As stressful, overwhelming, and intimidating as it can be, buying property in Florida is definitely an exhilarating experience for a Florida first time home buyer who has been imagining his dream home for years. Since many people get caught up in the euphoria of buying their first home and overlook the costs involved, our experienced mortgage originators have prepared an expense checklist to help them out.
Florida First Time Home Buyer’s Checklist
Down payment – Most lenders require a minimum down payment of 5 to 20 percent of the property value (e.g. $7,500 to $30,000 on a $150,000 property). A home buyer who can afford to put
down 20 percent or more doesn’t have to pay private mortgage insurance. Additionally, the higher the down payment, the lower the loan amount and interest rate will be.
Home appraisal/inspection – To determine the fair market value of a property, lenders require a home appraisal before approving the loan. An appraisal can cost anywhere between $300 and $1,500, depending on the size and value of the property. In addition, the buyer can ask for a home inspection.
Earnest Money Deposit – A home buyer must be prepared to make a “goodwill” deposit once the price is agreed. Though there’s no statutory limit on earnest money deposits, most home buyers put between 3 and 10 percent of the asking price in an escrow account. The amount is then added to the down payment during the mortgage process.
Mortgage origination fees (closing costs) – A lender may charge the following origination and third-party fees:
- Origination points (not to be confused with discount points) – up to $750;
- Application – up to $350;
- Title insurance – 0.5 percent of the price (e.g. $750 on a $150,000 property);
- Real estate transfer charges (mortgage transfer taxes) – 0.35 percent of the property value (e.g. $525 on a $150,000 property);
- Document preparation – up to $75;
- Tax service – up to $75;
- Lender/broker/originator fees – up to $1,300;
- Underwriting fees – up to $200;
- Wire transfer fees – up to $25;
- Home appraisal – up to $1,500;
- Pest inspection – up to $125;
- Flood certification – up to $10;
- Legal fees – up to $400;
- Credit report – up to $20;
- Employment verification – up to $15;
- Certificate of Location (survey) – up to $370;
- Postage/courier fees – up to $75;
On average, a Florida first time home buyer might pay between 2 and 5 percent of the property value (e.g. between $3,000 and $7,500 on a $150,000 property) in closing costs.
Moving expenses – Moving costs depend on the distance and the fees a company charges to pack and relocate goods. One important thing a Florida first time home buyer should know is that movers charge by weight or volume.
Property tax – In Florida, the average property tax is 0.97 percent of the property’s assessed market value. A person interested in purchasing a home in Jacksonville will pay, on average, 0.85 percent of the property value (e.g. $1,275 on a $150,000 property).
Renovation or repair costs – Based on the home appraisal/inspection report, a home buyer can estimate the cost of the supplies that may be required for renovations, repairs, or upgrades.
Though a Florida first time home buyer may not have to cover all these fees, knowing all the potential costs can help avoid getting caught in a real financial bind. Contact us at North Florida Mortgage with any questions or concerns about buying a home in Florida. Our mortgage originators will be more than happy to guide you through the home buying process.