In addition to their down payment, there are other costs Buyers can expect to pay at closing. Here are some examples:
-Professional services: If you are a Buyer and work with me to find your home, you will not have to pay anything. It is the Seller that pays the Realtor's compensation. However, there are other professionals that you need to hire to complete the transaction. Expect to pay $575 - $650 for an attorney in Chicago, and around $250 for a property inspection.
-Loan costs: To get the loan process started, most lenders charge for an application fee, appraisal and credit report. You will also pay for the lender to underwrite your loan, to process the loan, to draw up the many documents you will sign, and then to record them with the county. You will also pay for a title insurance policy for the lender and pay the title company to act as the lenders agent at the closing. Buyers who take out adjustable rate mortgages incur some additional charges because there is more documentation. The grand total is somewhere around $1500-$2000.
-Loan Points: Buyers can choose to buy down the rates charged for their mortgages by purchasing discount points at the time of closing. This usually happens when mortgage rates are high. Each point is equal to 1 percent of the loan value.
-Private Mortgage Insurance (PMI): If you put less than 20% down, you must purchase private mortgage insurance coverage, which will pick up the slack if you default. PMI costs around one-half to a full percent of the total loan amount annually. At your closing you will pay in advance anywhere from a few months to a full year in advance.
-Transfer Stamps: Of course, the government needs its money too! The State of Illinois, all Illinois counties and many municipalities levy taxes when property is transfered. Most of the time it is the Seller's responsibilty, but not always. The City of Chicago charges home buyers a fee of $7.50 per $1000 of the purchase price!
-Homeowner's Insurance: Alot of times, Buyers will be asked to bring a one-year paid up home owner's policy to your closing. The cost will vary widely, depending on the type of home and its contents. Most of the time, it would be wise to go through the same insurance company that you have your car insurance with, because you might get a discount.
-Homeowners association fees: In my opinion, these are ridiculous but some associations are charging "newcomers." I personally think this sends the wrong message and puts a stigma on the association. I understand if there is a "move in fee" to pay for the use of the freight elevator but sometimes associations charge "administrative" fees for no real reason.
I know these may seem like a lot of charges but they have always been a part of the transaction. Just remember tht Real Estate continues to be one of the BEST investments around!!!!
Need advice on buying or selling Chicago real estate? Look to www.312properties.com for the best in Chicago real estate, including Chicago short sales, and Chicago foreclosures. Whether you are a seasoned investor or a first time home buyer, we can help you with your real estate needs. Call Bradford at 312-519-7979 or email him at bradford@312properties.com.
