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Understanding and calculating the costs associated with buying property in NYC - A guide for Buyers


Closing costs are the fees associated with buying or selling a property, and they can add up quickly, especially in a high-cost city like New York. As a buyer, it's important to understand the closing costs involved in the purchase of a property so that you can budget accordingly and avoid any surprises at the closing table. In this article, we will guide you through the process of calculating closing costs in New York City for buyers.

Mortgage Points

One of the biggest closing costs for buyers in New York City is mortgage points. Mortgage points, also known as discount points, are a one-time fee paid to the lender to lower the interest rate on the mortgage. Each point is equal to 1% of the loan amount, and the number of points required will vary depending on the lender and the loan program. To calculate the cost of mortgage points, multiply the number of points by the loan amount. For example, if the loan amount is $500,000 and the number of points required is 1, the cost of mortgage points would be $5,000.

Origination Fees

Another closing cost for buyers in New York City is origination fees. Origination fees are charged by the lender to cover the costs of processing the loan application. These fees can include application fees, credit report fees, and appraisal fees. Origination fees can range from 0.5% to 1% of the loan amount, and they can vary depending on the lender and the loan program.

Appraisal Fees

Appraisal fees are another closing cost that buyers in New York City have to pay. An appraisal is a professional estimate of the value of the property, and it is required by the lender to ensure that the property is worth the amount of the loan. Appraisal fees can range from $300 to $600 and can vary depending on the location and the type of property.

Title Insurance

Title insurance is another closing cost that buyers in New York City have to pay. Title insurance is a policy that protects the buyer and the lender from any issues with the title of the property, such as liens or outstanding mortgages. The cost of title insurance can vary depending on the value of the property and the title company you choose, but it typically ranges from $1,000 to $2,000.

Escrow Fees

Escrow fees are another closing cost that buyers in New York City have to pay. Escrow fees are typically between $300 and $600 and are paid to a neutral third party to hold the funds for the closing until all the documents are signed and the sale is complete.

Other miscellaneous costs

Other miscellaneous costs that a buyer may need to pay include:

Recording fee

Survey fee

Home inspection fee

Mortgage Insurance

Property taxes

It's important to note that these costs vary depending on the property and location, so it's best to consult with a real estate agent or attorney to get an accurate estimate.

In conclusion, closing costs in New York City can be high, but by understanding and budgeting for them, buyers can make the process of buying a property less stressful. It's important to be aware of the mortgage points, origination fees, appraisal fees, title insurance, escrow fees, and any other miscellaneous costs that may be involved. It's also important to compare prices and shop around to find the best deals on these costs. It's always best to consult with a real estate agent or attorney to get an accurate estimate of the closing costs for the specific property you are buying.

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