When purchasing a home, one of the most frequently asked questions is, "How much are my closing costs?" As a rule of thumb, anticipate that your closing costs will equate to approximately 2-3% of the home’s purchase price. However, this can fluctuate based on a myriad of factors.

Loan Costs 💸

1. Origination Fee: This is the service fee your lender charges for reviewing your loan application and processing your loan. Typically, it falls between 0.25% and 1% of your loan amount. However, when considering other associated mortgage fees, this can extend from 1% to 4% of the mortgage amount.
2. Discount Points: These are fees charged by the lender to reduce your interest rate. It's essentially pre-paying interest to secure a lower rate on your mortgage.
3. Appraisal Fee: An independent assessment of the home's value, typically ranging from $300-$500.
4. Credit Report Fee: A nominal fee, often less than $20.
5. Flood Certification Fee: Ascertains if the property is in a flood hazard zone. Generally as low as $5.
6. Tax Service Fee: An average cost between $60-$90, this service ensures no back taxes are owed and property tax payments are up-to-date.
7. Warehouse Fee: A fee that some lenders might charge, typically around $100.
8. Attorney Review Fee (Levied by Lender): This is separate from your personal attorney's fee. Some lenders may charge this, ranging from $150-$300, for their legal team to review the loan documents.

Title Costs 📜

1. Title Search and Examination: Costs around $1,000. This ensures the property title is free from any encumbrances or legal issues.
2. Lender's and Owner's Title Insurance: Premiums are strictly regulated, ensuring the buyer and lender are protected from any future title disputes.
3. Settlement Fee: Charged by the title company for handling the closing process. It typically ranges from $475-$600.
4. Survey Fee: Depending on property size and complexity, this can average between $600-$900.
5. Recording Fees: These are fees for filing your Deed and Mortgage at the county clerk’s office. They usually range between $200-$400.

Other Costs 💼

1. Attorney Fees: These can vary, generally falling between $1,000 and $2,000. This fee is for the attorney representing you throughout the buying process.
2. Inspections: These are pivotal in determining the condition of the home. Their costs can vary based on type:
   • General/Engineering: $500 and up
   • Pest/Insect Infestation: $100 and up
   • Radon: $100 and up
   • Water Potability: $200 and up
   • ... [and so on for the rest of the inspections]
3. Condo or HOA Fees: If buying a condo or townhome, these fees are essential to consider. They can vary significantly based on the community.
4. Mansion Tax: For properties over $1,000,000, the buyer pays 1% of the sales price.
5. Prepaids and Escrows: These are upfront costs for recurring expenses related to the home. It includes homeowner's insurance, property taxes, and potentially more.
6. Adjustments: These are pro rata costs for items the seller may have pre-paid, such as property taxes or HOA fees.

Every home buyer asks this question. As a baseline estimate, anticipate that the closing costs will be about 2-3% of the home's purchase price. Thus, a $500,000 home will have estimated closing costs of $12,500, while a $1 million home will have costs closer to $25,000.

Closing Cost Components:

These are out-of-pocket expenses or fees outside of the purchase price, essential to complete your real estate transaction.

Loan Costs 💸

• Loan Origination Fee: 0.25%-1% of the loan amount. This fee is for processing your loan application.
• Discount Points: Essentially a fee to lower your interest rate. One point typically costs 1% of your mortgage amount and can reduce your interest rate by about 0.25%.
• Appraisal Fee: $300-$500. Paid to the appraiser for assessing the home's value.
• Credit Report Fee: Less than $20 to run your credit.
• Flood Certification Fee: As low as $5 to determine if the property is in a flood hazard zone.
• Tax Service Fee: $60-$90 for ensuring no back taxes are owed and property tax payments are timely.

Title Costs 📜

• Lender’s Title Insurance Policy: Protects the lender against title defects. For a $500,000 loan amount, the premium will be around $1,700.
• Other Title Costs: Fees for title examination, e-filing, notary, internet closing, and recording service, which can sum up to several hundred dollars.
• Settlement Fee: $475-$600, charged by the title company for managing the transaction.
• Survey Fee: For surveying the property, typically $600-$900.

Other Costs 💼

• Recording Fees: For recording your Deed and Mortgage at the county clerk’s office, usually between $200-$400.
• Prepaids: Include the first year’s homeowner’s insurance premium, the mortgage interest for the remainder of the closing month, and the next quarterly property tax payment.
• Initial Escrow Payment: Collects 2-3 months of homeowner’s insurance and property tax payments to fund your escrow account.
• Aggregate Adjustment: If your initial escrow payment exceeds the legal threshold, the difference is refunded at closing.
• Owner’s Title Insurance: Protects the buyer against title defects.
• Legal Fee: For representation from contract to closing, generally between $1,000 and $2,000.
• Condo or HOA Fees: Fees and dues for condos or homeowner's associations.
• Mansion Tax: 1% fee on properties over $1 million.

Inspections:

• General/Engineering Inspection: Starting from $500.
• Pest/Insect Infestation Inspection: Starting from $100.
• Radon Inspection: Starting from $100.
• Water Potability Inspection: Starting from $200.
• Septic Inspection: Starting from $800.
• Public Sewer Line Scan: Starting from $300.
• Chimney Inspection: Starting from $200 per flue.
• Underground Tank Scan: Starting from $250.
• Pool Inspection: Starting from $500.

Seller's Costs: Include pro rata share of property taxes, utilities, association dues, realtor commissions (often 6% of the sale price), and the NJ realty transfer fee.

Always refer to the Loan Estimate from your lender for a starting point on costs. The final costs, down to the last cent, might only be known a few days before the closing date.