Costs to be expected at Closing
Closing costs are fees associated with your home purchase / home sale that are paid at the closing of a real estate transaction. Closing is the point in time when the title of the property is transferred from the seller to the buyer. Closing costs are incurred by either the buyer or seller.
Below is a list of answers to some of the most common questions people have about Closing Costs.
CLICK EACH SECTION BELOW FOR AN EXPLANATION OF EACH
Buyer's Closing Costs
Mortgage lender expenses
Your lender may charge origination points or discount points. You can also expect an appraisal fee, a credit report fee, application fee, flood certification fee, underwriting fee, or any number of other fees. It is important that you get a “good faith estimate of settlement charges” from the lender well in advance of closing so that you will know what to expect.
Escrows
Most lenders insist on holding escrows for payment of property taxes and homeowner’s insurance. You can usually expect the equivalent of two or three months of insurance and tax payments to be paid into the escrow account.
Legal and Title Charges
Fees in this category will include the attorney fee, title insurance company charges, document preparation company charges and surveyor costs.
Recording Fees
You are responsible for paying the costs of recording certain documents in the official County records. These include the Deed, the mortgage, a “notice of settlement” and, if applicable, Power of Attorney forms.
Mansion Tax
If you are paying $1million or more for the home there is a 1% tax to the State. This is applied to the entire purchase price, not just the amount over $1million.
Tax and other municipal charge adjustments
All municipal charges will be adjusted at closing. This will include property taxes, municipal sewer, municipal water and municipal garbage pickup, if applicable. In addition, the lender may require that the property tax for upcoming quarter be paid at closing.
Your lender may charge origination points or discount points. You can also expect an appraisal fee, a credit report fee, application fee, flood certification fee, underwriting fee, or any number of other fees. It is important that you get a “good faith estimate of settlement charges” from the lender well in advance of closing so that you will know what to expect.
Escrows
Most lenders insist on holding escrows for payment of property taxes and homeowner’s insurance. You can usually expect the equivalent of two or three months of insurance and tax payments to be paid into the escrow account.
Legal and Title Charges
Fees in this category will include the attorney fee, title insurance company charges, document preparation company charges and surveyor costs.
Recording Fees
You are responsible for paying the costs of recording certain documents in the official County records. These include the Deed, the mortgage, a “notice of settlement” and, if applicable, Power of Attorney forms.
Mansion Tax
If you are paying $1million or more for the home there is a 1% tax to the State. This is applied to the entire purchase price, not just the amount over $1million.
Tax and other municipal charge adjustments
All municipal charges will be adjusted at closing. This will include property taxes, municipal sewer, municipal water and municipal garbage pickup, if applicable. In addition, the lender may require that the property tax for upcoming quarter be paid at closing.
Seller's Closing Costs
Realty Transfer Fee
This item is a surprise to many sellers. The State takes a transfer fee out of your sale proceeds, based on the sale price. This is a significant item, so you may wish to calculate your fee at this site: www.coanj.com/RTF2/main.php
Realtor commission
The commission due to the real estate agents is paid from the sale proceeds. The commission that you pay is based on the commission percentage that you agreed to in your listing agreement.
Legal Charges
The attorney fee is paid at closing along with a reimbursement for out of pocket costs incurred during the transaction.
Mortgages
Any outstanding mortgages on the home will be paid off at closing. This includes any equity loans or equity lines of credit. The payoff figure will be provided by the mortgage company. Please be aware that the final payoff figure may be higher than you expect as it will include daily interest charges up to the payoff date.
Recording fees
The County charges a fee to record a “discharge” for any outstanding mortgages. You can expect a charge of approximately $150 to $200 per mortgage.
Property Taxes and Other Adjustments
All municipal charges will be adjusted at closing. This will include property taxes, municipal sewer, municipal water and municipal garbage pickup, if applicable. If your home is heated by oil you are entitled to reimbursement for oil in the tank. You should arrange for your oil company to measure the amount of oil in the tank shortly before closing.
This item is a surprise to many sellers. The State takes a transfer fee out of your sale proceeds, based on the sale price. This is a significant item, so you may wish to calculate your fee at this site: www.coanj.com/RTF2/main.php
Realtor commission
The commission due to the real estate agents is paid from the sale proceeds. The commission that you pay is based on the commission percentage that you agreed to in your listing agreement.
