Most everyone knows that a down payment is required (most of the time) when purchasing a home. You’ll mostly be looking at saving 3.5% of the purchase price for a FHA loan, or 20% for a conventional loan. There are other variations – 5%, 10% or 0%, but most are either 3.5% or 20% down payment.
But what about closing costs?
Most have heard the term, fewer have a good idea of how much. Let’s take a look at costs in closing costs in New Jersey.
As a rule you can figure on 2% to 7% of the purchase price. But let’s look a little further.
First let’s talk about a cash purchase. You’ll have:
Attorney fees Title Company Fees – Title Search, Title Insurance, Misc Services
Well and septic system inspection – if applicable
Flood Insurance – if applicable
Also – many active adult communities have fees (with various names) requiring you to pay the association when you close. We’ve seen the fees range from $300 to $3000 or more. Check before you make an offer
If you’ll be getting a mortgage, there will be additional costs.
Prepaid Interest – the interest due between the closing date and the first payment
You’ll need to prepay taxes into an escrow account
If there’s a homeowners association, you may need to prepay a certain number of monthly payments.
If you are putting less than 20% down, you’ll usually need to pay Private Mortgage Insurance, typically the first months premium is due at closing
FHA Financing – the Up-Front Mortgage Insurance Premium, this is possible to roll into the mortgage
VA Financing requires the VA Funding Fee, which can be rolled into the mortgage
These are the major costs, but there will be many small costs that will add up. We suggest you speak with your attorney and your bank early and often to find out what their fees are. You have the right to shop around for attorneys and banks. Be aware of fees that are too low – there may additional fees that will make the total costs higher.