How much are real estate closing costs?
Closing costs are an additional expense that both a buyer and a seller occur during a sale-purchase transaction. Closing costs in New York are may comprise 1-8% of a purchase amount.
Buyer’s expenses include legal and registration fees as well as federal, state and city taxes. These costs have to be covered before or at the closing and will be an addition to your down payment. Please include these costs in preparation for your purchase. These expenses are described in detail below.
When buying a newly built condo (in NYC it is called “buying from a sponsor,”) you will pay: New York City real property transfer tax, which equals 1% for properties below $499,999 and 1.425% for properties above $499,999. Another tax payable to the state is New York state transfer tax, which is 0.4% of the sale price. Additionally, you will have to cover the seller's attorney fee which is usually $1,500-$2,500.
Title insurance is also requited to protect your ownership right from possible third party claims for the entire length of your ownership. It costs approximately $450 per $100,000 of the property price.
If your property costs more than $1,000,000, you will additionally pay Mansion Tax of 1% of the property price.
Many buildings collect additional fees such as an application fee of $200 and up; a managing agent fee of $250-$500, and a move-in deposit of $500-$1500.
You will also have to hire an attorney to review all the documents. This amount can range from approximately $2,500-$5,000 depending on the complexity of the purchase structure plus recording expenses, starting at $500.
If you are taking on a mortgage to buy your property, more cash is needed for closing. Mortgage loan origination fees or points range from 0.5% to 3% of value of the loan. Such mortgage-related expenses include a lien search of around $300 - $400, various bank fees (such as tax escrow, homeowners' insurance) of $400-$1200, mortgage title insurance which costs $200 per $100,000 of property value, and a mortgage tax of 1.8% of the mortgage loan for loans under $499,999 and 1.925% of mortgage loans above $499,999. Additionally, you will have to pay $500 and up for an appraisal, $30-$100 per applicant’s credit report, another $500 and up for the loan application. Additionally, there is usually a bank attorney fee of approximately $1000-$1500.