Welcome to Florida, the land of sun, fun, and absolutely no state taxes… Horaaay! Yes, we have beautiful beaches, nice smooth roads, wonderful parks and recreation, but just how does our state get manage all this without collecting state taxes you ask? The majority of that answer is found by exploring two areas of revenue generation.
The first is our friend Mickey Mouse. Yes, Disney World brings in a ton of tourists who spend quite a bit, and with each dollar spent the state collects its sales tax. Thank you Mr. Walt Disney!
The second, and less entertaining, revenue generating source is our closing costs! Florida is one of if not the most expensive state for closing costs, and a big chunk of that goes directly to our city and state, in the form of doc stamps, transfer fees, and recording fees. While these two fees can take a bite (often at about 1% of the purchase price), there are also other closing costs to consider as well. Some of the most common costs include:
- Appraisal. Before a loan can be approved, a lender will require an appraisal by a state licensed professional, who provides a written estimate of the market value of the home based on sales of comparable homes, while making adjustments for any special attributes or flaws of the home. This average cost ranges from $350 to $700 for a standard sized residential home.
- Home Inspections. Most lenders require that a home pass through a home inspection before approving the loan. If the lender doesn’t require it, we highly recommend getting it anyway for obvious reasons. The average cost ranges from $250 to $500 for a standard sized residential home.
- Survey. Your lender will require a survey of the property to confirm that there are no infringements on surrounding property. The average cost ranges from $300 to $500 for a standard sized residential home.
- Mortgage Banker/Broker. These consultants/lenders shop around between different banks for the best loan terms, then assist in the underwriting process. They can originate, sell, and service mortgage loans. The typical fee for this services ranges between $900 and $1500 called a loan processing or underwriting fee plus anywhere from 0-3% of the loan amount as an origination fee.
- Escrow or Title Company. After a buyer and seller agree to the terms, a deposit is put into Escrow and held until the transaction is finalized. The title company does a search to ensure that the seller is the legal owner, that the property doesn’t have any liens against it, and the property taxes are paid in full. Also, as a lender requirement, you’ll need to purchase Title Insurance that covers them and yourself in case a dispute comes up after the deal has closed. These fees are dependent upon the purchase price of the property and can vary from one title company to the next.
For more information on closing costs in Palm Beach county or any other real estate need, feel free to contact us for a direct consultation.
The Law Office of Donna Hearne-Gousse