You may be confident that you saved enough money to offer a considerable down payment for a New York City property you love. However, if you are a first-time homebuyer, you may be surprised by how much you have to budget for beyond the purchase price. This is why it is generally recommended that you do not use everything for the down payment, but set a portion aside for anything else that arises before you officially close. With that being said, please follow along to find out how much of your liquid funds you should have for a house’s closing costs and how one of the proficient New York City purchase & sale attorneys at Zimmet Law Group, P.C., can ensure you are prepared to handle these added expenses.
What closing costs are the buyer of a house responsible for?
Closing costs are typically shared between a buyer and seller. So if you are a buyer, you may only have to concern yourself with the following:
- Appraisal: a licensed appraiser must determine the home’s fair market value.
- Attorney fees: an attorney may be required to represent you during the transaction.
- Escrow fee: an escrow company may manage funds during the transaction.
- Loan origination fee: a lender may charge for processing your mortgage application.
- Property tax: this may be prorated based on your closing date.
- Title insurance: this may protect you and a lender from title issues.
- Title search: this may be to research property records for liens or ownership issues.
This is not to mention if you choose to opt into a home inspection. While this is not legally required in New York State, we highly advise you to see this through, as you want to ensure this large financial investment is a wise one. Also, you must obtain a homeowners’ insurance policy, which should be ready to go by your closing date.
How much should I save for closing costs on a house in NY?
Now that you understand what closing costs entail, you must anticipate how much this will cost you. Unfortunately, these costs are typically higher when buying a home in New York than in other states, and even greater in the New York City area. This is especially true during times when the real estate market is relatively competitive.
And so, there is no standard number for this expense, but as a common rule of thumb, you should budget between two percent and five percent of the home’s purchase price. For example, for an $800,000 home, you should expect closing costs to range from $16,000 to $40,000.
For further legal guidance, please look no further than a talented New York City real estate attorney. When you work with Zimmet Law Group, P.C., you can trust that you are in good hands. Schedule a consultation with us today.
