New homebuyers might experience a bit of sticker shock when they get to the table to close on their dream home. You must pay the fees before you get the keys! These final expenses are called closing costs, and they encompass several fees associated with purchasing a new home. It takes a village to help buyers find the perfect home, after all. Instead of paying each of the individual service providers, closing costs allow you to pay in a single bill.
Both buyers and sellers pay closing costs. Though, the buyer usually picks up the majority of the tab. If you’re looking to buy a new home in Florida, be prepared, our state’s closing costs are some of the most expensive in the country.
You can negotiate with a seller to help cover closing costs, which are called seller concessions. These concessions can be extremely helpful if you think you’ll have trouble coming up with the money to close. However, asking for seller concessions in this type of market is highly unlikely.
What’s typically included?
Each state has its own policies when it comes to closing. In Florida, there are several moving parts involved leading up to closing day. Below are some examples of expenses you can expect to be a part of your closing costs and why.
Loan Origination Fees
Whether you’re working with a bank or a mortgage lender, loan origination fees will likely be one of the first costs you’ll incur. These fees include everything from setting up your home loan application, pre-approval and processing your funding at closing. In Florida, homebuyers should estimate this cost at roughly 0.5 to one percent of your loan amount.
Florida is one of 20 states that have made hiring a real estate attorney mandatory when purchasing a home. Your lawyer is there to help with paperwork and works closely with other members of your team to ensure you close on time without any delays.
Lenders have lengthy lists of requirements you must fulfill before they transfer over your mortgage funds. At the top of the list is homeowner’s insurance. You must have this insurance policy in effect and paid for the upcoming year before you move into your new home.
Appraisal and Home Inspection
Two major checkpoints must happen before your lender processes your home loan – the appraisal and the home inspection. In Florida, appraisals can cost about $500, on average, while home inspections could be between $300 and $500. Count on these estimates to vary depending on where you live in the state, and the size of your home.
These are just a few examples. Other costs addressed at closing include:
- Escrow Fees
- Credit Report Fee
- Florida Title Search
- Florida Title Insurance
- Florida Real Estate Transfer Tax
- Property Taxes
- Surveying Fee
- Private Mortgage Insurance
Do you feel prepped and ready to close on the home you’ve been waiting for? If you’re looking to buy or sell a home in Sarasota, give me a call at 941-225-1500 or email me at AmyChapman@michaelsaunders.com. I am happy to help you start your journey.