Florida Closing Costs: What They Are and Will the Bank Pay Them in Your Florida Home Loan Closing?

Last Update: 02/24/16

As Florida’s real estate market continues to be complicated and chaotic – thanks to all the robo-signing and Foreclosure Fraud crises, in no small part – lenders hopefully will be looking at real estate closing costs.  It’s not a new idea for banks to pay closing costs in an effort to get a home loan deal completed – it’s an idea that’s been talked about before, and it may be good news for many home buyers and home sellers here in Florida that this strategy is being considered once again.

If banks listen.

Peter Miller over at the HSH.Com blog revisited the 2002 proposal made by former HUD secretary Mel Martinez, where banks would work to take the closing costs burden off the shoulders of the buyer or seller of a residential real estate property.   Given that for over 30 years now, HSH has been one of the country’s biggest publishers of lender information, specifically dealing with issues related to mortgages, home loans, and consumer lending, it goes without saying that lots of bankers and mortgage lenders will be reading what Mr. Miller is suggesting.

Taking on the expense of closing costs directly, or at least finding ways to lessen their impact at the closing table (Miller’s alternative suggestions) would not only help Floridians but also the growing number of foreign buyers and investors who are buying Florida condos and other Florida real estate buyers with little knowledge or experience of how closing costs work, or even what they are.

What are Florida Closing Costs?

Here is a list of several expenses that are standard closing costs in Florida home sales, although the exact costs involved in a closing will depend upon the individual sale transaction:

1. Title Search
2. Title Insurance Policy (Owners and Lenders)
3. Closing Fees
4. Land Survey (unless it’s a condo)
5. Public Record Document Recording Fee.  (Cost is Per Page)
6. Lien Searches
7. Transaction Taxes (Documentary Stamps and Intangible taxes)

The Department of Housing and Urban Development provides the following list as an example of expenses that will be paid at closing:

1. Property taxes (to cover tax period to date)
2. Interest (paid from date of closing to 30 days before first monthly payment)
3. Loan Origination fee (covers lenders administrative cost)
4. Recording fees
5. Survey fee
6. Mortgage Insurance Premium (if applicable)
7. Title Insurance (yours and lender’s)
8. Loan discount points
9. First payment to escrow account for future real estate taxes and insurance
10. Homeowner’s insurance policy (and fire and flood insurance if applicable)

Larry Tolchinsky’s Tip

Under Florida law, there is no set rule as to which party is responsible for paying closing costs: who bears the expense of closing costs is part of the real estate sale negotiations.  Most Florida home owners and condo owners understand that sometimes it’s part of the bargaining to decide if the seller or the buyer will cover part or all of the closing costs.  Several factors go into who pays certain closing costs, including who the seller is (a bank selling a foreclosure?) or where in the State of Florida the property is located.

Here in Florida, however, lenders are finding ways to help with closing costs.  A recent article in the Sun Sentinel, for example, was picked up by LoanSafe.org which reported that some South Florida banks are covering closing costs on refinancing home loans, for example. Will lenders do more to help the housing recovery by offering to pay closing costs when a borrower purchases a home?  If they do, is the lender going to want a higher mortgage interest rate and, if so, how much higher?  What if the borrower pays part of the costs, will the lender cover the rest?

Having a Florida Lawyer at Closing – It Can Help.

This is another example of how important it can be to have an experienced Florida real estate attorney by your side when negotiating a residential home loan transaction.   Florida real estate lawyers may not only be aware of ways to save on closing costs, they may also may know the lender’s representatives and the bank’s reputation – as well as that of the closing agent and others involved in closing the home sale.

Lawyers’ involvement in Florida real estate closings are really critical these days, given the concerns that the land title may be in question.  We’ve posted before on these concerns:  does the bank really have clear title?  Is the title insurance enough to protect the buyer and the seller from future claims against the property? Florida real estate titles are in a big legal mess right now, and what were once simple issues are not so simple anymore.   There are instances where buyers aren’t buying homes: instead, they’ve really bought lawsuits.

A good piece of advice when you and your family are purchasing or selling your family home in one of the biggest transactions of your life is to at least talk with a Florida real estate lawyer. Getting someone to review all of the paperwork including the all important promissory note, isn’t as costly as most of us think it is. And it’s always a lot cheaper than paying to fix a problem after a closing occurs.  Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

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