What are closing costs when you purchase real estate in New Jersey?
Closing Costs
The Buyer’s Costs
When you purchase a home, there are expenses you must pay besides the purchase price. Here are the biggest expenses you’ll face when buying either a house or a condo
Title Insurance
When purchasing real estate, a title company will issue an insurance policy. This is to protect you from purchasing property that the seller may not actually own. In addition, it protects you from liens against the property that haven’t been disclosed.
Title Insurance Fees are regulated by the New Jersey Department of Banking and Insurance. Title Fees consist of title search fees and the title insurance premium. The cost for a title search fee typically runs $200 – $300. The title insurance premium is based upon the purchase price. As an example, the title policy on a home costing $400,000 will be ~ $3,512.
Real Estate Taxes
These are based upon the Township’s assessed taxes. Your lender may require an escrow payment of 2-3 months taxes, depending upon the closing date. You, as the buyer, will pay this.
Homeowners Insurance
You’ll be needing homeowners insurance. Therefore, you’ll be required to purchase a one year homeowners insurance policy before closing.
Mortgage Interest
You’ll be required to pay the mortgage interest from the date of closing through the end of the month. For example – if you close on the 20th of the month you’ll pay the interest from the 20th through the end of the month.
Bank Fees
Most lenders will be charging you various fees. However, bank fees can vary among lenders. While shopping fr a lender, use the fees as part of the criteria.
Legal Fees
Your attorney and the title company will be charging you for their time spent in handling the process. You should ask your attorney what the fees will be. However, these fees are not regulated and may vary.
The Seller Costs
Realty Transfer Fee
New Jersey requires a tax to be paid by the seller. It’s based upon the sale price of the property. Example – a house selling for $250,000 would pay $1325, $400,000 – $3215, $600,000 – $5185.
The seller will be responsible for paying the Realtor commission fees and the Certificate of Occupancy. The CO costs vary by town, but are usually $100 – $200. Some transactions, typically AS-IS, short sales, foreclosures, may require the buyer to obtain the CO.
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The funds due at closing must be paid by bank check, certified check or wire transfer – consult with your attorney