How Much Are Closing Costs in New Hampshire?

Beyond the agreed-upon purchase price, buyers and sellers in New Hampshire encounter additional expenses known as closing costs. These charges cover services, taxes, and fees necessary to finalize a real estate transaction and transfer property ownership. Gaining a clear understanding of these costs is important for financial preparedness and a smoother transaction.

Defining Closing Costs

Closing costs are fees and expenses typically paid by both buyers and sellers at the conclusion of a real estate transaction. These costs cover various services provided by third parties involved in the sale, facilitating the transfer of property title. They are distinct from the down payment or the principal loan amount.

These expenditures generally fall into broad categories, including fees charged by the mortgage lender for processing the loan, expenses related to title services and escrow, government-imposed fees for recording documents, and certain prepaid expenses. The purpose of these costs is to ensure the transaction is legally sound, the property title is clear, and all necessary financial arrangements are in place.

Key Closing Costs in New Hampshire

Several specific costs arise during a real estate transaction in New Hampshire, each serving a distinct purpose in facilitating the sale.

Lender Fees

Lender fees are initial costs for buyers securing a mortgage. These charges typically include an origination fee, which covers the lender’s administrative costs for processing the loan, and an underwriting fee for evaluating the loan application. Buyers may also encounter appraisal fees to determine the property’s value, credit report fees to assess their creditworthiness, and flood determination fees to ascertain if the property is in a flood zone.

Title and Escrow Fees

Title and escrow fees are also components of closing costs. A title search fee covers the investigation into the property’s historical records to ensure a clear title, free of undisclosed liens or encumbrances. Title insurance premiums are paid to protect both the lender and the buyer from future claims against the property’s title; lender’s title insurance protects the mortgage holder, while owner’s title insurance safeguards the buyer’s equity. Additionally, a closing or settlement fee is charged by the title company or attorney for managing the closing process and preparing the necessary documents.

Government Fees and Taxes

Government recording fees are paid to the local municipality or county to officially register the deed and mortgage documents. These fees ensure the public record reflects the change in ownership and the existence of any liens. The New Hampshire Real Estate Transfer Tax is a state-specific cost, levied on the transfer of real estate. This tax is typically assessed at $7.50 per $1,000 of the sale price, with the total amount generally split equally between the buyer and the seller, meaning each party pays $3.75 per $1,000.

Prepaid Expenses

Prepaid expenses represent costs paid at closing that cover periods extending beyond the closing date. This often includes prorated property taxes, where the buyer reimburses the seller for taxes paid for the portion of the year the buyer will own the home. The first year’s homeowner’s insurance premium is also commonly paid upfront at closing to ensure the property is insured from the moment of ownership transfer. If the property is part of a homeowners association, initial HOA dues might also be collected at closing.

Other Potential Costs

Survey fees may be incurred to verify property lines and boundaries. Attorney fees might be charged separately if legal counsel is engaged beyond the services provided by the title company. While often paid before closing, a home inspection fee is a related expense that buyers typically incur to evaluate the property’s condition.

Allocation of Closing Costs

The division of closing costs between the buyer and the seller in New Hampshire generally follows established practices, although the final allocation is subject to negotiation.

Buyers are typically responsible for costs directly associated with obtaining their mortgage. This includes lender fees such as loan origination fees, appraisal fees, and credit report fees. The buyer also commonly pays for their own attorney fees, if they choose to retain separate legal counsel, and the premium for the lender’s title insurance policy.

Sellers usually cover expenses related to facilitating the sale of their property. Real estate agent commissions, which can represent a significant percentage of the sale price, are traditionally paid by the seller. The seller may also be responsible for their own attorney fees. In some instances, the seller might pay for the owner’s title insurance policy, although this can be a point of negotiation.

The New Hampshire Real Estate Transfer Tax is a cost that is statutorily split between both parties. While the total tax is calculated based on the property’s sale price, the buyer and seller each typically pay half of the total amount. Despite these common practices, the specific allocation of any closing cost can be modified through the purchase and sale agreement. The final negotiated terms are legally binding and supersede general conventions.

Factors Influencing Closing Costs and Disclosure

The total amount of closing costs can fluctuate based on several factors unique to each real estate transaction. The purchase price of the home directly impacts costs like the New Hampshire Real Estate Transfer Tax and potentially real estate agent commissions. The loan amount and type of mortgage chosen by the buyer also influence lender fees, as larger loans or certain loan products may have different associated charges. The specific mortgage lender selected can also affect costs, as different institutions have varying fee structures for origination, underwriting, and other services.

The choice of title company can also lead to variations in title search and closing fees. Even within New Hampshire, specific local recording fees might differ slightly depending on the municipality where the property is located. These variables contribute to the unique total cost for each transaction, meaning no two real estate closings will have identical cost breakdowns.

Buyers and sellers are informed about these financial obligations through standardized disclosure documents. For buyers, the Loan Estimate form provides a detailed breakdown of estimated closing costs within three business days of applying for a mortgage. This document outlines projected lender fees, title charges, government fees, and other expenses. The Loan Estimate allows buyers to compare offers from different lenders and understand their potential financial commitments.

Near the conclusion of the transaction, both parties receive the Closing Disclosure form. This document must be provided to the buyer at least three business days before the scheduled closing. The Closing Disclosure presents the final, actual costs for all aspects of the transaction, allowing for a comparison against the initial Loan Estimate. For sellers, the Closing Disclosure also details their specific charges and credits. These forms are important tools for transparency, ensuring all parties are fully aware of the exact financial obligations before the property transfer is finalized.