Closing Costs in Connecticut
As a real estate attorney, one of the most common questions that I hear from both sellers and purchasers of Real Estate is what my closing costs are. Closing costs in Connecticut vary greatly depending upon who you choose as a mortgage lender, your credit score and the price of the property you are purchasing. The typical closing costs for a real estate transaction in Connecticut are illustrated as follows.
Real Estate Purchaser desires to purchase a $390,000.00 home in Stratford CT. The Purchaser of this house has a good credit score and the mortgage lender (bank) is not requiring him to pay any points. Additionally the Purchaser (borrower) thinks he is not paying a mortgage broker any compensation, other than what the bank may be paying and not charging to him, and he is not paying any premium in order to receive a loan at a reduced interest rate. (note that if the purchaser was to pay any points in the form of a loan origination or loan discount fee that one (1) point would be equal to $3,900.00) The yearly real estate taxes on this house are $4,787.64 and his homeowner’s insurance carries a yearly premium of 810.96. The closing will take place on June 5th of any given year. The Purchaser will pay the following, in addition to the purchase price at the time of closing:
Fuel oil adjustment (this is equal to the amount of oil or propane that is left at the house at the time of closing and is paid to the Seller)
Tax adjustment – $341.12 paid to the seller to adjust for taxes prepaid by Seller through June 30th
Sewer Adjustment – $15.60 Stratford has a separate sewer fee in addition to the yearly real estate tax. Not all towns have this charge and your Attorney will determine what, if anything is due at the time of closing.
Appraisal fee – $300.00 is the fee charged by this particular bank. Appraisal fees vary by lender.
Credit report fee – $19.22 is the fee charged by this lender. Credit report fees vary by lender.
Funding Fee – $700.00 is the fee charged by this lender. Funding fees vary by lender.
Tax service fee – $75.00 is the fee charged by this lender, but again it varies by lender.
Flood determination fee – $12.00 is charged by this lender, but you guessed it, your lender may charge more or less.
Broker loan discount fee – $6,240.00 oops, what is this? The borrower did not pay the bank any points but he forgot that the signed a document with his mortgage broker to pay him. The moral is: know what you are signing and if you have any questions contact your lawyer that is why you are paying him.
Prepaid interest – $1,549.17 This is in effect your first mortgage payment, it is due at closing and is prorated for the number of days left in the month.
Hazard insurance escrow – $270.32 Hazard insurance (homeowners insurance) is escrowed by this lender and then paid when due to the insurance company. A four (4) month escrow was required. Escrow requirements vary by lender. Ask your attorney to explain this further.
City property tax escrow – $398.97 Real estate taxes are escrowed by this lender and then paid when due to the City. A two (2) month escrow was required. Escrow requirements vary by lender and the time of year that you close. Ask your attorney to explain this further.
Title Search – $160.00 This will vary
Attorney fees – $950.00 this is my typical fee and it varies by attorney. Many attorneys charge fees between $600.00 and $1,500.00, be careful do not choose a lawyer based solely on price because you do get what you pay for (trust me I have seen it all, there is nothing worse than that lawyer who charges $500.00 for a closing and then has no idea what he is doing or will not call you back when you have a question. You get what you pay for.
Title Insurance – $1,452.00 Required by the lender and the premium will not vary by attorney but it does vary by purchase price.
Recording fees – $203.00 This is the actual cost to record the deed and mortgage on the land records in this transaction. This cost will vary depending on the number of pages to be recorded.
Overnight mail and wire transfer fees – $100.00
Record and rundown – $55.00 this is essentially an update of the title search at the time your mortgage and deed are recorded and it verifies that no additional encumbrances were placed on your new home since the time the title search was performed. Why do you need this? What could be worse than buying your new home then finding out two weeks later that the seller forgot (sure he did) to pay the contractor who just so happened to place a lien on the property one day before you bought it.
CAUTION: THESE ARE FEES FROM AN ACTUAL CLOSING FROM JUNE 2006. ALL BANKS CHARGE DIFFERENT FEES, SOME MORE SOME LESS, AND MANY HAVE FEES THAT ARE NOT MENTIONED IN THIS EXAMPLE. CHOOSE YOUR MORTGAGE LENDER CAREFULLY AND ASK THEM WHAT THEIR CLOSING COSTS ARE BEFORE YOU SIGN ANY DOCUMENTS.
Closing costs for the seller of this example were:
Real estate commission – $19,500.00 This is 5% and it is typical.
Mortgage Payoff – $200,000.00 This is not the amount due on your mortgage statement. An actual payoff must be ordered from your bank and the final amount due will include your principal balance, interest, any fees due your bank etc.
Release fee – $43.00 this is the cost to record a release of your mortgage on the land records. Town hall charges $43.00 for each one page release so if you have more than one mortgage (remember a line of credit is a mortgage) then you will be charged for each release.
City conveyance tax – $975.00 They get you coming and going. There are some Cities in Connecticut that charge conveyance tax based upon .005 of the sale price but most charge .0025.
State conveyance tax – $1,950.00 Again coming and going. Conveyance tax to the State is .005 of the purchase price up to an $800,000.00 sale price then the excess over $800,000.00 is taxed at .01.
Final water bill – $50.25.
Attorney fees – $1,000.00 That is what the sellers’ attorney charged.
DISCLAIMER: This example is for informational purposes only; all fees are subject to change at any time based upon the circumstances of your particular matter. This example will, however, provide you with a general idea of closing costs. Call me if you would like a free analysis of your situation.