Estimating Monthly Housing Costs and Closing Costs

My spouse and I are planning on buying our first home next fall/winter. We live in a high COL area for home ownership (northern NJ), and expect that we will pay $500-550k for a 3 bed/2 bath well-maintained home in a good neighborhood. I travel frequently for work, so close proximity to the airport and a train station is critical. We have a combined annual salary around $260k, a little more including bonuses, so we'd be well within the "house should be no more than 3x your salary" guideline.

We graduated 2.5 years ago and got married last year, so while our income is high, we'll only have 10% saved for a down payment, and we'll have to pay PMI for a bit. Additionally, I have $32k of debt from law school, financed at a rate of 3.98%, which I pay $530/month on, and a car loan of $23k at 2.97%, for which I pay $460/month. We have excellent credit (when I purchased my car in August, it was over 800).

I'm trying to figure out what our monthly housing costs would be on a $500k home. Trulia has one of the more accurate estimators that I've seen, but I wanted to make sure nothing is being left out. On a 500k home in our desired county, with a 10% down payment and a loan rate of 4.35% (seems like a good conservative estimate, based on my research), the estimator shows housing costs of $3,661 per month, broken down as follows: $2,240 for principal/interest, $1,125 for property taxes, $75 for home insurance, and $221 for PMI.

Obviously utilities will be higher than in our one-bedroom apartment, and I assume cable/internet will cost more as well, which could add another couple hundred dollars to the total. I also imagine that home insurance is at least twice what the estimator shows. Is there anything else I'm not taking into account? Trying to avoid any nasty surprises…

I also have a question regarding closing costs. I've read that these costs average around 2-3% of the purchase price of a home, which is a pretty decent amount of cash on top of the $50k down payment. My father-in-law is a real estate attorney, so we'd be able to save on legal fees, but that appears to constitute only $1-2k of the closing costs. The other aspects of closing costs, such as inspection, title insurance, etc. seem fairly minimal - a few hundred dollars here and there - so where does the huge spike in closing costs come from? And is it common for the seller to cover these costs, or is that unlikely in a competitive market? Thanks in advance.