Buying Costs

Buying costs can vary across a number of factors. We have listed typical costs for a buyer in our area but note that all of these fees do not apply to all types of purchases and there may be additional fees. We strongly recommend that you consult your real estate attorney and your mortgage lender, if you plan to finance your purchase, to get detailed estimates of what the costs will be for your purchase. Federal law requires that a prospective lender provide a Good Faith Estimate to you within three (3) days of applying for a mortgage. Sit with your lender’s representative and review the list of expenses. Do not hesitate to ask how close the estimate is to typical actual cost. Also ask if any of the fees can be waived or reduced.

    Adjustments – Payments must be made to the seller for any heating oil left in the tank, any property taxes paid in advance, etc.

    Application fee – This fee is charged by banks and mortgage brokers to process your mortgage application.

    Appraisal fee – Your mortgage lender will require an appraisal of the property you intend to purchase to determine its value. The fee may vary based on the purchase price.

    Attorneys’ fees – You will pay the fee charged by your attorney and the fee for your lender’s attorney.

    Balance of purchase price – This is the difference between the selling price and the amount received from the mortgage loan plus the down payment you paid when the contract of sale was signed.

    Inspector’s fees – In most cases, you will want to hire a licensed inspector to report on the condition of the property. Depending on the property you may also want to request a termite and/or radon inspection. Fees are usually based on the size of the property.

    Mansion tax – There is a 1% tax on the total purchase price exceeding $1,000,000.

    Mortgage insurance – This insurance is paid by the buyer to cover the mortgage and pays the bank should you default on your loan. It is almost always required for loans where there is less than twenty percent equity, i.e. you will be required to pay it if you borrow with less than a 20% down payment.

    Mortgage tax – New York State charges 1% of the buyer’s mortgage amount. The buyer will pay 75% of the tax and the lender pays 25%. Rockland and Westchester Counties, Yonkers and New York City impose an additional tax.

    Points – This is an amount paid to the lender to “buy down” the interest rate for the mortgage loan.

    Prepaid interest – The buyer must pay, at closing, interest from the day of the settlement to the date of the first mortgage payment.

    Property tax escrow advance – Your lender may insist on paying the property tax on the property to assure payment. They will collect the money from you at closing (and with each monthly loan payment) to hold in escrow and pay the taxes when they are due.

    Title insurance – This is a one-time expense based on the price of the property. It insures that there is no one else who claims to own the property.

    Underwriting fee – This is a one-time fee for processing the loan.

This website is intended to provide general information to buyers and sellers of real property. The information it contains is believed to be accurate, but it is subject to errors and omissions. All information should be verified.