Rise in closing costs heightens importance of affordable policies
It’s a buyer’s market for real estate, no question. But if you’re getting ready to take advantages of low sale prices and interest rates, be prepared. You might have to pay some inflated closing costs.
Nationwide, closing costs — the assorted taxes and fees paid in a real estate transaction above the property price, such as attorneys’ fees and broker’s commission — have risen nearly 9 percent since last year, according to Bankrate’s annual survey.
And for the second year in a row, guess which state has the highest average closing costs? New York, at $6,183 — $1,239 more than Texas, No. 2 on the list. (New Jersey is tied for seventh, at $4,589; Connecticut, at $3,843, ranks 32nd — but that’s up from 39th in 2010.)
Blame the mortgage crisis — and the reactions to it from banks, lenders and the government. Sub-prime mortgages and the securities they backed were the primary cause of the economic collapse of three years ago and have forced everyone to take extra time and effort to check the solvency of mortgage applicants. They’ve passed those costs on to the consumer via extra fees and therefore higher closing costs.
But there’s a way to make sure you don’t have to pay any more than you need to. Shop around. Get good-faith estimates (GFEs) from at least three mortgage brokers and three banks. It’s the same basic process Gotham Brokerage Co., Inc., one of New York City’s oldest and most respected insurance brokers, uses to ensure new home buyers obtain the right mix of coverage at the right price — something that’s even more important now that closing costs are punching through the roof.
We work often with first-time home buyers looking for NYC homeowners insurance who, in such a rental-heavy city, might not be familiar with all the intricacies of homeowners insurance in each borough and neighborhood. Gotham Brokerage is a family-owned NYC insurance broker that’s been serving the five boroughs for more than 50 years. And if you’re looking to buy in Connecticut or New Jersey — a starter home in, say, Greenwich or Passaic — we can help assemble the right policy for the right price.
Don’t let escalating closing costs frighten you away from buying a home. Gotham Brokerage can help.