Closing Costs In New Jersey And How To Lower Them

Learning the average closing costs in New Jersey is your best first move when looking for the perfect home in this beautiful Northeastern U.S state. You can find whatever you need here.

However, if you’ve bought a house or condo before, you know the real estate process has its complicated transactions and documentation which can be time-consuming and costly. So, whether you’re selling or buying, you should know all about closing costs and how they can be lowered.

What Are Closing Costs Consisted of?

Regardless of the deal being closed and everything is taken care of, there are always closing cost fees that you’ll still acquire additionally. These cover all the administrative transactions for transferring the deed and title from the seller to the owner’s account.

Regarding New Jersey specifically, stats show that generally, the closing costs are close to 3% of the purchase price. However, selling prices being different and unique from client to client as well as the real estate agent, we will go through each fee separately and ways how to lower them.

Inspections Costs and Mortgage Fees

Just before you and the seller can close on the deal, there are costs that fall under the category of closing because they need to be paid when everything is ready to close.

The first line of costs are the inspection costs such as the inspection for termites, radon gas inspection, the septic tank inspection (if needed) and the standard home inspection fees. All these together can cost from $1000 to $2300, so you have to consult with the agency doing the inspections beforehand so you can choose the best option for you.

In addition, you’ll pay the mortgage application and inspection process. The fees for the mortgage include the property appraisal, mortgage application fee, private mortgage insurance (optional) and other miscellaneous expenses that depend on the process and the real estate agency. Expect to pay anywhere from $800 to $1800 depending on the area and neighborhood of the city you’re in.

Title Expenses/Legal Fees

The legal fees in this category go towards the real estate attorney who will look after all the pertinent details of the deed and mortgage, making sure all the documentation is complete and the process runs smoothly. Then, there is the official survey of the property which for a house costs anywhere between $450 and $800, while for a condo that amount is approx. $200.

Other legal fees include the title expenses, property endorsements, and recording fees. These all go from $200 to $500. At this point, you’re also paying for the title insurance premium which varies accordingly to property and agent, so it’s important to ask and consult beforehand so you can choose the one that suits you best.

Pre-paid Expenses

Last but not least, there are expenses connected to the purchase of a new property that needs to be paid beforehand. The most common ones are the homeowner’s insurance that lasts 1 year, and up to three months of escrow on the taxes of the property along with the NJ Mansion Tax that equals 1% of your purchase is above $1,000,000.

Ways to Reduce Your Closing Costs

Now that we have talked about some of the most common closing costs you will face during your purchase, here are ways to reduce them the best you can.

Always Shop Around

Never settle for the first deal you see on the market. Always compare costs between agencies and house/condo prices before you start considering an offer seriously. When it comes to closing costs, there’s a lot of money at stake, so it is wise to shop around for the offer with the lowest closing costs. Sometimes you can even ask for a lender to match the lower amount of closing costs some other lender offered. They might agree just to hold you as a client.

Another thing to consider is getting quotes for some different separate services too (the survey fee, title fee, pest inspection costs, etc.) instead of just asking for getting quotes from multiple lenders. This means that you don’t have to go with one lender and all the services they’re offering, but you can mix and match however it suits you based on your price preferences.

Negotiate, Negotiate, Negotiate

When it comes to real estate, prices aren’t always fixed. You can always try to negotiate (or better yet, ask your agent) the price of the property you’re buying. Some sellers, if they don’t have other offers, may be willing to lower the price or even accept some of the closing costs. Also, you can negotiate the amount of the fees the lender is charging you and immediately ask for a Closing Disclosure form. This form lists all your final closing costs. Compare each point on the list with the ones on the Loan Estimate. If there are any inconsistencies, make sure to consult with the lender immediately.

Don’t Hurry With the Closing

If you can, delay the closing for the end of the month. By doing so, you can minimize the pre-paid daily insurance charges. This is why it’s wise to plan ahead and organize the closing when it means paying the least amount of pre-paid insurance.

Summary

Closing costs are an inevitable part of any real estate purchase. However, although mandatory, some parts of these fees are negotiable and can be lowered. They also vary from lender to lender, and sellers can even accept to pay for some. This is why it’s always important to shop around and ask for coverage. All in all, be thorough with your estimates and always pick what’s best for you. Don’t hesitate to contact me with any questions regarding the closing costs in New Jersey.