So you're thinking about buying a house. You have your down payment saved, but you wanna know how much you can expect to pay in closing costs. Well, in this video, we're gonna break down what closing costs are here in South East Florida and what you can expect to pay to purchase your next home.

In addition to the down payment that you need to save in order to buy a house, you also have to save up for closing costs. So what are closing costs? Well, they can be split into two distinct categories.

One are your hard closing costs. These are the costs that you're not gonna get back if you were to sell the next day. Then the next is your prepaid items. So when you buy a house, there are certain things you have to pay in advance like insurance and taxes. These are really your money. So if you sold the house, literally the day after you bought it, you would get that money back, at least the prorated amount, but you do have to come out of pocket for it in order to buy the house.

So let's go over what those closing costs are. First and foremost, commissions. Buyers in Florida do not pay commissions, they're paid by the seller.  You as the buyer, get to have someone who works for you to make sure you're getting the best price, terms, and the whole deal is smooth. And you, as the buyer, are professionally represented, and that costs you absolutely nothing.

So if you are looking for a great Realtor, make sure you're doing your research, but it doesn't cost you anything to have someone work for you. As far as your actual closing costs go, some of the biggest revolve around if you're getting a mortgage or not. Most people are getting mortgages, at least the ones that we're dealing with, in some small fashion, whether it's a little mortgage or they're putting down as little as 5%, and so they're getting a relatively big mortgage compared to the size of the property.

Most of your closing costs are going to be related to getting that mortgage. Whatever lender you choose is gonna charge you, there's an underwriting fee, there's a processing fee. There's certain fees that are involved that go to the company that does your mortgage. Whether you go to one of the big banks or you go to a private mortgage company, they're all gonna charge you something to do your mortgage. That's how they pay their people. That's how they make their money in some aspects. So there's gonna be some sort of mortgage fee.

Realistically, I see it somewhere in the 2,000 to $2,500 mark, and that includes any of the recording fees for your mortgage. There's taxes and fees that you pay to the state when you get your mortgage. Depending on the price of the house, somewhere around the 2,000 to $2,500 mark is about what you can expect to pay for mortgage-related fees.

The next fee you're gonna pay as a buyer is title insurance. So it depends on which county you are buying in. If you buy in Broward County, you, as the buyer, pay for title insurance. In Palm Beach County, the seller pays your title insurance. So it could save you a good amount of money, depending on the price of the house, depending on which city and which county you are buying in. So title insurance is based on the price of the house. I can't give you an estimate as to what it's gonna cost. But if you're thinking about buying a home in a certain price range, give us a call, shoot us a text, send us an email. We're happy to give you the exact price of what title insurance would cost you on any property that you're thinking about buying.

The next fee's gonna be a settlement fee. That's what goes to the title company to pay them to do the closing process. So typically, it's somewhere around the $700 mark. It's a one-time fee and you pay that. It's for them to do all your paperwork and to physically complete the closing process for you.

Now let's get into your prepaid items. So all those fees from before, those are hard costs. The title company is not gonna reimburse you if you sell the house the next day. But some of these fees that we're about to talk about, these are all your money. You're paying for things upfront, and these would be prorated whenever you sell the property.

So the first is insurance. Down here, insurance can be relatively expensive, depending on the type of property you're buying, and where you're buying it. But when you close, you have to pay one full year of insurance upfront. So for a typical single family house down here, depending on the age it was built, and if it's not new, new construction, you're probably gonna estimate, I would say, somewhere between 3,500 and $4,000 a year for insurance. When you close, you're paying the first year of insurance upfront, and then in your mortgage payments every month you're paying 1/12 of next year's insurance.

Then you have your escrow accounts. If you're getting a mortgage, you can choose whether or not to escrow. Escrow means you're paying for part of next year's taxes and insurance upfront in your mortgage payment every month. So that way, when they become due, the mortgage company has already collected it from you and you have paid it. You can choose whether or not to do this, but most people choose to do it. If you're really good with budgeting and you wanna take that money every month, set it aside, maybe you invest it to get a higher return, you can definitely choose to do that. But most people just aren't that good with budgeting, so they end up just rolling it into their mortgage and then it gets paid for them.

When you close, the mortgage company is going to make you put in an additional three months of taxes and insurance into your escrow account. They do this to make sure that there's always enough money to pay the taxes and insurance when it comes out. So there's always gonna be enough money in your escrow account. And every month as you're paying your mortgage payment, you're paying 1/12 of your next year's taxes and insurance. So all the money is there for you.

Again, this is really your money, so you have to pay it upfront. But if you sold the house literally 24 hours after you closed it, all that money would come back to you. It'd be prorated, so you'd miss one day, but all of it's prorated to you.

So those are your closing costs. On an average home here in South Florida, you can expect, depending on the county and where the property is, to the spend between three and 4% of the purchase price in closing costs. Now that sounds like a lot of money, but again, a lot of it is your money and you're paying for things in advance. So you'll get it back when you sell. but you have to have insurance on a property. You never wanna have a hurricane or a storm cause damage that you can't pay for. And you gotta pay your taxes. This is America. It just is what it is. So I hope that helps explain closing costs. If you have any other questions, feel free to give us a call, shoot us a text, send us an email. We got your back when moving to South Florida.

Posted by Andy Mandel on
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