The above article "Real Estate Guide | Closing Costs For Illinois" was written by

Tony Ciancanelli
Tony is your exceptional Joliet real estate agent and part of a global family of agents & partners with eXp Realty.

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