Introduction
You’ve saved for your down payment, you’re pre-approved, and you’re ready to buy. But here’s what catches many first-time buyers off guard: closing costs.
On Long Island, closing costs typically run 2-5% of the purchase price. On a $500,000 home, that’s $10,000 to $25,000 on top of your down payment. Let’s break down exactly where that money goes.
The Big Ticket Items
Attorney Fees: $2,000-$3,500 In New York, you need a real estate attorney. They review contracts, handle the title search, coordinate with the lender, and represent your interests at closing. Don’t skip this — it’s worth every penny.
Title Insurance: $2,500-$5,000 This protects you (and your lender) if someone later claims ownership of the property. It’s a one-time fee based on the purchase price.
Lender Fees: $1,500-$3,000 Origination fees, application fees, underwriting fees, and processing fees. These vary by lender, so compare when you’re shopping for mortgages.
Prepaid Items: $2,000-$5,000 Your lender will require you to prepay some expenses:
- Property taxes (usually 2-6 months’ worth)
- Homeowners insurance (full year upfront)
- Interest from closing date to end of month
Recording Fees and Transfer Taxes: $500-$1,500 Government fees to record the deed and mortgage.
The Mortgage Tax (New York's Special Surprise)
New York charges a mortgage recording tax of about 2% of your loan amount. On a $400,000 mortgage, that’s $8,000. This is often the single biggest closing cost — and it catches a lot of buyers off guard.
Some co-ops don’t require this tax since you’re buying shares, not real property. It’s one reason co-ops can have lower closing costs than condos or houses.
What You Can Negotiate
Seller concessions: In some markets, you can ask the seller to contribute toward your closing costs. This is more common when inventory is high and sellers are motivated.
Lender credits: Some lenders offer credits toward closing costs in exchange for a slightly higher interest rate. Run the numbers to see if this makes sense for your situation.
Shopping around: Attorney fees, lender fees, and title insurance costs vary. Get quotes from multiple providers.
How to Prepare
When you’re budgeting for your home purchase, plan for:
- Down payment (3.5% to 20% depending on loan type)
- Closing costs (3-5% of purchase price)
- Moving expenses
- Immediate repairs or updates
- Emergency fund (don’t drain your savings to zero)
Your lender will provide a Loan Estimate within 3 days of your application that breaks down expected closing costs. Review it carefully and ask questions about anything you don’t understand.
Want help understanding what closing costs to expect for a specific property? I will introduce you to a Mortgage Specialist who will walk you through the numbers.
Call or text me: (516) 250-4891
Carolyn A. Best
Licensed Real Estate Agent
EXIT Realty Premier
PERFORMANCE…not promises.
