How Much Are Closing Costs for a House in NY?

Closing costs are fees and expenses paid at the conclusion of a real estate transaction, distinct from the down payment. They cover services from lenders, legal professionals, and government agencies. These costs ensure the proper transfer of ownership and the legal establishment of any associated mortgage.

Buyer Closing Costs in New York

Buyers in New York typically encounter a range of closing costs. A significant expense is the mortgage recording tax, imposed by the state and collected by the county. Outside New York City, this tax is 0.75% for mortgages under $500,000 and 1.00% for mortgages of $500,000 or more. In New York City, rates are higher, ranging from 1.80% for mortgages under $500,000 to 1.925% for mortgages of $500,000 or more.

Lender fees include charges for loan origination, underwriting, appraisal, and credit reports. These fees compensate the lender for processing the mortgage application. Title insurance is also a common requirement, protecting both the lender’s investment and the buyer’s equity against title issues.

Buyers also pay attorney fees for legal representation, ensuring documents are legally sound and their interests protected. A 1% “mansion tax” is levied on the buyer if the purchase price exceeds $1 million. Additional expenses include survey fees, property tax adjustments (where the buyer reimburses the seller for prepaid taxes covering the period after closing), first-year homeowners insurance premiums (and flood insurance if applicable), and recording fees for deed and mortgage documents.

Seller Closing Costs in New York

Sellers in New York also incur specific closing costs. The largest expense is often the real estate broker commission, typically 5% to 6% of the sale price, paid to both agents and deducted from sale proceeds.

New York State imposes a real estate transfer tax on the seller: 0.4% for properties $500,000 or less, and 0.65% for properties exceeding $500,000. New York City properties incur an additional Real Property Transfer Tax, generally 1% to 1.425% for residential properties.

Sellers are responsible for attorney fees, covering legal services for drafting contracts and reviewing documents. Any outstanding mortgage balance must be paid at closing. Property tax adjustments are common, where the seller reimburses the buyer for taxes covering the period before closing. Co-op or condominium sales may incur additional fees like a “flip tax” or various move-out fees.

Factors Influencing Total Closing Costs

The total amount of closing costs can vary significantly due to several factors. The home’s purchase price plays a substantial role, as many costs like transfer taxes and real estate commissions are calculated as a percentage of the sale price. Location also impacts costs, with New York City properties generally incurring higher transfer taxes and attorney fees compared to upstate regions.

The type and amount of the loan obtained by the buyer also influence total costs. For instance, the mortgage recording tax is directly proportional to the loan amount. The specific type of property, whether it is a single-family home, condominium, or co-operative apartment, can also introduce unique fees. Co-ops and condos often have additional administrative fees, such as application fees, move-in/move-out fees, or a “flip tax” imposed by the building’s board.

The choice of service providers can affect the overall cost. Attorney fees can vary based on the lawyer’s experience and location, while title insurance rates may differ between various title companies. Appraisal or survey costs can also show minor variations depending on the chosen vendor. These variables collectively contribute to the wide range of closing costs encountered in different real estate transactions.

Understanding Your Closing Disclosure

The Closing Disclosure (CD) is a standardized five-page form detailing all costs and final terms of your loan and real estate transaction. Its purpose is to provide a clear summary of expenses, ensuring buyers understand their payments. Federal regulations require buyers receive this document at least three business days before closing.

This three-day review period allows the buyer time to examine all charges, compare them against the Loan Estimate, and ask questions before signing. The CD details loan costs (lender fees/services) and “other costs” (taxes, government recording fees, and other charges). It also outlines the “cash to close,” indicating the total amount the buyer needs to bring to closing. Reviewing this document is essential to verify accuracy and prevent unexpected charges.