When buying or selling real estate in New York, you will incur closing costs. If you are borrowing money from a lending institution, these closing costs can be substantial. Understanding how much will help save you a nasty surprise during the final days leading up to the closing.
It has been my experience that closing costs always seem to be more than expected. A lending institution is required by law (The Truth in Lending Act) that they disclose any and all fees. However they are allowed to estimate some of the fees that will not become finalized until just before closing. In my experience, the Truth in Lending form is generally between five and ten percent less than what the total ends up being.
I have compiled a list below of what costs you will probably incur when buying or selling a house in Sullivan County. Please keep in mind that these are general. Every sale is different.
Typical Closing Costs for Home Sellers in Sullivan County.
1) Bank payoff: If you have a mortgage on your property, then the balance becomes due at closing. While many don't view this as a closing cost, in fact it is.
2) Real Estate Commission: Other than your bank payoff, this is more than likely your biggest cost. Generally it is six percent of the selling price. Commission is paid to the listing and selling broker, and due at the transfer of title.
3) Attorney fees: For sellers this is generally in the $800 to $1,000 range.
4) New York State Property Transfer Tax: This is .4% or four dollars for every thousand. So if your home sells for $200,000 you would owe $800.
5) Real Estate Taxes or Liens: If at any point while you owned the property, a lien of any sort was attached, this needs to be paid in order to transfer the deed. If there is any blemish on the title, the buyer's title search will uncover this, and you will have some warning prior to the closing.
Typical Closing Costs for Home Buyers in Sullivan County.
1) Mortgage Application Fee: This is a fee all banks charge to "process and handle" your mortgage application. These can vary pretty widely. I have seen anywhere from $300 to $800. Don't immediately balk if this fee is on the high end. Banks are sneaky, and if this fee is low, another fee could be much higher (like "lender closing fees". Look at the whole picture before deciding which one to go with.
2) Appraisal: This fee is generally around $350. Sometimes it is included in your processing fee, and sometimes it is separate. One way or another, you are paying for the appraisal. That is why it is important to remember that it is yours. Just like the x-rays at the dentist office, you paid for them, and they are your property. I always recommend asking for a copy. (Of the appraisal not the x-rays.) Some banks give it to you automatically, but the majority do not.
3) Balance of Purchase Price: Also known as your down payment. It is the difference in the purchase price and loan amount. With USDA, VA or FHA loans it can be as low as 1.5% to 3%. (In rare cases a loan may even be offered at 100% financing.) A conventional loan is 80% financing, leaving a balance of 20% of the purchase price.
4) Real Estate Tax Service Fee: In New York State, this fee is $69.
5) Mortgage Tax: Tax on mortgages in New York is 1% of the buyer's mortgage amount. However the bank pays 25% of this, so in essence, you the mortgagor pays .75% of the amount mortgaged.
6) Title Insurance: This is a onetime fee. This insures the property's title is free and clear of encumbrances and that you alone own the property. Rates vary a bit, but plan to spend around $6.00 for every $1,000 of the purchase price. Here is a good tax and insurance calculator.
7) Survey: A new survey is between $1,000 and $3,000 depending on the size of the property. However often times the lender only requires a recertification, if there is an existing survey, and no major improvements have been made to the property. Recertifying runs around $600 to $800.
8) Property tax reimbursement: Property taxes are paid in advance, so sellers are entitled to a reimbursement when the property sells. Depending on what time of year this happens, you could be paying almost an entire year of taxes at the closing table.
9) Attorney: Fees for an attorney in Sullivan County run between $800 to $1,000.
10) Property insurance: Again this is a general estimate, but expect to pay between $600 to $1000 a year, depending on what type of home, and what coverage you choose.
11) Fuel reimbursement: In Sullivan County, NY fuel does not convey with the house. So whether it be gas or oil, the seller is entitled to a refund on whatever is left in the tank.
Below is a short video explaining the closing cost process a bit further. But as always do not hesitate to drop me a line if you have any questions. I will be happy to answer them.