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What should homebuyers know about closing costs?

On Behalf of | Sep 22, 2022 | Residential Real Estate |

The price that you offer for the purchase of a home is not the full amount you will need to pay. There will be other costs that you will need to cover, either by retaining liquid capital or by preserving extra wiggle room in your financing.

As someone hoping to buy residential real property in Florida, you will need to invest a significant amount of money in the upcoming transaction. In addition to the price that you offer for the property, you will require additional funds to cover certain closing costs.

What do prospective buyers need to know about closing costs for Florida residential real estate transactions?

Buyers pay numerous costs

In a standard residential real estate transaction in Florida, the seller and the buyer will cover some of the closing costs. The seller will pay taxes and agent commissions, while the buyer will usually cover inspection fees and costs associated with their mortgage. Closing costs in Florida range from between 2.5% of the purchase price to 4% in rare cases.

What might your closing costs include?

Those buying residential property typically need to pay for surveys, appraisals and inspections. There will also be mortgage-related expenses and recording costs for the deed. Mortgage lenders often require substantial deposits to establish escrow accounts to pay for both taxes and homeowners insurance.

There will also be title insurance costs, as buyers need to cover the cost of their own policy and of one to protect their lender. If the property you purchase is in a homeowners association (HOA), you will need to make prorated contributions for the HOA fees. Those making cash offers and those who purchase properties that are not in HOA communities can expect to pay lower closing costs.

You should receive a full breakdown of all your closing costs

Before you reach the table to sign the paperwork and officially become a property owner you should have an opportunity to review an estimated breakdown of your closing costs. Carefully going over those documents, possibly with professional help, can help you make sense of the transaction and catch an error if there are mistakes.