Understanding Closing Costs: What Buyers Should Expect

You’ve found the perfect home, your offer has been accepted, and you’re almost at the finish line. But before you get the keys, there’s one last financial step: closing costs. Many first-time buyers in New Jersey are surprised by these expenses, so it’s important to understand what they are and how to prepare.

What Are Closing Costs?

Closing costs are the fees and expenses you pay at the end of a real estate transaction, on top of your down payment. They cover services like loan processing, inspections, and legal paperwork needed to finalize your purchase.

How Much Are Closing Costs?

On average, buyers can expect closing costs to range between 2% and 5% of the home’s purchase price. For example, if you’re buying a $400,000 home in New Jersey, you could pay between $8,000 and $20,000 in closing costs.

Common Closing Costs for Buyers

Here are the most typical fees you may see on your settlement statement:

• Loan Origination Fee: Charged by your lender for processing the loan.
• Appraisal Fee: Pays for a professional to determine the home’s value.
• Home Inspection Fee: Covers the cost of evaluating the property’s condition.
• Title Search & Title Insurance: Ensures the home is legally yours and protects against claims.
• Attorney Fees (if applicable): Some states, including parts of New Jersey, may require an attorney at closing.
• Prepaid Expenses: Includes property taxes, homeowner’s insurance, and interest that must be paid upfront.

Can You Reduce Closing Costs?

Yes! Here are a few strategies buyers in New Jersey often use:

• Shop around for lenders and services to compare fees.
• Ask your lender about closing cost credits in exchange for a slightly higher interest rate.
• Negotiate with the seller—sometimes sellers may agree to cover part of your closing costs as part of the deal.

Closing costs are an essential part of buying a home, but with the right planning, they don’t have to be a surprise. By understanding what’s included and budgeting accordingly, you can walk into closing day prepared and stress-free.

Have questions about closing costs in New Jersey? We are the #1 Century 21 company in New Jersey and we are here to guide you through every step of the homebuying process!