The Definition of Closing Costs

First off, it is important to note that while you may be searching for what closing costs are and how to calculate them – there are variables to take into account that will affect your personal real estate closing costs and fees. TitleZoom is a real estate closing and title insurance company in Florida with extensive experience in the real estate closing costs process,and lends the following information about what closing costs are, how to calculate closing costs, what’s included, and what your best option is.

Closing Costs Definition:

Closing costs are the fees paid at the closing of a real estate transaction. They are called “closing” costs because they represent the point in time when the title to the property is transferred to the buyer. Closing costs can either be incurred by the buyer or the seller, depending on the state and/or county. The State of Florida is a split-market; meaning that in some counties, the seller covers the majority of closing costs, and in other counties, the buyer covers the majority of closing costs. Your Florida realtor knows the market you are in and whether or not you are the party that is usually responsible for covering closing costs and whether or not that can be negotiated into the actual price of the home. If you’re selling or buying a home without a realtor, you can see if your county is traditionally buyer- or seller-paid here.


How Do You Calculate Closing Costs?

Typically, home buyers pay 2 to 5 percent of the purchase price of their home in closing fees. So, if your home costs $350,000, you might pay between $7,000 and $17,500 in closing costs.

However, if you are a cash buyer, you can expect your closing costs to be less, since you are not having to deal with lender fees. If you are purchasing FSBO with no realtor, you too can shop around to get the best quotes on title insurance, appraisals, and land surveys, to get the best possible price for each fee that is included in your closing costs, allowing you to pay the least possible amount out-of-pocket.

Title Insurance by County in Florida

Image provided by: Attorneys’ Real Estate Councils of Florida, Inc.


What is Included in Closing Costs for the Buyer?

If you have a sales price of $200,000, your closing costs could be around $3,306. What comprises this number? – A pre-determined set of fees.

Typical fees included in closing costs are:

  • Origination points
  • Commitment fee
  • Document preparation
  • Broker, originator, or lender (bank)
  • Processing
  • Tax service
  • Underwriting
  • Appraisal
  • Closing or settlement
  • Title insurance
  • Credit report
  • Flood certification
  • Postage / courier services
  • Land survey
  • Mortgage tax


Which Closing Costs Items Can You Negotiate?

Whether you are using a lender or are involved in a cash deal, the government imposed fees—recording, deed, stamps—are non-negotiable.

Other charges are typically the charges in the real estate closing process that you can negotiate by simply searching for the lowest real estate closing service provider.

These types of charges included in closing that you can negotiate are the title insurance company that executes the transaction and transfers the title, the land or property surveyor, home inspection company, and any other professional services that are used in the process to complete the real estate transaction.


Can Closing Costs be Included in a Loan?

In short, yes, you can roll your closing costs into your mortgage. However, is it in your best interest to do so? No.

When you roll your closing costs into your mortgage, not only does your overall loan amount increase, but you will also have to pay higher taxes and interest on the closing costs.

Some home buyers choose to go this route simply because they cannot cover the out-of-pocket expenses, but paying cash up-front for your closing costs is your best option.


Disclosure: TitleZoom does not provide financial advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial advice.

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