How Much Should I Budget For Closing Costs???

How Much Should I Budget For Closing Costs???

When buying a home in Westchester County, you’re already spending top dollar on some of the most sought-after real estate in the Country. Whether your focus is on an amazing property, a great commute, or a top school district most buyers wind up spending their full budget on that perfect property.
Most of my clients start the process by taking a hard look at their finances and figuring out what they can afford every month. But that is only half the equation. Clients also need to budget for the transaction and make sure they aren’t surprised by the money due at the closing table.
So, for clients buying a single-family home in Westchester, you should be prepared to walk into the closing armed not only with your down payment (usually ten percent of the purchase price is paid at contract signing with the remainder of the down payment due at closing) but with the following closing costs (Note: this assumes that a mortgage is being used):
  • Attorney Fees: About $1500 for a typical transaction

  • Bank Fees: $750 to $1000

    • Some banks charge additional fees so make sure to ask whenever receiving a mortgage quote

  • Application Fees: $250 to $500

  • Processing Fees: $200 to $400

  • Appraisals: Around $800 each. Normally there is one appraisal but some banks may require two appraisals

  • Bank Attorney: $600 to $900

  • Tax Escrow: Usually between 2 months and 6 months of your annual property taxes. Some banks will not require you to escrow taxes and thus this can be avoided

  • Recording Fees: $250 to $750

  • Fee Title Insurance: Around $450/per $100,000 of purchase price

    • Example: 1 million dollar purchase price would require a $4500 premium

  • Mortgage Title Insurance: Around $130/per $100,000 of mortgaged amount

    • Example: 1 million dollar purchase price, with 25% down would be a 750k mortgage. Hence 7.5 x 130 would equal a $975 premium

  • Title Search Fees: $500

  • Mortgage Recording Tax: .80% of mortgaged amount

    • Example: 1 million dollar purchase price, with 25% down would be a 750k mortgage. $750,000 X .008 would equal $6000)

  • Mansion Tax: 1% of the purchase price for properties purchased over 1 million dollars

    • Example 1: Property purchased for $950k would not have a mansion tax.

    • Example 2: Property purchased for $1,200,000 would have a mansion tax of $12,000

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  • Adjustments: Some or all of the following adjustments could come into play and would be due at the closing table. These vary per transaction

    • Common Charges: If applicable (Condo, Coops, developments with HOAs) this would be a proration of the month's common charges for the month you move in

      • Example: If common charges are $500 per month and the closing is on the 15th day, the buyer would owe about $250

    • Real Estate Tax Adjustment: The buyer would need to reimburse the seller for real estate taxes paid in advance.

      • Example: If Property taxes are $12,000 per year taxes were completely paid for the year in advance and the property changes hands on December 1st, the buyer would owe the seller one month, or $1000.

  • Short-Term Interest: Interest paid to the bank for the remainder of the month in which you close

    • Example: If monthly mortgage interest is $3000 per month and the closing is on the 20th day of September, the buyer would owe the bank $1000 for the remaining 10 days of September. The first mortgage payment would then be due in 41 days, on November 1st. 
It sounds expensive and it is. Always estimate higher and have a chance of being pleasantly surprised.
Want to save on closing costs? There is a way.
You can use a Realtor who will offer you a Broker Commission Rebate. That rebate can pay for a large chunk of your closing costs and help lower the cost of the transaction.

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If you are embarking on a new property journey or simply want to find out how we can help you, give our team members a call.

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