Closing Costs When Buying a Home in Florida

MortgagepageAs a REALTOR ® I’m often asked what the typical closing costs are when buying a home in Florida and who pays them. There isn’t a definitive answer because there are a lot of variables, such as if the purchase is cash or financed, purchase price, HOA, etc. Lender’s financing charges vary too but I can tell you what closing costs are required by the State.

 

Florida is a non-income tax state, instead there are taxes on a home purchase to help generate revenue. There are several taxes that must be paid, plus title insurance. There are three taxes on a real-property purchase and depending on if the purchase is financed or cash determines what is required. Most closing costs are negotiable but generally the seller pays doc stamps on the deed and the buyer pays doc on mortgage and county tax stamps.

The first “hard cost”, and one that must be paid on every purchase, is documentary stamps on the deed which is generally paid by the seller. The cost is .70 per $100, or $700 per one-hundred thousand dollars of the purchase price. A $200,000 home will have a $1400 “Doc on Deed” tax. If it’s a cash purchase, that’s all the state requires as a tax.

If the home is financed, there’s a “Doc on Mortgage” tax at .35 per hundred, or $350 per $100,000 of the mortgage amount, not sales price.

If the purchase is financed, there’s also a county tax of about 2% of the mortgage amount.

Title Insurance.

There are two types of title insurance, Owner Policy and Lender Policy. Who pays owner title policy is negotiable between buyer and seller.

Florida is a Title Insurance state. All residential purchases should have title insurance and if the purchase is financed, the lender will require it. Title insurance protects the buyer from many liens that may have been missed in the search, but title companies are generally very thorough and typically don’t miss much.

Title insurance protects the buyer (or lender) from liens up to the purchase price of the home.

Florida regulates the cost of title insurance but title companies may have different preparation costs. It’s wise to check with several title companies to ask what they typically charge for their services.. A buyer can ask for a preliminary HUD-1 to ascertain approximate closing costs, but until the title company has the figures from a lender, they can only give you the hard cost, such as title insurance, their fees and taxes and who pays them as outlined in the purchase contract.

Current Florida owner’s title insurance cost based on purchase price. (as of Feb 28th, 2013)

$5.75 per $1000 up to $100,000.
$5.00 per $1000 of purchase price over $100,000 to 1 million.
$2.50 per $1000 of purchase price over 1 million to 5 million.
$2.25 per $1000 of purchase price over 5 million to 10 million.
$2.00 per $1000 of purchase price over 10 million.

Other fees include title search, tax service fee, flood certificate and lender title policy (if financed), settlement or closing fee, search fee, title service fee, deed recording and mortgage release fee. It sounds like a lot and depending on what title company is closing the deal, the total cost for these fees (not including owner title policy) should be less than $1500. (This is an estimate for a $200,000 purchase. Your cost depends on purchase price and other variables.)

Again, these closing costs do not include lender fees if you’re getting a mortgage. Your lender is required to supply a Good Faith Estimate (GFE).

If your looking to buy or sell a home in Sarasota or Charlotte County, Florida, we’d appreciate an opportunity to help you. Contact Us and we’d be happy to answer your questions.

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