USDA Loans In Florida

USDA Loan Closing Costs

Closing a USDA loan deal in Florida feels pretty much like finally catching the perfect wave. But to ride this wave, be aware of the closing costs that come with it:

• Appraisal Fees: An appraisal fee is paid to the appraiser who assesses the home’s market value.
• Origination Fee: This is charged by the lender for processing the new loan.
• Title Search and Insurance Fee: This covers the cost of researching the property’s records to make sure you’re receiving a “clean title.” Title insurance protects the lender (and optionally, the homeowner) from claims against the property that may arise from disputes over the title.
• Recording Fee: Paid to a city or county in exchange for recording the new land records.
• Discount Points: An optional, upfront payment to lower your interest rate.

Seller Paid Concessions

Just like deciding who will pick up the dinner bill after a friendly outing, in a real estate transaction, the buyer and the seller must determine who covers the closing costs. In some scenarios, sellers may agree to help with these costs, a practice known as ‘seller concessions.’

These concessions are agreements where the seller offers to absorb specific expenses related to the closure to help sell their property. This can be beneficial for both parties—buyers can save on the upfront money they need while sellers can attract more prospective buyers and facilitate quicker deals.

Seller concessions in a USDA loan may include:

• Closing Costs: These include appraisal fees, origination fees, title insurance, and recording fees. The seller can pay a portion or all of these costs.
• Prepaid Items: These are expenses that need payment at the time of purchasing but are related to a later date. They could include homeowner’s insurance or property taxes.
• Discount Points: If a buyer desires to lower the interest rate on the mortgage, they can opt to pay discount points. In a seller concession, the seller might decide to cover this expense.

Remember, while seller-paid concessions can be a fantastic way to reduce out-of-pocket expenses when buying a home, each loan type has rules about how much a seller can contribute. For USDA loans, a seller’s concession is typically capped at 6% of the home’s sale price.

Rolling Closing Costs Into The Loan

In some cases, you might feel like rolling the closing costs into your USDA loan, much like adding a side of fries to your main order. Here’s how it works:

With a USDA loan, it’s possible to fold the closing costs into the total loan amount. This means you’re essentially financing your closing costs, which leads to a higher total loan balance. Consequently, your monthly payment might increase slightly.

However, this option is contingent on the appraised value of the property being higher than the purchase price. In other words, this route is only available if the home is appraised at a value high enough to include the closing costs in the loan amount without exceeding the home’s value.

For instance, if you’re buying a home for $150,000 and the appraisal value comes in at $155,000, up to $5,000 of your closing costs could be included in your loan amount, assuming it allows for the fractions of a percent necessary to keep the loan within the appraised value.