Closing Costs in Miami
On a $1 million purchase, one percent is $10,000. So when a buyer asks about closing costs, an answer somewhere between two and five percent leaves rather a lot unresolved.
I want to see an estimate before we submit the offer. By then, we should know how the purchase will be financed and which expenses we are asking the seller to cover. Those decisions belong in the negotiation. Waiting until closing to understand them is expensive.
Start with the mortgage. A buyer borrowing $800,000 for a Miami property will generally have $2,800 in Florida documentary stamp tax on the mortgage and another $1,600 in intangible tax. That is $4,400 before the lender has charged for arranging the loan. A cash buyer avoids those particular expenses, which is one reason the purchase price alone tells you very little about closing costs.
Then look at what the lender is charging. Origination fees, processing fees, and discount points deserve individual attention. Paying points to obtain a lower interest rate may make sense, but the calculation depends on how long you expect to keep the loan. Ask how much you are paying upfront, how much it saves each month, and when you recover the expense.
Title insurance is another item that deserves an actual quote. Florida sets the base premium rates. For a standard original owner’s policy with $1 million in coverage, the base premium is $5,075, before applicable adjustments and additional charges. Settlement fees, searches, and endorsements need to be identified separately so you can compare what each title company is quoting.
Who pays for the owner’s policy should be established in the contract. Buyers arriving from another county, or another state, may expect the same allocation they encountered on their last purchase. Read this contract before carrying that expectation into this transaction.
The deed tax also changes when you cross a county line. Most Florida counties charge $0.70 per $100 of consideration. Miami-Dade’s base rate is $0.60. A straightforward transfer of a single residential condominium unit is exempt from the county’s additional surtax, making the deed tax $6,000 on a $1 million sale. The contract should make clear who is paying it.
Some of the money collected at closing goes toward bills you would have as an owner anyway. An insurance premium paid in advance buys coverage. An initial escrow deposit funds an account the lender uses to pay expenses such as property taxes and insurance. These amounts affect how much cash you need, but they should be considered separately from the cost of obtaining the loan. A lender estimate with a smaller allowance for insurance does not make the insurance cheaper.
Buyer brokerage compensation belongs in this calculation as well. Check what your agreement requires, what the seller or listing broker has agreed to contribute, and whether you are responsible for a balance. Compensation is negotiable, and the payment arrangements need to be settled in writing.
For mortgages covered by the federal disclosure rules, you generally must receive the Closing Disclosure at least three business days before closing. Use that time to compare it with the Loan Estimate and your contract. Check that deposits and negotiated credits appear, and ask for an explanation of any changed charges.
When reviewing an offer, I want the purchase price and the estimated cash required in front of me together. A seller contribution may be more useful to a buyer’s immediate cash position than the same amount taken off the price, subject to the lender’s limits. That is worth discussing while the offer is still being written.
So, what are the extras?
Use this checklist when requesting your estimate.
The examples below assume a $1 million Miami condo purchase with an $800,000 mortgage. Some expenses are paid before closing. Others depend on what you negotiate in the contract.
Lender fees: Request an itemized quote for origination, underwriting, and processing. For perspective, a charge of 1% of this loan would be $8,000. That is an illustration, not a required fee.
Discount points, if you choose them: $8,000 per point on this mortgage. Ask for the interest rate with and without points before deciding.
Mortgage documentary stamp tax: $2,800, calculated at $0.35 per $100 borrowed.
Mortgage intangible tax: $1,600, calculated at 0.2% of the loan amount.
Appraisal: Approximately $300 to $600 for a typical property. Larger or unusual properties can cost more.
Property inspection: Approximately $300 to $450 for a standard inspection. Specialist inspections cost extra. (WORTH EVERY PENNY! I always recommend to do a mold inspection, and do a deep one, you will regret not doing it if you later find mold, and this is very common in Miami)
Owner’s title insurance: $5,075 base premium at this purchase price, before applicable discounts, endorsements, and additional charges. Confirm who pays under your contract.
Lender’s title insurance: Often a $25 base premium when issued simultaneously with the owner’s policy, subject to the policy amounts and applicable conditions. Endorsements cost extra.
Settlement, title searches, and recording: Request an itemized quote from the closing agent. These are separate from the title insurance premium.
Attorney: Obtain a quote for the work you need, including contract review and any additional due diligence.
Condo application: Generally up to $150 per applicant, where association approval and the fee are authorized. Certain family applicants count as one applicant. Confirm the building’s requirements.
Insurance and initial escrow funding: Property and loan specific. Get the insurance quote early and ask the lender how much must be paid upfront or deposited into escrow.
Association dues, prorations, and assessments: Ask for the amounts due at closing and check how the contract allocates them.
Buyer brokerage compensation: The amount you agreed to pay, less any contribution secured from the seller or listing broker.
Deed documentary stamp tax: $6,000 on this straightforward Miami condo purchase. Check the contract before including it in your buyer total.
Your down payment is separate. Deposits already paid should be credited toward the amount you still owe. Ask for the final cash to close, with every negotiated credit included, rather than adding this checklist together yourself.