North Carolina Ranks #2 for Least Expensive Closing Costs in the Nation

Each year Bankrate.com conducts a closing cost study where researchers collect data from at least four lenders in 50 states and the District of Columbia. This year, data was collected separately for Los Angeles and San Francisco in California.  The study was based on a good faith estimate for a $200,000 mortgage loan with a 20% down payment and good credit.

According to the survey, origination and third-party fees on a $200,000 mortgage loan added up to $3,741, which was a 36.6% increase compared to 2009′s average of $2,739.  Fees charged directly by lenders went up 22.8% and third party fees for such items as appraisals, inspections and title insurance went up 47.2%.

Least Expensive Closing Costs

North Carolina fared well in Bankrate’s mortgage fee survey, ranking #2 in the country for having the least expensive closing costs, with average costs at $3255. The national average for closing costs is $3741. Other contenders in the least expensive category included:

• #1 – Arkansas at $3007
• #3 – Iowa at $3261
• #4 – Montana at $3298
• #5 – Wisconsin at $3303

Most Expensive Closing Costs

New York was one of the states that didn’t do so well, ranking #1 for having the most expensive closing costs in the nation, with average costs at $5623.  New York was followed by:

• #2 – Texas at $4708
• #3 – Utah at $4605
• #4 – California – San Francisco at $4566 & Los Angeles at $4406
• #5 – Alaska at $4327

 Closing Costs for North Carolina

Overview based on a $200,000 purchase mortgage 
Bankrate’s survey includes origination fees charged by the lender as well as fees charged by third parties.  The survey does not include homeowners insurance, property taxes, recording fees or prepaid items such as a partial month’s mortgage interest or any discount points.

• Average origination fees charged by lender – $1,476
• Average title and third-party fees – $1,779
• Average total fees – $3,255

If you add up the itemized fees below they will not equal the averages listed above because each bank may charge some of the fees listed,  but not all of them.  The following list includes the average for each fee if charged by the lender. 

Origination fees charged by the lender

• Points – $479
• Commitment fee – N/A
• Application – $343
• Document preparation – $50
• Broker, originator or lender – $939
• Processing – $495
• Tax service – $70
• Underwriting – $200
• Wire transfer – $25

 Third-party fees

• Appraisal – $360
• Attorney, closing or settlement – $468
• Credit report – $16
• Employment verification – $15
• Inspections – $125
• Flood certification – $8
• Postage/courier – $35
• Survey – $545
• Title search and title insurance – $1,141

New GFE Rule

Even though fees rose only moderately this year, the biggest change is that the government began requiring lenders to provide accurate GFEs (good faith estimates).  The new regulatory requirement was put in place to help consumers save money on closing costs. 

It also forces brokers and lenders to provide accurate estimates of closing costs so that consumers can compare loan offers. Unlike before, lenders are now penalized for low balling GFEs.

 The new GFE rule includes the following: 

• The GFE is now a standardized 3 page form 
• The GFE includes an easy-to-understand summary of the loan’s terms
• The lender must stand by the GFE for 10 days, giving you time to compare loan offers
• The lender must adhere to the estimate of its own fees.
• The final costs for third-party fees must be in close proximity to the costs on the estimate

Bankrate’s survey takes its numbers from online GFEs so some of this year’s increase may be attributed to the regulatory requirement for higher accuracy.

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Article Sources:  Bankrate.com, ScrippsNews