Closing Costs

What Are Closing Costs? and Who pays for them?

Learning the true cost of your real estate closing

Everything you need to know about your Closing costs

When Buying (or selling) Real Estate property, you often encounter the term “closing costs”. So, what are these so called “closing costs”?

And how can you most accurately estimate them before making (or accepting) an offer on a real estate property?

What are closings costs?

Closing costs are a collection of fees, dues, services and taxes that are split between the buyers and sellers of real estate property and cover the additional expenses related to real estate transaction that are not included in the sales price.
Closing costs can include, among others, costs related to due diligence, ownership transfer, document recording, loan origination, escrow management.

What is included in closing costs?

Based on the county in which the property is in, the term “closing-costs” can include different line items.

You should ask the title company the handles your closing for a “Preliminary Closing Disclosure” or Prelim CD in short, which is a ledger document that should specify which closing costs items are applicable in your transaction and which party (buyer or seller) is responsible for each line item.

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How much are closing costs?

There are several different factors that can affect the final amount of your closing costs. Aside from the cost of Title Insurance which is directly tied the value of the traded property and charged by your title company, closing costs for buyers and seller can change drastically based on the costs of 3rd party services they receive such as costs charged by their lender for initiation or disposition of a loan, the costs for inspections and surveys, charges assessed by Homeowners associations and Municipalities and even your homeowners insurance.
Title and Lien Search
Based on the title insurer and Municipality
Title Insurance Premium
Based on the price of the property
Lender Charges
Determined by your lender
State and Local Taxes
State Mandated Formula
Inspections and Surveys
3rd Party Vendors

Buyers and Sellers Charges

Who pays closing costs?

In Florida, similarly to other states, closing costs are charges that applied to both parties in a real estate transaction, the buyer AND the seller.

The way in which these charges are being split, is based upon the county in which the property is located in and the contractual terms negotiated in your Purchase and Sales agreement

Buyer's Closing Costs

  • Title Insurance Charges
    If the buyer pays for title insurance, this line item will include the price for the title insurance premium. In Florida, title insurance premiums are computed by a fixed formula set by the State and are directly tied to the price of the property being purchased.
  • Lender Charges
    If you are taking out a loan to purchase a property, these charges can include several items by your bank or financial institution to process you loan application and issue the loan to you
  • Inspection Charges
    Physical condition inspections are the most commonly used inspections in real estate transactions. "4-Points" and "Wind Mitigation" are two popular examples you might consider, while other inspections such as environmental or hazardous materials are more popular in commercial transactions and specificly exposed areas.
  • Survey Charges
    When you purchase a property the includes a lot (almost anything that is not a condominium) it is always recommended (and most likely required if you take out a loan) to obtain a survey that will define the legal boundary lines of the purchased property.
  • State Tax and Local Tax Charges
    When you take out a loan on a property, the State of Florida and your local municipal governments will charge you certain tax amounts such as documentary stamp tax and intangible tax. We recommend consulting with your title company to understand which taxes, if any, are applied in on your real estate purchase.
  • Escrow Settlement Charges
    These are the charges associated with the management and disbursement of escrow funds. An escrow is a “middle-man” which is holding the funds associated with your purchase, until all the terms of the contract have been met, and then disburse these funds, according to the terms of the contract.

Seller's Closing Costs

  • Title Insurance Charges
    If the seller pays for title insurance, this line item will include the price for the title insurance premium. In Florida, title insurance premiums are computed by a fixed formula set by the State and are directly tied to the price of the property being Sold
  • Estoppel and HOA Charges
    If you live within a Homeowners Association, then your HOA will charge you to obtain and Estoppel Letter, which clarifies the status of your financial obligations to the association, if any exist.
  • Payoff Charges
    This is most likely include the balance you have with your current mortgage holder (if you have a mortgage) however, this item can also include other lien charges against your property such as utility, local and municipal liens, contractor’s mechanic’s liens, or any other liens that currently exist against your property for an unpaid monetary value.
  • Realtor Commissions
    If you used a Real Estate professional to list and sale your property, this line item will include the commission that is owed to that individual or company.
  • State Tax and Local Tax Charges
    The State of Florida and Local Municipal governments in Florida may charge you certain tax amounts in order to sale and dispossess a property. We recommend consulting with your title company to understand which taxes, if any, are applied for your real estate sale.
  • Escrow Settlement Charges
    These are the charges associated with the management and disbursement of escrow funds. An escrow is a “middle-man” which is holding the funds associated with your sale, until all the terms of the contract have been met, and then disburse these funds, according to the terms of the contract.
Title Insurance Closing Costs Estimate from Your Tablet
Florida Title Online Tool Closings Costs Estimator

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How to calculate your closing costs?

Calculating the accurate amount of closing costs is nearly impossible before having all the information from all the partied involved in the transaction, since there are many variables that can affect the cost of different charges.

You can always obtain a preliminary Closing Costs Estimate with our quick and easy Closing Costs Calculators.

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