Mortgage Closing Costs Differ from State to State

An annual survey of mortgage closing costs in the fifty states brings up some substantial differences in its 2006 edition. The survey is partial to some extent, because it does not reflect taxes, other government costs or escrow fees. Nevertheless, it can provide an accurate sense of the variation that you will find from state to state on charges that are involved with every home loan settlement. All of the following statistics were based on a fixed rate mortgage of $200,000 for people with good credit ratings who made a twenty percent down payment.

These statistics were collected from nine lenders in each state, in the largest city of each state with one exception. Buffalo was substituted for New York City, because the Big Apple is in a league of its own. Nevertheless, New York finished first (or last, depending on your point of view) with its high title and settlement costs. The other states in the top five for mortgage closing costs were Texas, Hawaii, Ohio and Florida.

The national average for mortgage closing costs was $3,024. In New York, the figure was $3,907. Home buyers in Missouri currently pay the lowest closing costs, at $2,713. The rest of the bottom (or top) five are Michigan, New Hampshire and Montana.

Mortgage closing costs can be divided into three categories. The first is loan fees, which are charged by the lender. The second is title and settlement fees charged by parties other than the lender. This survey includes all of these charges. The highest lender’s fees are found in Hawaii at over $1,900 while the lowest are in New Hampshire, at $1,400. The national average is $1,672 with two thirds of the states within $113 of that figure.

There was a wider variation in title and closing charges. Fees averaged $1,353. In most states, title insurance averages less than $600, but in New York and Texas title insurance premiums are well above $1,000 on a $200,000 loan. In Texas, title insurance fees are set by the state - $1,453 on a $200,000 loan. However title companies are allowed to tack on additional fees and surcharges in order to beef up their participation in mortgage closing costs.