Understanding Closing Costs: A Buyer’s Checklist

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You’ve found the right home, negotiated an offer and are ready to close. Before you get the keys, there’s one more important piece to plan for: closing costs.

Closing costs are the fees and expenses you pay to finalize your mortgage and officially transfer ownership of the property. They typically range from 2% to 5% of your home’s purchase price, and they cover a mix of lender, legal and administrative services that make your home purchase possible.

Understanding what to expect can help you budget confidently and avoid surprises at the closing table. Here’s a checklist to guide you:

Lender-Related Costs

These fees come directly from your mortgage lender. They include:

  • Loan origination fee: Covers the lender’s processing and administrative work for creating your mortgage.

  • Credit report fee: The cost to pull your credit report and evaluate your financial history.

  • Underwriting fee: Charged for verifying your income, assets and risk as a borrower.

Tip: Ask your lender for a loan estimate early in the process. This document breaks down each expected charge so you can compare lenders and avoid hidden fees.

Title & Legal Fees

These costs ensure the property’s ownership is clear and legally transferred to you. You can expect to pay:

  • Title search & title insurance: Verifies that the seller legally owns the home and protects you (and your lender) from future claims against the property.

  • Attorney fees: In Illinois, closings typically involve an attorney who reviews documents, ensures legal compliance and guides you through the process.

  • Recording fees: Paid to the county to officially record your new deed and mortgage.

Prepaid & Escrow Items

You’ll likely prepay certain ongoing costs at closing, like:

  • Property taxes: Usually prorated between the buyer and seller, depending on when the property changes hands.

  • Homeowner’s insurance: Lenders often require the first year’s premium to be paid at closing.

  • Prepaid interest: Covers interest that accrues from your closing date until your first mortgage payment.

  • Escrow deposits: Funds held by your lender to cover future property tax and insurance payments.

Other Possible Expenses

  • Appraisal fee: Pays for an independent assessment of your home’s value to confirm it meets the lender’s standards.

  • Home inspection: Though not always required by the lender, it’s a smart step to identify potential repairs or safety issues.

  • Transfer taxes: In Chicago, both buyers and sellers may pay a real estate transfer tax when the property changes hands.

Preparing for the Final Step

Before closing day, review your closing disclosure, a detailed summary of all final costs, at least three business days in advance. Compare it with your loan estimate and ask your lender or attorney to explain any differences.

If funds are due, your lender or attorney will let you know how much to bring to the closing table (usually by wire transfer or cashier’s check).

Buying a home is one of the biggest investments you’ll ever make — and knowing what to expect at closing helps you start your homeownership journey on the right foot.

The Pre-Approval Process: Why It Matters and How to Get Started

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Buying a home is one of the biggest financial decisions you’ll ever make, and the journey often starts before you even set foot in an open house. One of the smartest first steps you can take is getting pre-approved for a mortgage. Pre-approval gives you a clear picture of your budget, shows sellers you’re a serious buyer and helps your REALTOR® guide you toward the right homes.

What Is Mortgage Pre-Approval?

Pre-approval is a lender’s written estimate of how much they’re willing to loan you for a home purchase. To get it, you’ll provide financial documents so the lender can verify your income, credit, debt and savings. This offers a more detailed view than pre-qualification, which is typically based solely on self-reported information.

With a pre-approval letter in hand, you’ll know your price range, potential interest rate and loan options. Many sellers require pre-approval before accepting an offer, so it’s a powerful tool in a competitive market.

Why Pre-Approval Matters

  • It Sets Your Budget: You’ll know exactly how much home you can afford and avoid falling in love with properties out of reach.

  • It Strengthens Your Offer: Sellers are more likely to take you seriously and accept your offer if they know financing is lined up.

  • It Saves Time: You and your REALTOR® can focus on homes that match your price range.

  • It Identifies Issues Early: If there are problems with your credit or debt-to-income ratio, you’ll find out before you’re under contract, giving you time to address them.

What You’ll Need for Pre-Approval

Every lender may ask for slightly different information, but generally you’ll need:

  • Recent pay stubs and proof of employment

  • W-2s and/or tax returns from the past two years

  • Bank and investment account statements

  • Records of debts like car loans, student loans or credit cards

  • Identification (driver’s license, Social Security number)

The lender will also run a credit check to see your credit score and history.

How to Get Started

  1. Check Your Credit: Review your credit report for errors and know your score. The higher your score, the better your loan options.

  2. Gather Documents: Organize the financial paperwork listed above so it’s ready to share.

  3. Shop Around: Talk to multiple lenders, like banks, credit unions and mortgage brokers, to compare rates and fees.

  4. Apply for Pre-Approval: Once you choose a lender, submit your application and documents. If approved, you’ll receive a pre-approval letter, usually valid for 60–90 days.

  5. Work With Your REALTOR®: Share your pre-approval with your REALTOR® so they can help you find homes in your range and negotiate confidently.

Getting pre-approved sets you up for success. It helps you shop smarter, negotiate stronger and move faster when you find the home you love. With your pre-approval in hand, as well as the guidance of a trusted REALTOR®, you’ll be ready to turn your homeownership goals into reality.