Closing Costs Explained

 

What Are Closing Costs?

You've found your dream home, the seller has accepted your offer, your loan has been approved, and you're eager to move into your new home. But before you get the key, there's one more step...the closing.

Also called the settlement, the closing is the process of passing ownership of property from seller to buyer, and it can be a daunting process. As a buyer, you will sign what seems like endless piles of documents and will have to present a sizeable check for the down payment and various closing costs. It's the fees associated with the closing that at times remain a mystery for buyers who may simply hand over thousands of dollars without really knowing what they are paying for.

As a responsible buyer, you should be familiar with these costs that are both mortgage-related and government-imposed. Although many of the fees may vary by locality, below are some common fees explained.

What Are The Types Of Property Closing Costs In New Jersey?

 Real estate agent commissions. About 5%-6%, and split between the listing agent and the buyer’s agent. (paid by seller)

  1. Mortgage settlement. Includes principal balances, accrued interest, statement fee, and registration fee.

  2. HOA dues, transfer fees, or documents. HOA-owned homes may be subject to HOA fees, document fees, transfer fees, and possibly one-time capital contributions.

  3. Attorney fees. Generally, attorneys charge between $1,500 and $2,500 in fees, but it all depends on the type of sale and the types of houses in New Jersey.

  4. State, city, and county transfer taxes. It varies depending on the sale price but is usually 1%. If you’re a disabled veteran or age 62 or older, it could be 0.05%.

  5. Home inspection. It can range from $300 to $900.

  6. Inspection of oil tanks. Between $395 to $500.

  7. Septic inspection (if applicable). Between $750 and $1,000.

  8. Radon inspection (if applicable). It ranges between $150 and $300.

  9. Credit report. Between $15 and $40.

  10. Mortgage Application Fee: Between $300 and $600.

  11. Appraisal fee. Between $300 and $450.

  12. Survey fee. $700 to $1,000.

  13. Title search. Between $250 and $500.

  14. Wood destroying organism inspection. Between $50 and $250.

  15. Title insurance. More or less 1% of the total price.

  16. Deed preparation. $150 approximately.

  17. Documentation preparation fee. Between $200 and $400.

  18. Recording fee. Between $50 and $250.

  19. Settlement fee. $250 approximately.

  20. Miscellaneous mortgage costs. Between $100 and $600, but varies by lender. 

     

These are just average estimates and are by no means written in stone as actual costs. We suggest you call a few of these vendors to verify for yourself what some of these typical costs are. If you would like any referrals we are happy to recommend whatever you need. In our experience, we have been fortunate enough to have worked with many great vendors that our clients rave about. We base all of our referrals on client feedback as we know your opinion, as well as your satisfaction, are ultimately what matters most.

Additional Costs

 There are certain additional costs and variants depending on your specific case that you should consult with our office on. Some of these are:

 

  • Certificate of occupancy (typically paid by seller)

  • Certificate of smoke detectors or carbon monoxide (typically paid by seller)

  • Home insurance (with 1-year pre-payment)

  • Property taxes (pro-rated at the time of settlement)

  • If you are selling a $1 million home, you will need to pay a “mansion tax” which is an additional tax of 1% of the purchase price.

Please note that the values shown here are only estimated amounts ​​for purposes of general information regarding the topic of who pays closing costs in NJ. Do not hesitate to contact us for more information.

EXAMPLE APPROXIMATE LOAN COST EXAMPLE FROM A GOOD LENDER

The information provided regarding the Approximate Cost of Closing Fees, Approximate Total Funds needed, and other details are something you should get right away from your mortgage lender. Setting expectations on what your real payment is going to be could go a long way in deciding how much house you can or want to pay for.

Schedule time with us