Whether you’re an outdoor enthusiast or you prefer the fast-paced city life, you’ll find it all in New Jersey. Home to more than 50 state parks as well as a booming job market, it’s no wonder that so many residents choose to call the Garden State home.
Yet, any real estate transaction includes a closing process, which can be both costly and time-consuming. Whether you’re on the buying or selling end of the deal, it’s important to know what to expect.
The good news? We’re here to help.
Today, we’re sharing the ins and outs of the New Jersey closing process, so everyone is well-prepared on the big day.
Ready to learn more? Let’s take a look.
What Buyers Can Expect
Ready to stake your claim on a piece of NJ real estate? Before you can walk away with the keys, you’ll need to shell over some cash.
Even after you’ve agreed on a property purchase price with the seller’s real estate agent, you’ll still incur additional costs. These closing costs help to cover the administrative work required to transfer the deed and title over to your name. Data shows that closing costs for most homebuyers in New Jersey equal around 2% to 3% of the home’s purchase price.
Though your exact payments will vary depending on your specific scenario, let’s go over a few of the charges you may see on your closing documents.
Legal Fees and Title Expenses
The costs in this category go toward paying for the services of a real estate attorney. This law expert will help to make sure the closing goes smoothly, entering all the pertinent details of the mortgage and deed.
Expect to pay around $1,500 to $2,000 for the attorney fee alone.
From there, you’ll pay between $450 and $800 for an official survey of the property. If you’re buying a condominium, that number drops to around $200.
Other charges include:
- Recording fees ($200 to $300)
- Title searches or property endorsements ($250 to $500)
In addition, you’ll also pay your title insurance premium at this time. Your lender or attorney can fill you in on that exact price.
Mortgage and Inspection Costs
Before you can close, there are also other costs you’ll discover during the mortgage application and inspection process. You’ll complete these steps before your closing date. Mortgage-specific fees include the:
- Mortgage application fee ($300 to $600)
- Property appraisal ($400 to $600)
- Miscellaneous mortgage costs ($100 to $600)
- Private Mortgage Insurance (PMI) if applicable (Check with your lender)
Some buyers choose to pay for points in an effort to “buy down” the interest rate on their mortgage. One point equals 1% of your total mortgage. For example, one point on a $500,000 mortgage equals $5,000.
In addition, you’ll pay to have the property in question inspected, incurring the following fees before closing:
- Standard home inspection fee ($300 to $900)
- Radon gas inspection fee ($120 to $300)
- Termite inspection ($75 to $150)
You may also need a septic tank inspection, which runs between $750 and $1,000 as well as an oil tank inspection for upward of $500.
Finally, sellers will also incur other pre-paid expenses associated with the purchase of a new property. These include one year of homeowner’s insurance, which your insurance agent or provider can quote.
Also, expect to pay for up to two months of escrow on your homeowner’s insurance. Your attorney or lender can direct you on that amount. You may also need to pay up to three months of escrow on your property taxes, as well.
Buying a home worth more than $1,000,000? If so, you’ll pay the NJ Mansion Tax, equal to 1% of the total consideration.
What Sellers Can Expect
Though the list may not be as expensive, there are also seller closing costs in a typical NJ real estate transaction.
In addition to paying your real estate agent and any costs you’ll incur during the actual moving process, it’s important to set aside money to cover these payments. Let’s take a high-level look at the costs you’ll see at closing, keeping in mind that an official seller closing cost calculator can give you a more accurate picture of your exact charges.
Often, sellers will help to pay the legal fees associated with the property’s closing process. These will run around $800 to $1,300 for most sellers.
As the seller, it’s your responsibility to foot the bill for the property’s water inspection. This can cost between $450 and $700 depending on the location.
Township Certificate of Occupancy
Before you can sell a property and transfer its title, some NJ towns require that you verify that you’re the legal owner. This is where a Township Certificate of Occupancy comes in. You can get one for about $100, payable to the township.
New Jersey Real Estate Transfer Tax
Sellers will pay around 1% of the total sale price in New Jersey real estate transfer tax. If you’re 62 or older or a disabled veteran, this drops to less than 0.5%.
New Jersey Closing Costs Add Up
This list isn’t exhaustive, but the simple breakdown alone reveals that New Jersey closing costs add up, regardless of whether you’re the buyer or the seller!
Looking to get a local property off your hands in a quick and cost-effective way, avoiding these hefty fees associated with most real estate transactions?
We can help.
We buy NJ houses for cash, paying a fair price and doing so as fast as possible to help you move on to your next step. You don’t have to wrangle with expensive and time-consuming processes like those described above.
Contact us today to learn more about what we do and take back your financial freedom.