How Much are Closing Costs?

How Much Are Closing Costs When Buying a Home in Florida?

You've saved for your down payment, found a home you love and arranged your financing. Then another number enters the conversation:

Closing costs.

If you're buying a home in Ocala or Marion County, Florida, understanding closing costs before you make an offer can help you budget properly and avoid surprises as you approach closing day.

So, how much are closing costs when buying a home in Florida?

There's no single percentage that applies to every transaction.

Your actual closing costs depend on the purchase price, type and amount of financing, lender, insurance, property taxes, title and settlement charges, prepaid expenses and the terms negotiated in your purchase contract.

That's why I encourage buyers to look at the complete financial picture—not just the down payment.

What Are Closing Costs?

Closing costs are the expenses associated with obtaining your mortgage and completing the transfer of the property.

Depending on your transaction, they may include lender charges, appraisal fees, title-related expenses, government recording charges, prepaid homeowners insurance, prepaid interest, escrow deposits and other costs.

Some expenses are directly related to your mortgage.

Others are associated with transferring and closing the real estate transaction.

And some expenses buyers commonly think of as “closing costs” may actually be paid before closing, such as a home inspection.

Closing Costs vs. Cash to Close

These two terms are often confused, but they're not the same thing.

Closing costs are the fees and expenses associated with your loan and real estate transaction.

Cash to Close is the amount you actually need to provide at closing after your down payment, closing costs, deposits already paid, lender or seller credits and other applicable adjustments are taken into account.

So if someone tells you that your closing costs are a certain amount, don't automatically assume that's exactly how much money you'll need on closing day.

Your lender's Closing Disclosure will provide the final details.

What Closing Costs Does a Florida Home Buyer Pay?

Every transaction is different, but here are some of the expenses you may encounter when buying a home in Ocala or Marion County.

Loan Origination and Lender Charges

If you're financing the purchase, your lender may charge fees associated with originating, processing and underwriting the mortgage.

These costs vary by lender and loan program, which is one reason it's worthwhile to compare mortgage offers rather than looking only at the advertised interest rate.

Appraisal

A lender will commonly require an appraisal to help evaluate the property securing the mortgage.

An appraisal isn't the same thing as a home inspection.

The appraiser is primarily evaluating the property for the lender's purposes, while a home inspector evaluates the condition of the home's systems and components.

Home Inspection

A professional home inspection is generally paid directly by the buyer around the time the inspection is performed rather than necessarily being paid at closing.

Depending on the home, additional inspections or evaluations may be appropriate.

Your inspection expenses should still be included in your overall home-buying budget, even if they don't appear as part of the final cash you bring to closing.

Survey

A survey may be required or recommended depending on the property, lender, title requirements and circumstances of the transaction.

Survey costs can vary based on the size and characteristics of the property.

This can be especially relevant in Marion County when purchasing acreage or a property with fences, outbuildings or other improvements where understanding boundaries is important.

Title Search and Title Services

Before ownership transfers, title work is performed to identify issues that could affect ownership of the property.

Depending on the transaction, there may be costs associated with title search, settlement or closing services and title insurance.

Who pays particular title-related expenses can depend on the contract and local practices, so don't assume that every Florida transaction will be structured exactly the same way.

Title Insurance

Title insurance is designed to provide protection against certain covered title problems.

A lender will generally require a lender's title insurance policy when a mortgage is involved. An owner's title insurance policy protects the owner's interest subject to the terms and exclusions of the policy.

Again, who pays particular title expenses can depend on the transaction and contract.

Recording and Government Charges

Florida real estate transactions can involve government recording fees and taxes associated with deeds, mortgages and other documents.

Your closing professional will calculate the charges applicable to your particular transaction.

Homeowners Insurance

If you're financing a home, your lender will generally require homeowners insurance.

You may need to pay a homeowners insurance premium in advance as part of the closing process.

This is especially important when buying a home in Florida, because insurance costs can vary considerably based on the property.

Roof age, construction, electrical and plumbing systems and other property characteristics can affect insurance availability and premiums.

Don't wait until the last minute to investigate insurance.

Prepaid Interest

Mortgage interest typically begins accruing when your loan closes.

Depending on the closing date, you may pay interest covering the period between closing and the beginning of your first regular mortgage-payment cycle.

This is one reason the amount needed at closing can change somewhat depending on the date of closing.

Property Taxes and Escrow Deposits

Your closing figures may include adjustments involving property taxes and funds deposited into an escrow account for future taxes and insurance.

One important warning for Florida buyers:

Don't assume the seller's current property-tax bill will be your future property-tax bill.

Florida Homestead Exemption and Save Our Homes assessment limitations may have reduced the seller's assessed value over many years.

After a change in ownership, the property's assessment can change, and your exemptions may differ.

When calculating what you can afford, use an appropriate estimate of your future taxes rather than relying only on what the current owner pays.

