Closing costs are not finalized until a few days before closing, however it is possible to estimate your closing costs. As a purchaser, you can expect to pay approximately 5%-7% of the purchase price in expenses. These expenses do not include any difference purchaser will be required to pay between the purchase price of the property and the sum of purchaser’s downpayment plus purchaser’s mortgage.
The expenses included in the estimate are: purchaser’s costs to inspect the property (a home inspection, environmental survey, pests inspection, structural survey, etc.); purchaser’s attorney’s fees; charges by purchaser’s title company for running a title search and issuing title insurance; and charges in connection with obtaining a mortgage. Charges in connection with a mortgage may include bank fees, application fees, appraisal fees, credit report fees, legal fees from the lender’s attorney, a tax escrow (i.e. giving the lender an amount of money equal to a portion of your real estate tax payments), short term interest (interest that accrues on your mortgage from the date you close until your first monthly mortgage payment), mortgage recording tax and costs in connection with recording your mortgage. These charges do not include any points purchaser may agree to pay to lower the interest rate of purchaser’s mortgage.
If the property is residential property in New York City with a purchaser price equal to or greater than $1,000,000, then the purchaser will typically pay a transfer tax known as a millionaire’s tax starting at 1% of the purchase price and increasing to 3.9% of the purchase price depending on the exact price of the property.
If the property sold is a coop or a condo, the purchaser may also be required to pay any move in deposit or move in fee, capital contribution (typically equal to a certain number of months of maintenance/common charges) and any charges payable to the managing agent/transfer agent for facilitating the transaction.
Finally, it should be mentioned that these closing costs are estimates only and may not apply to every scenario. Different deals have different terms which may vary from the information provided above. There may be additional costs or reduced costs or different parties may be responsible for different expenses.