Mortgage loan closing costs on the rise

For Sale sign

Mortgage closing costs are getting expensive for people looking to pay off mortgages or sell their homes. Image from Wikimedia Commons.

One of the costs of a mortgage loan is the closing costs, or the fee you pay when you finally pay your mortgage off or sell your home. The costs can be considerable, and the average closing cost nationally is several times more than the average payday loan. The average amount of a closing cost has risen nationally, although not universally. New regulations are in place, and with the turmoil of the real estate industry, it will be hard to tell when it has recovered.

States with high closing costs

According to Bankrate, the most expensive state in the union for closing costs is New York. The closing costs for paying off a mortgage in New York would have a king hurting for a cash advance. The average New York closing costs for a $200,000 mortgage is $5,623. It’s too bad there isn’t  closing cost modification to go with mortgage loan modification. Considering how strapped many people are these days, that sum will send most out to get a personal loan, as not everyone has that much instant cash socked away for a rainy day. Texas, Utah, California and Alaska were the five most expensive states to close a mortgage in.

Closing costs rise nationwide

Closing costs for mortgage loans rose 36.6 percent overall. Lender costs rose 22.8 percent, and third party fees went up 47.2 percent. Last year, the average cost was $2,739 and that rose to $3,741. That’s an increase of more than $1,000, which is about three times the typical loan until payday. Since the housing market is depressed, funding for a mortgage loan is harder to secure. There are also more rules governing many aspects of consumer finance.

Costs to lenders rising also

Part of the increased rates is the fact that costs have gone up for lenders as well. A mortgage lender now has to provide a good faith estimate of the closing costs, and penalties are assessed as of this year if the estimates come in under the actual costs. The Federal Reserve also banned bonus incentives for loan brokers who sell customers on higher rates than they might normally pay, according to the Los Angeles Times. However, if turning a profit depends entirely on bilking the consumer, then change is needed to a business.

Further Reading

Bankrate survey of closing costs

Los Angeles Times

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