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Buyer Closing Cost and Prepaids in Florida: A General Overview

Nov 02 2020

Buyer Closing Cost and Prepaids in Florida: A General Overview. Real estate is surely a complex business in its essence. It involves various things, including several legal aspects that can make the process of buying a property complicated.

Even the most experienced real estate agent must do constant research about all aspects involved in a transaction, because different states across the U.S have different requirements and restrictions. Hence, what is required in one place might not be in another.

An essential aspect of buying a property in Florida is the buyer’s closings costs and prepaids involved in the transaction. This is a critical step, requiring attention to detail and a specialized approach.

In this short article, we show you how to prepare for buyer’s closing costs and prepaids in Florida. Keep reading to know how to anticipate and prepare for these costs.

Property’s Purchasing Price:

Known as the Contract Sales Price on the Integrated Disclosures, the price of the property must be considered. Throughout the process, the purchasing price will remain the largest piece amid buyer’s closing costs.

Fees Related to Lenders:

The closing stages in a property purchase procedure also require some lender charges. The buyer must expect to pay it, so it is good to strategize and prepare for paying it previously.

There are various fees of this type, such as:

  • Owner’s Title Insurance Policy – The buyer pays it as a one-time premium fee. It ensures the lender against potential unseen issues that may happen in the future.
  • Credit Report – It is a charge required for checking purposes. The purpose is to pull and check the borrower’s credit history in detail.
  • Appraisal Fee – An appraiser calculates and determines the value of the property before the lender can approve a loan for the borrower. This upfront fee is charged to pay the appraisal company.
  • Application Fee- It is required to cover the costs of setting up a new file.
  • Processing Fee- This is required for borrowers. It is meant to cover all the costs of arranging or managing the loan.
  • Underwriting Fee- An underwriter is any party that evaluates and assumes another party’s risk for a specific fee. This fee is to pay the underwriter for their due services.

Prepaids Associated with Lender’s Services:

Most lenders take different types of prepaid. Prepaids are portions of the buyer’s taxes and insurance premiums. These portions are held in escrow, to offer a guarantee that the lender will have the loan value available. It is not uncommon that some lenders let new owners pay the prepaid when the date is due as well.

When buying a property in South Florida, usually the prepaid is included in the closing statement. Most common costs include:

  • Homeowner insurance premium
  • Property taxes and future insurance premiums
  • Partial Loan Interest (this fee can be paid any time between the day of closing and the first mortgage payment)

Miscellaneous Fees:

Various fees may arise through the buying and closing process. Lenders may charge additional fees as part of buyer closing costs and prepaids, so be aware.

The buyer will be required to pay the government fees as well. It does include stamp tax on the mortgage, as well as recording the mortgage in public records.

There is also:

  • A flood certification, which determines the flood zone location.
  • A tax certification, which confirms if the property’s taxes have been fully paid by the current owner.
  • A set of fees for recording purposes, which are homeowner (condo) association fees. There are cases when monthly, quarterly, and annual association fees are paid in advance by the seller. In this case, they are meant to be refunded by the buyer.

Other possible costs include maintenance aspects of the property. It includes a home and termite inspection fee- if the buyer did not prepay them.

There is the possibility to pay a home warranty premium. It can occur if the buyer takes out a warranty on plumbing, HVAC, or other aspects of this type.

Anticipating is Essential:

Buying a property in Florida is a dream come true for thousands of people. To soothe the purchasing process, it is necessary to anticipate all the buyer closing costs and prepaids. If you want to take a step further and get professional guidance throughout the process, we are here for you.

Now You Know The Buyer Closing Costs And Prepaids In Florida, Why Do Not Take The Next Step?

We are experts in procedures involving title and escrow. If you are interested in buying a property in Florida, call us now. Contact us by calling us to (305) 901-5628 or email us to to get help immediately. 

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