Average Closing Costs in New York

For typical closing costs in New York, the average loan origination fees charged by lenders total $1,032. The average fees charged by third parties involved in the transaction are $879, which brings the total average closing costs to $1,911. For comparison, the average closing costs in the neighboring states of New Jersey and Connecticut are $2,094 and $2,033, respectively, which are the highest in the nation. The national average is $1,847.

On average, a New York homebuyer pays the lender $60 for document preparation, $983 for the origination fee and $76 for tax services. Third-party charges include $418 for an appraisal, $1,117 for closing or settlement, $21 for credit reports, $10 for flood certification, $125 for pest inspections, $100 for postage or couriers, and $465 for a survey.

Title insurance fees are not included in these averages because lenders have difficulty in estimating them, but they can add thousands of dollars to the total closing costs. New York is one of a few states that charge a mortgage tax, which is about 2% of the property value. For home purchases in New York City, additional taxes and fees, such as a mansion tax, building fees and co-op fees, can add thousands of dollars to the total closing costs.

Buying a home in New York is not for the faint-hearted. Aside from having the highest home values in the nation, New York's real estate codes for purchasing and selling homes in many parts of the state are among the most complex. Although the typical closing costs are not extraordinarily high, there are fees and taxes that can be added on, driving total closing costs into the thousands of dollars. As with most other states, New York homebuyers can still expect to pay between 3 and 5% of their homes' sale prices in closing costs. However, with some New York City markets exceeding $2 million in median sale prices, that can amount to five or six figures tacked on to the cost of buying a home. For the rest of New York's cities and towns, the average closing costs are more reasonable; the median sales prices are lower, and they don’t include the add-on taxes and fees associated with New York City home purchases.

What Goes Into Closing Costs in New York

Closing costs in New York vary widely based on the market, the lender and the type of property. Homebuyers in New York City need to brace themselves for additional taxes and fees. However, for most homebuyers in New York, these are the most common closing costs found on their good-faith estimates.

• Loan origination or lender fee: This is an umbrella fee that covers most of the lender's costs for processing the loan, including origination, underwriting, document preparation, funds and administration.

• Appraisal fee: This fee covers the cost of appraising the property to determine its current market value. Lenders need to ensure the property appraises at or above the sale price and that it is comparable to other homes in the neighborhood.

• Settlement/closing fee: This covers the legal costs associated with escrow settlement, which is typically performed by the title company. Although New York does not require legal representation by an attorney at the time of closing, it is highly recommended, especially for more complex transactions involving purchases of co-ops in New York City.

• Title Insurance: The buyer is required to pay for the cost of title insurance on the lender in the amount of the loan. Title insurance protects the borrower and the lender against any claims on the property that might have gone undetected in the title search. The seller covers the cost of title insurance on the borrower.

• Survey: Some lenders may require a survey of the property to protect their interests. A survey can ensure that the property lines of the land and the buildings correspond with the title documents. Even if a survey is not required, buyers should consider it to prevent any property line issues that might arise.

Home inspection: The buyer typically pays the cost of a pest inspection, and, if they request it, the cost of a home inspection.

New York City Taxes and Fees

• Mansion tax: The mansion tax is a 1% tax imposed on the buyers of homes valued at $1 million or more. The tax was instituted in 1989 to boost revenues for the city during an economic recession. Back then, million-dollar properties were far less prevalent, whereas today, the tax affects hundreds of homebuyers each year.

• Sponsor closing costs: Buyers of new construction may be required to pay a proportionate share of the developer's closing costs, including transfer taxes, legal fees and a share of the building superintendent's apartment.

• Building fees: Many condominium and co-op buildings charge move-in and move-out fees, which can run as high as a few thousand dollars.

Seller Closing Costs

The seller is responsible for paying the sales commission and covering the cost of title insurance on the buyer. Additional closing costs include property transfer tax, property taxes owed, title search, a home warranty, if applicable, and escrow fees. A seller can expect to pay approximately 1% of the sale price in closing costs.

Pennsylvania (PA): Average Closing Costs

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