Chris Griffith: Calculating closing costs in advance

CHRIS GRIFFITH

How do I find out, in advance, all of the closing costs and fees related to buying real estate here?

Whether you’re buying or selling real estate you should be able to calculate the majority of closing costs prior to closing day or even signing a contract. This answer is about as specific as I can get without knowing whether you’re buying new product or resale, paying cash or financing or which county you’re buying in. Disclaimer: Always contact a lawyer, yada yada.

It’s not rocket surgery and just about any real estate agent should be able to work up most of the closing fees for a cash buyer on a Mead spiral notebook. If they can’t work up those figures for you … you have a problem and it isn’t related to your closing costs.

Buyers obtaining financing will have varying closing costs.

Mortgage related expenses can differ depending upon the buyer’s credit score and the chosen loan program. A buyer who is planning on getting a mortgage can get those fees figured out by contacting a reputable, local mortgage broker.

Some of the fees related to mortgages such as the lender’s title policy, documentary stamps on mortgage and intangible tax are based on the loan amount, plus there are several minor expenses you’d never think about calculating for such as an appraisal, flood certification, survey, condo questionnaire and credit report. That’s why it’s important to sit down with a pro who knows and can prepare a good faith estimate of mortgage expenses.

Typically, when an experienced real estate agent recommends a reputable mortgage broker it’s so that you don’t end up with surprises or last minute drama. Take my word for it, going rogue and picking a dot com lender based in California isn’t exactly going to add structure to the situation.

Mortgage expenses aside, buyers can expect to see property taxes and homeowner association/condominium fees prorated on the settlement statement. Buyers only pay taxes and fees related to the days of actual ownership after settlement.

Membership has its privileges so buyers may be obligated to pay a one-time transfer fee to become a member of a homeowner or condo association.

The larger expenses related to a property purchase or sale includes the title insurance and documentary stamps on the deed. Title insurance rates are based on the sale price of the real estate. Which side pays for title insurance is paid based on local custom and/or whatever the buyer and seller negotiate. Very often, in Lee County, seller pays — in Collier County, buyer pays. It’s all lined out in the contract so check twice and ask before putting ink to paper.

In Florida we have a transfer tax on real estate to collect revenue; 70 cents for every $100 of the sale price. The seller generally pays documentary stamps on deed but that detail will be in your purchase or sale contract so double check before signing. Triple check if there are multiple addendums especially when purchasing a foreclosure property.

If you’ve made it this far and you’re still awake, there are a few things that may be paid outside of the closing statement to plan for; the home inspection, application for the homeowner association and possibly a background check, and legal expenses if you’ve chosen to have an attorney review the documents and represent you.

There’s no reason why you can’t have most of the closing costs estimated before you commit to any real estate transaction so you understand exactly what you’re getting into.

If your mortgage broker or your real estate agent can not provide those figures or you are not comfortable that you have all of the information, you’re probably not working with the right people.

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Chris Griffith is a real estate agent at Downing-Frye Realty Inc. in Bonita Springs. If you have a question about local real estate or Bonita Springs, e-mail her at chris@LifeInBonitaSprings.com.

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