Many things cost a bit more in New York City than in the surrounding counties. (But a good bodega sandwich is still a great deal.) Are the fees for title and closing services higher in New York City than outside the five boroughs?
The insurance premiums that title insurance companies charge are a portion of the title fees on a settlement statement. These premiums are set and maintained by the Title Insurance Rate Service Association (TIRSA) and approved by New York State Department of Financial Services. All title companies in a given area will charge the same amount for title insurance policies; the remaining fees will vary slightly.
That means that all title and escrow companies in any given area have almost identical title fees, so homebuyers don’t have to call multiple firms seeking price quotes when shopping for title services.
It also means that homebuyers will foot the bill for whatever the prevailing fees are in their new neighborhood. Spoiler alert: Those fees are higher in the five boroughs.
The New York City Premium
In New York and the surrounding areas, title insurance premiums are generally about 0.4% of the sale price. (Again, there will also be some fees for title work provided by the title insurance companies.) However, title fees aren’t the only government fees charged at settlement. Additional charges are generally labeled taxes.
One of those additional charges is the transfer tax, which is higher in New York City than in the surrounding counties. Within the five boroughs, that tax is 1-2.7% of the purchase price. Outside the city, 1% or so is the norm. While the seller typically pays the transfer tax in New York, the buyer will be responsible for the mansion tax if the residential property sells for $1 million or more. Mansion tax rates start at 1% of the purchase price and increase by 0.25% for each additional million.
However, homebuyers can save on the title insurance (part of the title fee) in two ways, and they can also reduce their bills.
Saving on Insurance and Taxes
Purchasing title insurance to protect the lender (almost always required) and a policy to protect the homebuyer (optional but highly recommended) will reduce premiums. Because the title and closing company can use the same due diligence for both policies, the buyer saves.
When the home is sold, many of the settlement fees are considered part of the home’s basis price, which can mean tax savings. Those fees include the following:
- Title insurance (owner’s policy, not lender’s)
- Abstract fees
- Attorney fees related to the purchase
- Recording fees
- Survey fees
- Transfer taxes
The potential tax savings may not make up for the higher fees paid by New York City buyers, but it helps.
It also helps to choose the right title company.
Why Cornerstone
Because title insurance rates are set by the government, all title insurance companies will charge similar fees. (You can estimate the title costs for any property you’re considering here.) That’s why it makes sense to choose a title company based on the services and support they provide. Although a lender or agent may suggest a title company, the buyer has the power to make that decision.
Involve Cornerstone early in the process, and you have a partner who can make the entire transaction smoother and easier. We can recommend vetted professionals for every type of real estate service. With the experience gained from over 16,000 transactions, we know which professionals share our values of efficient, ethical, responsive, and proactive service.
We have no business relationship with the professionals we recommend and earn no commissions or fees.
There’s a reason why Cornerstone has a five-star rating from Google reviews. The earlier you include us in the buying process, the more we can help. If the American Dream of homeownership is important to you, please let us help you make your dream a reality.
