Helpful Information to Assist You
In Buying or Selling a Home




BUYER'S CLOSING COSTS

– Mortgage Costs –

Speak to your attorney about which fees will apply in your situation.

Mortgage Tax
This state tax amounts to 3/4% of 1% of the total mortgage minus the $25 exemption allowed for residential properties.

Appraisal Fee
This fee is for appraising the property. For an average one-family house it is approximately $275 - $350.

Credit Report
The fee ranges from $15.00-$54.00 to investigate the borrower’s credit rating.

Bank’s Attorney’s Fee
This fee can vary. An average fee is $450 - $550. For this fee the bank’s attorney is responsible for reviewing the title to the property, working out any title problems, coordinating the closing, typing up the bank papers, attending the closing, dispersing the money at the closing, making sure all documents are recorded properly and accepting responsibility for accuracy of all documents.

Mortgage Title Insurance Policy
Title insurance guarantees that, if for any reason the title should have a defect or prove to be defective, the holder will receive just compensation. For example, several years after you’ve purchased your home it’s revealed that the previous owner had a tax lien on the property, or that a portion of the property was incorrectly surveyed and belongs to someone else. The title insurance company would pay the homeowner’s legal costs and would settle the case by paying off the rightful owners. Before a title insurance policy is issued, a title search is conducted to prevent such occurrences from happening. Title insurance is a one-time charge. These are recommended guidelines suggested by the State that govern premiums for title insurance. They are divided into two payments - one that covers the banks and is required, the other covers the homeowner and is highly recommended. A general rule of thumb is that it will cost abut $1,100 for the first $150,000 and $4 per $1,000 above that. In addition to the fee title insurance policy, the homebuyer may be required to pay for a Market Value Endorsement. This additional charge on a title insurance policy will raise the value of coverage to keep pace with the rising values of real estate.

Points
Each point is 1% of the principal amount of the loan. Points on a purchase are a buydown and are considered a form of pre-paid mortgage interest, you should consult with your accountant about tax deductibility.

Fee for Recording Mortgage
This fee, which is paid to the County Clerk’s office, will run $10 plus $3 per page. For an average document this totals $60 - $70.

Private Mortgage Insurance (PMI)
A premium that the buyer pays for the lender to be insured, if the buyer is borrowing more than 80% of the appraised value of the home. Speak with your mortgage consultant about ways of avoiding this insurance.

– Other Costs –

Attorney’s Fee
Your attorney’s fee will vary depending on the attorney. Attorneys may bill on an hourly basis, or a pre-set amount.

Recording of Deed
This fee is paid to the county and runs $11 plus $3 per page for a
total of $20.

Homeowner’s Insurance Policy
The home buyer is required to bring to the closing a paid receipt for an insurance policy listing the bank as the loss payee. The cost varies depending on the type of coverage and the insurance firm. We recommend you discuss this with your attorney.

Adjustments
Also called “apportionments”, these are fees that are pro-rated to determine the buyer’s costs. They can include adjustments on taxes and fuel left in the tank.

Survey
(if required)
Banks do require surveys so that they can sell the mortgage on a secondary market. If the existing survey is more than 10 years old, there are structural changes or a new driveway or fence has been added close to the property line, an updated and certified survey may be required. A complete new survey will cost $1,000 and up depending on property size. A homeowner would want to discuss the accuracy of any old surveys with their attorneys.

– Inspection Costs –

Termite
Some banks may require this inspection. This precaution is especially important for older homes. Signs of termites include apparent rot around windows or walls. This inspection should be done before you sign a contract for a home. Figure on $65 to $100 for a termite inspection.

Radon
Many buyers are now having their prospective homes tested for radon. This could cost between $100 and $150.

Engineers
A typical inspection report will list the condition of the major components of the house - plumbing, structure, foundation, electrical, etc. This inspection should be made before signing a contract for a house. An engineers inspection may cost $275 to as much as 1% of purchase price.

Water Analysis and Septic Test
The bank will require these tests to determine if the home’s water is drinkable and if the septic system is adequate. These tests will cost between $150 and $250.

– Condominium Charges –

Common Charges & Maintenance Fees
These charges are paid to the board of managers who runs the condo. Condo boards will usually require charges for one month in advance.

Contribution to Capital
This is a fee usually associated only with new construction. This fee (generally equal to two months of common charges) is put towards the condo’s board general budget for operating a condo complex that is still under construction.

Recording of Power of Attorney
Condominium boards may require all condo buyers to give the condo board the power of attorney to make decisions on behalf of the entire condominium complex. This fee is $25.


– Taxes Paid at Closing –

Tax Escrow
The bank may require that the home buyer deposit funds into an escrow account to be used by the bank to pay next year’s property taxes.

Reimbursement to Seller
for Prepaid Apportionments
Since the seller has paid taxes on the property, the buyer will owe the seller a portion of these prepaid taxes.

Mansion Tax
All properties that sell in excess of $1,000,000 are subject to this tax of 1% of the sale price. Subject to tax law changes.


The Tax Escrow and the Tax Reimbursement to seller are major expenses and are frequently overlooked when estimating total closing costs. Of all the expenses involved in a closing, there are only three variables — the bank’s points of origination charge, the bank’s legal fees, and the homebuyer’s legal fees. The rest of the closing costs have remained fairly steady over the past few years.

This information has been compiled from a variety of sources and is meant to be used as a guide only.
Your real estate attorney is still your best source for exact closing costs.

Also see:


Click on the topics listed below
for in-depth home search information.








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