Home Buyer Closing Costs

When buying a home in Morristown, NJ or surrounding areas, it can be very tough to know how much are closing costs for your home purchase.

Various fees come into play with a home purchase including dues to your attorney, mortgage fees, inspection costs, and prepayments to your mortgage, insurance and taxes.  As a rule of thumb, closing costs tend to be between 3-5% of a home’s value.  While many fees are service-based such as the cost to pay your lawyer and inspector, the money paid toward your taxes, insurance and mortgage allows for a little breathing room before taking out your checkbook again after you close on your home.  Depending on what day of the month you close on your home, buyers will have at least one month before they need to make a mortgage payment.  Taxes are prepaid up to three months and home insurance is paid for a year in advance.

While it may feel like a huge check to write, buyers need to realize that many of the fees are simply prepayments for fees they would have been responsible for anyway.  For those first time home buyers or even veteran buyers who are looking to move up but struggle to handle the burden of a large downpayment for a mortgage and the closing costs, they can consider making offers on homes that ask for the sellers to contribute money toward their closing costs.  FHA allows for sellers to pay up to 6% of the home buyer’s closing costs.

Below is a list of the buyers approximate closing costs that can be used as a reference through closing on a home:

Legal Fees and Title Costs

  • Attorney Fee — $1,000 to $1,500
  • Survey (Condo $150 to $250) — $450 to $800
  • Recording Fees with Mortgage & Deed — $200 to $300
  • Title Insurance Premium (Fees are state regulated)
    • POLICY LIABILITY
      Fee below per $1,000 of purchase price insured
      $0- $100,000                                         $5.25
      $100,001 – $500,000                         ADD $4.25
      $500,001 – $2,000,000                    ADD $2.75
      OVER $2,000,000                              ADD $2.00
  • Additional title fees for searches, recording, between $500-$560

Mortgage Costs

  • Application Fee (Includes Credit Report) — $300 to $600
  • Appraisal — $400 to $600
  • Miscellaneous Mortgage Costs (Varies, ask your lender) — $100 to $600
  • PMI (Private Mortgage Insurance) — (obtain from lender)
  • Points — (obtain from lender)

(Fee paid to lender to “buy-down” interest rate on mortgage)
(One point = 1% of mortgage, i.e. – 1 point on a $500,000 mortgage equals $5,000)

Inspection Costs

  • Home Inspection — $300 to $650
  • Radon Inspection/ Wood Destroying Insect — $120 to $300
  • Septic Inspection (if applicable) — $750 to $1,000
  • Oil Tank Inspection (if applicable) — $395 to $500
  • Other Inspections — (if applicable)
  • Asbestos, Chimney and Mold — (costs vary)

Additional Fees

  • Homeowner’s Insurance (1 year prepaid) —  Obtain from Insurance Company
  • Two Months Escrow Homeowner’s Insurance
  • Escrow for property taxes up to 3 months
  • Mansion Tax, if applicable (Residential Zone Use) 1% of consideration when sales price is more than $1,000,000

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