Loan Closing Costs Experience 36.6% Increase



Origination and third-party fees on a $200,000 mortgage increased 36.6% to $3,741, on average, from last year's average of $2,739, according to Bankrate's annual mortgage fee survey. Lender origination fees increased to $1,463, or 22.8%, in 2010 from $1,192 in 2009, while the average third-party fees rose 47.2%, to $2,277 from the year-ago average of $1,547.

One reason for this jump is the governmental requirement for lenders to provide accurate good faith estimates (GFEs) of closing costs. GFEs give a borrower an idea of how much the loan will cost to close and were non-binding until this year. This means that the lender could provide an inaccurate or lower statement to the borrower without being penalized, reports HousingWire.

Another cause of closing cost inflation is the increased cost labor lenders go through to comply with tighter underwriting standards and background checks, suggests Bankrate.

"Just to do one loan is time-consuming now, with all the compliance and paperwork," Chik Quintans, a mortgage planner, told Bankrate. "Labor is a true cost."

New York and Texas maintain the most expensive closing costs nationally. The two states have occupied the top two spots on the survey for four out of the last five years. Last year's results were reversed; Texas was followed by New York. Utah, California and Alaska complete the top five most expensive states for mortgage fees while Wisconsin, Montana, Iowa, North Carolina and Arkansas came in at the lowest.

For more information or to see the entire list of statewide closing costs, please visit

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