When buying a Chicago metro Area home home, the terminology used in the closing costs can be confusing, especially for first time buyers.
The glossary below explains most closing cost terminology you will need to become familiar with and will help you identify which party pays what fees.
- Appraisal Fee – A one-time fee to pay an independent appraiser.
- Credit Report Fee – A one-time fee covering the cost of obtaining a current credit report.
- Document Preparation Fee – Depending on the transaction, there may be a separate fee covering the preparation of the final legal papers.
- Homeowners Fee – Some homeowners associations may require an up-front deposit or dues, as well as a fee to transfer their records from seller to buyer.
- Loan Discount Fee – A one-time fee to adjust the yield on the loan to what market conditions demand (often referred to as “points”).
- Loan Origination Fee – A one-time set-up fee charged by the lender for their administrative costs.
- Escrow and Title Charges – The title company will charge fees for the title policies, additional endorsements, recording fees, escrow, and any additional services such as release tracking or special couriers.
- PMI Premium – Depending on the down payment, the buyer may have to pay an additional up-front fee for mortgage insurance.
- Prepaid Interest – This is a per diem charge that will be calculated depending on the time of the month the transaction closes.
- Taxes & Hazard Insurance – Property taxes will be brought current in escrow. Depending on the month the transaction closes, the seller may be required to credit the buyer for property taxes which are not yet due but not yet payable. The buyer will have to pay a year’s hazard insurance premium up-front and may be required to put certain amount for taxes and insurance in a reserve account, which is held by the lender.
Good Faith Estimate
When you apply for a Chicago Illinois home loan, a Good Faith Estimate will be issued by your lender. Your closing costs must be listed on your HUD-1 settlement form. In addition to the sales price of your home will be costs associated with finalizing the transaction, such as:
- Real Estate Broker Commission/Fees – Section 700
- Loan Fees – Direct Loan Costs – Section 800
- Items Required by the Lender to be paid in advance (a/k/a “Prepaids”) – Section 900
- Escrows/Impounds/Reserves – Section 1000
- Title and Closing Charges – Section 1100
- Recording/Government Filing Fees – Section 1200
- Other, Miscellaneous Charges – Section 1300
- Harmful Fees That Could Appear on the HUD-1
When you hire us as your Chicago Illinois Realtor®, we will make sure that your Good faith Estimate and HUD-1 settlement form are perfect. We have years of experience and extensive training in the home buying process, focusing on Chicago IL real estate and surrounding suburbs.
Steps to buying a home in the Chicago Metro area include:
Our goal is to provide you with expert advice and exceptional customer service every step of the way. We will listen to your needs and desires, and use that information to assist you in finding the perfect home in the right neighborhood to fit for your lifestyle and needs. Use our Chicago metro area real estate expertise to alleviate your stress and make your home search a pleasant one.
Give us a call today for a list of Chicago metro area homes for sale that are currently available in your area of interest.
Whether you are looking to buy a home or thinking about investing in Chicago metro area real estate, we offer a variety of comprehensive real estate services, including REO’s and short sales, in the following counties:
- Cook County IL Real Estate
- Will County IL Real Estate
- Du Page CountyIL Real Estate
- Kane CountyIL Real Estate
- McHenery County IL Real Estate
Adam Balawender, Realtor, CDPE
Real Estate Pro Chicago Re\max, City
Cell Phone: 773.671.4663