What additional costs are involved with closing?
In addition to the down payment (if you are financing) or full contract price (if you are paying cash), there will always be costs known as "closing costs". These costs are always much higher if a mortgage is involved, because of lender fees and required state taxes. Typical costs include: State documentary tax (35 cents for each $100 borrowed), State intangible tax (.002 of the loan amount), lender fees, documentation preparation fees, mortgage broker fees, fees for recording the mortgage and the deed (usually around $250), courier fees (+/- $100) closing agent fees (usually around $500), title insurance (usually around $600 for the buyer, if the policy is issued simultaneously with the seller's policy), fees for a survey (+/- $450), appraisal (+/- $450) and termite inspection (+/- $175). You will almost certainly also have to pay one year's homeowner's insurance premium in advance (+/- $1,500). We also recommend having a home inspection done (although this is optional) and this usually costs around $450.
EXAMPLE OF ESTIMATED BUYER CLOSING COSTS
The following are typical lender related fees on a $100,000 loan:
1% loan origination fee - $ 1,000
Miscellaneous lender processing fees - $ 1,000
Borrower's title insurance - $ 600
Mortgage and deed recording fees - $ 250
State documentary tax (35 cents per $100 borrowed) - $ 350
State intangible tax at .002 of the loan amount - $ 200
Credit report - $ 50
The following estimated costs will be incurred on a transaction whether it involves a loan or is for a cash purchase:
Courier fees - $ 100
Appraisal - $ 450 (optional for a cash purchase)
Title company fees - $ 500 (this may be slightly lower for a cash purchase)
Buyer transaction fee - $295
Survey - $ 450 (optional for a cash purchase)
Termite inspection - $ 175 (optional for a cash purchase, but recommended)
Home inspection - $450 (optional for all purchases, but highly recommended)
Total closing costs = $ 5,870 (with a mortgage), or $2,420 for a cash purchase with all optionals.
Costs of inspections are almost always paid upfront when these are done, but most other costs are included on the final settlement statement (HUD) and paid at closing.
addition to the actual costs, there are always items to be prepaid in advance.
Prepaid items (estimated)
12 month's homeowner's insurance $ 1,500 (for both mortgage or cash purchases)
3 month's insurance in escrow $ 375 (not required for cash purchase)
3 month's escrowed property tax $ 900 (not required for cash purchase)
Total prepaid items $ 2,775 (with a mortgage) or $1,500 (cash purchase)
Your mortgage lender will always want to escrow a few months of property insurance and property taxes and these will be included as part of your closing costs. If you are a foreign national, most lenders also require you to show that you have 6 months of mortgage payment amounts in your bank account as a reserve. In addition, if the property you are buying has an HOA (homeowner's association), which most Disney area neighborhoods are, you will most likely have to pay any prorated HOA dues at the time of closing. Some HOAs also charge initiation fees and transfer fees, which can vary from a couple of hundred to a few thousand dollars (although the higher fees are very rare).
As you have read, this process can be quite complicated, especially if you are not currently living in Orlando. Part of our job at Dolby Properties is to ensure that this process is as smooth and uncomplicated as possible. You can rely on our expert knowledge and experience.
CLOSING COSTS FOR SELLERS (information included
here so that buyers know what to expect when they come to sell)
Sellers are responsible for brokerage commissions and costs associated with transferring the deed. Brokerage commission is typically 6% of the sale price, with 3% going to the listing broker and 3% going to the broker who brings the buyer.
Other costs include title insurance (+/-.0067 of the selling price), State documentary stamp tax on the deed (70 cents for every $100 of the selling price), courier fees (+/- $100), closing agent fees (+/- $500). In addition, the seller may have to pay for certain repairs to the property prior to closing, as agreed in the contract (often up to $1,000).
The seller will usually have to pay a certain amount of property taxes to the buyer (depending on the time of year), to represent the prorated amount of taxes for the months that the seller owned the property. This is because when the property tax bill arrives in November, it is for the previous year and the buyer will have to pay for the entire year, including for the time the seller owned the property, so the buyer receives a credit for this at closing. Also, most neighborhoods have HOAs (homeowner associations), who are required to provide estoppel letters to the title companies prior to closing. Most HOAs charge fees for this, as much as $500. Many neighborhoods have two different associations, so fees must be paid to both for providing the estoppel letters.Sellers are usually required to prepay these fees before the HOAs will release the estoppel letters.
Foreign nationals will also have to have an accountant file a FIRPTA withholding with the IRS, which is 15% of the selling price (formerly 10% prior to Feb 17 2016). By law, the title company has to either to withhold this amount (on behalf of the buyer) until receiving the "all clear" from the IRS to release this back to the seller, (after the IRS is satisfied that there are no outstanding taxes due as a result of any capital gains), or else they have to immediately remit this amount to the IRS (in the case of the seller's accountant not preparing a certificate of exemption in time for closing). When the title company gets to withhold it, it generally takes from 90 to 120 days for a refund. If they are obligated to remit it to the IRS, this could take a year or two to be refunded. The accountant will usually charge around $1,000 or so for filing.