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"Mimi Weisinger Presents..."

Mimi Weisinger
Broker/Salesperson in NJ
105 Union Avenue
Cresskill, NJ 07626
201-871-0800


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Buyer's Estimated Closing Costs


Buyer's Estimated Closing Costs

Before you buy a house, you need to anticipate and plan for "closing costs".

 
1. Deposits. 

When the offer to purchase signed, the REALTOR will ask you for an "initial deposit,"   generally a minimum of $1000.  This amount can be higher depending upon the price of the property.  This initial deposit must be deposited into an escrow account (generally the real estate company's trust account) unless the seller has immediately refused the buyer's offer and refuses to negotiate. 

 
After the offer has been accepted and the buyer and seller are in contract, the buyer needs to put down an additional deposit.  Generally, the deposit is 10% of the purchase price agreed upon in the contract.  This money is also held in a trust account, usually the seller's attorney's trust account. The buyer usually must deposit that amount within 10 to 14 days after the contract is signed.
 
2. Lender's costs

            A. Application fee.  Lenders charge an application fee when a buyer applies for a mortgage.  The fee can range from $250 to $500.

            B. Appraisal fee. The lender will order an independent appraisal to decide if the property is actually the worth the price that the buyer and seller have agreed to. If the appraisal for the property is higher or equal to the price paid there is no problem.  However, if the contract price is higher than the appraised value of the property, the lender can refuse to grant a mortgage for the buyer's desired amount.  An appraisal fee can vary according to the size of the property. The usual cost is about $400-$750.

            C. Loan origination or discount fee.  These fees are called "points." One point is equal to 1% of the mortgage amount. Points can be used to pay the mortgage broker or bank for the processing of the loan.  They can also be used to lower the interest rate.  If the mortgage company or lender does not mention points, ask how he or she is getting paid to originate the loan, and how much they are being paid.  Points may be tax deductible.

            D. Credit report fee.  Lenders will look at your credit history to determine if you have a history of repaying your debts in a prompt and timely manner.  Credit report fees are generally about $50-$100.

            E. Tax service fee.  This fee is paid by the lender to an outside company which monitors your property tax payments.  The tax service fee is a one-time fee of about $75-90.

            F. Miscellaneous fees. Underwriting/documentation preparation/administrative fees. These are charged in varying amounts by lenders. Each fee can vary from $300-$700.

 
3. Home inspection fees. After the buyer's offer has been accepted, a home inspection should be done by a licensed home inspector (even if the property is a new construction) to determine if there are any structural or environmental problems with the property, e.g. radon gas. The lender will require a wood boring insect (termite) inspection. Other inspections that are recommended, if applicable, include testing for the possible existence of oil tanks, testing septic systems, evaluating an existing pool and determining the integrity of synthetic stucco (EIFS).  Basic home inspection fees can range from $400-$800.
 
4. Attorney fee.  In Northern New Jersey it is recommended that the buyer hire a real estate attorney to represent him/her in the purchase of real estate. An attorney will review the contract of sale and advise the buyer how to protect his interests if problems arise.  Attorney's fees generally range from $850 to $1,500.

The following items will be ordered by your attorney:

            A. Title search.  This is a search of all public records to determine who the rightful owners are, what debts they owe and any judgments or liens that may be attached to the property.  

            B. Title insurance.  Title insurance protects lender from claims that someone else has an interest the property (an ex-spouse or heir, for example) or has a lien (claim) on it. Such claims can be from contractors who worked on the house and were not paid, mortgages that the seller has taken out and that need to be paid from the closing proceeds, or unpaid taxes or judgments. It is strongly recommended that the buyer also obtain owners title insurance. The title insurance premium varies according to kind of title insurance.

            C.  Survey.  A survey of the property determines where the boundaries of the property are, and if there have been any encroachments.  If you plan to erect a fence or install a pool, it is helpful to have stakes placed at the time of the survey.

 
6.  Homeowner's Insurance.  The buyer must obtain and pay for one year of hazard insurance. This insurance is required by the lender so that the lender may recover the amount of the loan if the property were to be destroyed by fire, for example.
 
7.  Condominium or Cooperative Application fee.  These fees are charged by the relevant associations to cover their administrative costs.  Application fees generally range from $150 to $500.

The following fees may also be charged by condominiums or cooperatives:

A.  Capital Improvement fee.  This fee may be equal to two or three months maintenance fee.

B.  Move in deposit.  Generally is refundable if no damage to the elevators or hallways.

 
6.  Prepaid or escrow fees.
  • Prepaid mortgage interest
  • Hazard insurance
  • Mortgage insurance, required if down payment less than 20%

7. As of August 1, 2004, the Buyer of a residential property for consideration or a sales price in excess of $1,000,000.00 must pay a fee of 1% of the entire purchase price to the state of New Jersey. The fee applies to the sale or purchase of land which is zoned for residential use.

 

This is only an estimate of typical closing costs associated with buying a residential property in Northern New Jersey.  At the time you apply for your loan, the lender should give you a Good Faith Estimate of all the costs associated with that loan.  When you hire an attorney ask what s/he will charge and what the associated costs (Survey, title search and title insurance) will be.

 

 

 

 
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