Buying a home comes with a lot of paperwork — and the settlement statement is one of the most detailed documents you’ll see. This page is designed to explain closing costs in plain English, so you know what you’re looking at, why the charges exist, and what (if anything) you need to do next.
What a Settlement Statement Is (and What It Isn’t)
A settlement statement (sometimes called a Closing Disclosure) is a summary of the financial details of your purchase. It shows:
The purchase price
Your loan details (if applicable)
Closing costs
Prepaid items and escrows
Your estimated cash to close
Important: This statement is often sent for review only. Your lender will provide your final cash-to-close amount and will tell you when and how to send funds. You should always wait for your lender’s final instructions before sending any money.
Title Insurance: Required vs. Strongly Recommended
Lender’s Title Insurance (Required)
If you’re getting a mortgage, your lender requires a title insurance policy that protects their interest in the property.
Owner’s Title Insurance (Optional but Strongly Recommended)
Owner’s title insurance protects you against issues tied to the home’s past, such as:
Unknown liens
Recording or clerical errors
Ownership or boundary disputes
This is a one-time cost that protects you for as long as you own the home. While optional, it is strongly recommended and very common in Illinois transactions.
Property Taxes in Illinois: Paid in Arrears
Illinois property taxes are paid in arrears, meaning:
Taxes for the current year are paid the following year
At closing, the seller credits you for the portion of the year they owned the home
You will use that credit to pay the full tax bill when it comes due next year
This is one of the most common (and confusing) line items, but it’s standard across Illinois.
Loan Charges (Buyers with a Mortgage)
Loan charges appear on the buyer side of the settlement statement and are paid directly to the lender or third parties working on the lender’s behalf.
Common buyer loan charges include:
Processing Fee – Administrative cost of preparing your loan file.
Underwriting Fee – Covers review and approval of your loan.
Credit Report Fee – Cost to obtain your credit information.
Flood Certification – Confirms whether the property is in a flood zone.
Appraisal (if applicable) – Determines the property’s value for lending purposes.
These fees vary by lender and loan type. Your loan officer is the best resource for questions about these line items.
Prepaids, Impounds & Escrows (Buyer Side)
Some buyer-side charges are not fees, but funds collected upfront to set up your escrow account or cover upcoming bills.
These may include:
Prepaid Interest – Interest from the day of closing through the end of the month.
Homeowner’s Insurance Premium – Often collected for the first year.
Property Taxes – Initial deposits collected to fund your escrow account.
Aggregate Adjustment – Ensures the escrow account is not overfunded.
These are your own expenses — they are simply collected at closing so future bills are paid on time.
Title Company & Settlement Charges (Buyer Side)
On an ALTA Combined Settlement Statement, buyer and seller charges appear on the same document, but each line clearly shows whether it applies to the buyer or seller.
For buyers, title and settlement charges typically include:
Settlement / Closing Fee – Covers coordinating the closing, preparing documents, handling escrowed funds, and ensuring the transaction is properly completed.
Title Search / Property Search – Researches the property’s ownership history to confirm there are no undisclosed liens, judgments, or ownership issues.
CPL (Closing Protection Letter – Buyer & Lender) – Protects you and your lender against errors or misconduct by the settlement agent.
Lender’s Endorsements – Additional protections required by your lender based on loan type.
Recording Service Fees – Covers submitting documents to the county for official recording.
Wire / Processing Fees – Covers secure handling and transfer of funds.
These charges support a clean, legal transfer of ownership and are standard in Illinois closings.
Cash to Close: How Buyer Funds Are Delivered
Your settlement statement will show an estimated cash to close, but this document is provided for review only.
Your lender will:
Finalize the cash-to-close amount
Confirm when funds are due
Provide secure wiring or delivery instructions
Once your lender confirms your final amount due:
Over $50,000: Funds must be sent via wire transfer
Under $50,000: Funds may be sent via wire transfer or cashier’s check
Personal checks and cash are not accepted
Always wait for final instructions directly from your lender or title company before sending any funds to avoid wire fraud.
Reading a Combined Buyer & Seller Statement
Because this settlement statement shows both sides of the transaction, it’s helpful to remember:
Buyer charges appear in the buyer debit column
Seller charges appear in the seller debit column
Credits reduce the amount owed
The totals at the bottom summarize what each party owes or receives
If a line item isn’t clearly marked or doesn’t make sense, it’s completely normal to ask for clarification.
The Bottom Line
Every line item on a buyer’s settlement statement serves a purpose — ensuring your loan is properly funded, the title is clear, and ownership transfers legally.
If something doesn’t look right or raises questions, don’t guess. We’re here to walk through it with you so you feel confident going into closing.