What are Closing Costs?
Once you have decided to purchase a home, the final stage in your real estate purchase is called closing. This is when the title of the property is transferred from the seller to the buyer. During this point in time, both parties are required to pay the fees and charges, collectively called closing costs, that are associated with the real estate transaction. Closing costs, in general, are shouldered by both the buyer and the seller, but as to what expenses and how much they would have to shoulder individually, this would vary by state and county.
Average Closing Costs in Jupiter Island, FL
On average, closing costs in the state of Florida come to approximately 1.98% of the home purchase price, which ranges between $200,000 and $300,000 across the state. In Martin County, where Jupiter Island is located, the average percentage of closing costs is 2.60%. This amounts to around $6,128 based on the median home value in the area which is estimated at $233,000.
Rule of thumb is to set aside 2% to 5% of the home price for paying all the various fees, charges, and taxes included in your closing costs. The first in your list would be the bank charges from your mortgage lender, called origination fees. This would encompass several different services, such as underwriting, document preparation, processing, broker services fee, origination points, and commitment fees. It is important to note that these charges will vary depending on your mortgage lender.
Aside from origination fees, other expenses included in your closing costs are credit report fee, appraisal fee, attorney’s fees, flood certification fee, and survey fee. In addition, you’ll also need to factor in title insurance, funding fees for VA loans and mortgage, as well as transfer tax. In Florida, homebuyers are required to pay a mortgage tax, also known as documentary stamp tax, which amounts to $0.35 per $100 of the purchase price. So, for example, if your home purchase price is $200,000, the mortgage tax that you’ll be required to pay would amount to $700. You will also need to allot funds for an intangible tax of 0.02%. There is also a state transfer tax of $0.70 per $100 of the home purchase price and is usually paid for by the seller.
Breakdown of Closing Costs in Jupiter Island, Florida
Typical Closing Costs for Homebuyers
- Condo/HOA Approval Fee
- Recording Fees (Deed,
- Condo/HOA Approval, Mortgage)
- Prorate Condo/HOA Charges
- Homeowners Insurance
- Flood Insurance (if applicable)
- Inspection Costs
- Survey Fee
- Real Property Tax Proration
- Permit Search Fee
- Title Services
- Simultaneous Issue Mortgage Title Insurance
- Title Endorsements (including Florida Form 9)
- Loan Discounts or Points
- Documentary Stamp Tax or Mortgage Tax
- Intangible Tax on Mortgage
- Escrow (taxes, insurance, condo/HOA fees, mortgage insurance)
- Lender’s Attorneys’ Fees
- Document Preparation
- Appraisal Costs
- Tax Service Fee
- Termite Report
- Credit Report
- Environmental Report
- Flood Certification Fee
Typical Closing Costs for Sellers
- Doc Stamps on Deed
- Pay Off Existing Mortgage Loans
- Owner’s Title Insurance Premium
- Real Property Tax Proration
- Recording Fees – Satisfaction of Mortgage, Curative Documents
- Prorate Condo/HOA Charges
- Real Estate Brokerage Commission
- Condo / HOA Estoppel Fee
- Lien Search Fee
How a Jupiter Island Homebuyer Can Lower Their Closing Costs
Browsing through the list of closing costs can be very intimidating, especially if you are a first-time homebuyer. Keep in mind, though, that most of these are negotiable and there are a few things you can do to reduce your overall closing costs:
1. Check Banks for Loyalty Programs
Do some research on which banks offer Certain banks offer incentives or rewards to customers for choosing them to finance their home purchase. One such bank is Bank of America, which offers lower origination fees for “Preferred Rewards” members.
2. Schedule Your Closing at the End the Month
This would be the easiest way that you can reduce your closing costs. By doing this, you can lower your cash outlay for prepaid or “per diem” interest. This is because the number of days from your loan closing and the beginning of the next month is less compared to when you schedule your closing date earlier in the month. If you multiply your loan amount by your interest rate then divide the result by 365, you’ll get your daily interest charge. And when you multiply that figure by the days left in the month, you’ll get the amount that you’ll have to pay at closing. So, in effect, less number of days means you’ll have a lower interest.
3. Ask the Seller to Pay
Closing costs are not set in stone and there are certain expenses that buyers can ask the sellers to shoulder. Most lenders allow sellers to contribute up to 6% of the home purchase price as a closing-cost credit. It a strategy to help them seal the deal and is also a tax-deductible expense for the seller. This might not be plausible, though, in hot markets where inventory is low, but you’ll never know until you try!
4. Wrap the Closing Costs into Your Loan
This might not look like a good option to lower your overall costs because mortgage lenders would be charging you more for this, but it is a great option if you don’t have enough cash on hand to pay for your closing costs. You may also want to consider a no-closing-cost mortgage wherein the lender covers the fees. However, be prepared to pay a higher interest rate for the duration of the loan, which also means larger mortgage payments.
5. Apply for an FHA Loan
An FHA (Federal Housing Administration) loan is a government-backed mortgage available to those with lower incomes. Once approved, you can benefit from the help of various third parties, such as real estate agents, sellers, and mortgage brokers, who can pay up to 6% of the new loan amount. Compared to traditional lenders, FHA loans are not as strict on credit scores. Borrowers with a credit score of 580 or higher are likely to qualify, whereas traditional lenders require at least 620.
If you are currently in search of a lovely home in Jupiter Island, Florida, I would gladly show you all your best options and assist you in every stage of your home purchase transaction. Please give me a call at 561-781-0810 or send me an email at firstname.lastname@example.org for any questions or if you want to schedule a meeting.