What Every New York Home Buyer Needs to Know About Closing Costs

Closing costs are the costs incurred in connection with a home purchase that are paid at closing, in addition to the down payment. In New York, these costs are notably higher than in most other states – and buyers who aren’t prepared for the full amount frequently find themselves scrambling for funds at the closing table or, worse, discovering they can’t close at all.

The Total Range

Buyer closing costs in New York typically range from 2% to 5% of the purchase price for standard residential transactions. For co-op purchases, NYC purchases involving the mansion tax, or purchases with specific loan types, costs can run higher.

On a $650,000 purchase, 3.5% in closing costs is $22,750 – paid in addition to the down payment. A buyer with a 20% down payment of $130,000 needs to bring $152,750 in total cash to the closing.

The Major Line Items

Attorney fee: Your real estate attorney’s fee for representing you through the transaction. Typically $1,500 to $3,500 for a standard residential closing. Non-negotiable in the sense that you need an attorney; the specific fee is negotiable.

Mortgage origination fee: The lender’s charge for processing and originating the loan. Can be expressed as a flat fee or as points (a percentage of the loan amount). Compare carefully between lenders – this is one of the most variable costs across different loan options.

Appraisal fee: Paid to the lender’s appraiser, typically $500 to $800. Often paid at application rather than at closing.

Title search fee: The cost of searching public records for title defects. Paid to the title company or attorney conducting the search. Typically $300 to $600.

Title insurance – owner’s policy: As discussed in the title insurance post. Premium is set by New York State based on the purchase price. On a $650,000 purchase, the owner’s title insurance premium is approximately $2,300.

Title insurance – lender’s policy: Required by the lender. Typically significantly less than the owner’s policy when purchased simultaneously.

Mortgage recording tax: New York State charges a mortgage recording tax when a new mortgage is recorded. For mortgages over $500,000 in New York City and some other jurisdictions, the rate is higher. In many suburban counties, the buyer’s portion is 1% to 1.5% of the mortgage amount. On a $520,000 mortgage, this is $5,200 to $7,800. This is often the largest single closing cost for New York buyers.

Mansion tax: For residential properties purchased at $1,000,000 or above, New York State charges a transfer tax of 1% of the purchase price paid by the buyer. For purchases above $2,000,000, the rate increases on a tiered scale. On a $1,100,000 purchase, the mansion tax is $11,000.

Homeowner’s insurance – first year: Lenders require the first year’s premium to be paid at closing. Cost varies by property and coverage level.

Prepaid interest: Interest on the mortgage from the closing date to the end of the month. If you close on October 15th, you prepay 16 days of interest at closing.

Escrow setup: If your lender requires an escrow account for taxes and insurance, you’ll need to fund initial escrow reserves at closing – typically two to three months of taxes and insurance.

Mansion tax: See above.

Co-op specific: Co-op purchases add costs not present in condo or single-family transactions, including flip taxes, share transfer fees, and recognition agreement fees that can add several thousand dollars to closing costs.

What Buyers Should Do

Request a detailed Loan Estimate from your lender early in the process – this document itemizes anticipated closing costs and allows comparison between lenders. Review it carefully and ask about any line item you don’t understand. Don’t wait for the Closing Disclosure that arrives three days before closing to see the numbers for the first time.

I make sure every buyer I work with has a complete, accurate picture of their total cash requirement before they go under contract – with no closing-table surprises. Call me at (321) 447-4259 or visit movewithricky.com.

—

Rakesh (Ricky) Khanna | Licensed Real Estate Salesperson
Better Homes and Gardens Real Estate Realty Connect
Call or text: (321) 447-4259 | movewithricky.com