There are fees involved in purchasing Real Estate that many new homebuyers overlook. The actual cost of buying a home is significantly higher than the purchase price and many people are unaware and unprepared for that fact when they begin the home buying process. Depending on your jusidiction there are different taxes and fees involved in buying real estate.

Standard Fees

These fees apply to everyone regardless of where you purchase real estate. These fees include what are known as title fees which include, recording deeds and mortgages, searches run against the premises and people involved, and a one time insurance policy purchase to insure the buyer that they have the most superior to claim to ownership. Title insurance also insures the lender that they are in the first lien position.

Jurisdictional Fees

In New York, there is a tax placed on mortgages. Throughout the state, New York charges a a tax of .8% of the mortgage amount in taxes. In NYC, the City adds an additional tax of 1% of the mortgage amount. Additionally, New York State charges a processing fee of $125.00 to process some of their transfer documents and tax returns that are required.

Bank Fees

If you are using financing from a lender, there will be bank fees involved. Bank fees depend entirely upon the lender, your credit score, income, risk assessment and program you qualify for or choose. Therefore, there is no hard and fast rule as to lenders fees. However, there are some fees that are relatively standard; appraisal fee, credit fee, flood certification fee, tax assessment fee, document preperation fee, establishment of an escrow account, short term interest and a point ot two. If you are obtaining an FHA loan, there is also the addition of MIP (Mortgage Insurance Premium), which equals about 2% of the loan amount.

Attorney and Miscellaneous Fees

In addition to all of the fees above, there is the business of paying your attorney and other miscellaneouse fees such as adjustments for city, school, village and other taxes, transfers of warranties, water and sewer, etc… these fees are not standard. Therefore, they can be difficult to estimate which is why you should hire an experienced Real Estate Attorney who can help you determine these amounts.

Summary

As a general rule, we always tell our buyers to estimate that they will need 5-6% of the purchase price for closing costs. As long as they are prepared to have that amount of money available for the closing, if the amount is a little lower, it will be a pleasant surprise.