Mortgage-Closing Costs Fall 7 Percent Year-Over-Year

Closing costs on a mortgage loan have lowered over the past year, making purchasing a home less costly.

According to Bankrate.com research, mortgage closing costs dropped 7 percent over the past year and now averages $1,847 on a $200,000 loan. The research also determined that origination fees lowered, while third-party costs increased.

“Homebuyers have more say over closing costs than they think,” said Holden Lewis, Bankrate.com’s senior mortgage analyst. “Costs vary between lenders, so everyone should compare at least three different options. You don’t have to go with the lender your agent suggests.”

Bankrate surveyed up to 10 lenders in all 50 states and Washington, D.C. in June 2015. Researchers obtained online good faith estimates for a $200,000 mortgage to buy a single-family home with a 20 percent down payment. Costs include fees charged by lenders, as well as third-party fees for services such as appraisals. The survey excludes discount points, taxes, title fees, property insurance, association fees, interest, and other prepaid items.

Bankrate found that Hawaii’s average closing costs are the highest in the nation at $2,163. This amount breaks down into $1,033 in origination fees and average third-party fees of $1,130. New Jersey had the second-highest average closing costs at $2,094, according to Bankrate. Connecticut ($2,033), West Virginia ($1,971), and Arizona ($1,969) finished up the top five states with the highest closing costs.

Bankrate reported that the cheapest closing costs are in Ohio at $1,613. This breaks down to $933 in origination fees and an average of $681 in third-party fees.  Idaho ($1,682), Wyoming ($1,689), Utah ($1,697), and Maine ($1,727) wrapped up this top five states with the lowest closing costs.

On a national level, the average origination fee declined 22 percent to $1,041 and the average third-party fee rose 22 percent to $807.