When buying or selling a home in New Jersey, there are various closing costs that need to be taken into account. Closing costs are the fees and expenses paid at the time of the real estate transaction closing. These costs are typically split between the buyer and the seller, but the exact division can vary. Understanding who pays for closing costs in New Jersey is important for both home buyers and home sellers to properly budget for the transaction.

Key Takeaways

• Buyers in New Jersey are responsible for the majority of closing costs, including mortgage fees, title insurance, and prepaid expenses.
• Sellers in New Jersey must pay real estate agent commissions, transfer taxes, and their own title insurance, in addition to paying off any existing mortgages.
• The exact division of closing costs between buyer and seller can be negotiated, but a common split is 70-90% paid by the buyer and 10-30% paid by the seller.

Buyer Closing Costs in New Jersey

As the party acquiring the home, the buyer is responsible for paying the majority of the closing costs in New Jersey. Typical buyer closing costs include:

• Mortgage application fee – This is a fee charged by the lender to process the mortgage application, typically ranging from $300 to $700.
• Origination fee – Also known as an underwriting fee, this is a charge by the lender for evaluating and preparing the mortgage, usually 0.5% to 1% of the loan amount.
• Appraisal fee – The lender will require an appraisal of the home, which costs $300 to $500 on average.
• Title insurance – Protecting the buyer’s ownership interest in the property, the title insurance premium is typically 0.5% to 1% of the home’s purchase price.
• Recording fees – There are fees charged by the county to officially record the property deed and mortgage, usually around $75 to $150 total.
• Prepaid items – The buyer will need to prepay things like homeowner’s insurance, property taxes, and mortgage interest, which can add up to 2-5% of the home’s value.

Seller Closing Costs in New Jersey

While the buyer shoulders the majority of closing costs, the seller is still responsible for certain fees, including:

• Real estate agent commission – This is the biggest closing cost for sellers, typically 5-6% of the home’s sale price.
• Transfer tax – New Jersey charges a transfer tax when the property changes ownership, usually around 1% of the sale price.
• Title insurance – Similar to the buyer, the seller will need to purchase a title insurance policy to protect the new owner, costing 0.5-1% of the sale price.
• Payoff fees – If the seller has an existing mortgage, they will need to pay off the balance, plus any prepayment penalties.

Who Pays What in New Jersey?

In a typical New Jersey real estate transaction, the general breakdown is:

• Buyer pays 70-90% of the total closing costs
• Seller pays 10-30% of the total closing costs

However, this can be negotiated between the buyer and seller. Some sellers, for example, may agree to pay a larger portion of the closing costs to make their home more attractive to buyers in a competitive market.

Knowing who pays for closing in New Jersey is an important part of budgeting for a real estate transaction. Both buyers and sellers should factor in these costs when planning their home sale or purchase.

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