What are Closing Costs in NJ?
May 21, 2020 | Eric Beepat
What are Closing Costs in NJ?
One thing I always explain to my buyer clients are closing costs. Closing costs are out-of-pocket expenses that typically must be paid up front. Your costs will vary by lender and the specific property that you purchase. When you are thinking about all wants and need of a home purchase and filling out a buyers questionnaire like this BUYERS QUESTIONNAIRE read on for a few of the charges you may see on your closing documents.
Legal Fees and Title Expenses
In Northern Jersey a real estate attorney is almost always used. It’s different in other parts of the state. These costs are for paying for the services of a real estate attorney who will help to make sure the closing goes smoothly.
Once an offer is sent and there is an agreement with the seller, you need to have your attorney chosen. I am in contact with your real attorney from the start to ensure that we are on the same page and that your concerns are addressed.
Expect to pay around $1,000 to $2,000 for an attorney from what I have seen and heard in our Hudson County, NJ.
Other charges include:
- Recording fees ($300 to $600)
- Title searches or property endorsements ($450 to $600)
- Title Insurance Premium (based on purchase price – for example $300k loan = $1,500 in title insurance – Your lender or attorney can fill you in on that exact price.)
Inspection, Appraisal and Mortgage Costs
After your selected attorney reviews the contract, an inspection is the next step. The typical home inspection fee is ($300 to $900). Inspections are key to pointing out issues or potential issues which may give a buyer some negotiation strength.
After inspection, an appraisal is performed by your lender. An appraiser is a neutral third party usually paid by the lender to determine an estimate of the property’s fair market value. A property appraisal is typically $400 to $600.
Mortgage-specific fees vary by lender but they include:
- Mortgage application and document preparation fees ($200 to $600)
- Other mortgage costs ($100 to $600)
- Private Mortgage Insurance (PMI) if applicable (Check with your lender)
Pre-paid expenses are just that…expenses that are prepaid. Homeowners Insurance is one prepaid. One year of homeowner’s insurance is required. You can get free quotes with property insurers to find the best rates.
Also, expect to pay for up to two months of escrow on your homeowner’s insurance, may also need to pay up to three months of escrow on your property taxes, as well.
In Closing on Closing Costs
Before you shop for a home, always think about the costs needed to close so that you can be prepared. Note that NO money for closing will be required except the inspection and possibly the appraisal fee and a portion of the attorney fee once you are in contract and intend to move forward. All other fees are collected at closing.
As a homeowner, one of your main goals is to keep these costs down. Check out my buyers page HERE for my information on the home buying process.
You can find a New Jersey Mortgage Closing Cost Calculator like this one HERE for additional analysis.