| PURCHASER’S CLOSING COSTS | ||
| Bank Fees: | ||
| Includes fees such as discount points, application fee, credit reports, document preparation, underwriting/ post-closing review and appraisal fee | Varies according to bank and loan product ( obtain Loan Estimate from Lender) | |
| Bank Attorney | $800-$1250 | |
| UCC -1 Filing Fee | $75-$125 | |
| Move-in Deposit ( refundable) | $500-$1000 | |
| Move-in Fee ( Non -refundable) | $300-$1000 | |
| Purchase Application Fee | $350-$1000 | |
| Mansion Tax | 1% of purchase price when price is $1,000,000 or more | |
| Purchaser’s Attorney Fee | Varies according to deal complexity | |
| Maintenance or Common Charge Adjustment | Purchaser reimburses Seller for any prepaid maintenance or common charge payments | |
| Cooperative Apartment Purchases ONLY | ||
| Judgment and Lien Search | $350 | |
| Financing/Recognition Agreement Fee | $250-$500 | |
| Condominium Apartment Purchases ONLY | ||
| Title Insurance | Approximately $4 per $1,000 of purchase price | |
| Mortgage Title Insurance | Approximately $1 per $1,000 of loan amount | |
| Real Estate Tax Adjustment | Purchaser reimburses Seller for any pre-paid real estate taxes | |
| New York State Mortgage Recording Tax | 1.80% if mortgage amount is less than $500,000, 1.925% if mortgage amount if $500,000 or more | |
| Title and Municipal Search Fee | $500 | |
| Deed Recording Fee | $250 | |
| Mortgage Recording Fee | $200 | |
| Unit Owner’s Power of Attorney Recording Fee | $125 | |
| Title Closer Attendance Fee | $300 | |
| Purchaser’s Additional Closing Costs – NEW CONSTRUCTION ONLY | ||
| Sponsor’s Attorney Fees | $2500-$3500 | |
| Sponsor’s NYC and NYS Transfer Taxes | The transfer taxes are calculated and added to the purchase price ( for tax purpose only) and then recalculated based upon the bulked up price ( may trigger Mansion Tax) | |
| Resident Manager’s Apartment ( If applicable) | Calculated based upon Purchaser’s percentage of common interest in the building | |
| Working Capital Fund Contribution | One-time fee equal to 2 months of common charges |
| SELLER’S CLOSING COSTS | ||
| Broker’s Commission | Varies according to deal complexity | |
| Seller’s Attorney Fee | Varies according to deal complexity | |
| Move-out Deposit ( Refundable) | $500-$1000 | |
| Move-out Fee ( Non- refundable) | $500-$1000 | |
| New York City Real Property Transfer Tax | ||
| * Residential Transactions | 1% of sales price if sale is $500,000 or less. 1.425% of sale price if sale is greater than $500,000 | |
| *Commercial/ Bulk Sale Rates | If two or more unattached units are sold simultaneously to the same buyer, the commercial transfer tax rate applies, i.e., 1.425% of sale price if sale is $500,000 or less or 2.625% of sales price if greater than $500,000 | |
| New York State Transfer Fee | 0.4% of sale price | |
| New York State Estimated Capital Gain Tax | 8.97% of estimated gain paid at closing UNLESS (i) Seller is a NY State resident at time of sale or (ii) Property was Seller’s principal residence for 2 out of the last 5 years or (iii) Seller has set up a 1031 Tax-Deferred Exchange | |
| Federal Withholding Tax ( FIRPTA) | 10%-15% of purchase price is withheld if Seller is a non-exempt foreigner | |
| Cooperative Apartment Sales ONLY | ||
| Flip Tax ( If applicable) | Varies per building | |
| Stock Transfer Tax Stamps | $0.05 per share | |
| Transfer Agent Fee or Co-op Attorney’s Fee | $500-$750 | |
| New York City Transfer Tax Filing Fee | $100 | |
| Payoff Bank Attorney’s Fee | $450-$550 | |
| UCC-3 Filing Fee | $75-$125 | |
| Condominium Apartment Sales ONLY | ||
| Application/ Wavier Fee | $500-$1000 | |
| Satisfaction of Mortgage Recording Fee | $110 per mortgage | |
| Title Closer Pick-Up Fee for Mortgage Payoff | $250 per mortgage |
The Advantage of Home Ownership
- More Housing Options. Generally, there are fewer options in the type and location of rental housing. If you are looking for a particular type of apartment or house or are interested in living in a certain neighborhood, you may have to buy.
- Tax Advantages. A significant portion of the money you spend on mortgage interest and real estate taxes is deductible form your taxable income.
- Value Appreciation. The value of your home may increase over time, providing you with a valuable asset and a smart investment.
- Autonomy. As a homeowner, you will have more freedom to make changes to your home than you will have as a renter. And, unlike a renter, you have the security of knowing that as long as you meet your financial obligation related to the property, you cannot be evicted or forced to move when your lease expires.