Mortgage Insurance

Depending on your loan type and down payment, mortgage insurance may apply.

With some conventional loans, private mortgage insurance—or PMI—may be required when the buyer makes a smaller down payment.

Other mortgage programs have their own mortgage-insurance or funding-fee structures.

Your lender can explain exactly what applies to your loan.

Discount Points

Some buyers choose to pay mortgage discount points to obtain a lower interest rate.

Whether buying points makes financial sense depends on the cost, rate reduction, how long you expect to keep the loan and your overall financial circumstances.

Ask your lender to show you the numbers both with and without points before deciding.

Does Florida Require a Real Estate Attorney at Closing?

No. Florida doesn't universally require every residential real estate buyer or seller to hire an attorney simply to complete a home purchase.

Depending on the transaction, a title company or attorney may perform closing and title functions.

However, a real estate attorney can be extremely valuable when legal issues arise involving contracts, estates, trusts, title problems, ownership disputes or other circumstances requiring legal advice.

A real estate agent can help guide you through the transaction, but legal advice should come from a qualified Florida attorney.

Who Pays Closing Costs in Florida—the Buyer or Seller?

Usually, both the buyer and seller have expenses associated with closing, but they don't necessarily pay the same types of costs.

Which party pays a particular expense can depend on the purchase contract, financing and other circumstances.

Some costs are associated specifically with the buyer's mortgage. Others relate to the seller's side of the transaction.

Rather than relying on a generic online list saying “buyers always pay this” and “sellers always pay that,” look at the actual contract and settlement figures for your transaction.

Can a Seller Pay Some of the Buyer's Closing Costs?

Sometimes.

Depending on the market, purchase agreement and the buyer's loan program, a seller may agree to contribute toward certain allowable buyer closing costs.

This is something that can be negotiated as part of an offer.

However, seller contributions aren't unlimited. Mortgage programs can place restrictions on the amount and types of costs a seller may pay.

If you're financing the purchase, your lender should be involved in determining what's permitted.

Can Closing Costs Be Negotiated?

Some can.

You may be able to compare lenders, title or settlement services where applicable, insurance providers and other services.

Your Loan Estimate can help you identify which services you're permitted to shop for.

You may also be able to negotiate credits with the seller depending on the circumstances of the transaction.

The key is to investigate these costs before closing day, not when you're sitting down to sign documents.

What Is a “No-Closing-Cost” Mortgage?

You may see lenders advertise a “no-closing-cost” mortgage.

That doesn't necessarily mean the costs disappear.

The lender may provide a credit toward certain closing costs in exchange for a higher interest rate or structure the financing in another way.

Ask the lender to compare the total cost of each option so you understand what you're paying both now and over time.

Does Closing at the End of the Month Save Money?

You may have heard that closing near the end of the month lowers your closing costs.

It can reduce the amount of prepaid interest collected at closing because there are fewer days remaining in that month.

But that doesn't necessarily mean you're saving a significant amount of money over the life of the loan.

You're primarily changing the timing of when interest is paid.

Choose a closing date that works for your transaction rather than basing the entire decision on this one factor.

What Is a Loan Estimate?

If you're obtaining a mortgage, your lender will generally provide a Loan Estimate after you apply.

This document provides important information about the proposed loan, including the estimated interest rate, monthly payment and closing costs.

Use it to understand your loan and compare financing options.

Don't just look at the interest rate.

Look at lender charges, points, estimated cash to close and the total structure of the loan.

What Is a Closing Disclosure?

Before closing on most covered mortgage transactions, you'll receive a Closing Disclosure showing the final loan terms and costs.

Compare it carefully with your most recent Loan Estimate.

Look at:

Loan amount
Interest rate
Monthly payment
Closing costs
Credits
Prepaid expenses
Escrow amounts
Cash to Close

If something is different from what you expected, ask your lender or closing professional about it before you sign.

How Much Money Do I Need to Buy a Home?

This is a better question than simply asking how much your closing costs will be.

Your total home-buying budget may need to account for:

Down payment
Loan and closing costs
Earnest money or escrow deposit
Inspections
Appraisal
Homeowners insurance
Moving expenses
Immediate repairs or improvements
Utility deposits
Cash reserves after closing

You don't want to spend every available dollar getting the keys and have nothing left the following week when the air conditioner needs service or you discover you need a new washer and dryer.

Buying a Home in Ocala or Marion County?

I've called Ocala home for more than 30 years and have been helping buyers and sellers throughout Marion County for more than a decade.

Part of my job is helping buyers understand the process so they know what questions to ask and what to expect along the way.

I'll work with your lender, title or closing professionals and the other parties involved to help keep the transaction moving toward closing.

And if you're just starting to think about buying, that's a good time to talk.

We can discuss what you're looking for, connect you with financing resources if needed and start exploring homes for sale in Ocala and Marion County within a comfortable budget.

