In this video we are going to walk you through
how to use the buyer closing cost calculator for New York City
which is available at hauseit.com
So we are looking at the calculator interface on
the screen the way to get to it
if you're on the hauseit website is to go
to calculators click on that drop down
for buy and click on buyer closing cost calculator
There are a number of other calculators as well if you'd like to
review those mention tax calculator if
you're buying something above a million dollars mortgage recording tax
calculator if you're financing a purchase for a condo or a house and
There's also a number of other ones here
as well for you to consider
so looking at the buyer closing cost calculator
there's a couple of inputs for us to consider
You have the sale price most importantly you also have the amount
financed as well as the housing type
There is also an option for new construction now all of these inputs do
have implications for the size of your buyer closing cost bill
Of course, goes without saying the higher the sales price
the higher your closing costs will be and that's largely because there are
many elements of your closing costs that
are going to be percentages of the sale
or of the purchase price including but
not limited to the mansion tax as well as the mortgage recording tax the amount
financed does have an effect as well primarily because there are some
financing related closing costs which obviously only apply if you're taking
out a mortgage and the housing type has
an impact primarily because of the distinction between condos and co-ops
with regard to what's called real property
your traditional condominium or
house or land has a deed associated with
it and it is considered to be real property a co-op on the other hand is
not real property and that's because if
you buy a co-op you're actually purchasing shares in a private
corporation that owns the co-op building
because of that distinction between real property there are some closing costs
which do not apply to real property specifically with regard to financing
and you actually do not have to pay the buyer mortgage recording tax if you're
buying a coop because that tax only applies to loans taken out on real
property so quick preview as to one of the benefits of buying a co-op is the
fact that as a buyer you're going to have lower closing costs than with a
condominium now the reverse is the case with a co-op usually because most coops
have a flip tax which is an additional seller closing cost that you must pay as
a seller so again buying a co-op lower buyer closing costs selling a co-op
usually higher seller closing costs than a condominium so let's give it a shot
Let's say you're buying a co-op in the East Village with an asking price of
seven hundred and fifty thousand dollars so you'll put in the price there and we
can assume in this case that your financing say 80% most coops in the city
will require you to put down at least 20% and therefore this is an appropriate
assumption let's also check co-op for a housing type and we are not going to
check the new construction box because this is a traditional private resell
what that means is you're just buying the property from another owner who's
not the what's called the sponsor or the original developer or owner of the
building so on the right here it's calculated our closing costs and they
they're quite low actually as you'll see they're only a little over 1% for a
co-op and couple reasons for this we are below a million dollars so there is no
buyer mansion tax mansion tax was recently updated in New York City it was
historically a 1% tax on all purchases above a million irregardless of the
price or in the sale price now it's a more progressive system there are eight
brackets the highest transfer tax rate mentioned tax rate is three point nine
percent for purchases above twenty five million and I said the word transfer
because a mansion tax is technically an additional transfer tax levied by New
York State but we do not refer to it usually as transfer tax primarily
because transfer taxes refer to what sellers have to pay when they're selling
a property so again closing costs here on low because in part we don't have the
mansion tax to worry about buyer's attorney fee move and deposit and all of
these smaller fees they're essentially fixed costs and they have to do with of
course your representation on the purchase the various costs of the board
application and you know building procedures and so you know the higher
the sale price the lower the percentage these would have in relation to your
overall closing cost bill just because they're fixed amounts now going to
financing related costs again we don't have the mortgage recording tax because
it's a co-op so as you can see here if we flip this to condo we've gone up from
a little over one percent to more than three percent and that's largely due to
this line item the mortgage recording tax which doesn't apply to coops so if
we click back to co-op you'll see that the total buyer closing cost bail goes
down significantly in terms of other fees related to
financing you're gonna have a loan application fee it does vary by bank
usually it's around $1,000 banks will also charge you for an appraisal give or
take seven hundred and fifty dollars and you know I would say in our experience
usually these costs are especially the appraisal fee is very difficult to get the bank to pay
In the case of the appraisal it's the case that it's hard
for them to pay it because really they are hiring somebody actually to do the
appraisal on your behalf. These other fees are just mechanical
