There are various things to learn as a first-time homebuyer. Even if you are a seasoned realtor, states have different requirements and restrictions, so what is a necessity in your town may not be a prerequisite in another. If you are looking to purchase a new home or property in Florida, buyer closing costs and prepaids are some of the critical areas you should review. Below is a brief look at these costs, including what to anticipate:
The price of the property you are purchasing remains the major buyer closing cost. It is also known as the Contract Sales Price on the Integrated Disclosures.
https://heightstitle.com/wp-content/uploads/2020/01/buyer-closing-costs-and-prepaids-in-florida.jpgThere are various lender charges you will be expected to pay during the closing stages. This includes:
- Application Fee – Is offered to cover the cost of setting up your new file
- Processing Fee – Is required to cover all the costs of arranging the loan and or managing the loaning process
- Underwriting Fee – Is required to pay the underwriter for their due diligence
- Credit Report – This charge is necessary to pull and examine your (the borrower) credit history and details
- Appraisal Fee – This is an upfront fee paid to the appraisal company. The company (appraiser) calculates and determines the property’s value before the lender can approve your loan
- Owner’s Title Insurance Policy – This is a one-time premium fee you pay to insure the lender against unforeseen issues in the future
Prepaids in Florida
Most lenders take different kinds of prepaids, which are portions of the buyer’s taxes and insurance premiums. The prepaids are held in escrow and offer guarantee that the lender will have the loan amount available when needed. Some lenders also allow new owners to pay the prepaids when the date is due. In South Florida, if prepaids are included in the closing statement, they usually feature the following costs:
- Homeowner insurance premium
- Property taxes and future insurance premiums
- Partial Loan Interest paid any time between the day of closing and the first full mortgage payment
There are several additional fees that a lender may charge as part of buyer closing costs and prepaids. You will be required t pay the government fees such as stamp tax on the mortgage and recording the mortgage in public records. Other miscellaneous fees include flood certification to determine the flood zone location, tax certification to confirm that the property’s taxes have been paid in full by the current owner and homeowner (condo) association fees for recording purposes. In many cases, the monthly, quarterly and annual association fees are paid in advance by the seller to be refunded by the buyer. Home and termite inspection fee is another cost you may incur if the buyer did not prepay them. You may also pay a home warranty premium if you take out a warranty on plumbing, HVAC, or any other aspect of your new home. What’s more, the title agent may charge different amounts for an out-of-office closing, where courier costs are passed to the buyer.
As a new home buyer in Florida, you should anticipate a few other costs, such as attorney fees, especially if your states require that licensed attorneys handle all closing. It is also advisable to hire attorney services to help you understand and get through the closing period. Most law firms that deal with mortgaging offer a free consultation, so finding one shouldn’t be a daunting task.