Judith Sutton ABR CRS IDS PMN ASP IAHSP SRES GREEN
Judy@JudithSutton.com 908 803-0472
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WHAT ARE THE CLOSING COSTS IN NEW JERSEY?
Closing costs may include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed recording fees, and credit report charges. The lender is required by law to show these costs in a loan estimate form within three days of a home loan application. Gifts of equity (real estate sales to a relative or close friend at a below-market price) can also incur some closing costs. It is important to point out that engaging a Real Estate Attorney who deals in real estate transactions every day is so important. You will get the full attention to your transaction and be able to have your individual questions answered promptly when this is your attorney’s main source of business. If you have any questions or need a list of suggestions, call me. I can help! Please read below to see the definitions of many of the fees you may incur-
How Much Are Closing Costs?
Closing costs occur when the title of a property is transferred from the seller to the buyer. You will typically pay between 2% and 5% of the purchase price in closing costs as a guide.
Laws require lenders to provide a loan estimate that discloses the closing costs for the transaction. They must provide this information within three days of taking the borrower's loan application. At least three days before the closing, the lender must also provide a closing disclosure statement outlining all closing fees. The listed fees may have changed from the loan estimate. This information should also be provided by your attorney as they prepare your closing bill.
Here is a list of the fees you might expect to be charged- depending on your loan amount and what is in your contract of sale.
THE FEES
Application fee
This is a fee charged by the lender to process your mortgage application. Ask the lender for details before applying for a mortgage.
Attorney fee
This is a fee charged by a real estate attorney to prepare and review home purchase agreements and contracts. Not all states require an attorney to handle a real estate transaction.
Closing fee
Also known as an escrow fee, this one goes to the party that handles the closing: the title company, escrow company, or an attorney, depending on who you have chosen for your closing.
Credit report fee
A charge ($30 to $40) from a lender to pull your credit reports.
Escrow deposit
Some lenders require you to deposit two months of property tax and mortgage insurance payments into an escrow account at closing.
Flood determination and monitoring fee
This is a fee paid to a certified flood inspector. The inspector's job is to determine whether the property is in a flood zone and requires flood insurance (separate from your homeowners' insurance policy). Part of the fee includes ongoing observation to monitor changes in the property's flood status.
Homeowner association transfer fee
If you buy a condominium, townhouse, or property in a planned development, you may be required to join that community's homeowner association (HOA). This is the fee that covers the costs of switching ownership, such as updating documents. Whether the seller or buyer pays the fee may not be spelled out in the contract, so you should check in advance. The seller (or the association) should provide documentation showing HOA dues amounts and a copy of the HOA's financial statements, notices, and minutes. Always have your attorney include this information.
Homeowners Insurance
A lender usually requires evidence that you have paid your first year’s homeowners insurance premium at closing.
Lead-based paint inspection
This is a fee paid to a certified inspector to determine if the property has hazardous, lead-based paint.
Lender's title insurance
An upfront, one-time fee paid to the title company protects the lender if an ownership dispute or lien arises that it did not find in the title search.
Origination fee
This charge covers the lender’s administrative costs to process your mortgage and is typically 1% of the loan amount. Some lenders do not charge origination fees but instead charge a higher interest rate to cover those costs.
Owner's title insurance
This policy protects you if someone challenges your ownership of the home. It is usually optional but highly recommended by legal experts.
Pest inspection
This is a fee covering the cost of a professional pest inspection for termites, dry rot, or similar damage. Some states and some government-insured loans require an inspection.
Points
Points (or discount points) are an optional, upfront payment to the lender to reduce the interest rate on your loan and thereby lower your monthly payment. One point equals 1% of the loan amount.
Prepaid daily interest charges
A payment to cover any interest that will accrue on your mortgage from the date of closing until the date of your first mortgage payment.
Private mortgage insurance (PMI)
If your down payment is less than 20%, your lender might require that you take out private mortgage insurance. You might also be required to make the first month’s PMI payment at closing.
Property appraisal fee
This is a required fee paid to a professional property appraisal company to assess the home's fair market value.
Property tax
At closing, expect to pay any local property taxes due within 60 days of the home purchase.
Rate lock fee
This is an optional fee charged by the lender for guaranteeing you a specific interest rate for a limited period, typically from the time you receive a preapproval until closing. A rate lock protects you against a sudden rise in interest rates.
Recording fee
This is a fee charged by your local recording office, usually city or county, for the recording of public land records.
Survey fee
This is a fee charged by a surveying company to check property lines and shared fences to confirm a property's boundaries.
Tax monitoring and tax status research fees
These are third-party fees to keep tabs on your property tax payments and notify your lender of any issues with your property tax payments, such as late or failed payments.
Title search fee
Title search fees are fees charged by the title company to analyze public property records. The title company searches those records to ensure that there are no outstanding ownership disputes or liens on the property.
Transfer tax
This is a tax levied by the state or local government to transfer the title from the seller to the buyer.
Underwriting fee
An underwriting fee is charged by the lender for verifying your financial information, income, employment, and credit for final loan approval.
Keep this list handy for future reference- any questions you may have can be directed to me and I will be happy to give you names of Real Estate Attorneys and lenders in our Coldwell Banker-approved network that would be glad to help.
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