Mortgage rates are not the only thing that is rising. Closing costs are on the rise too. Closing costs on a home sale excluding title insurance rose 6 percent year over year in June, averaging $2,402 on a $200,000 mortgage, according to an annual survey by financial rate comparison site Bankrate.com.
Lender origination fees drove the increase, jumping 8 percent to $1,730. Third-party fees for services such as appraisals and credit reports rose 1 percent to $672.
The state-by-state survey was based on online good-faith estimates from up to 10 lenders in a state, plus Washington, D.C., for a hypothetical $200,000 purchase loan for a single-family home in a state’s largest city with a 20 percent down payment and excellent credit, Bankrate.com said.
The five most expensive states were Hawaii, where closing costs averaged $2,919, followed by Alaska ($2,675), South Carolina ($2,658), California ($2,639), and New Mexico ($2,566). This is actually not a huge surprise to me because I would have guessed that these would be among the most expensive states – especially Hawaii and California. These would have been my first two guesses for highest closing costs.
The five least expensive states were Wisconsin, where closing costs averaged $2,119, followed by Missouri ($2,188), Kansas ($2,193), Michigan ($2,203), and Washington State ($2,208).
There is always a lot of talk about mortgage rates. However, closing costs are important to track as well because they are frequently underestimated and all but forgotten costs in home ownership.
These numbers do not sound significant but they do not include title insurance, settlement fees and any abstract or escrow fees. When these are added into the cost, the total closing costs are suddenly significant.
There is not a huge discrepancy between most expensive and least expensive states, but it is nice that Bankrate.com tracks this type of thing.
Paddy Deighan, J.D. Ph.D
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