UNDERSTANDING CLOSING COSTS.

 

Mr. and Mrs. Smythe have created a budget for the purchase of their new home. They are concerned about the closing and what expenses will be incurred on closing day. They paid $756,000 for their new home in this example.   *(Costs may vary with your location.)

Here's a breakdown of typical closing costs the Smythe’s might expect when purchasing a home for $756,000 in Florida. Closing costs can vary, so it's essential to verify these with the specific lender and title company.

Closing Costs Breakdown:

1. Loan-Related Fees:
• Origination Fee: Typically, 0.5% to 1% of the loan amount. For a $756,000 home, this could range from $3,780 to $7,560.
• Discount Points: Optional fees to lower the interest rate (if applicable). One-point equals 1% of the loan amount.
• Appraisal Fee: $300 - $600.
• Credit Report Fee: $30 - $50.
• Underwriting Fee: $500 - $1,000.
2. Title Fees:
• Title Search: $200 - $400.
• Title Insurance: $1,500 - $2,500, based on the home price.
• Settlement/Closing Fee: $500 - $1,000.
• Attorney Fees: (if applicable) $500 - $1,500.
3. Government Fees:
• Recording Fee: $100 - $200.
• Transfer Taxes: Florida has no state transfer tax, but county taxes may apply.
4. Prepaid Costs:
• Homeowners Insurance: Usually 1 year’s premium upfront, around $1,500 - $3,000, depending on coverage.
• Property Taxes: Usually 2-12 months' worth, depending on the time of year and local tax rate.
• Prepaid Interest: Varies based on closing date and mortgage rate.
5. Miscellaneous Fees:
• Home Inspection: $300 - $500.
• Survey Fee: $400 - $700.
• HOA Fees: If applicable, prorated HOA dues.
• Courier/Delivery Fees: $50 - $100.

Pro-Rated Property Taxes and Insurance:

• Pro-rated Property Taxes: Yes, these are typically included in the closing costs. The buyer will reimburse the seller for the property taxes already paid for the portion of the year they’ll own the home.
• Pro-rated Insurance: Generally, not included as a closing cost unless the buyer assumes an existing policy. Instead, buyers typically pay upfront for a full year’s homeowners insurance.

Estimated Total Closing Costs:

Typically, closing costs range between 2% and 5% of the purchase price. For a $756,000 home, this would be approximately $15,120 to $37,800. This estimate includes loan fees, title fees, government fees, and prepaid costs.

Make sure your client gets a Closing Disclosure (CD) from their lender at least three days before closing, which will detail all costs.