Posted on Feb 01, 2022
Potential home buyers typically budget for their down payment, but people new to buying a home may forget about closing costs completely. They shouldn’t, though: closing costs represent a substantial amount of money - sometimes as much as the down payment. In Florida, you can expect closing costs to be a little more manageable than in other states (hooray!). Here’s everything you need to know. Closing costs are the fees paid by the buyer and the seller when a home is sold. These fees typically need to be paid upfront - in other words, they can’t easily be rolled into your loan balance the way your down payment can. This is why it’s important to estimate high.What are Closing Costs?
“Buyers often have no idea that there are even closing costs to begin with,” observes Orlando-based buyer agent Daniel Robinson. “Closing costs are quite detailed, and they are on an individual basis so it’s not like a one-size-fits-all price.”
It’s impossible to determine your exact closing costs until you have a home in mind because many of the fees are dependent on the specific home. HOA fees, for example, vary from home to home - and other fees vary depending on which company you order them from. There is no state-mandated price for appraisal fees, for example, so they vary from company to company.
Some of these costs remain even if the home sale doesn’t go through. If you order an inspection and it reveals massive issues that lead you to back out of buying the home, you won’t get your money back.
Other costs are prorated fees - if the seller already paid their HOA fees for the quarter, then you’ll be paying them their HOA fees back for that period of time.
You might hear about “no-closing-cost mortgages” offered by lenders. However, mortgage advisor Robert Wagner notes that the consumer still ends up paying: “You can do that, but you’re doing a much, much higher rate,” he explains. And a higher mortgage rate can add on thousands of dollars over the lifetime of your loan.
Who pays for Closing Costs in FL?
Both the buyer and the seller pay for closing costs in Florida - they are responsible for different costs. If you're a buyer, you pay for fees associated with your mortgage and having the home inspected. If you're a seller, you're responsible for the agents' commission and taxes (see below for line-by-line expenses).
How Much are Closing Costs in Florida?
Buyer Closing Costs in Florida
If you’re interested in getting a rough estimate of your future closing costs, in Florida homebuyers spend an average of 2.58% of the purchase price. The average home in Florida sells for $225,000 - so at 2.58%, you’d owe $5,800 (approximately).
In major cities, you can expect higher costs - Tampa’s average home sells for $323,000, so you’d owe around $8,300.
However, you’ll want to estimate on the high side for this rather than assuming exactly 2.58%. Some costs - like survey fees - are variable based on your home, so you could end up paying more than the average homebuyer. And other fees vary by city or by county, like appraisal fees. And the cost of your home - especially in this competitive market - may be harder to predict than you think. Finally, you want to make sure you have enough money to close the sale successfully so that you don’t need to start your home search all over again.
“Closing costs for buyers are typically between 2.5% and 3.5% of the price of the home,” explains Robinson. “In extreme cases [such as with a very high HOA fee] it could be 4%. Compared to the Northeast, our taxes down here are less expensive - especially when selling. One of the benefits of buying down here is that the seller pays the title, which is $1,500 to $2,000 on average. But it all depends on how the contract’s written.”
- Prorated HOA charges, HOA approval fees
- Survey fee ($200-$800 based on land size: $400 -$500 is typical)
- Appraisal fee ($400-$500)
- Credit report ($50-$75)
- Loan origination fees (varies)
- Home inspection ($375-$450)
- Recording fees ($50-$250)
- Wood Destroying Organism inspection ($75-300)*
Keep in mind that these are approximations. Your fees can vary depending on the city you live in, the home you buy, and the companies you end up working with.
It’s worth noting that the survey fee is optional, and there may be a way to get it for free.
“I encourage my buyers to get a survey fee, especially if the lender wants a copy of it. But a lot of times you can ask the seller if they have one and they usually do, and they can just give it to us and that saves the buyer money,” explains Robinson. “But unless the lender needs it, you don’t need to get one here in Florida. It’s just good to have because now you know your boundaries.”
*Note: Many lenders require a WDO inspection for Florida home buyers. However, if you're buying a home with a VA loan, you will not be allowed to pay for the WDO, so the seller would need to pay for it.
Seller Closing Costs in Florida
Sellers can expect to pay from 7-9% of the home’s purchase price in closing costs (this includes the commission fees given to the agents). For the average $225,000 home, this equates to a range of $15,750 to $20,250. Fees will vary depending on where you live, the home you’re selling, and the companies you work with.
- Real estate commission (up to 6% of purchase price)
- Transfer taxes/documentary stamp (selling price of home divided by 100, then x .7)
- Promissory note (mortgage amount divided by 100, then x .35)
- Intangible tax (promissory note amount x .002)
- Title search fee ($1,500- $2,200)
- Property taxes (since these are paid at the end of the year, sellers may need to pay back the buyer for the part of the year they were living there)
Note: home sellers in Florida can benefit from Houwzer’s 1% all-inclusive listing feeplus 2-3% to the agent representing the buyer (rather than the typical 6% agent split).
Closing Costs in Florida: New Construction
When the housing market was more balanced, new construction builders would often pay for all the closing costs for the buyers - they would basically roll the closing costs into the price of the home.
"If you were buying new construction you could walk in with your 3% down, and as long as you went with the preferred lender from the builder, they would pay for the rest," explains Robinson. "It was a great way to go for first-time homebuyers because you could save on $10,000 out of pocket."
Unfortunately, due to the extremely competitive nature of the current housing market, most builders have dropped this offer. Instead, you might receive a reduction in your closing costs - but you won’t see them eliminated completely.
"Because there are more buyers than there are homes, builders have just stopped doing it. They might credit you $1,500 toward closing - but when closing’s $10,000, that’s not helping too many people," explains Robinson.
Can I Use a Mortgage Calculator to Determine Closing Costs?
Although you can use a mortgage calculator to get a general idea of how much cash you’ll need to bring to the closing table, it's worth keeping in mind that online calculators use averages to estimate costs - so they will never be completely accurate.
“The only mortgage calculators that I trust are where you plug in an interest rate and it shows you the payment. But even that can be wrong, because for a borrower who’s putting less than 20% down and is going to be paying PMI, mortgage insurance is not the same for every lender,” explains Wagner. “The lenders we use may have slightly lower charges for the PMI than another lender. So it’s hard to trust any of the mortgage calculators out there because they default to 20% and industry averages rather than specific rates.”
SmartAsset has a fairly nuancedonline calculator for closing costs, as it allows you to specify by your city, down payment, type of loan (FHA or VA), etc. - all things that can impact your closing cost estimate.
How Can I Figure Out My Closing Costs for Florida?
The best way to get a more accurate closing cost estimate is to meet with your Realtor and/or mortgage advisor. They can come up with these numbers based on the type of home you’re interested in, your lender’s loan requirements, local taxes, and more.
If you need a rough estimate, though, 3% is a good place start.
- For a $300,000 home, you'd pay approximately $9,000 in closing costs in FL
- For a $450,000 home,you'd pay approximately $13,500 in closing costs inFL
- For a $600,000 home,you'd pay approximately $18,000 in closing costs in FL
Talk to a Florida agent about closing costs
For Further Reading
- 18 Problems You'll Need to Note in a Florida Seller's Disclosure
- Moving to Florida: is Tampa, Orlando or Miami the Right City for You?
