What are Closing Costs for Buyers in Florida? | Sarasota Homes International, LLC

What are Closing Costs for Buyers in Florida?

July 18, 2017 No Comments

What are Closing Costs for Buyers in Florida?


Posted by Kristin in Blog

Closing costs are fees associated with your home purchase that are paid at the closing of a real estate transaction. Closing costs are incurred by the buyer and the seller. Once the closing has completed and the funds have been transferred, the title of the property is transferred to the new owner. Closing costs can include down payments and pre-mortgage payments and fees to the lender, inspections, appraisal and survey fees, title insurance and homeowner insurance, taxes and transfer fees and other application and fees association with a real estate purchase transaction. Cash sales have lower fees and less paperwork for everyone involved but there are still some fees for the buyer and the seller.

Closing costs vary widely based on where you live, the property you buy, and the type of loan you choose. Listed below are fees that may be charged but your particular fee amounts will depend on the property contract and if there is a mortgage.

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What are the fees a buyer in Florida can expect to pay?

On a typical home purchase, buyers will pay between about 2 to 5 percent of the purchase price of their home in closing fees. So, if your home cost $200,000, you might pay between $4,000 and $10,000 in closing costs.

Your lender will provide a Loan Estimate for your mortgage and this will include a list of the closing costs expected for your property. This, by law, has to be given to a buyer within three business days of receiving a loan application. These costs are an estimate and the amounts may change. The list will give you a good idea of what you will need to “bring to the closing table”.

Appraisal: This is paid to the appraisal company to confirm the fair market value of the home. A buyer who will have a mortgage will be required to have an appraisal for loan approval of the mortgage amount.  A cash buyer is not required to have an appraisal but many buyers want to know the true value of the property and know they are not paying more than the home’s value. It is up to the cash buyer to make this decision.

Attorney Fee: This pays for an attorney to review the closing documents. A buyer always has the option to hire an attorney to act in their behalf. The fee will vary based on the attorney hired. It is not necessary to have an attorney represent you in a real estate transaction in Florida. Florida is not an attorney state and many closings are managed at Title Companies. There are Attorney Companies who do closings so it is your choice whether to use a Title Company or an Attorney who will provide the Title for Closing.

Closing Fee: This is paid to the Title Company or Attorney for conducting the closing. The Title Company or Attorney oversees the closing as an independent party in your home purchase. Some title companies do not charge closing fees. Your Realtor can recommend companies to use.

Courier Fee: This covers the cost of transporting documents to complete the loan transaction as quickly as possible. Electronic signatures can be used for contracts and other paperwork needed in a transaction but original signatures are needed on closing mortgage and sale paperwork. If you are local and will attend the closing, you will not have to pay this fee. If you are not attending the closing, you will have to pay for overnight delivery of the closing papers.

Flood Determination. If the property is found to be located within a flood zone, you will need to buy flood insurance if you have a mortgage. If you are a cash buyer, it is up to you to determine if flood insurance is purchased.

Home Inspection: Your home inspection will verify the condition of a property and  check for home repairs that may be needed before closing. This is normally paid at the time of the inspection and not at the closing. Pricing is based on the square footage of the home. Additional inspections (Mold, Termites, Radon) can also be done at this time but each will add to the cost of the inspection. A home inspection is always a good idea for cash buyers too.

Pest Inspection: This fee covers the cost to inspect for termites or dry rot.

Homeowner’s Insurance: This covers possible damages to your home and contents. The first year’s insurance is paid at closing with a mortgage. The mortgage company will collect future monthly payments with the escrow account and pay the insurance in the future. A cash buyer can purchase homeowner’s Insurance anytime they choose.

Property Tax: You will be responsible for taxes from the closing date to December 31st of the year of closing. Florida taxes are paid in arrears which means taxes for the year 2017 will be paid the end of 2017. Adjustments will be made to buyer and seller to cover the amount of taxes each of them owe for the year of purchase. The mortgage company will collect future monthly payments with the escrow account and pay the taxes in the future.

Recording Fees: A fee charged by your local recording office, usually city or county, for the recording of public land records.

Survey Fee: This fee goes to a survey company to verify all property lines and items such as shared fences. The seller may have a survey for the home and provide it to the buyer. If this is the case, a new survey will not be needed. However, if there were changes to the home which changed the square footage or the outside dimensions or a shared fence or a pool was added, a new survey will be needed. A mortgage company will require a survey. A cash buyer has the option to purchase a survey.

Transfer Taxes: This is the tax paid when the title passes from seller to buyer.

What are the mortgage related fees for a buyer in Florida?

Please Note: The Application Fee and the Origination Fee vary from lender to lender. It would be smart to speak with at least two or three lenders prior to choosing the best one for your sale. Some lenders also have special programs with lower down payment requirements. Ask your Realtor to recommend three lenders for you to interview about their requirements and their fees.

Application Fee: This fee covers the cost for the lender to process your application. Before submitting an application, ask your lender what this fee covers. It can often include things like a credit check for your credit score or appraisal as well. Not all lenders charge an application fee, and it can often be negotiated.

Origination Fee: 
This covers the lender’s administrative costs. It’s usually about 1 percent of the total loan but you can sometimes find mortgages with no origination fee.

Underwriting Fee: This fee pays for the cost of the underwriters who make the determination whether or not to approve the loan.

Credit ReportA credit report is pulled to get your credit history and score. Your credit score plays a big role in determining the interest rate you’ll get on your loan. You may or may not be charged this fee. It is a nominal amount.

Appraisal: This is paid to the appraisal company to confirm the fair market value of the home. The lender orders the appraisal.

Prepaid Interest: Most lenders will ask you to prepay any interest that will accrue between closing and the date of your first mortgage payment.

Escrow Deposit for Property Taxes & Mortgage Insurance: Often you are asked to put down two months of property tax and mortgage insurance payments at closing.

Private Mortgage Insurance (PMI): If you’re making a down payment that’s less than 20% of the home’s purchase price, you will be required to pay PMI. You may be required to pay the first month’s PMI payment at closing.

Loan Discount Points: “Points” are prepaid interest. One point is one percent of your loan amount. This is a lump sum payment that lowers your monthly payment for the life of your loan. You may have the option to do this and will pay this fee at closing.

FHA Up-Front Mortgage Insurance Premium (UPMIP): If you have an FHA loan, you will be required to pay the UPMIP of 1.75% of the base loan amount. You may be able to roll this into the cost of the loan.

What fees are paid in a VA Loan by a Buyer?

VA Funding Fee: If you are planning to use a VA loan to purchase a Florida home, you may be required to pay a VA funding fee at closing (you may have the option to roll this fee into the cost of the loan). This is a percentage of the loan amount that the VA assesses to fund the VA home loan program.  Some borrowers are exempt from this fee and your lender can determine if this is the case for you. The percentage depends on your type of service and the amount of your down payment.

Sarasota Homes International, LLC is a full service real estate brokerage serving the Sarasota and Manatee County areas of the Florida gulf coast. Please let us know if you have further questions on the purchase and sale of a Florida property.

 

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