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Don't Be Surprised at Closing: Home Buyer's Costs in New York

Posted by attorney Cheryl Fratello

Before you purchase a home in New York, you should have knowledge of the costs involved so that there are no surprises at your closing. Homebuyers are often caught off guard by unexpected lender’s fees. You should keep in mind the following fees before buying a home:

  • Balance Due After Mortgage. This is the amount due to seller after the mortgage proceeds have been deducted. For example, your mortgage may only cover 80% of the purchase price and you would have to present the seller with the remaining 20% at closing.
  • Down Payment to Seller on Contract. It is customary on Long Island to leave a deposit on the home, upon signing the contract of sale, of usually 5% to 10% of the purchase price. The down payment amount can often be negotiated.
  • Lender’s Fee – Points. Points are a pre-payment of interest and one point is equal to 1% of the loan amount. Points and interest rates will differ among lenders.
  • Lender’s Fee – Loan Origination Fee. The lender will most likely charge you for administering the loan.
  • Lender’s Fee – Credit Report Fee. Lenders will sometimes charge for running a credit report and may build it into the loan origination or application fee.
  • Lender’s Fee – Appraisal Fee. An appraisal of the home will be required before a lender will commit to giving you a mortgage.
  • Lender’s Fee – Mortgage Insurance. Some lenders require mortgagors to purchase insurance on the mortgage. Mortgage insurance protects the lender should you default on the loan.
  • Lender’s Fee – Document Prep Fee. Be aware of lenders charging for the preparation of the loan documents.
  • Lender’s Attorney Fee. You can expect to pay the attorney that was hired by the lender to attend the closing.
  • Attorney Fee. You should hire an attorney to represent your interests in your purchase, negotiate the contract, address any issues and attend a closing on your behalf.
  • Title Company Fees. Title insurance is usually one of the prerequisites for obtaining a mortgage. Title insurance protects you against future title claims or discrepancies that may arise. You will pay for the title search, the title policy premium, deed recording and mortgage recording fees and any mortgage taxes that are owed.
  • Land Survey. It is not uncommon for lenders to request a survey to verify the property’s boundaries, structures and improvements.
  • Inspections. Lenders most often require inspections such as termite inspections. This fee is paid directly by you and is due at the time of the inspection.
  • Property Insurance. Lenders require property insurance and it must be in place at the time of the closing.
  • Property Tax Adjustments. Often a seller has pre-paid property taxes, and you will owe the seller a credit for the period that you own the home.
  • Broker Commissions. You may be required to pay a commission to a mortgage broker, if you chose to use one.
  • Home Association/Maintenance Fees. Some developments have an association and a monthly fee and/or new resident expenses may be incurred.

You should go into your closing aware of the additional costs of buying a home in New York. Be sure to request a good faith estimate from your lender, so that you can be prepared for your closing and have adequate funds.

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