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Key takeaways:
But before you get swept up in the excitement (as you should), it’s time to ask yourself a few key questions.
Have you crunched the numbers and set a smart, realistic budget for the long run? Do you know how much you’ll need upfront—and what your monthly costs will look like? Have you factored in the often-overlooked expenses like homeowners insurance, maintenance, property rates, and utilities?
Most importantly, is this home a good fit not just for right now but also for where you see yourself in a few years?
The fact is that you’ll need to come up with anywhere from 1 to 5% of the home’s sales price for closing costs, among other expenses.
Let’s break down these fees, discuss why you’re paying them, and consider how much you’ll spend.
For 33% of 26 to 34-year-old buyers, saving for a down payment is the toughest part of buying a home.
It’s especially challenging for first-time buyers who can’t count on the proceeds of a sale. PFCU Mortgage Loan Originator Nathan O’Gorman explains: “Many first-time buyers believe they need at least 20% as a down payment. The truth is, putting down as little as 3% is fine, and first-time buyers can even buy a home with no downpayment thanks to PFCU’s Time Home Buyer Special Program.”
Your new home or condo will be collateral for your mortgage.
Your lender can take ownership of your home or condo if you stop making your mortgage payments.
In other words, your property acts as a guarantee—or "collateral"—for the loan. If you default on the loan, the lender has the legal right to foreclose on the home to recover the money they lent you.
Your lender needs an appraisal before issuing the loan to ensure that you’re not borrowing more than fair market value.
In Florida, buyers often spend more than $600 on a home appraisal.
A mortgage origination fee is what your lender charges you to process your application. It’s typically 0.5 to 1% of the total loan amount, and it pays to shop around since some mortgage lenders are on the lower end of that range.
Skipping the home inspection isn’t worth the $200 to $500 you would save. It's best to know what you’re getting into and budget for a few small repairs.
You should also budget for small repairs and maintenance, an area where home and condo owners spend more.
You should also know that standard homeowners’ insurance doesn’t cover flooding. The National Flood Insurance Program can provide you with an affordable policy instead.
You can research a home’s title yourself, but it's a good idea to hire a professional for $100 to $300.
They’ll check public records to ensure that the deed is free of liens or issues and that the sellers can legally sell the property.
Your lender will likely ask you to buy title insurance to protect you if a legal problem arises during the sale. The cost is $100 to $200 and increases with property value.
If you're considering a condo, pay extra attention: Condominium association fees are rising due to new regulations that require buildings to keep cash reserves for major repairs and assessments. This is especially important for older buildings, where those reserves—and the fees that fund them—can be even higher.
Hazard insurance is part of your homeowner’s insurance policy that protects you from natural disasters. Rising premiums are a reality, with home insurance policies exceeding $2,400 a year on average across Florida.
Before the sale can go through, you’ll have to put enough money in an escrow account to cover your home insurance for six months to a year.
You’ll also need:
If you’re looking to save on closing costs, you should know that we waive the PMI requirement as part of our program for first-time buyers!
A point costs 1% of the loan amount and lowers your rate according to your lender’s point schedule.
Mortgage specialist Nathan O’Gorman has some advice: “If you see yourself refinancing in the near future, skip the points. They’re a good investment if you’re ready to commit to a 30-year fixed rate product and don’t plan on refinancing anytime soon.”
At PFCU, we’re here to make things easier—especially for first-time homebuyers. Our no-down-payment program helps free up cash for your closing costs, and you won’t need to worry about paying Private Mortgage Insurance (PMI), no matter your down payment amount.
Not a first-time buyer? You can still benefit from our 2% lender credit, which can be applied directly toward your eligible closing costs.
Learn more about our First Time Home Buyer Special Program and explore our competitive mortgage rates in South Florida.
Plan on spending 1 to 5% of a home’s sale price in closing costs.
Can I negotiate closing costs?
Most closing costs aren’t negotiable. However, you can adjust how much you want to spend on a down payment and shop around to find a lender with low origination fees.
Do I need to pay for a home inspection?
It’s not always a hard requirement, but spending $200 to $500 to get a better idea of what you’re buying is definitely worth it.
How can I save on closing costs as a first-time buyer?
Some programs for first-time homebuyers let you save by buying a home with no down payment and no PMI.
Key takeaways:
- Closing costs can represent 1 to 5% of your home’s sales price .
- Many buyers fail to anticipate these costs and budget properly.
- While you can save on these costs by shopping around or adjusting your buying strategy, some are difficult to bring down.
But before you get swept up in the excitement (as you should), it’s time to ask yourself a few key questions.
Have you crunched the numbers and set a smart, realistic budget for the long run? Do you know how much you’ll need upfront—and what your monthly costs will look like? Have you factored in the often-overlooked expenses like homeowners insurance, maintenance, property rates, and utilities?
Most importantly, is this home a good fit not just for right now but also for where you see yourself in a few years?
The fact is that you’ll need to come up with anywhere from 1 to 5% of the home’s sales price for closing costs, among other expenses.
Let’s break down these fees, discuss why you’re paying them, and consider how much you’ll spend.
Down Payment
For 33% of 26 to 34-year-old buyers, saving for a down payment is the toughest part of buying a home. It’s especially challenging for first-time buyers who can’t count on the proceeds of a sale. PFCU Mortgage Loan Originator Nathan O’Gorman explains: “Many first-time buyers believe they need at least 20% as a down payment. The truth is, putting down as little as 3% is fine, and first-time buyers can even buy a home with no downpayment thanks to PFCU’s Time Home Buyer Special Program.”
