WHAT ARE CLOSING COSTS?
I have found that even with my experienced home buyers closing costs can be a source of confusion and unknown and this doesn't have to be. While somehow it is impossible to have an exact number til right before you close you can come up with a pretty good estimate of what they are going to be.
CLOSING COST BREAKDOWN:
TITLE CHARGES AND TRANSFER TAXES:
Title Company Charges (sellers choice) - $1000 - $2000
City of Chicago Transfer Tax - $7.50 for every $1000 purchased ($2,250 for a $300,000 place)
State of Illinois: $3
Loan origination fees (this is the cost of getting a loan) - $1400-$2000 (Barry Schwartz at Perl Mortgage waives half his lender fees and is amazing)
Appraisal (depends on property type) - $400-$800
PREPAID ITEMS & CREDITS:
You will have to pay for -
Mortgage interest for the remaining days of the month you close in
Homeowners insurance for a year
3-5 months of real estate taxes (goes into an escrow account with your lender)
3-5 months of HOA dues (goes into an escrow account with your lender)???
You will receive a tax credit from the seller for the portion of the year they were still the owners. This is because you will be paying this years taxes next year as our bills in Chicago come after the year that the taxes are accrued.
Attorney - $450 - $800
HOW CAN I PAY FOR CLOSING COSTS?:
If you do not have enough money for your down payment as well as the closing costs you can sometimes negotiate a credit with the seller to help you cover your closing costs. The amount you can receive in closing cost credit at close is dictated by the type of loan that you are getting.
For a conventional loan
- Less than 10% down you can get up to 3% of purchase price.
- With 10-25% down you can get up to 6% of purchase price.
- With over 25% down you can get up to 9% of the purchase price.
For an FHA loan that requires a minimum of 3.5% down you can get up to 6% of the purchase price.
Here are examples for a $180,000 place , a $380,000 place and a $700,000 place.