Closing costs are fees and expenses that buyers and sellers incur during the finalization of a real estate transaction. These costs are paid at the "closing" of the deal, which is when the title of the property is transferred from the seller to the buyer. Closing costs typically include a variety of charges such as:
 
 
1. Loan-Related Fees

 
Origination Fee: Charged by your lender for processing your loan application, typically around 0.5% to 1% of the loan amount.

 
Discount Points: Optional fees paid to lower your interest rate. One point equals 1% of the loan amount.
Appraisal Fee: The cost of hiring a professional appraiser to assess the property’s value, usually ranging from $300 to $500.
 

 
2. Property-Related Fees

 
Home Inspection Fee: Covers the cost of inspecting the property’s condition. Typically $300 to $500.
Survey Fee: If required, this fee covers the cost of verifying property boundaries, generally $300 to $600.
Pest Inspection Fee: Checks for termite or pest damage, usually costing around $100 to $200.

3. Title and Escrow Fees

 
Title Search and Title Insurance: Protects you and the lender from any legal issues with the property’s title. Fees vary but are often around $1,000 to $2,000.
Escrow Fees: Paid to the title company for managing the closing process and funds, typically 1% to 2% of the home’s purchase price.

 
4. New Jersey State -  Specific Fees and Taxes

 
Realty Transfer Fee: Paid to the state of New Jersey upon the sale of the property. This fee is based on the property's sales price and is typically paid by the seller, but buyers should be aware of it during negotiations.

 
Mansion Tax: For homes with a purchase price of $1 million or more, a Mansion Tax of 1% of the purchase price is required to be paid by the buyer at closing.
Recording Fees: Charged by the county for recording the deed and mortgage documents. These typically range from $100 to $250, depending on the county.

 
5. Prepaid Costs and Reserves

 
Homeowners Insurance: Usually required to be paid for the first year upfront. The cost varies based on coverage and property value.
Property Taxes: You may need to prepay several months of property taxes at closing.
Prepaid Interest: Covers the interest on your loan from the closing date until the end of that month.

 
6. Miscellaneous Costs

 
Attorney Fees: While not mandatory, it is recommended to have an attorney review your closing documents. Fees vary depending on the attorney.
Homeowners Association (HOA) Fees: If applicable, you may need to pay a portion of HOA dues upfront.
Private Mortgage Insurance (PMI): If your down payment is less than 20%, you may need to pay PMI premiums.