Legal Charges
The attorney fee is paid at closing along with a reimbursement for out of pocket costs incurred during the transaction.
Mortgages
Any outstanding mortgages on the home will be paid off at closing. This includes any equity loans or equity lines of credit. The payoff figure will be provided by the mortgage company. Please be aware that the final payoff figure may be higher than you expect as it will include daily interest charges up to the payoff date.
Recording fees
The County charges a fee to record a “discharge” for any outstanding mortgages. You can expect a charge of approximately $150 to $200 per mortgage.
Property Taxes and Other Adjustments
All municipal charges will be adjusted at closing. This will include property taxes, municipal sewer, municipal water and municipal garbage pickup, if applicable. If your home is heated by oil you are entitled to reimbursement for oil in the tank. You should arrange for your oil company to measure the amount of oil in the tank shortly before closing.
Legal Fees and Title Costs
1. Attorney Fee: $1,500.00 to $2,500.00
2. Survey: $150 to $450 for condo; and $450.00 to $800.00 for house
3. Recording Fees with Mortgage & Deed: $200.00 to $500.00
4. Title Searches/Title Policy Endorsements: $250.00 to $500.00
5. Title Insurance Premium: $1,500.00 to $3,000.00
Mortgage Costs
6. Application Fee (May Include Credit Report): $300.00 to $600.00
7. Appraisal: $400.00 to $700.00
8. Miscellaneous Mortgage Costs (Varies, be sure to ask your lender): $100.00 to $600.00
9. PMI (Private Mortgage Insurance): Obtain figures from lender
10. Points: Obtain from lender
(Points are a Fee paid to lender to “buy-down” interest rate on mortgage)
(One point = 1% of mortgage; for example: 1 point on a $500,000 mortgage equals $5,000)
Inspection Costs
11. Home Inspection: $600.00 to $900.00
Radon Inspection: $150.00 to $300.00
Wood Destroying Insect Inspection/Certification: $75.00 to $200.00
Septic Inspection (if applicable): $750.00 to $1,000.00
Oil Tank Inspection (if applicable): $400.00 to $700.00
Other Inspections (if applicable)
Asbestos, Chimney and Mold – (costs vary)
Insurance, Escrows, etc.
12. Homeowner’s Insurance (1 yr. prepaid): Obtain from Insurance Co.
13. 2 or 3 Months Escrow Homeowner’s Insurance
14. Escrows for property taxes up to 3 months
15. Mansion Tax, if applicable (Residential Zone Use) 1% of consideration when sales price is over $1,000,000
1. Attorney Fee: $1,500.00 to $2,500.00
2. Survey: $150 to $450 for condo; and $450.00 to $800.00 for house
3. Recording Fees with Mortgage & Deed: $200.00 to $500.00
4. Title Searches/Title Policy Endorsements: $250.00 to $500.00
5. Title Insurance Premium: $1,500.00 to $3,000.00
Mortgage Costs
6. Application Fee (May Include Credit Report): $300.00 to $600.00
7. Appraisal: $400.00 to $700.00
8. Miscellaneous Mortgage Costs (Varies, be sure to ask your lender): $100.00 to $600.00
9. PMI (Private Mortgage Insurance): Obtain figures from lender
10. Points: Obtain from lender
(Points are a Fee paid to lender to “buy-down” interest rate on mortgage)
(One point = 1% of mortgage; for example: 1 point on a $500,000 mortgage equals $5,000)
Inspection Costs
11. Home Inspection: $600.00 to $900.00
Radon Inspection: $150.00 to $300.00
Wood Destroying Insect Inspection/Certification: $75.00 to $200.00
Septic Inspection (if applicable): $750.00 to $1,000.00
Oil Tank Inspection (if applicable): $400.00 to $700.00
Other Inspections (if applicable)
Asbestos, Chimney and Mold – (costs vary)
Insurance, Escrows, etc.
12. Homeowner’s Insurance (1 yr. prepaid): Obtain from Insurance Co.
13. 2 or 3 Months Escrow Homeowner’s Insurance
14. Escrows for property taxes up to 3 months
15. Mansion Tax, if applicable (Residential Zone Use) 1% of consideration when sales price is over $1,000,000