Costs to be Expected at Closing
Real estate transactions generate a great deal of written communications; Contracts, attorney review letters, inspection reports, negotiation letters, title commitments, etc. Many of these items will require your review and comment. My policy is for you to see everything that is happening with your file as soon as it happens.
We distribute everything as email attachments. All letters are forwarded via email to our clients and to the realtors. This includes items drafted within my offices as well as everything that comes in from outside sources. We turn everything in to a pdf file and email it to you upon receipt.
For more information visit http://www.BuyingInNJ.com
In the interest of total transparency, I’ve compiled a list of answers to some of the most common questions people have sometime before & during the transaction.
Mortgage lender expenses.
Your lender may charge origination points or discount points. You can also expect an appraisal fee, a credit report fee, application fee, flood certification fee, underwriting fee, or any number of other fees. It is important that you get a “good faith estimate of settlement charges” from the lender well in advance of closing so that you will know what to expect.
Most lenders insist on holding escrows for payment of property taxes and homeowner’s insurance. You can usually expect the equivalent of two or three months of insurance and tax payments to be paid into the escrow account..
Legal and Title Charges
Fees in this category will include the attorney fee, title insurance company charges, document preparation company charges and surveyor costs.
You are responsible for paying the costs of recording certain documents in the official County records. These include the Deed, the mortgage, a “notice of settlement” and, if applicable, Power of Attorney forms.
If you are paying $1million or more for the home there is a 1% tax to the State. This is applied to the entire purchase price, not just the amount over $1million.
Tax and other municipal charge adjustments
All municipal charges will be adjusted at closing. This will include property taxes, municipal sewer, municipal water and municipal garbage pickup, if applicable. In addition, the lender may require that the property tax for upcoming quarter be paid at closing.
Realty Transfer Fee
This item is a surprise to many sellers. The State takes a transfer fee out of your sale proceeds, based on the sale price. This is a significant item, so you may wish to calculate your fee at this site: https://www.cbtitlegroup.com/calc/NJTCal.cfm
The commission due to the real estate agents is paid from the sale proceeds. The commission that you pay is based on the commission percentage that you agreed to in your listing agreement.
The attorney fee is paid at closing along with a reimbursement for out of pocket costs incurred during the transaction.
Any outstanding mortgages on the home will be paid off at closing. This includes any equity loans or equity lines of credit. The payoff figure will be provided by the mortgage company. Please be aware that the final payoff figure may be higher than you expect as it will include daily interest charges up to the payoff date.
The County charges a fee to record a “discharge” for any outstanding mortgages. You can expect a charge of $75 to $100 per mortgage.
Property Taxes and Other Adjustments
All municipal charges will be adjusted at closing. This will include property taxes, municipal sewer, municipal water and municipal garbage pickup, if applicable. If your home is heated by oil you are entitled to reimbursement for oil in the tank. You should arrange for your oil company to measure the amount of oil in the tank shortly before closing.