The closing should be the best part of the sale or purchase of a home, condominium, or other real estate property. Too often though, the closing is a confusing time for both the buyer and seller.
The buyer has the right to expect he/she will receive the keys to their property, title insurance to protect their investment, and a clear understanding of what they will owe at settlement and on a monthly basis after they move in.
The seller has the right to know that all the property bills and claims against the property will be paid – and the amount of the proceeds check that will be paid. Both buyer and seller have the right to expect that their lawyers will be paid, that the broker will be paid, and all other property bills such as recording fees will be taken care of – at the closing.
What real estate closing costs might you have to pay?
Typically the buyer’s closing costs are the costs to finance the purchase of their home. These are the costs in addition to the mortgage. Buyer’s closing costs include the cost of title insurance, the buyer’s lawyer’s fees, origination fees, discount points, insurance for the home, and real estate transfer taxes.
The seller’s closing costs normally include any payoffs related to the house such as the mortgage due and utility bills through the date of closing. Seller’s closing costs also typically include the seller’s lawyer’s fee, the broker’s fee, and any home repair costs so the property can meet local building code standards.
How much are the closing costs
For the buyer, closings costs generally run two to six percent of the amount of the loan. Some closing costs may be added to the loan. The origination fee normally must be paid at settlement. Your legal fees depend on your agreement with your lawyer. The title insurance amount is normally a set fee that the title company charges or a percentage of the sales price.
For the seller, your lawyer will help you obtain payoff statements for all the home bills. Your lawyer’s fee is based on agreement. Typical broker’s commission costs can run about 6% of the sales price.
Typically, the buyer pays its closing costs and the seller pays its closing costs. Some agreements of sale may provide that the seller pays some of the closing costs.
What are the common closing costs – in more detail?
Common items that must be paid for at the closing of your Indian River County property or Florida property include:
- Title Insurance. Buyers purchase title insurance to protect their home from claims by prior owners or others against the property or other claimants who have judgments, liens, or other legal rights. The lender normally requires that buyers purchase title insurance though all buyers should buy this protection. The cost of title insurance is often a fixed amount or a percentage of the sales price. The title company will run a search to determine who might have an ownership or legal claim against your property.
- Settlement Fee. This is usually the cost for the title company or agent to handle the closing.
- Attorney’s Fee. In Florida, the lawyers for both the buyer and seller are normally paid at the closing.
- Various home protection fees. These fees include the cost of:
- Flood insurance. You may be required to buy flood insurance depending on the location of your property.
- A home warranty fee. This fee protects buyers in case the home needs repairs because parts of the home were defective
- The home inspection fees. Buyers should pay professionals to inspect the home for any damage or possibility of damage such as termites, structural damage, or other damages – before they sign the agreement of sale and/or before the closing.
- Survey costs. A survey will examine your property’s official boundary lines. Lenders normally require a survey.
- Appraisal fees. Lenders usually require that a real estate appraiser place a value on the property so the lender can be reasonably sure of obtaining their money if the buyer defaults on the loan.
- State transfer or mortgage taxes. These are fees due based on the sales price.
- A seller may be required to place funds in escrow to cover the cost of any required repairs. Buyers may also place money in escrow to cover the cost of home damage, property taxes, and mortgage insurance. Mortgage insurance protects the lender in case the buyer defaults.
- Smaller fees. These fees include the cost to pay for a notary who verifies the signer did sign legal documents and recording fees to ensure your deed is properly recorded.
- Buyers may pay a mortgage interest fee to cover the cost of the loan until the buyer makes his/her first mortgage payment.
- Lender Fees and Charges. These are often the largest fees for the buyer. The lender is required to provide a reasonable estimate of these fees when you apply for the loan. These fees include:
- The loan origination fee. This cost varies based on several factors. It’s usually one or two percent of the loan amount.
- Discount points. This is a method to reduce the interest rate on your loan so your mortgage payment is lower. One point means one percent of the home loan.
- Tax service fee. A tax service agency normally handles your local property taxes so the lender pays your property taxes on time.
- Document preparation fee. This is the cost for all the real estate loan and mortgage paperwork.
Discuss the amount of closing costs you’ll need with an experienced Vero Beach and Sebastian real estate lawyer
At Lulich & Attorneys, our Indian River County real estate lawyers have been advising buyers and sellers for 30 years. We’ll help you with each phase of your real estate purchase or sale. Lulich Attorneys & Consultants provides practical guidance in all areas of real estate. Whether facilitating a real estate closing or representing a client in a contract dispute, our real estate attorneys are ready to serve you. Call us at 772-580-5500 or use our contact form to schedule an appointment.