Understanding closing costs is a crucial aspect of the home buying process, particularly in dynamic markets like New York City. As a trusted real estate expert in the city, I'm here to guide you through the various costs associated with purchasing a co-op, condo, or townhouse in NYC.

Set Aside 2-4% of the Purchase Price

A general rule is to allocate approximately 2-3% of the purchase price for closing costs. However, if the apartment is over $1 million or if you're purchasing a condo, increase that estimate to 3-4%. For a brand new condo, prepare for up to 5% of the purchase price in closing costs. Remember, every deal is unique, based on property type, sales price, financing, and market conditions.

Key Closing Costs to Consider

1.     Bank Fees: If you're securing a mortgage, anticipate $3,000 to $4,000 in bank fees, including bank attorney’s fees and an appraisal.

2.     Attorney Fees: Typically ranging from $3,000 to $5,000, these fees can increase for complex transactions, like combining two units. Be wary of attorneys offering significantly lower rates who may not specialize in NYC real estate closings.

3.     Mansion Tax: This tax applies to co-ops, condos, and townhouses sales of $1 million or more, starting at 1% and escalating up to 3.9% for sales prices of $25 million or above.

4.     Mortgage Recording Tax (Only for Condos and Townhouses): Buyers who take out a mortgage must pay a state and city mortgage tax of 1.925% on loans over $500,000 or 1.8% for loans under $500,000.

5.     Transfer Taxes (Only for Sponsor Co-op and New Condo Buyers): Buyers of new condos or co-ops from sponsors may also have to pay a NYC transfer tax and a state transfer tax. In slow markets, sponsors are sometimes willing to cover these costs as a sales incentive.

6.     Homeowners Insurance: Lenders and co-op and condo boards will require suitable homeowners insurance. Policies range from $350 per year for basic coverage to around $1,500-$2,500 annually for comprehensive coverage.

7.     Building Fees: Most buildings charge move-in and move-out fees. Expect to also pay a managing agent and co-op attorney fee and board application fees.

8.     Title Insurance (Only for Condos & Townhouses): Title insurance can vary but typically estimates at .45 percent of the price.

Remember, co-op buyers do not have to purchase title insurance or pay a mortgage recording tax. With co-op purchases, you're technically transferring shares in a cooperative corporation rather than a real property.

Purchasing a co-op, condo, or townhouse in NYC is an exciting journey. Knowing your closing costs upfront allows for a smoother process and no surprises. Contact me today to guide you through your NYC real estate journey.