Mortgage Closing Costs Rise 36 Percent

August 16, 2010 No Comments »

costs

Mortgage closing costs jumped 36.6 percent as banks and lenders put in more work to get loans closed, according to the 2010 Closing Costs Study from Bankrate.com.

The average cost of origination and third-party fees on a $200,000 loan for a home purchase mortgage ($250,000 purchase price) was $3,741, up from $2,739 last year.

Origination fees charged directly by lenders increased 22.8 percent to $1,463, while fees charged by third parties for things like appraisals and title insurance surged 47.2 percent to $2,277.

But the rise in fees may be overstated, thanks to more accurate Good Faith Estimates, a requirement born out of the ongoing mortgage crisis.

“The big rise in average closing costs may scare some homebuyers, but it’s important to keep things in perspective,” said Greg McBride, senior financial analyst for Bankrate.com, in a statement.

“Increased regulation on lenders’ GFEs means more accurate estimates and less expenses popping up for consumers on the back end.”

Lenders are now subject to penalties for underestimating fees, but there are no such penalties for overestimating costs.

New York led the nation in closing costs at $5,623, followed by Texas at $4,708 and Utah at $4,605 – Arkansas was cheapest at $3,007.

Bankrate’s survey, which assumed the borrower had excellent credit, included origination fees charged by mortgage lenders, along with fees charged by third parties.

However, discount points, property taxes, recording fees, homeowners insurance and prepaid items like a partial month’s mortgage interest are excluded.

Leave A Response