There are certain costs associated with closing the sale of a house. These fees are split between the buyer and the seller, as spelled out in the sales contract. As we negotiate the contract for you, we will not only work to get the sales price you want, we will also work to limit the amount of closing costs for which you will be responsible. We will walk you through the closing costs, answering any questions you may have, and explaining which costs are mandated by law to be yours and which are negotiable.
Good Faith Estimate
Buyers obtaining financing should always receive from the lender a “Good Faith Estimate” of closing costs at the time the loan application is submitted to the lender. The estimate is based on the loan officer’s past experience and may not include all the closing costs. We will be glad to review the “Good Faith Estimate,” answering questions and highlighting any missing costs, and estimates that we believe to be low.
Standard Closing Costs
Typical Loan-Related Buyer’s Costs
- Loan Origination Fee (typically from ¼ to 1% of loan amount)
- Points (optional, but typically ½ of loan amount)
- Appraisal Fee (usually $300-$450)
- Credit Report (usually $20-30)
- Interest Payment (will vary depending on day of month loan closes)
- Escrow Account (from $0 to $400)
- Title Search or Abstract (from $50 to $100)
- Lien Search (typically $75)
- Recording costs for mortgage (approx .55% of loan amount)
- Property Taxes (prorated to establish escrow – usually 3 months of taxes are collected in advance +/-)
- Transfer Taxes (.70% of Sales price – usually paid by Seller – though many new construction sales require the Buyer to pay this.)
- Recording Fees on property (minor costs, usually under $75)
- Homeowners Insurance (homes built prior to 2002 will usually have a higher cost than newer homes). An annual homeowners insurance policy for may cost anywhere from .25% to 1.25% of the home’s value, depending on age of the home, construction quality, location, etc.)
- Flood or Quake Insurance (varies depending on Flood zone, but for homes in non-flood area, costs may be as little as $375 per year additional)
- Private Mortgage Insurance (PMI) is normally required by the lender if you are borrowing more than 80% of the sales price. Some combination type loans allow buyers to avoid PMI by using 2 loans, perhaps 1 loan at 80% of the sales price, and a 2nd loan for 10 or 15% of the sales price. The second mortgage interest rate is often 2-4% higher than the first mortgage.
- Title Insurance (always recommended – and usually costs about ½ percent of the purchase price for a Ooe-time policy that covers the buyer against certain types of potential liability/lien related issues that may later be discovered against the property so long asthe buyer owns the property.)
Preliminary HUD (Closing Statement)
Typically, approximately 24 hours prior to the actual closing time, the buyer can expect to receive a copy of the closing statement with all of the expected final closing costs, many of which are provided by the particular lender that you as the buyer have selected for your loan. Occasionally, the HUD statement may not be available until just prior to closing, which can make it a little more difficult to obtain your cashier’s check/certified funds for the closing. Another option is to obtain an estimate, and have some extra added to it for a financial cushion – with any overage being paid back to you at closing.
It is very important to have a great closing company handling your purchase or sale. We recommend:
Steve Greenberg with Icard Merrill
Address: 2033 Main Street, Suite 500,
Sarasota, FL 34237
Fax: (941) 954-6585