You're hit with unanticipated fees at closing. This is not an uncommon scenario for many homeowners. Unfortunately, New York leads the nation in closing costs. According to Bankrate.com's 2010 Closing Costs Study, New York closing costs are a little less than 3 percent of a $200,000 mortgage, or $5,623. In contrast, Arkansas boasts the lowest closing costs in the nation at just over $3,000.
Step 1
Determine how much you are going to pay for the house. The value of the house is going to determine how much you pay in closing costs. According to the real estate website Trulia, the average sales price for a 3-bedroom house in New York is a little less than $200,000. Supply and demand and other factors, such as location, determine home prices. New York metropolitan home prices, for instance, are generally higher than average. In fact, the March 2010 Federal Reserve report "Bypassing the Bust" indicates that metropolitan home prices actually increased in value in Buffalo, Rochester and Syracuse during the last recession compared to before the recession began.
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Step 2
Multiply 3 percent times the price of the home you are buying. The higher the cost of the house, the more you can expect to pay in closing costs. For example, the closing cost estimate is $10,500 if the price of the house is $350,000, compared to $6,000 for a $200,000 house.
Step 3
Create a worksheet listing the various closing cost line items, such as title search and title insurance fees. You can create a spreadsheet setting purchase price and closing cost percentage as independent variables. Change your purchase price and closing cost percent assumptions to see how the individual line items change for your total closing cost estimates. For example, if the price of the New York home you're buying changes from $350,000 to $300,000 and the closing cost percent is lowered to 2.5 percent, the new closing cost estimate is $7,500.
Step 4
Refine your closing cost estimates by making adjustments either up or down based on individual circumstances. For example, you may be able to reduce the total closing cost if you know the exact price of certain line items, such as your attorney's fee. You should also adjust your estimate if there is a seller's concession. For instance, if the seller is willing to apply $2,000 toward your closing costs as part of the negotiation, you should deduct this from your closing cost estimate.
Tip
The Real Estate Settlement Procedures Act (RESPA) requires lenders and brokers to provide a good faith estimate that is accurate within 10 percent of their quoted fees. Look over your loan documents and correspondence to understand pricing. Ask for itemization of fees as much as possible so that you know exactly what you are paying.
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