Qualifying for Financing: Pre-Qualification vs. Pre-approval vs. the Loan Commitment
- Pre- Qualification: The quickest way to determine how much you will be able to borrow for your home purchase is to pre-qualify for a loan. In order to obtain a pre-qualification, you simply contact a lender by phone and provide your income, assets and liabilities to the loan officer. After evaluating this information, the loan officer will advise you of the loan amount for which you would qualify. Loan pre-qualification does not include a credit check, a verification of the information that you have provided, or a review of the home that you are interested in purchasing, so it’s not a sure thing. The pre-qualified loan amount will, however, give you a good idea of how much you will be able to borrow.
- Pre-Approval: To obtain pre-approval, you’ll need to complete a loan application and provide the loan officer with the necessary documentation for the lender to verify your income and assets, including copies of your tax returns for the previous two years, pay stubs, W-2 statements and your most recent bank statements. The loan officer will calculate your debt to income ratio, examine your outstanding debt and other monthly financial obligations and order a credit report to examine your credit and payment history with credit cards and other loans. After this process is completed, you will receive a pre-approval letter for the specific mortgage amount for which you are approved. It’s important to obtain a pre-approval letter, it gives you an advantage in a competitive bidding situation, as the seller will know that you are qualified for financing and are one step closer to obtaining a loan commitment.
- Loan Commitment: Once you have signed a purchase contract and submitted it to your lender, the final step in the loan qualification process is obtaining a loan commitment. a loan commitment is issued only after the lender has approved you and the property that you hope to purchase. The loan commitment is a formal pledge by the lender to provide you with a loan of a specific amount, subject to the property appraising at or above the sales price and final verification of your income and assets confirming that your credit profile has not changed since you submitted your loan application.
Different type of Real Estate
- Single – family House: In the U.S., a single-family house is the most common form of home ownership. Ownership is evidenced by a Deed that gives ” fee-simple” ownership of the house and the land on which it sits. The homeowner is responsible for payment of all real estate taxes, insurance, utility and maintenance costs for the house.
- Condominium Apartment: Condos are found in almost all U.S. cities. A condo, like single-family house, is considered real property and the purchaser obtains title to the apartment by receiving a Deed from the seller. Rather than owning the building itself, a condominium unit owner owns the interior space of the apartment and a share of the building ( known as the ” common areas” or ” common elements” ) with the right to use the common areas of the building, such as the community facilities, laundry room, parking spaces, and the hallways. Generally, a condo owner is permitted to alter the interior of his or her condominium apartment with permission from the condo board, provided that the alternations do not adversely affect the building’s structure or systems, or interfere with neighboring apartments.
- Co-operative Apartment: Co-ops are common in New York City but relatively uncommon elsewhere. A co-operative corporation owns the building, including the individual apartments and the common areas. The corporation issues shares of its stock, which are allocated in each apartment, based upon its size and location within the building. As a shareholder in a co-operative corporation, you also receive a proprietary lease from the corporation, which gives you the right to live in the apartment. Most co-operative corporations have a mortgage covering the entire building and each shareholder may obtain a loan for the purchase of their own apartment. Most co-operative corporations limit the amount of money a purchaser may borrow for the purchase of the their apartment to an amount equal to between 50% and 80% of the purchase price. To obtain financing, a purchaser pledges their stock and lease as collateral for the loan and authorizes the lender to file a Uniform Commercial Code Financing Statement ( UCC-1) in the county where the apartment is located to give the lender a lien against the apartment. Each co-op corporation is governed by an elected board of directors whose powers are derived from the certificate of incorporation, the bylaws, the house rules, and the proprietary lease. The co-op’s board of directors establishes the co-op’s annual budget and makes all decision about the operation of the building including the amount of the underlying mortgage, whether or not a purchaser’s or subtenants’s application to purchase or sublease in the building will be approved for disapproved, review and approval of repairs and alternations of individual apartments, repairs and capital improvements to the building, and the amount of monthly maintenance to be collected from the shareholders to cover the builiding’s operating expenses. As a co-op owner, you pay a monthly maintenance fee to the co-op corporation to cover your share of the costs of operating the building. Typically, operating cost for the building are comprised of property taxes, monthly payment on the underlying mortgage, insurance, utilities and labor costs.
- Cond-op: A cond-op is a residential co-operative building where the ground floor ( typically consisting of commercial units such as offices or retail stores) is converted into a separate condominium unit owned by either an outside investor or by the original sponsor of the building. If the co-op corporation does not own the condominium portion of the building, the co-op corporation will not receive any of the rent paid by the commercial tenants, Nevertheless, most people refer to cond-ops when describing a co-op with policies regarding subletting and sales of the residential units similar to those for a condominium.
****Above information is generously provided by Keith A. Schuman, Esq. Schuman & Associates LLC; he can be reached at 212.490.0100 or [email protected].