Many Walton County property buyers are from out of state. They are familiar with buying and selling, but most do it only occasionally, so while they know the process, they may forget the details. This article will help them to come up to date with the buyer side of their closing costs. Not all costs apply to every purchase; lender costs being an example. Some costs are typical for Walton and Florida closings, and an out-of-state buyer may not know what they are.
Our hope is to paint a broad and clear picture for your clients to make it easier for you, their Realtor, to explain the closing docs when they get them.
Price of the Property
The major cost is, of course, the property’s price. It appears on the Integrated Disclosure as the Contract Sales Price. The buyer’s escrow deposit shows as a credit.
Lender’s Fees and Charges
- The Application Fee covers the costs of setting up the file.
- The Processing Fee covers the costs to arrange the loan and manage the processing.
- The Underwriting Fee is the cost for the underwriter to do their due diligence work.
- The Credit Report charge is for pulling and examining the borrower’s credit details.
- Some borrowers pay ‘Points’ which is an upfront amount in exchange for the lender lowering the interest rate.
- The Appraisal Fee is paid to the appraisal company. The appraiser uses an approved method of determining the property’s value. so the lender can approve the loan. This is often paid upfront.
- The Owner’s Title Insurance Policy covers a one-time premium to insure the lender against any unforeseen title issues which may surface in the future.
Prepaids
Many lenders require some portion of the new owner’s taxes and insurance premiums to be held in escrow, so the lender has the money available when needed. Some buyers agree with the lender that they will handle such payments when due, and so the lender does not charge prepaids or collect such monies with the mortgage payment. If there are prepaids on the closing statement, then they will include:
- The Homeowner insurance premium: usually collected a year in advance at closing.
- Property taxes, future insurance premiums, etc.
- Partial Loan Interest: loan interest is due from the day of closing until the first full mortgage payment is due, usually at the end of the following month.
Government Fees
Florida charges a documentary stamp tax on mortgages. Walton County charges for recording the mortgage and deed in public records.
Miscellaneous Fees
- Flood Certification: is a fee charged to determine the property’s flood zone location.
- Tax Certification: is a cost incurred to confirm that all due property taxes have been paid by the current owner.
- Homeowner or Condo Association Fees: Associations often charge to record the new owner. They may also charge to issue a new set of Association documents.
- Monthly, quarterly or annual Association fees may have been paid in advance by the seller, so the appropriate amount is refunded by the buyer.
- Home and WDO (termite) Inspection Fees: if the buyer did not prepay them.
- Home Warranty Premium: if the buyer takes out a warranty on their new home’s plumbing, HVAC, etc.
Settlement Fees
These are amounts charged by the title agent. There may be a charge for an out-of-office closing, etc, where courier or other costs are passed back to the buyer.
Buyers will anticipate some costs, but they may be unfamiliar with others. They may expect to see an attorney fee, for example, because in some states all closings are handled by an attorney, not a title company, and some Florida counties have fees that others do not.
As always, if you have any closing cost questions, please feel free to contact us.