Mortgage Appraisal and Estimating Closing Costs 

 July 4, 2021

By  Lora Keller

Need An Appraisal For A Property In Southwest Florida? Call (941) 743-3700

Buying and selling your home is a big change. Most people who are selling their homes are also looking to purchase a new one. It is a lot to juggle. Between realtors, open houses, getting the home ready to sell, negotiations, down payments, it is easy to forget about one important part of buying a new home. 

Closing costs. 

If you are a first-time buyer or a first-time seller, you probably have plenty of questions. When you go to buy or sell a home there are a ton of things to worry about and consider. That includes the closing costs.

Anyone who is looking to buy or sell their home needs to be prepared. Focusing on your mortgage appraisal and estimating closing costs is not easy. If you are on a very tight budget even one slight miscalculation or an unexpected expense can be exceptionally difficult to manage. 

So let’s talk closing costs. 

Estate Appraisal Port Charlotte

What Is an Appraisal and Why Do I Need One?

You probably already know what an appraisal is but just in case you don’t, an appraisal is the calculated value of your property from the opinion of a trained and certified professional appraiser. 

And technically you don’t need an appraisal. Your mortgage lender does. They require you to have an appraisal done on a property that you plan to buy before they will agree to your mortgage loan. 

This is so they can protect themselves. For obvious reasons, no mortgage lender wants to lend you more money than what the property is worth. That would be irresponsible on their part. 

They do this because if the homeowner stops making payments and the property needs to be foreclosed on, the lender will want to make as much of their money back as possible when reselling the home. If they overpaid for the property, they most likely will never get that money back. 

Now, let’s look at the appraisal and how it is factored into the closing costs. 

Who Typically Pays for the Appraisal?

Who do you think pays for the home appraisal? If you said the buyer, you are correct. 

In most cases, the buyer is who pays for an appraisal to be done on the property. This is because the buyer is the one requesting a mortgage loan from their lender. 

The lender requires an appraisal on the property before they will agree to the mortgage loan. 

In some situations, the seller will have an appraisal done on the property before putting it on the market. They do this because they want to know what the current market value of the property is. 

If the seller knows what the appraised value of their property is before putting the home up for sale, it can save a lot of grief and frustration later on. The last thing you want is to have a buyer ready to purchase the home and then find out their mortgage lender won’t approve it because the appraisal came in low. 

Picture of a home and coins of value

What Types of Fees Are Included With Closing Costs?

Buyers and sellers both have different fees that they will need to pay. Here are some of the main fees and costs associated with sellers and buyers at closing. 

Seller Closing Costs:

  • Commission – The seller will usually pay both commission prices for both their agent and the buyer’s agent. This is going to be the largest fee amount. 
  • Property Transfer Taxes – A tax paid when transferring ownership from the seller to the buyer.
  • Title Insurance – A title search is used to confirm that the seller does indeed own the property.
  • Attorney Costs – Some states do require you to have a real estate attorney look over the title search which will be an additional fee. (However, this is not a requirement in Florida)
  • The Mortgage Balance – Is there a second mortgage on the property? How about a home equity loan? These types of loans will need to be paid off before you can sell the property.
  • HomeOwners Association (HOA) Fees – If you live in a community with a homeowners association then you will need to pay the required fees when selling the property dictated through the HOA. 
  • Escrow Fees – This is usually a type of deposit made for any property tax or insurance payments at closing. 
  • Other Fees – There are some other fees that will be involved with closing costs, however, we listed some of the main fees that you can expect.

Buyer Closing Costs:

  • Mortgage Loan Application Fee – This is another fee required by your lender in order for them to process your application.
  • Home Inspection – Even though a home inspection isn’t required most buyers opt for an inspection to be done on the property. 
  • Appraisal Fee – This is required by your lender to determine what the property is worth.
  • Flood Certification (Common in Florida)  – This fee is required for anyone in a potential flood zone. If you are in a flood zone you will need to purchase flood insurance. 
  • Prorated Property Taxes – A normal fee for any property sale.
  • Homeowner’s Insurance – Fees for homeowners insurance paid at closing so that home is properly insured. 
  • Recording Fee – A recording fee is paid to your local records office to property file your new land records.
  • Other Fees – There are some other fees that will be involved with closing costs, however, we listed some of the main fees that you can expect.

How Much Should I Expect to Pay?

When it comes to the mortgage appraisal, estimating closing costs depends on a few different things. First, are you the buyer or the seller? Both the buyer and seller will have to pay closing costs, however, the costs are a little different depending on which party you are. 

The buyer tends to pay less for closing costs, however, it is still a pretty penny. One common mistake for first-time homebuyers is grossly underestimating how much the closing costs will be. It is easy to be more concerned about the down payment for a home and to forget the additional fees that are involved at the end of your transaction. 

There are plenty of buyers who end up taking out a small, low-interest loan to pay off the closing costs which can get up to around 5% of your purchase amount. So if you are buying a home at $200,000 you can expect to pay up to about $10,000 in closing costs. 

Now, sometimes the closing costs can be lower at around 2% which is a significant difference. It all depends on the sale and exactly what fees are involved. 

Sellers will typically pay more for their closing costs upwards of 7% or even 10% of the purchase amount. So for a home that they sell at $200,000 they might pay $14,000 to $20,000 in closing costs. That is why it is so important to remember the closing costs and plan for them when buying or selling your property. 

If you want to know more about appraisal closing costs or how much an appraisal could cost, check out our appraisal calculator for a free estimate on your appraisal. Or you can give us a call today at (941) 743-3700.

Lora Keller


Lora Keller 

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