When you buy a home in Florida, you’re not just paying for the home’s sales price. You’ll also need to pay closing costs.
Home buyers closing costs are the fees and dues above the sale price that consummate the sale.
Exactly what you need to pay for and how much you’ll need to pay varies.
What are Closing Costs?
Closing costs are all of the costs associated with buying and selling a home.
Many of the buyer’s closing costs are related to financing a home with a mortgage.
For example, an appraisal fee, credit report, and loan origination fees.
In Florida, buyers and sellers typically share closing costs, but it’s not an even split.
How Much Are Buyers Closing Costs in Florida?
Florida ranks 8th highest on BankRate’s list of average closing costs on a home by the state.
In 2021, the average closing costs for buying a home in Florida were $8,554. For comparison, the national average was $6,905.
The median sale price for a Florida home was $399,900 in the first quarter of 2023.
Suppose a buyer borrowed $319,900 to buy a home at that price (the purchase price minus a 20% downpayment). The closing costs would be an estimated $6,398 to $19,194.
It’s often much less than what sellers owe at closing.
Sellers typically cover the bulk of closing costs, including the buyer’s agent’s commission.
Buyers Average Closing Costs
Buyers closing costs will typically be between 2 percent and 5 percent of the home purchase price. The amount will vary largely on if the property is being purchased with cash or with a lender. Cash transactions end up with much lower closing costs.
What Are The Home Buyers Closing Costs in Florida?
Buyers typically encounter loan costs, prepaid costs, title and settlement fees, and other related fees at closing.
However, every real estate transaction is unique.
Whether an expense is covered by the buyer or the seller and how much the expense is will vary depending on your purchase contract.
Loan Origination Fees & Prepaid Points
Some mortgage lenders may charge a fee when you take out a loan. The amount will vary across banks as there is no standard fee.
Some lenders also charge for points, which can secure you a lower interest rate and save you money later on.
Points often cost 1% of the loan amount and may reduce your total interest rate by 0.125% to 0.25%.
Appraisal Fee
Your lender will require an appraisal before lending you money.
They need to make sure that the house is worth at least what you’re borrowing.
Expect to owe somewhere around $500 for this expense.
In some cases, an appraisal won’t be required, but this is rare, and usually only in deals where the buyer is paying cash.
Credit Report Fee
You’re responsible for the cost of the mortgage lender running a hard credit check.
The cost for this varies but may cost up to $200.
If you’re borrowing with another person, you’ll need to pay for the cost of both credit reports.
Title Search Fee
The title search ensures the house you’re buying is clear with no judgments or unpaid claims.
Buyers or sellers could be responsible for this fee in Florida. Title search fees vary.
Survey Fee
A survey fee covers the cost of surveying the property to determine the property lines.
Cost varies depending on the size of the property, but you can expect to pay between $200 to $800.
Often times the seller will have a copy of a survey that they can provide to you, and you may not need a new one.
Settlement Fee
In Florida, buyers typically pay the settlement fee.
Expect to pay around $500 to $800 for services provided by the settlement agent.
Prorated Taxes or Other Fees
If the seller has paid for any fees or taxes relating to the house upfront, the buyer will need to reimburse the seller on a prorated basis.
For example, if the seller paid a yearly HOA fee, the buyer must pay the seller a prorated amount.
The same applies to property taxes, quarterly utilities, etc.
How much you’ll owe for these costs will vary significantly.
It will depend on the value of the property, what utilities or fees were paid in advance and the way the real estate contract is written.
Property Tax Escrow
Property taxes are paid in arrears, so you shouldn’t have any property taxes due at closing unless the seller has already prepaid taxes.
In this case, then the buyer needs to credit the seller for the prorated amount that they would be due in real estate taxes post-closing.
If the seller has not paid any real estate taxes up front, then the seller will typically provide the buyer a credit at closing for the days they owned the house during the calendar year that they have not yet paid taxes for.
Fortunately, Florida has lower property taxes than many other states.
Attorney Fees
If you hire a real estate attorney, you’re responsible for covering their fee.
You will pay for their services at closing.
Costs will vary, but you can shop around to find a real estate attorney that fits your budget if you choose to use one.
Note About Attorneys in Florida Transactions
Most Florida residential real estate transactions do not involve attorneys. Real estate agents handle the contracts, and title services handle the closing of the transaction. Hiring an attorney in Florida is completely up to the buyers discretion, but not necessary or common.
Home Inspection
Home inspections aren’t required in Florida, but they’re always a good idea.
A home inspection typically costs $300 to $500.
Specialized inspections and home inspections for large homes will cost more.
You can shop around online for companies offering discounts if you’re hoping to reduce your closing costs.
The home inspection is a cost that the buyer occurs during the purchase of a home, but its typically paid when services are rendered and not part of the settlement statement.
Homeowner’s Insurance Premium
Most lenders require buyers to purchase a homeowner’s insurance policy. In some areas, you will also need flood insurance.
You’ll pay your homeowner’s insurance premium at closing, but the cost varies depending on your property value, quality of coverage, and provider.
HOA or COA Fees
If you’re moving into a community with a homeowner’s association or a condo owner’ association, you might need to pay HOA or COA dues at closing.
Some HOA communities charge an initial move-in fee plus ongoing monthly fees.
Others only require monthly fees. Buyers often pay 3 or 4 months’ worth of HOA fees during closing.
When Do I Find Out What I Owe for Closing Costs?
Lenders must give you a document called a Closing Disclosure at least three business days before your closing date.
The document outlines exactly how much you owe and why.
Although you won’t have the final numbers until you receive this document, you can track many of the expenses along the way.
For example, the expected loan origination fee, the cost of the inspection, anticipated HOA fees, and the cost of other services as you choose service providers.
FAQs About Buyer’s Closing Costs
Do Cash Buyers Owe Closing Costs?
Yes. Even if you’re purchasing a home with cash, you will still owe money at closing beyond just the home’s sale price. For example, fees relating to the title, taxes, and insurance.
Do Buyers Pay Their Real Estate Agent’s Commission?
Typically, no. The seller is responsible for paying a commission to their own realtor and the buyer’s realtor. Sellers account for this expense when pricing their homes for sale.
How Do Buyers Pay for Closing Costs in Florida?
Buyers typically pay for closing costs out of pocket. Sometimes buyers will ask sellers to cover their closing costs. This is more common in a buyer’s market.
How Can I Reduce My Closing Costs?
Certain fees pertaining to the closing are negotiable and vary between service providers. Negotiate or shop around for these services to find the best rates.
- Origination fees and points charged by the lender
- Appraisal Services
- Title Services Fees
- Insurance Coverage
- Attorneys Fees
- Survey Cost
