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Home buyers and sellers pay lots of attention to the purchase price, but may never consider other costs, such as those that come up at closing. Here is a guide towards
New York home buyers and sellers ,who already pay among some of the highest home prices and taxes in the nation, now have a new concern: rising closing costs.
Average closing costs on a $200,000 mortgage in New York State rose 67 percent to $5,623, according to a survey released by Bankrate.com. That was 50 percent higher than the national average of $3,741, which means that New York has the highest closing costs of any state.
Banks and brokers say the climbing closing costs partly reflect the rising cost of doing business to comply with new state and federal regulations, as well as increased vigilance on the part of lenders that are scrutinizing mortgage applications closer than in the past.
"There's new regulation in the marketplace requiring multiple appraisals and more paperwork ,and those costs must be built into the cost of service, ultimately passing to consumers," said Keith Gumbinger, vice president of HSH Associates, a publisher of consumer loan data.
But some of the jump in closing costs estimates may not actually reflect what consumers pay. New federal regulations enacted in January require lenders to provide borrowers with more accurate good faith estimates. Previously, many lenders would low-ball borrowers on the fee estimates only to surprise them with thousands of dollars in additional fees at the closing table.
Now, lenders that misstate origination fees, even if it's an honest mistake, could incur penalties of thousands of dollars. Of course, mortgage rates are still hovering at record low levels, which offsets some of the sting from rising closing costs. But even here, New Yorkers pay more.
If you are buying or selling a property in New York State, you will incur closing costs. Lots of closing costs.
Knowing what these costs are up front can help you plan your next move and make your transaction go more smoothly.
Real Estate Broker’s Commission. This is the amount of money you have agreed to pay your realtor. It is usually a percentage of the total sale amount of your house- usually payable only if and when title passes to the new owner.
Mortgage Principal. You will have to pay your mortgager the amount remaining on your mortgage. Make sure to have a pay off amount prior to the closing.
Attorney’s Fee. If you are using an attorney to close the sale of your house, you will need to pay them a fee for services rendered.
NYS Transfer Tax: New York State charges $4 for each $1,000 of the selling price (if your selling price is $1,000,000, you will have to pay $4,000).
Attorney’s Fee. If you are using an attorney to close the sale of your house, you will need to pay them a fee for services rendered. You will also have to pay the lender’s attorney.
Inspections. This can include a structural inspection, along with termite, oil and radon, each one costing extra.
Mortgage Application Fee. This fee is charged by all banks and mortgage brokers to process your mortgage application.
Appraisal Fee. Your bank will require an appraisal of your intended purchase by a licensed real estate appraiser. Some banks today might even request a second (and sometimes third) appraisal.
Real Estate Tax Service Fee. This fee is $69 in New York.
NYS Mortgage Tax. In Westchester, the mortgage tax is $1.30 per $100 of mortgage. The borrower pays 1.05 percent, minus $30.00 if the property is 1-2 family. The lender pays .25 percent if the property is a 1-6 family.
NYS Deed Recording Fee. $250
Mansion Tax. Welcome to Scarsdale and Edgemont where the average home costs around $1.4M. And…surprise! There is a 1 percent tax on any purchase price exceeding $1,000,000. This Mansion Tax applies to most property purchases in New York State. (Stay tuned next week for a more detailed explanation of this tax)
Lender Closing Fee. These fees cover origination fees not paid at time of loan. These are sometimes referred to as points.
Prepaid Interest. Per diem interest must be paid on the day you close the loan, if closing is not on the first of the month.
PMI (Private Mortgage Insurance). Depending on the amount of your down payment, you may have to pay an up-front fee for mortgage insurance (which protects the lender against loss due to foreclosure). You may also be required to put a certain amount into a special reserve account (an impound account) held by the lender for PMI.
Property Tax Escrow Advance. Lenders often insist on paying property taxes on the house which they are issuing a mortgage, They will often escrow money for this at the time of the closing.
Buyer’s & Lender’s Title Insurance. There are two title policies: a lender's title policy (which protects the lender against loss due to defects on title) and a buyer's title policy (which protects you). These are both one-time charges.
Miscellaneous Title Charges. The title company may charge fees for a title search, title examination, document preparation, notary fees, recording fees and a settlement or closing fee. These are all one-time charges and can add up to about $200.
Document Prep Fee. There may be a separate, one-time fee that covers preparation of the final legal papers, including the note and deed of trust. These legal documents run about $150.
Homeowners Insurance. Obviously, for the purchase and any property, you will be needing to purchase a homeowner's policy. Fees are based on the value and size of the home.
Adjustments. By closing time, the seller will have paid some property taxes and heating oil. Checks must go to seller for any heating oil left and any property taxes paid in advance.
Foreclosures & Short Sales. In many cases with these types of properties, the Buyers are actually required by the Banks to pay all Transfer Taxes.
In certain areas of Westchester, towns have their own additional taxes. Yonkers has a transfer tax of 1 percent of the purchase price, and Mount Vernon is 1 percent of the purchase price after the first $100,000.
If you are a buyer, you will likely hear your attorney tell you to just bring your checkbook and to be prepared to do a lot of autographing. Unfortunately, this is very true.
No matter how they're calculated, closing costs are a big and growing share of the cost of home ownership. If at any point you begin to feel overwhelmed by the costs ahead of you, take some time to analyze all the financial steps and see if the purchase is something you can really afford.
Article Source: http://scarsdale.patch.com/articles/a-guide-to-closing-costs