How Much Are Closing Costs on a House in Florida?

When buying or selling a home in Florida, financial considerations extend beyond the agreed-upon purchase price. Closing costs are additional fees and expenses necessary to finalize the transfer of property ownership. Understanding these expenditures is an important step for both buyers and sellers as they navigate the real estate process.

Defining Closing Costs

Closing costs are the various fees and expenses incurred by both buyers and sellers to complete a real estate transaction. These are distinct from the property’s sale price and are paid at the “closing” or “settlement,” when property title officially transfers from the seller to the buyer. These costs compensate numerous parties involved, ensuring the legal and financial integrity of the sale.

The fees encompass several categories, including those charged by lenders for processing a mortgage, expenses related to title services, government recording fees, and various prepaid expenses. These charges cover essential services such as verifying property ownership, preparing legal documents, and establishing escrow accounts for future property-related payments. The specific items included in closing costs can vary based on the transaction’s nature and location.

Typical Buyer Closing Costs in Florida

Buyers in Florida encounter a range of closing costs, many associated with obtaining a mortgage. A loan origination fee is charged by lenders for processing the mortgage application, underwriting the loan, and preparing necessary documents. This fee often ranges from 0.5% to 1% of the loan amount, compensating the lender for setting up the loan. An appraisal fee covers the cost of a licensed appraiser determining the home’s fair market value. Buyers also pay a credit report fee to pull their credit history from major bureaus during the loan application process.

In Florida, buyers pay for a survey fee, which confirms the property’s boundaries and checks for any encroachments. This cost ensures there are no disputes regarding the land’s exact dimensions. Home inspection fees are paid to a professional inspector to evaluate the property’s condition, identifying potential issues before purchase. While paid upfront, these inspections are important for buyers to understand the property they are acquiring.

Title insurance protects against financial loss from defects in the property’s title that existed prior to the policy’s issue date. Two types are common: the lender’s title insurance policy, which protects the mortgage lender’s investment, and the owner’s title insurance policy, which protects the buyer’s equity in the home. Lender’s title insurance is generally required by mortgage lenders, while owner’s title insurance is optional but provides important protection for the homeowner. In Florida, buyers cover both lender and owner title insurance policies.

Recording fees are charges imposed by local government entities to officially record the change of property ownership and the mortgage lien in public land records. Buyers may also incur attorney fees if legal representation is sought or required for reviewing documents and overseeing the closing process. Additionally, prepaid expenses are collected at closing, including a portion of annual homeowner’s insurance premiums and property taxes to establish an escrow account. This initial deposit ensures funds are available for future recurring payments.

Florida also has specific taxes that buyers may encounter, such as note stamps and intangible taxes. Note stamps are a state tax applied against the amount of the loan, while the intangible tax is a tax on obtaining a mortgage, contributing to state revenue.

Typical Seller Closing Costs in Florida

Sellers in Florida have a distinct set of closing costs, with real estate agent commissions representing the largest expense. This commission, usually ranging from 5% to 6% of the home’s sale price, compensates both the listing agent and the buyer’s agent for their services. While traditionally paid by the seller, the specific division of this fee can be subject to negotiation.

Documentary stamp taxes are a common seller cost in Florida. This state tax is levied on the sale price of the property, typically at a rate of $0.70 per $100 of value. This tax is a statutory requirement for transferring the deed. Sellers may also be responsible for the owner’s title insurance policy, though this can be a point of negotiation. This policy protects the buyer from title defects that existed before the sale.

Prorated property taxes are another common expense for sellers. This involves paying their share of property taxes up to the closing date, ensuring the buyer is not responsible for taxes accrued during the seller’s ownership period. If the property is part of a Homeowners Association (HOA), sellers might need to pay for an estoppel certificate, which certifies the seller’s current standing with the HOA, including any outstanding dues or violations. They may also cover any prorated HOA fees up to the closing date.

Sellers may also incur attorney fees, especially if legal counsel is engaged for contract review or to address specific transaction complexities. Recording fees may apply for documents related to satisfying an existing mortgage, ensuring the release of the seller’s prior loan is properly documented in public records. Any agreed-upon seller concessions, such as contributions towards the buyer’s closing costs or repair credits, will also be deducted from the seller’s proceeds at closing.

Reviewing Your Closing Cost Documents

For buyers, the Loan Estimate is a crucial document received shortly after applying for a mortgage. This three-page form provides an estimate of the loan terms, projected monthly payments, and estimated closing costs. Lenders are required to provide this document within three business days of receiving a mortgage application, allowing buyers to compare offers from different lenders. The Loan Estimate details various expenses, indicating which amounts can change and which are fixed.

As the transaction progresses toward closing, both buyers and sellers receive the Closing Disclosure. This five-page form contains the final details about the mortgage loan and all associated closing costs. Lenders must provide the Closing Disclosure at least three business days before the scheduled closing date. This three-day period is important, allowing time to review the final terms, compare them against the initial Loan Estimate, and ask any questions before signing.

Reviewing these documents carefully is important to ensure accuracy and transparency. Buyers should compare the Closing Disclosure to their Loan Estimate to identify any significant changes in fees or terms. While minor adjustments can occur, substantial discrepancies should be questioned and clarified with the lender or real estate professional. The Closing Disclosure itemizes all charges, providing a comprehensive overview of the financial aspects of the transaction.