In this blog post, Florida mortgage company experts will discuss closing costs, how much you will pay for them and how they can be divided into categories.
What is a Closing Cost?
Lenders and other service providers charge closing costs for their services. These charges are not part of the house price, but since they total up to almost 5 to 6 % of the purchase price, it makes sense that you should know about them.
The fees can vary depending on several factors, such as the type of mortgage, the location, and even the lender that offers your loan. Since each case is different, it would be impossible to provide you with a list of all possible charges. However, the possible ones include your home appraisal, origination and underwriting of a mortgage loan, taxes, real estate commissions, insurance premiums, and record filings.
Read here for our four steps to a quick closing.
Who Pays the Closing Cost?
Both the buyer and seller pay for closing costs. The split will be different depending on the state you are in, but generally, it can also depend on whether you have a mortgage loan or paying cash.
In the case of a mortgage, the Florida mortgage lending company will add all your closing costs to your total amount, while when buying without a mortgage, these expenses might gets shared with the seller.
Though the buyer usually pays most of the closing costs, you can negotiate with the seller. They can help you absorb some of the expenses termed “seller concession.”
Seller concession can be highly beneficial, especially for people who would like to lower their monthly mortgage payments and also help them save money in the long run. However, depending on the loan type, down payment, and other factors, there are limits to how much a seller can contribute towards your closing costs.
It is important to note that the seller fee often counts toward your closing costs. So sometimes it can’t be completely work out away or shared between you and your seller.
How Much Do You Pay?
On average, closing costs are around 4 to 5 % of the purchase price of a house. For instance, if you’re buying a $200,000 home, expect to pay $8,000 and $10,000 in closing costs. Of course, depending on several factors, your lender may charge more or less than this figure. However, closing costs can never be totally avoided. The good news is that you should ask the local mortgage lenders to break down the charges for you. In addition, you may find other fees which are not necessary or can gets eliminated.
For example, your monthly payment usually does not include interest for the first month of your Florida home loan. This fee is called a “funding fee .”You can avoid this fee if you pay some or all of the interest upfront.
So How Much do you Expect to Spend on Closing Costs?
Florida mortgage Lenders generally provide you with an itemized list of the fees they will charge you. This list may include some or all of these charges. However, you can eliminate some if you negotiate with your lender for lower charges.
Here are some of the most common closing costs and charges that you may encounter with:
$100-$400+ – Most lenders will order an appraisal of your home after applying for a mortgage but before closing on the property. Your lender uses the appraisal to ensure that your home is worth what you owe on it. The fee for this service usually depends on how much the appraisal costs in your area but generally ranges between $100-$400+.
Lender’s Attorney Fee
$75-$300+ – This fee covers the cost of a lawyer or a representative from your lender to review and approve the final loan documents before you sign them.
$50-$525+ – This tax is collected by the state or county where you purchased your home and is based on the purchase price of your property. You can paid at closing, but some borrowers choose to pay it before their monthly payments begin. Your lender typically collects this tax and sends it directly to the taxing authority.
Your Local Lender’s Charges
$100-$300+ – Your lender may act as your representative in closing. Depending on local practices, it can range from $75 to $400. However, it is not uncommon for some lenders to charge more than this amount. Also, your lender may charge you a fee for processing and sending your loan documents to the county recorder’s office. These fees can range from $50-$150+.
$100-$400+ – This type of insurance protects lenders if a borrower defaults on a loan. Most lenders require you to have this type of insurance if your down payment is less than 20 percent.
$600+ – The survey tells you what’s in the boundaries of your property and can prevent future problems from cropping up with neighbors. This fee varies depending on the cost of a survey in your area.
$500+ – The fee for this varies depending upon the value of your home but usually ranges between $300 and $700. Your lender requires you to have homeowners insurance before closing on a mortgage loan, but you can ask them to include it with your monthly payments.
FREE – You are entitled to one free annual credit report from each significant bureaus — Experian, TransUnion, and Equifax.
$250-$500+ – This is a fee charged by title companies for researching property records at the local county offices relating to your new house.
Transfer Taxes and Recording Fees
$300-$1,000+ – Your state’s revenue department charges a fee for transferring the title from the seller to you. This cost is normally paid by the seller at closing, but it can also imposed to you. In addition, your local government charges fees for recording deeds with the county recorder’s office. This fee can range from $50 to $2000, depending on your location.
$75-$300+ – Your attorney will write up the final documents and ensure that the title is transferred correctly. They also check for potential problems with the property you’re about to buy. Attorney’s fees vary by state and locality.
$75-$125+ – This includes the cost of reviewing and preparing your settlement statement, which outlines all of your closing costs and any fees that you owe.
You can’t avoid closing but you can cut them. You can find programs that offer low down payment options with affordable monthly payments; check the fine print, though, as you may incur additional fees.
Ask your mortgage lenders in Florida for more information about your specific closing costs and any potential hidden charges behind it. Paying off the significant debt before closing on a new mortgage will help you get a better rate and lower your overall closing costs.
Please keep in mind that this is a general breakdown of the costs connected with buying a property. Also that your fee structure may vary based on your financial situation. Be sure to check with your local mortgage lender for specific questions about your closing costs. The above approximated fees are between $450 and $1,400.
Happy house hunting!