Closing Costs Declining Across the Nation

August 18, 2012

closing costs falling nationwideClosing costs on mortgages vary across the nation, and across the nation, those costs are coming down, thanks to recent changes to the Real Estate Settlement Practices Act, and described in the recent CNNMoney article, “Mortgage closing costs fell 7% for homebuyers.”

According to a recent survey, the average closing cost on a mortgage has declined by 7.4 percent. In real numbers, at the end of June 2012, a buyer closing a $200,000 mortgage with 20 percent down paid $3,754 on average, $300 less than the same time in 2011.

Closing costs include such expenses as application fees, credit check fees, title search fees and insurance fees.

According to Bankrate, the decreasing costs are due to Real Estate Settlement Practices Act regulations requiring lenders to be more accurate, within 10% in fact, with their closing cost estimates for borrowers. The fact that closing costs are down means that lenders are doing a good job of estimating closing costs.

Across the nation, closing costs vary by several thousand dollars. The most expensive state was New York, where final costs averaged just over $5,400 for a $200,000 mortgage. Texas, Pennsylvania and Florida also had costs much higher than the average, says Bankrate.

The cheapest? Missouri, where total costs averaged just over $3,000. Kansas, Colorado and Iowa are also among the least expensive.

The article also describes how closing costs can even vary significantly house to house in the same neighborhood. Chicago real estate buyers should get estimates from three lenders, pay attention to the total cost of borrowing (including all those fees described above) and not look at just the lowest interest rate.

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