Surprised by Closing Costs?

Over half of all homebuyers are surprised by closing costs required to obtain their mortgage, according to a survey conducted by ClosingCorp.

The survey included 1,000 first-time and repeat homebuyers. The results revealed that 17% of homebuyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected.

“Homebuyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.”

Bankrate.com gathered closing cost data from lenders in every state and Washington, D.C. in order to share the average costs in each state. The map below was created using the closing costs on a $200,000 mortgage with a 20% down Payment.

Average Closing Cost by State

Remember if you are in the market for a home above this price range, your costs could be significantly greater. According to Freddie Mac,

“Closing costs are typically between 2 and 5% of your purchase price.”

In my experience here in Northern Va, if your closing costs are more than 3% and you are not buying points, you are paying too much and need to investigate why. (Buying points, is paying money up front for a lower rate)

Bottom Line

Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.