How Much Are Closing Costs in Florida?
December 1, 2022
Whether you are buying or selling a house in Florida, a real estate transaction comes with closing costs. Often, closing costs are an overlooked expense for first-time home buyers but they can add up to thousands of dollars. Being unprepared when you buy or sell a house in Florida, it’s important to understand the costs associated with closing on a property. Closing costs can vary by location and mortgage loan. This blog post will explain what Florida real estate closing costs are and how they can affect the sale of your property.
What Are Closing Costs?
The term “closing costs” refers to the additional fees charged by mortgage lenders for creating the loan. Closing costs are incurred at the end of the real estate transaction and can change depending on if you are a buyer or seller. Sellers can negotiate with the buyer to cover some of their closing costs as a way to sweeten the deal. However, in most cases, the buyer is responsible for paying most of the closing costs.
Average Closing Costs in Florida
Average Florida closing costs for buyers and sellers can differ significantly. Buyers in Florida typically pay 1% to 4% of the purchase price for closing costs, whereas sellers usually pay anywhere from 5% to 10%. Although buyers have more expenses, sellers often pay more at closing because they are expected to cover the real estate agent‘s commission.
Closing Costs For Buyers in Florida
Buyers can pay up to 4% of the purchase price at closing. With the average home price in Florida being $400,000, buyers on average should expect to pay closing costs of around $16,000 or less. Buyers are commonly expected to pay for the following closing costs:
- Home Inspection
- Appraisal
- Private Mortgage Insurance (If Down Payment Is Less Than 20%)
- Survey
- Pest Inspection
- Mortgage Loan Origination Fees
- Credit Report
Home Inspection
A home inspection is a thorough examination of both the exterior and interior of a property in order to assess its condition.
Read More: How To Choose a Home Inspector
Home Appraisal
An appraisal is when a professional appraiser examines a property and determines the current market value.
Private Mortgage Insurance
Private mortgage insurance is a monthly payment that protects the lender if you default on the loan. If your down payment is less than 20% on a conventional loan, you will likely be required to pay private mortgage insurance.
Attorney Fees
The attorney fee pays for the real estate attorney that is in some states required to be present at closing, not in Florida.
Survey Fees
A survey is a map or drawing of a property that outlines its boundaries and shows any encroachments or easements.
Pest Inspection Fees
A pest inspection is a search for any infestations or conditions that could be hazardous. Florida law requires all home buyers who are taking out a loan to have a pest inspection.
Mortgage Loan Origination Fees
The loan origination fee pays for the lender to underwrite and process your loan.
Credit Report
A credit report is a record of your financial history that includes information like your payment history, credit accounts, and debt. Lenders require a credit report before approving borrowers for a loan.
Closing Costs For Sellers in Florida
Typically home sellers can pay up to 10% of the sale price of their property as closing costs. The average home price in Florida is $400,000 which means that sellers on average should expect to pay at most $40,000 in closing costs. Home sellers don’t have as many closing costs as buyers, but they do have a good amount. The most common closing costs that sellers pay are:
- Title Search and Insurance
- Mortgage Payoff/Prepayment Penalties
- Prorated Property Taxes
- Debts Owed on Property
- Settlement Fees
- Attorney Fees
- The Real Estate Commission
Title Search
This fee covers the cost of searching public records to make sure the seller is the actual owner of the property and that there are no outstanding liens or claims on the property.
Title Insurance
Title insurance protects the buyer from the problems that could arise from any unknown issues with the property’s title.
Mortgage Payoff/Prepayment Penalties
Unless your house is paid off in full and you don’t have a mortgage, you’ll need to factor in the cost of paying off your mortgage when you sell your home. The mortgage that’s currently on your home is no longer needed once it’s sold. However, a lot of mortgage lenders have a penalty fee for paying off a mortgage early. The prepayment penalty fee varies by lender but typically is a small percentage of the outstanding principal amount.
Prorated Property Taxes
Unfortunately, the seller or homeowner is not off the hook for property taxes just because the property is being sold. The seller is still responsible for paying their property taxes due for the current year and the previous year if they have not paid those taxes yet. If you are selling your house halfway through the year and the annual property taxes are $1,752 (the average annual Florida property tax), then you’d pay half of that cost on closing day.
Settlement Fees
This fee goes to the title or escrow company for handling the title or funds related to the sale of your home on closing day.
Attorney Fees
Florida doesn’t require real estate attorneys to be present at closing as some other states do. If you choose to have an attorney represent you at closing as the buyer or seller, their fees will be added to your total closing costs.
The Real Estate Agent Commission
The largest closing cost for Florida homeowners is typically the real estate commission. The seller pays for the commission for the seller’s agent that they worked with and the agent that worked with the buyer to purchase their house, otherwise known as a buyer’s agent. The seller of the home pays for these commissions from the proceeds of the sale, and will typically add this commission fee to the total purchase price.
Read More: How Much Is The Commission Of A Real Estate Agent and Who Pays For It?
Work With a Negotiator To Buy or Sell a House in Florida
Looking for a good real estate agent in Florida? Then you’ll want to work with a Negotiator. Negotiators are top-performing real estate agents who have a proven track record of getting their clients the best possible deal on their home purchase or sale. These agents are located in Florida along with many other states across the country and have a wealth of experience in helping people move to a new house.