New Jersey closing costs

What are closing costs in New Jersey?

Always request a detailed estimate of closing costs from your lender. This gives you a chance to review charges, ask questions and, if needed, negotiate before the closing date.

Closing costs are fees and expenses that lurk beneath the surface of the listed price when buying a home. They include the cost of services like appraisals, legal fees, credit reports, title insurance, property taxes and more.

Many homebuyers in New Jersey often assume that the listing price is all that matters when making their purchase. But the closing costs that follow can be an unwelcome surprise.

These costs can easily run into thousands of dollars, so it’s important to budget for them.

Closing costs in New Jersey that buyers are responsible for

Personally shopping for services like home inspections, surveys and title searches can potentially save you money on closing costs. Be sure to compare prices and reviews before making your decision.

As a homebuyer in New Jersey, you’ll have to shoulder various expenses besides the listing price as part of your closing costs. While not all these costs may apply to your specific transaction, they're certainly worth preparing for.

Here's a breakdown of typical costs you'll come across:

• Escrow fees: These are fees associated with the transfer of funds and documents between the buyer, seller and other relevant parties.
• Loan application fees: Some lenders charge an application fee to process a loan request. In New Jersey, buyers can expect loan application fees of $150-$500.
• Recording fees: Buyers may be charged a fee from the local recording office in New Jersey. This fee makes your home purchase official with the local authorities.
• Origination fees: These are the costs of processing and underwriting your loan. They’re often a percentage of the total loan amount.
• Property taxes: Buyers may foot part of the property tax bills at closing, depending on the sale terms and the time of year.
• Title insurance fee: Buyers typically bear the costs for both the lender's and the owner's title insurance. In New Jersey, you can expect a title insurance fee of $2-$5.25 per $1,000.
• Home inspection expenses: Home inspection fees in New Jersey range between $400-$600. And though these inspections are optional, they're highly recommended for buyers to avoid surprises.
• Prepaid expenses: Bills like mortgage interest, homeowners insurance and property taxes typically require an upfront payment from buyers.
• Real estate appraisals: Lenders often require an independent assessment of the property's value, and buyers typically foot the bill.

It's important to understand and assess all potential closing costs before finalizing your property purchase in New Jersey. Your real estate agent and lender can offer more insights to help you manage these costs for the best outcomes.

Does the buyer or seller pay for closing costs in New Jersey?

The closing costs division between buyers and sellers is often negotiable in New Jersey. It’s influenced by factors like market dynamics, local norms and the terms of the deal.

Typically, sellers in New Jersey bear costs like agent commissions, title transfer fees, home warranty costs and any outstanding liens on the property. That said, the exact allocation of costs depends on negotiation outcomes between buyers and sellers.

From August 2024 onward, real estate commissions (that are traditionally fixed) could become more negotiable, meaning better prices for both buyers and sellers.

» MORE: How much should you put down on a house?

How much are closing costs in New Jersey?

As we’ve established, total closing costs in New Jersey are an average of 1.72% of the home’s price. Before finalizing your property deal during closing, you'll receive an itemized list of closing costs.

That said, let's unpack each individual cost to help clarify what to expect in the Garden State:

» GUIDE: Closing costs: average cost + how to calculate

How to save on closing costs in New Jersey

In any home purchase, every penny you save counts. And with closing costs amounting to thousands of dollars, even a 5% reduction goes a long way.

To ease the strain on your wallets, here are a few ways to cut down your closing costs when buying a home in New Jersey:

• Thoroughly search for the best deals: Escrow agents and title companies typically compete in terms of pricing, so it’s smart to shop around for the best prices when it comes to these aspects of closing costs. This may require a little extra effort on your part, but it definitely pays off.
• Pay keen attention to the loan estimate: The loan estimate is a breakdown of all costs associated with the loan. Carefully review it and don't hesitate to question charges that seem unreasonable or irrelevant. You'd be surprised by how much you can save by being proactive.
• Negotiate with the seller: In a buyer’s market, buyers have more negotiating power. This means sellers are more likely to take on additional closing costs with a little push.
• Consider a no-closing-cost mortgage: A no-closing-cost mortgage is one where the closing costs are included in the loan amount or handled by the lender. While lenders may charge a slightly higher interest rate, this option is a great way to lessen your upfront closing costs.

Want to learn more about cutting down closing costs? Check out our full guide on closing costs to approach your home purchase with confidence.

Bottom line

Closing costs in New Jersey can feel like a tough pill to swallow. But knowledge is power, and understanding what to expect with these expenses is the first step to managing them effectively.

By learning all about closing costs in New Jersey and budgeting accordingly, you can approach your closing confidently, reduce financial strain and finalize your new home purchase with peace of mind.