Who Pays Real Estate Closing Costs in New Jersey?

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If you are buying or selling a home in New Jersey, keep in mind that “closing costs” is a generic term used for anything that gets paid over and above the purchase price, usually at the end of the transaction, the so-called closing table. Although some closing costs can be negotiable between a buyer and seller, most are typically paid by one or the other. Before you make any decisions, it is important to consult with an experienced real estate attorney.  Call the Matus Law Group to schedule an appointment today.

Typical Seller’s Closing Costs

During the course of a real estate transaction, there are closing costs that are typically paid by or credited to the buyer by the seller. Typical costs paid by the seller at closing are:

  • Mortgage payoff, accrued interest, and recording of the satisfaction — if the seller had a mortgage on the home, this is paid off from the proceeds of the closing.
  • Real estate commissions
  • State, county, and city transfer taxes or stamps — depending on the home’s sale price, this figure is a percentage of that amount.
  • Well water inspection — the PWTA requires that well water is tested prior to the closing
  • Smoke detector/carbon monoxide certificate — the seller must obtain a certificate in compliance with New Jersey Fire Code.
  • Prorated adjustment for property taxes for the year.
  • Prorated adjustment for any homeowners association dues and transfer fees

Typical Buyer’s Closing Costs

The buyer’s closing costs will vary depending on whether the buyer is getting a mortgage, who the lender is, and what type of loan it is. When a buyer applies for a mortgage, the lender is required to give them what is called a good-faith estimate of their closing costs. Some are paid at closing and some are paid in advance. Typical closing costs paid by the buyer are:

  • Costs associated with closing and title insurance such as the title search, title insurance premiums for the buyer’s policy as well as the mortgage holder’s, administrative fees charged by the closing office, and the property survey
  • Costs associated with the mortgage such as application fee, mortgage points, appraisal, prepaid interest, private mortgage insurance, recording fees, and other miscellaneous costs
  • Inspection costs such as a home inspection, radon inspection, wood destroying insect inspection, roof inspection, septic inspection, oil tank inspection as they are required or applicable
  • Prorated adjustment for property taxes for the year.
  • Prorated homeowners association dues and transfer fees
  • Escrow for homeowners insurance
  • Escrow for property taxes
  • Mansion tax (if applicable)

Can the Seller Pay Some of the Buyer’s Closing Costs?

Whether the seller can pay a portion of the buyer’s closing costs will depend on the lender that the buyer is using. With most loans, the seller can contribute some amount toward the buyer’s costs. Depending on the mortgage this can vary from around 3 percent to 6 percent.

In most cases, however, the market will determine whether a seller chooses to contribute to a buyer’s closing costs. If the market is very competitive, the seller will have little incentive to pay a buyer’s closing costs. Conversely, in a down real estate market, a seller may offer to offset a buyer’s costs or offer other concessions to attract buyers.

Getting the Assistance of a New Jersey Real Estate Attorney

A real estate transaction is one of the largest investments of a lifetime…and most expensive. You never want to pay more than necessary. Getting the assistance of a New Jersey real estate lawyer can ensure that. At the Matus Law Group, we will guide you through your real estate transaction, review your contract, and ensure that the lender has properly disclosed the closing costs you are paying. If you are a seller, we can make sure that your contract and title documents are properly drafted, executed, and filed. Contact us to learn more.

 

 

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Christine Matus

Christine Matus