Survey Finds Closings Costs Are Rising, New York Highest

Earlier this week, Bankrate, Inc. released its “2010 Closing Cost Survey” which revealed that the costs associated with buying a home are seemingly on the rise. Ultimately, the study found the average origination and title fees on a $200,000 mortgage in 2010 totaled $3,741, up 36.6 percent from $2,739 in 2009.

Bankrate surveyed one area in 49 states, two areas in California (Los Angeles and San Francisco), and the District of Columbia. Researchers selected a zip code from one of the area’s largest cities and request the closing costs for $200,000 loans. Researched specifically focused on fees for 30-year fixed-rate mortgages for borrowers with a 20 percent down payment and good enough credit to buy a single-family home. Bankrate’s survey includes lenders’ origination fees and title and settlement fees, but does not include taxes or prepaid items.

The survey found New York to have the highest fees in the nation with an average fee of $5,623. Texas, Utah, San Francisco, and Los Angeles followed closely behind. In 2009, Texas held the survey’s number one spot with New York at number two. In the past four out of five years, Texas and New York have held the top two spots. Arkansas was found to be the least expensive, with an average fee of $3,007, replacing Nevada from last year’s survey. This year Nevada is ranked at number 34. Other states with the lowest fees included North Carolina, Iowa, Montana, and Wisconsin.

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Researched for Bankrate feel the rising rates are due to the new regulations implemented in January of this year. Lenders are now required to provide a potential buyer with a Title and Closing fee estimate within 10 percent of what the final cost will be with providing a Good Faith Estimate (GFE). Before these regulations were in place, estimates could fall much lower on the scale without the lender being penalized.

Fees charged directly by lenders went up 22.8 percent this year and fees charged by third parties, such as appraisals and title insurance, went up 47.2 percent. For lenders, this is because it now takes more labor to approve a loan than it did in the past. Before the new regulations, only around 10 percent of mortgages were double-checked before closing. But now, Fannie Mae’s “Loan Quality Initiative” requires the borrowers tax documents be checked against IRS transcripts, and lenders must match the borrower’s social security number against fraudulent checks and pull their credit reports. This means, fees have to go up. Origination fees charged by lenders now average at $1,463, up 22.8 percent from last year at $1,192.

Written by Kelly Mellott

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  • Here we go again. One city in 49 states but two in California. LOL!!!rnrnFinally those east of the Hudson have discovered California is the most populous state in the Unior but it is not homogeneous; however, they are still dividing California into north and south. They need to divide it east and west as well. To get a better idea about differences in costs, try San Diego and Alturas. Or another shot at the same concept is San Francisco and El Centro. rn

  • The implementation of HVCC & FHA Appraiser Independence, which effectively forces the use of an AMC has also helped to drive costs up. I’ve seen appraisal fee increases from 5% on up to 45% and higher depending on the AMC and location of the subject.

    • reverser,rnrnAre you implying that total costs have gone up by 5% to 45% or just the cost of the appraiser by itself? I doubt if total costs have been driven up that much by the new appraisal policies.rnrnOf course the increased costs have resulted in more quality and reliability in appraisal results (LOL).rnrnThe value of independence is not derived by insulating the professional from pressures and tension. It comes from a renewed vigilance to insure that appraisers maintain their independence despite the pressures. A pearl does not have better quality because it was formed from a piece of cotton rather than a grain of sand; nor does a flawless diamond come from lowered temperatures and pressures. However, the price of quality is generally always higher than mediocrity. rnrnThe problem with what has been instituted is that seniors are paying more for a lower quality product. While this is not the fault of the appraisers per se, it is the fault of the AMCs. Yet HUD and the lenders seem satisfied with the current appraisal situation. The situation is not only mind boggling; it is down right BIZZARRE. rnrn

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