Buying a home involves more than the purchase price. Let's make sure you understand the process—and the numbers—before you get to the closing table.

You’ve saved up your down payment, found the perfect home and got a great rate on your mortgage. Don’t let closing costs come as a shock when you sign on the line. Understanding how much are closing costs is an essential part of making sure you are prepared to purchase your new home.

How much are closing costs? You’ll find that in most cases, mortgage closing costs are 2 to 5 percent of the purchase price of your new home. For example, the median home value in Ocala, Florida, is $142,000. This means buyers purchasing a home here might expect to pay between $2,800 and $7,100 in closing costs.

What Costs are in Closing Costs?

You’ll find that closing costs cover an assortment of fees that apply to the services and expenses that go into getting a mortgage and buying a home. These fees and services charges for buyers can include:

Appraisal and survey fees: These fees are usually a few hundred dollars and are used to help determine the fair market value of your home.
Attorney fees: Careful buyers and sellers often want an attorney to review contracts and fees for the review might be included with closing costs. In fact, a real estate attorney is required to oversee home closings in Florida.
Closing or escrow fees: An escrow agent likely helped close the deal on your home and these fees cover those services.
Home inspection fees: A typical home inspection costs between $300 and $400 and buyers might pay this fee at closing.
Homeowner’s insurance: It is typical to pay the first year of homeowner’s insurance at closing.
Loan origination fees: It costs money to process and underwrite a home loan. Underwriting is an essential part of the approval process and involves the lender checking your credit scores and more. These lender charges can vary and are included in closing costs.
Mortgage points: Sometimes called discount points, mortgage points are fees paid to the lender to help you get a better interest rate on your mortgage.
Private mortgage insurance (PMI): It is not always necessary to have the standard 20% down payment when buying your home. However, if you don’t put down enough money some lenders require you to obtain PMI to protect the lender and cover losses if you default on your loan. Your mortgage insurance premium might vary based on a number of considerations.
Property tax: In most cases, you’ll pay 6 months of property taxes upfront at closing. How much property tax you pay depends on your location and municipality. Property taxes might be reassessed after closing and value might increase. If this happens the amount the lender set aside for taxes might need to be readjusted to cover the new amount.
Title insurance: Title insurance policies for both the buyer and seller are based on the home sale price.

You might find a few other miscellaneous fees tacked on to your closing costs. These extra costs might include recording fees with the local government, transfer taxes, title search, credit checks and more.

Want to know how much are closing costs before you start the homebuying process? Closing costs must be transparent and disclosed before a deal can go through. Your bank is required by law to produce a Loan Estimate (LE) shortly after you submit your mortgage application. This document should be reviewed carefully. You should contact your lender if anything in the LE doesn’t add up. You’ll want to compare this document to the Closing Disclosure you get before officially closing on your home.

Who Pays Closing Costs?

You’ll find that both parties, buyers and sellers, are responsible for paying closing costs.

Buyers typically pay 2% to 5% in closing costs when purchasing a home, while the seller might be responsible for a bit more. Typical closing costs for sellers might range between 8% to 10% of the home’s selling value. Sellers pay more in closing costs because their fees typically include listing and the buyer’s agent’s commissions.

While buyers need to bring cold, hard cash (or most likely a cashier’s check) to cover their costs at closing, seller closing costs are deducted from proceeds of the home’s sale.

How Can I Avoid Paying Closing Costs?

In most cases, closing costs are a certainty that can’t be avoided. However, there are a few steps you might be able to take to reduce your closing costs. All it takes is a bit of knowledge and some negotiation. In many cases, a buyer can negotiate with mortgage lenders or the seller and let them assume some of the closing costs.

There are several tactics you might try to avoid paying closing costs.

Arrange a No-Closing Cost Mortgage with the Lender

Some buyers can work with their lender to arrange a loan without closing costs. However, you’ll likely end up paying for the closing costs in some way or another. You might see costs bundled into your mortgage payment or in the form of a higher interest rate.

Shop Around for Services

Many of the fees that make up closing costs are for the services that go into buying a home. You might be able to reduce closing costs by shopping around for these services and finding the best deal possible. You can find service providers and loan products with more competitive rates by doing your research.

Wait Until the End of the Month

As a buyer, you become responsible for paying your mortgage as soon as your home closes. You can save on closing costs by waiting until the end of the month to make the deal official. This will cut back on per diem fees and help you keep a little more money in your pocket.

Buy or Sell Your Home with Bill Blankenship

Another way you can avoid closing costs: work with an experienced Realtor like Bill Blankenship. Bill can leverage his expertise and relationships to advocate for you as a buyer. From making sense of how much are closing costs to finding the perfect home for your family, Bill is ready to guide you through your home buying journey.

Ready to reach out to one one of the top Real Estate Agents in Ocala? Contact Bill Blankenship today and get ready to enjoy an easy home buying experience.