When buying a home, buyers usually only factor in their down payment, but some overlook closing costs completely. One shouldn’t make this mistake though, as closing cost for buyer can be substantial.
It takes a whole bunch of people to help you close the purchase of your home. You’ll need a lender, attorney, home inspector, appraiser among other people. You do not pay these parties individually. Instead, these fees are bundled together in a single bill that you need to pay on the closing day.
If you’re buying a home in Florida with USDA lenders in Florida, you may heave some sigh of relief as the closing costs in the Sunshine State are relatively lower than up north. The exact closing costs can only be determined once you have set your eyes on the home of your dream as many fees depend on the type of property involved. However, the average closing cost for buyer in Florida are estimated between 2.05% and 2.74%.
Here’s a breakdown of what comes under closing costs so you won’t face any unwelcome surprises.
Typical closing costs for buyers in Florida
We look at the state-specific closing costs details here.
Loan origination fee: Unless you have bags full of cash to pay for your house upfront, you’re likely to approach a lender. This is where loan origination fee comes into the picture. This is what your lender charges to open a mortgage account. Everything from creating your loan application, underwriting to processing your loan comes under its umbrella. Buyers in Florida can expect this fee to be somewhere between 0.5% and 1% of their loan amount.
Attorney fees: Florida is one of the 20 states where it is compulsory to hire an attorney for the purchase transaction. This fee varies majorly, based on the complexity of the process and location of the home among others. An attorney in downtown Miami is likely to charge more for his counsel than his/her counterpart in Kissimmee.
Credit report: When you apply for a personal loan or a credit card, your lender does a credit check to ensure your loan repayment ability is strong. Similarly, when you apply for mortgage, your lender will charge you for this. In Florida, this may cost you around $175-$200.
Title search: A title company will perform a detailed scrutiny on your potential new house to check if the seller is in the position to transfer ownership to you. Typical tasks involve scouring the historical records. In the Sunshine state, this can cost you anywhere from $150 to $1,500.
Title Insurance: If despite the initial title search, something goes awry and there are claims on your property, title insurance has your back. It covers all legal costs. In Florida, title insurance premiums depend on the purchase price of the house. Homes priced over $100,000 have a premium of $5/thousand dollars. Those with a price below $100,000, carry premiums of $5.75/thousand dollars. Title insurance premium, unlike other insurance premiums, is paid just once at the time of closing.
Homeowner’s insurance: You will need to meet a whole laundry list of requirements from your lender, before your loan gets processed. Homeowner’s insurance is perched atop that list. Before you move in, you should have an insurance policy, which is paid for the coming year. This insurance covers any damage to your property caused by theft, fire etc.
Property taxes: Counties levy 0.97% of a property’s fair market value in property taxes annually. So, if you are buying a house worth $180k, you will need to shell out $1,746. Of the 50 states, Florida ranks 23 for the average amount of property taxes collected. New Jersey charges the highest property taxes (2.49%).
Real-estate transfer tax: Florida is one of the 13 US states which requires homebuyers to pay real-estate transfer tax. These are local and state government duties that need to be paid when the property transfer takes place between the seller and the buyer. It is also known as documentary stamp tax. The stamp duty depends on the sum borrowed from the lender. The prevailing rate is almost standard across the state at $0.70 for every $100 on the purchase price. While this tax is normally paid by the seller, it is not set in stone.
Home inspection: This covers the cost of hiring a home inspector who checks if the house is in the described condition or not. Home inspection can cost between $300 and $500
How to calculate closing cost for buyers in Florida?
Now that you have got a hang of the different closing costs you may face at the time of buying your house, the next step is to calculate them. While you can get many closing cost calculator online, you can visit here to get the most accurate closing cost estimate.