fees related to what's called a recognition agreement. This is a
tri-party agreement between you the coop and the lender giving the lender
various rights with regard to the unit in the
event that you don't pay you know your obligations on the property you've
purchased and then this is just the filing fee. So the total closing costs
here are super low because you're buying a co-op
there's no mortgage recording tax, it's below a million dollars. Now let's
increase the sale price to say 1.5 million and you'll see that the closing
costs have gone up. They haven't gone up significantly and the reason for that is
while you are paying the mansion tax all of these other various tax all of these
other buyer closing costs rather again our fixed costs so you increase the
purchase price and that's actually lower these expenses as it relates to the
fraction of your sale price. So you know again we've really only increased the
buyer closing costs by three or four tenths of a percent here. Now if we go to
condominium, you're gonna see a massive jump so we've gone from 1.5 percent
approximately to 3.7 percent. Just to summarize here main difference for this
is the fact that we're now paying the mortgage recording tax and we also have
to pay title insurance so title insurance is something that really only
applies to a property that actually has a deed such as a house a condominium or
land title insurance gives you protection against the claim that you
know anyone may make saying that well hey you know that property I owned it
someone sold it without my authorization and that person could make a claim that
they actually owned the property you've bought. So title insurance is for you
it's also for the lender so this is the mortgage policy premium component and
therefore you know that's gonna add another say a little over half percent
in buyer closing costs. Quick thing as well with regard to you know title
insurance, when you do close on a property and you buy title insurance
you're gonna have an opportunity to buy what's called a market value writer
Customarily with title insurance, they will only protect the value of your
purchase. So let's say you buy a property for 1.5 million and 15 years later
somebody makes a claim to the title of your property. Presumably over 15 years
the value of your unit has gone up significantly
So if you by the market value writer the title insurance policy will step up to
the market value giving you full coverage for all the appreciation you've
had during the course of ownership. If you do not have the market value writer,
the maximum coverage will be essentially your purchase price fifteen years ago
which was 1.5 million dollars. Now let's play around with the amount financed. If
we say you're doing an all-cash transaction we would assume that your
closing costs would go down significantly and as we can see here
they actually go down by approximately two percent so we have one point eight
six percent all-cash compared to three point seven percent if you're financing
eighty percent. Now the less you financed, the lower your closing cost will be as
you can see here we're close to four percent if you finance ninety percent
we're closer to three point three percent if you financed only sixty
percent and this is because the mortgage recording tax is a percentage of the
loan size so the smaller the loan the smaller financing related closing costs
you will incur. Quick note as well, if you'd like more clarification on any of
these closing costs you can simply click on the links here and it will take you
to the relevant articles which explain them in greater detail. The final thing
we want to discuss is new construction so if you're buying a new construction
so if you're buying a new construction unit let's say it's a brand new condo in
bed-stuy you're buying it directly from the developer you would want to check
the new construction box. Buyer closing costs are higher for new construction
and this is because the transfer taxes and the attorney fees for the sellers
which are customarily paid by the seller for a normal transaction are usually
paid by the buyer when it comes to a sponsor related transaction also known
as a new development or new construction. These transfer taxes for this particular
price point are a total of 1.8 to 5% and they usually also ask you to pay the
sponsors attorney fee. So as you can see if we go from existing construction
we're at 3.3 percent if we go to new construction we're at 5.3 percent. So we
essentially have higher by our closing costs of around two percent if you're
buying a sponsor unit one thing to mention
Generally speaking sponsor closing costs are negotiable so depending on the level
of demand that the sponsor is experiencing the urgency of their
interest in selling, it is possible for you to negotiate to have the sponsor
cover some or all of the buyer closing costs. On that note, it is always helpful
to have an experienced buyer agent to help you with the purchase they can help
you figure out what is appropriate to ask for and what is not and the other
thing to consider as well is you may be interested in requesting a house at
buyer closing credit. You can save some additional money through that
opportunity and you can also lower your buyer closing costs. If you have any
questions leave us a comment below, we'll answer it right away. And if you have any
other requested suggestions for videos other topics for us to cover closing
other topics for us to cover closing costs buying or selling real estate in
New York City, let us know and we'd be more than happy to help
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