When you sell your home or pay off your mortgage, you have to pay closing costs. The average closing cost has gone up about $1,000 in the past year. The national average for closing costs has been going up. There are more costs and regulations involved for real estate lenders, and it might be awhile before the real estate industry has completely recovered.
The highest closing costs in the nation
The dubious honor of highest nationwide closing costs goes to New York, according to Bankrate. For a $200,000 mortgage, closing costs are $5,623 in New York, and borrowers can’t get closing cost modification as part of mortgage loan modification. A lot of people are strapped for cash, and because not everyone maintains enough cash for these kinds of fees, most people end up having to borrow the money for closing costs. After New York, the most expensive states are Utah, Texas, California and Alaska.
Costs increased nationwide
Mortgage loan closing costs went up 36.6 percent since last year. Third party fees went up 47.2 percent, and lender costs went up by 22.8 percent. The average cost from last year was $2,739 which went up to $3,741 for this year. Mortgage loan funding is harder to secure in the current market. Consumer finance is also subject to far greater amounts of regulation, and people need higher credit ratings to obtain mortgages.
Lender costs rising also
Costs for lenders to do business has gone up too. Mortgage lenders are required to estimate what the closing costs will be, and if they lowball the estimate they get fined. According to the Los Angeles Times, the Federal Reserve just made it illegal for brokers to get incentive payments on selling higher interest rates to customers, which was a shady practice. Thankfully, that new regulation works in favor of borrowers
More information on this topic
LA Times: http://latimesblogs.latimes.com/money_co/2010/08/federal-reserve-mortgage-lender-bonuses.html
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