If you’re a first-time homebuyer, you may be a little thrown off when you receive the closing statement from your loan officer or attorney. You immediately ask, “What am I paying for and why is it so much?” Let me walk you through them.
Your earnest money is a “good faith” deposit that is given to the seller’s representation or a mutually agreed upon title company once the sales contract is signed by all parties. This “up front” amount is usually subtracted from the bottom line due at the closing table.
The bulk of your closing costs will be on the loan end. Your “loan origination fee” is usually a high amount compared to others fees. This includes items such as underwriting and processing fees along with charges to pull your credit report. You will also have some title company charges as well. These can include courier fees to send your loan packet back to the lender once the closing has been completed or recording fees to due to the county for recording the deed to the property.
When it comes to the actual property itself, you will have inspection fees if you decide to hire a home inspector which this broker always recommends! Everything may look clean and shiny, but a home inspector’s job is to go through the property with a fine tooth comb and find any issues with the property. There are also other inspections which you can complete, including but not limited to radon, mold, termite, & main drain line inspections. A home inspector will usually recommend one of those if he suspects an issue.
One of the biggest questions I hear from my clients who are not familiar with Illinois are the attorneys. In the state of Illinois it is always recommended to have an attorney represent you in the purchase or sale of your property once a contract is fully executed. There is usually a 5 to 7 day due diligence period for an attorney to review it and declare it null and void if they see an issue, or they can negotiate the issue with the other parties’ attorney. Legal costs can range and usually have a median of around $500 for a simple home purchase or sale.
Many times a lender will require you to set up an escrow account for the taxes and insurance on the property. The lender usually requires several months paid up front at the closing in order to get the account started. The amount is based on the annual property tax bill along with any insurance dues.
It is always best to consult with a qualified Realtor prior to starting your home search and talk about the numbers so you are fully prepared!
To contact me, call 847-292-4700, e-mail firstname.lastname@example.org or visit www.zerillorealty.com.