Closing Costs Explained

Closing costs for a home buyer can seem like a bit of a mystery. Here’s what a buyer
purchasing with a mortgage pays for:

Inspection Fees

Several different inspections examine the condition of a property: general inspection, 4-point inspection (roof, plumbing, electrical, a/c), WDO inspection (wood destroying organism), and wind mitigation inspection. Inspections are optional for a buyer, but I ALWAYS recommend getting inspections. Insurance companies will require at least a 4-point inspection before binding an insurance policy, and often a wind
mitigation inspection as well.

Loan Origination Fees

The loan origination fee is the lender’s one-time charge for initiating a mortgage. Certain loan programs like FHA also have additional origination fees.


The monetary valuation of the property is required by the lender, and so the appraisal fee will need to be paid.

Title Insurance

The title insurance policy is required by the lender to protect the lender from title defects. It ensures clear ownership of the property.

The Escrow or Title Fee

The title company charges an escrow or title fee for handling the transaction between the buyer, seller, and mortgage company.

Recording Fee

The fee for recording the deed and mortgage in county public record.

Property Taxes

Property taxes will be prorated and paid to the county for the year.

Homeowner’s Insurance

A prepayment of your insurance premium to the homeowner’s insurance company of your choice.


A survey is a bird’s eye view of the house on the lot, as required by the lender. A survey shows the boundary lines of the property, easements, and any encroachments.

Courier, Notary, or Document Storage Fees

These are additional fees a title company might charge.

How much will my closing costs be?

The average purchase closing costs in Florida are 2.3% of the price of the house if the purchaser is getting a mortgage. A cash buyer pays around 1% of the purchase price in closing costs. Nerdwallet has a nifty closing cost calculator which does a good job of estimating the costs. Keep in mind that closing costs and downpayment are two different things. The downpayment is the percentage of the purchase price in cash a buyer brings to closing. A downpayment can be as low as 3.5%.

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What is Private Mortgage Insurance or PMI?

When a buyer makes a down payment of less than 20%, the lender considers the buyer a higher risk. Private Mortgage Insurance (PMI) protects the lender in case the buyer stops paying the mortgage.