TITLE SEARCH – Charge to search the land records to uncover mortgages, liens and defects in title to the property to be purchased. Also includes a search for judgments, building violations, certificate of occupancy, etc. Ordered by buyers attorney or bank attorney after contract or commitment. Range $300 – $500. Paid at closing. But a cancellation charge may be due if transaction does not close.
TITLE INSURANCE – The bank requires title insurance up to the amount of its mortgage. Title insurance is also available to the buyer and highly recommended. Additional market value coverage is available to the buyer to cover any increase in the value of the premises that may occur over time. Title insurance rates are uniform based upon the sale price and loan amount. Paid at closing.
POLICY ENDORSEMENTS – This is add-on title insurance coverage required by the bank for items over and above basic coverage. The cost for most policy endorsements is $25.00 each. Usually two to three policy endorsements are required. Range $50 – $75. Paid at closing.
SURVEY – A survey looks like an overhead “map” of the property and improvements. The seller’s existing survey may be used at no cost to the buyer. If no suitable survey exists, a new survey may be required. Costs vary with geographic area, property size and property type. Range $400 – $1,200 or more for a one family residence. Paid at time that survey is ordered or at closing.
SURVEY INSPECTION – If an existing survey is being used, the title company will conduct a physical inspection to make sure that there have been no structural changes to the premises since the date of the survey. Range $75 – $100. Paid at closing.
SURVEY ENDORSEMENT – If an existing survey is not available, the lender may allow the borrower to close with a survey endorsement from the title company. Note: The survey endorsement insures the bank’s interest only, not the buyers’.
RECORDING FEES – The loan (mortgage) and transfer (deed) documents must be recorded on the land records. The cost of recording varies with the type of instrument and the number of pages it contains. Range $200 – $300 for mortgage, $200 – $300 for deed, $75 – $150 for assignments, $75 – $150 for power-of-attorney, etc.
TAXES – The bank typically requires that any installment of real estate tax or water/sewer tax due within 60 days of the closing be paid by the buyer at closing. The cost equals the amount of the tax installment that is due.
ESCROW SERVICE CHARGE – This is the title company’s fee for collecting and paying tax or any other item escrowed at closing. Range $75 – $100. Paid at closing.
MORTGAGE TAX – The amount of tax in Westchester is 1.05% of the amount of the mortgage, except in the city of Yonkers where it is 1.55% of the amount of the mortgage and anywhere in New York City where it is 1.8% of the mortgage. There is a $30 exemption. For example, a $300,000.00 mortgage on Yonkers property would result in a $4,650.00 mortgage tax. The mortgage tax is paid at closing to the title company which then pays the taxing authority.
R.E. TRANS TAX – This is a seller’s charge. In New York City it is 1% of the sales price of a home $500,000.00 or less and 1.425% if the price exceeds $500,000.00. The City of Yonkers transfer tax is 1. 5% of the sales price. Most other localities do not charge a transfer tax except for Mount Vernon, where the tax is 1% of the purchase price of a home in excess of $100,000.00 (e.g. Purchase price is $150,000.00. The first $100,000.00 is exempt and the tax is 1% of the balance. 1% of $50,000.00 = $500.00) The State of New York also charges the Seller a transfer tax which is .4% of the selling price.
ORIGINATION FEE (POINTS) – A point is 1% of the amount of the loan to be taken. It is paid to the bank to by down the interest rate (e.g. – 9% with 0 points, 8.75% with 1 point, 8.50% with 2 points). It is paid by the borrower at the time of commitment and/or at the time of closing. This item may be tax deductible.
PREPAID INTEREST – The borrower pays to the bank at closing, a charge for interest on the loan from the date of closing through the end of that month (e.g. if you close on the 5th day of May, at closing you pay the bank for 27 days of interest through to the end of the month). There is then no mortgage payment due until the first day of July. This item is tax deductible for the year in which it is paid as is all interest paid on your mortgage on your primary residence.
PMI PREMIUM – Private mortgage insurance (PMI) is required by the bank if the borrower does not put down at least 20% of the purchase price. PMI insures the banks mortgage. Rates and payment options vary greatly. Inquire with the lender. Please Note: Once you have PMI, it won’t go away until you pay the principal down to 77% although you can ask the bank to remove it when it reaches 80% of the appraised value of your home.
BANK ATTORNEY FEE – The bank passes along all of its costs the borrower, including the fee of the bank’s attorney to prepare the loan documents and conduct the closing. Range $750 – $1,200 for a residential closing. Paid at closing.
FLOOD CERTIFICATION – The cost of the bank conducting a flood search to see if the premises is located in a designated flood zone. Range $15 – $20. Paid at closing. Note: if the property is in a flood zone, additional flood insurance will be required by the bank.
APPLICATION FEE – Required by most, but not all banks. This is paid by the borrower at the time of the loan application. It is usually non-refundable. Range $250 – $450.
APPRAISAL FEE – The bank usually retains the services of an outside appraiser to appraise the value of the subject property. A satisfactory appraisal is a condition of the loan commitment. Range $350-$700 for a one-family home. Paid at closing or at time of application. Note: The application fee may include the cost of the appraisal.
DOCUMENT PREP FEE – This is a charge by the bank to prepare the loan documents in-house. It is in addition to the bank attorney’s fee. Range $250 – $500. Paid at closing.
TAX SERVICE FEE – This is charged by the bank for setting up your tax/insurance escrow account with the bank. Range $60 – $80. Paid at closing.
HOME OWNERS INSURANCE – This insures your home in the event of a fire, etc. You select the insurance company. The amount of insurance required must be at least equal to the amount of the mortgage. “Guaranteed Replacement” cost coverage is preferable. The insurance must be in place and the first year premium paid prior to closing.
HOME INSPECTION – You may conduct a building inspection of the home prior to signing the contract. You select your own building inspector. The cost varies greatly depending upon the services to be provided. Services may also include termite inspection, radon, water, oil tank, asbestos, lead paint and other environmental hazard testing. If the property is served by well water, the Seller must have it tested for you.
TAX ESCROW – Deposited into your bank’s escrow account to pay your future property taxes and insurance when they become due. Range varies depending upon the amount of the taxes and when you close in relation to when the tax is due. Not always required but every standard mortgages gives the bank the right to require a tax escrow. Paid at closing.
INSURANCE ESCROW – Established to pay future homeowners insurance bills. Usually a two-month escrow is taken. Paid at closing.
PMI ESCROW – Applicable only if you borrow more than 80% of the value of the home. Established to pay future PMI premiums. Usually a one to two month escrow is taken. Paid at closing.
TAX ADJUSTMENTS – Adjustment between buyer and seller at closing on a per diem basis (e.g. if you close on July 1 and the seller has paid the real estate taxes through December 31, you must reimburse seller for six months of taxes). Divide the annual tax by 365 and multiply by the number of days paid in advance by Seller. Note: this adjustment may also work the other way if taxes are unpaid by the Seller.
FUEL ADJUSTMENT – Adjustment between buyer and seller at closing. Buyer must purchase the remaining fuel in the oil tank. It is valued as of the date of closing (e.g. 100 gallons at $1 per gallon equal $100.00).
RENTAL ADJUSTMENT – In the event that the premises or a portion thereof are rented (e.g. a two family home) , the buyer and seller will also adjust for rent and rent security at closing.
LEGAL FEE – Fee charged by buyers attorney. It is usually a fixed amount flat fee established up front. Range (varies) $1,000- $2,000. Paid at closing. Note: Legal fees for commercial real estate transactions will be higher.