Almost every borrower I’ve closed since 2002 has had the same reaction to their first Loan Estimate: the rate was what they expected, the down payment was what they’d planned, and then there’s a third number sitting under it that nobody had ever explained. That number is closing costs, and this week’s newsletter question was the right one to ask: what’s actually in it?
Here’s the honest version. Closing costs are real money, they are not all fixed, and the difference between a borrower who understands them and one who doesn’t is often several thousand dollars at the table. So let’s open the box.
The short answer
For a purchase in Broward or Palm Beach, plan on roughly 2% to 5% of the purchase price in true closing costs, plus prepaids and escrow deposits on top. On a $450,000 purchase that’s a working range of about $9,000 to $22,500 before prepaids, and the spread between those two figures is mostly the stuff you can influence: title arrangement, seller concessions, and how the lender fees are structured.
That range is an industry rule of thumb, not a quote. Your real number shows up on a Loan Estimate within three business days of applying, and it’s the only figure worth planning around. Everything below is how to read it.
What’s actually in the number
Every Loan Estimate and Closing Disclosure sorts costs into the same lettered sections, so once you know the map you can read any lender’s paperwork. Grouped the way I walk clients through them:
Lender charges. Origination or underwriting fees, processing, and any discount points you choose to pay. This section is the one that varies most from lender to lender, and it’s the section a broker can shop. A bank can only show you its own fee sheet; I can put the same file in front of many lenders and let them compete on it.
Third-party services. The appraisal, credit report, flood certification, and tax service. These are pass-through costs; nobody at the closing table is marking them up, and in South Florida the appraisal is usually the biggest line in this group.
Title and settlement. The title search, the settlement or closing fee, and two title insurance policies: the lender’s policy that protects the loan, and the owner’s policy that protects you. Florida title premiums are promulgated, meaning the rate is set by the state, so the shopping happens on the settlement fees around the policy, not the policy itself.
Government charges. This is where Florida is genuinely different from the rest of the country, and it’s the section that surprises relocating buyers most. Florida charges documentary stamp tax on the mortgage note at $0.35 per $100 borrowed, plus a non-recurring intangible tax of 0.2% of the loan amount, and both are paid by the borrower because they attach to the loan. On a $450,000 loan that’s $1,575 in doc stamps and $900 in intangible tax before anything else. The separate doc stamps on the deed, $0.70 per $100 of the purchase price, are customarily the seller’s, along with recording fees for the deed.
Prepaids and escrow. Technically not closing costs, but they show up in the same cash-to-close total and they catch people off guard. Prepaid interest from your closing date to the end of the month, the first year of homeowner’s insurance, and the initial deposit into your escrow account for taxes and insurance. In South Florida the insurance line alone can move the total by thousands, which is why I ask for an insurance quote at the scenario stage rather than the week before closing.
Who pays what in Broward County
The buyer-versus-seller split is set by two things: county custom and your contract, and the contract always wins.
By custom in Broward and Palm Beach, the seller pays the doc stamps on the deed and buys the owner’s title policy, and the buyer pays everything tied to the loan. That’s the opposite of Miami-Dade, where the buyer customarily picks up the owner’s policy, and it’s why a buyer moving up the coast from Miami sometimes finds Broward closings a little cheaper than they expected.
Custom is the starting point, not the rule. Every one of those lines can be moved by the purchase contract, which brings us to the part of this conversation that actually saves money.
Five ways to bring the number down
1. Seller concessions. The seller agrees to pay a stated dollar amount or percentage of your closing costs, written into the contract. The program sets the ceiling: conventional loans allow 3% of the price with less than 10% down, stepping up to 6% and then 9% with larger down payments; FHA loans allow up to 6%; VA loans allow 4% in concessions on top of the seller paying all of the buyer’s standard closing costs. In a balanced market, a concession is often easier to negotiate than a price cut, and it’s worth more to you dollar for dollar because it’s cash you don’t have to bring.
2. Lender credits. The mirror image of discount points. Instead of paying money up front for a lower rate, you accept a slightly higher rate and the lender pays part or all of your closing costs. This is the mechanism behind every “no closing cost” offer you’ve ever seen advertised; the cost moves into the rate rather than disappearing. It’s the right trade when you don’t plan to keep the loan long, and the wrong one when you do. I run the break-even on both structures side by side rather than guessing.
3. Shop the shoppable lines. Your Loan Estimate has a section of services you’re allowed to shop for, and the settlement and title fees live there. The premiums are fixed by the state; the fees around them are not, and the spread between title companies in Broward is real.
4. Time the closing date. Prepaid interest runs from your closing date to the end of that month. Close on the 28th and you prepay three days; close on the 3rd and you prepay most of a month. It doesn’t change the loan, but it changes the cash you bring.
5. On a refinance, roll them in. Purchase loans can’t exceed the price, so this option only exists on a refinance, where the closing costs can be financed into the new loan up to the lender’s loan-to-value limit. It’s why most refinances close with little cash out of pocket, and it’s a decision I want made on purpose: financing $8,000 of costs over thirty years is fine if the monthly saving is large, and a bad trade if it isn’t.
Purchase versus refinance: the number changes
The categories are the same, but the weight shifts. A refinance has no seller, so there’s nobody to share the government charges or buy the owner’s title policy; on the other hand there’s no deed to stamp, and if you’re refinancing with the same title company that closed your purchase within a few years, ask about the reissue rate on the lender’s policy. The bigger difference is that a refinance can absorb its own costs into the loan, which makes the break-even math the entire decision: divide the total cost by the monthly saving and you have the number of months until the refinance has paid for itself.
Read the disclosure before you sign, not at the table
Two federal rules protect you here and most borrowers never use them. You get a Loan Estimate within three business days of applying, and you get the final Closing Disclosure at least three business days before closing. That three-day window exists so you can put the two side by side. Lender charges can’t increase at all between the two; shoppable services you chose from the lender’s list can rise no more than 10% in total; and if something jumped without an explained change in circumstances, you’re entitled to ask why before you’re sitting across from a notary.
I go through both documents line by line with every client, on purpose, because the goal at closing is boring: no surprises, no last-minute wire, nothing on the page you haven’t already seen. Two decades in, that’s still the part of the job I take most seriously.
The number that actually matters is cash to close
Closing costs get the attention, but the figure to plan around is cash to close: down payment, plus closing costs, plus prepaids, minus your earnest money deposit, minus seller credits, minus lender credits. That’s the wire. Everything in this article moves one of those lines, and it’s why the closing-cost conversation belongs at the very beginning of the process, when there’s still time to structure it, rather than at the end when the only remaining option is to write a bigger check.
If you’re planning a purchase or a refinance anywhere in South Florida and want to see what your closing costs would actually look like before you commit to anything, that’s a fifteen-minute scenario conversation. Get pre-approved with James and you’ll have a real Loan Estimate to work from, not a rule of thumb.