Home Appraisal Fee
Your new home or condo will be collateral for your mortgage. Your lender can take ownership of your home or condo if you stop making your mortgage payments.
In other words, your property acts as a guarantee—or "collateral"—for the loan. If you default on the loan, the lender has the legal right to foreclose on the home to recover the money they lent you.
Your lender needs an appraisal before issuing the loan to ensure that you’re not borrowing more than fair market value.
In Florida, buyers often spend more than $600 on a home appraisal.
Mortgage Origination Fee
A mortgage origination fee is what your lender charges you to process your application. It’s typically 0.5 to 1% of the total loan amount, and it pays to shop around since some mortgage lenders are on the lower end of that range. Inspection Fee
Home inspections aren’t a hard requirement – unless your lender asks you to do one or you buy a property with a VA or FHA loan.Skipping the home inspection isn’t worth the $200 to $500 you would save. It's best to know what you’re getting into and budget for a few small repairs.
You should also budget for small repairs and maintenance, an area where home and condo owners spend more.
Flood Determination Fee and Insurance
Under Florida law, sellers must tell you:- If they have filed an insurance claim related to flood damage.
- Whether they got federal assistance after a flood.
You should also know that standard homeowners’ insurance doesn’t cover flooding. The National Flood Insurance Program can provide you with an affordable policy instead.
Title Fees
You can research a home’s title yourself, but it's a good idea to hire a professional for $100 to $300. They’ll check public records to ensure that the deed is free of liens or issues and that the sellers can legally sell the property.
Your lender will likely ask you to buy title insurance to protect you if a legal problem arises during the sale. The cost is $100 to $200 and increases with property value.
HOA and Condominium Association Fees
Thinking of buying a condo or a home in a gated community? Don’t overlook the HOA (Homeowners Association) fees—they can add significantly to your yearly costs. In South Florida, these fees have increased substantially, sometimes by thousands of dollars a year, depending on the services provided.If you're considering a condo, pay extra attention: Condominium association fees are rising due to new regulations that require buildings to keep cash reserves for major repairs and assessments. This is especially important for older buildings, where those reserves—and the fees that fund them—can be even higher.
Prepaid Expenses (Home Insurance, PMI, and Property Taxes)
According to mortgage expert Nathan O'Gorman, "Hazard insurance is way up in South Florida. It’s one of the most common closing costs homebuyers fail to anticipate.”Hazard insurance is part of your homeowner’s insurance policy that protects you from natural disasters. Rising premiums are a reality, with home insurance policies exceeding $2,400 a year on average across Florida.
Before the sale can go through, you’ll have to put enough money in an escrow account to cover your home insurance for six months to a year.
You’ll also need:
- Around 0.79% of the property’s value to pay for property taxes for the first year (or less if your lender only requires six months).
- Enough money to pay for your Private Mortgage Insurance (PMI) for the first six months to a year, which can be anywhere from 0.2 to 2% of the loan amount.
If you’re looking to save on closing costs, you should know that we waive the PMI requirement as part of our program for first-time buyers!
Discount Points
Discount points are optional. If you choose to add them to your closing costs, you’ll pay upfront to secure a lower mortgage rate.A point costs 1% of the loan amount and lowers your rate according to your lender’s point schedule.
Mortgage specialist Nathan O’Gorman has some advice: “If you see yourself refinancing in the near future, skip the points. They’re a good investment if you’re ready to commit to a 30-year fixed rate product and don’t plan on refinancing anytime soon.”
Moving Costs
Don’t overlook moving costs when budgeting for your home purchase! A local move can cost under $200 if you rent a van and do things yourself, while a long-distance full-serve move costs $9,000 on average.Utility Fees
Set aside a few hundred to cover activation and transfer fees for utilities. You might also have to pay cancelation fees for your old contracts.Agent Fees
Are you using an agent to help you find the right home? If yes, you’ll have to pay a flat rate or a commission you agreed on when you hired them.What the Seller Will Cover
Good news: You’re not on the hook for all closing costs! The seller will use the proceeds from the sale to pay for:- Their agent’s commission.
- Property taxes up to the date of the sale.
- A transfer tax of $0.70 per $100. This tax is a little lower for some properties in Miami-Dade County.
- In some counties, the seller pays for the title insurance fees mentioned above.
Closing Costs
Closing costs can vary depending on the property you're purchasing and your chosen lender. Your mortgage officer will provide a detailed breakdown, but it’s important to plan ahead and factor these expenses into your budget early on.At PFCU, we’re here to make things easier—especially for first-time homebuyers. Our no-down-payment program helps free up cash for your closing costs, and you won’t need to worry about paying Private Mortgage Insurance (PMI), no matter your down payment amount.
Not a first-time buyer? You can still benefit from our 2% lender credit, which can be applied directly toward your eligible closing costs.
Learn more about our First Time Home Buyer Special Program and explore our competitive mortgage rates in South Florida.
FAQs
How much should I budget for closing costs?Plan on spending 1 to 5% of a home’s sale price in closing costs.
Can I negotiate closing costs?
Most closing costs aren’t negotiable. However, you can adjust how much you want to spend on a down payment and shop around to find a lender with low origination fees.
Do I need to pay for a home inspection?
It’s not always a hard requirement, but spending $200 to $500 to get a better idea of what you’re buying is definitely worth it.
How can I save on closing costs as a first-time buyer?
Some programs for first-time homebuyers let you save by buying a home with no down payment and no PMI.