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In Illinois, sellers typically pay for the owners title insurance policy that the buyer will walk away with after closing, unless they have negotiated otherwise in the contract. Buyers however, typically pay for the cost of the closing itself (sometimes referred to as the “Escrow Fee”), in addition to the cost of their lender’s title insurance. Lender’s then often require special additions to the loan policy called “endorsements” providing extra coverage adding more title charges to the buyer’s side.
LOAN POLICY: For a lender’s policy, buyers should expect to pay in the range of $150 to $1,000 or more, based on the purchase price. Some states have title insurance rates set by the state and those fees are non-negotiable. In other states, the fees are negotiable. It also never hurts to try and negotiate for a reduction in title fees. Title companies charge differently – and being a very competitive industry, most are willing to make reductions where possible if it means keeping your business.
OWNER’S POLICY: The owner’s policy will run quite a bit higher - $1000 to as high as $3125 -depending on the purchase price of the home. And if you are a buyer, you should never agree to waive having the seller obtain an owner’s policy for you. If you only buy a loan policy, and someone makes a title claim to the property and you lose the house, only the lender will get a check. There needs to be a separate owner’s policy so that you will be fully compensated for the loss of the property in the event someone else has a successful title claim.
ENDORSEMENTS: Then, if your lender requires special endorsements to the policy, these can cost $150 or more each, depending on the type of endorsement and the fee schedule for these endorsements. Depending on the type of property you are purchasing, the lender can require that you add special endorsements to the title, such as an environmental lien endorsement, adjustable rate mortgage endorsement, or even a condominium endorsement. If these endorsements are required and available, just three endorsements could add $450 to the cost of your loan closing.
CLOSING OR ESCROW FEE: On top of the title policies themselves, the title company or closing agent will charge a closing fee, which is separate from the cost of a title insurance policy. This could be anywhere from $800 to $1500 or more depending on the value of the home and the value of the mortgage you are obtaining. This fee is paid to the title company or closing agent to work through the paperwork for the closing. The title company and closing agent is not representing either party in the transaction–but rather, they are the intermediary to facilitate the transaction on behalf of the lender. In Illinois, buyers typically bear this cost as well, since they are the party with a lender requiring a title company closing.
RECORDING FEE: Buyers can then also expect to pay anywhere from $25-$150 in recording fees for the deed and mortgage . Both documents will need to get recorded with the local recorder of deeds office in the county in which the home is located.
MUNICIPAL TRANSFER TAX; COUNTY TRANSFER TAX; STATE TRANSFER TAX: These charges vary from municipality to municipality, and are usually either a flat fee or are based on the sales price of the house. For example, in Chicago, the buyer picks up the city transfer tax, a hefty $3.75 per $500 of the purchase price. In most municipalities in greater Chicagoland that charge a transfer tax (and not all do) the Seller bears the brunt of the transfer tax and inspection requirements imposed by the municipality. Seller also bears the cost of the state ($.50/500) and county ($.25/500) transfer taxes.
DELIVERY AND E-MAIL FEE: Despite the advancements in technology and the ability to email documents, most title companies now charge a fee to the buyer to receive loan documents from their lender. Those fees can range from $10 to as high as $100. If trying to negotiate a reduction in title charges-this is arguably a good target. Although, even if you pay this fee, many title companies may also charge a fee to send documents back to your lender who requires originals. The title company will then pass on the cost of mailing them back to you (at a premium!).
CLOSING PROTECTION LETTER (CPL): As the closing agent, the title company is responsible for disbursing funds to the buyer, the seller, the taxing authorities, search companies and the lender. The closing protection letter, sometimes referred to as an insured closing letter, lists the circumstance where the title company will take responsibility for errors, omissions or fraudulent actions. The letter indemnifies the lender, buyer and seller in the event the funds are improperly disbursed. But this indemnity comes with a price tag of anywhere from $50 to $100.
WIRE TRANSFER FEE: If the title company is wiring out funds to a lender, or to pay off the Seller’s mortgage, or the proceeds to the seller’s personal bank account, they will charge a wire fee. These range anywhere from $10-$50. Sometimes title companies also charge to accept a wire from the lending institution.
COMMITMENT UPDATE FEE: Title companies perform their initial title search of a property often weeks before the actual closing. So when it’s time to actually close, they do another search or update to make sure nothing has happened in the interim. This ranges from $100-$175. This fee is generally charged to the Seller.
POLICY UPDATE FEE: Like the title company wants to make sure nothing has happened between the time they searched title and the closing, so the buyer will want to make sure that nothing happens between the date of the closing and the date the deed is actually recorded. And so the title company charges them anywhere from $100-$175 for this service.
ILLINOIS ANTI-PREDATORY LENDING DATABASE CERTIFICATE SERVICE FEE: Every mortgage in Illinois must be entered into this database, and it’s the title company that prepares the certificate–and they will charge $25-$50 for this service.