Pa. and N.J. are in the top 10 of closing costs, a survey says.
It's something few buyers appear to include when calculating the price of homeownership, but closing costs sometimes can be the tipping point in a sale.
It's something few buyers appear to include when calculating the price of homeownership, but closing costs sometimes can be the tipping point in a sale.
Pennsylvania, it seems, is near the top of the list in settlement costs - No. 8, in fact, according to a recent survey by the real estate website Bankrate.com.
The total: an average $4,236.
New Jersey is a close No. 9 at $4,110.
The survey excludes property taxes, recording fees, homeowners' insurance, and prepaid items such as a partial month's mortgage interest.
It was based on a $200,000 loan with 20 percent down and good credit.
Holden Lewis of Bankrate.com said the website had been tracking settlement costs for about seven years, out of curiosity.
"I've come away from these closing-cost studies with one firm notion: that title insurance is much too expensive in many parts of the country," he said. "Some states have title-insurance premiums promulgated by government."
In Pennsylvania and New Jersey, premiums are set by state insurance departments.
Two questions arise. Are Bankrate.com's findings accurate? And how can the typical buyer reduce costs?
"The information is flawed," said Marshal Granor, principal in Granor Price Homes of Horsham and a practicing lawyer.
Title insurance in Pennsylvania for a $200,000 loan is $1,358.75 basic rate and $1,222.88 reissue rate, if another policy was issued on the property in the previous 10 years, he said.
Horsham mortgage broker Peter Buchsbaum says using a title-company-approved lawyer to conduct the closing - instead of a title company agent - may save $250.
Closing-cost estimates have risen substantially, however, Granor said. Under revised HUD rules, the estimates cannot be increased, so lenders are "guessing very high," he said.
Other experts share Granor's complaints about the survey - some saying the averages listed for appraisals and inspections are low - but agree that closing costs are high.
Narberth Realtor John Duffy says closing costs can affect a buyer's ability to purchase, but many, especially first-timers, are negotiating a "seller's assist" in the sales contract, helping to pay some or all of the costs.
Jerome Scarpello, of Leo Mortgage in Ambler, said that with rates at 4.32 percent, "there is no sense in paying points" (fees to lower the rate).
With 20 percent down, most lenders waive escrow, he said. That cuts closing costs, but passes responsibility for making tax and insurance payments to homeowners.
Diamond Mortgage's David Diamond urges buyers to look at closing costs early, requesting a Truth In Lending Disclosure, which factors in closing costs and can be used to compare mortgage offers.
Weichert Realtors' Noelle Barbone suggests that "if a buyer wants to conserve up-front cash, it is better to go with the lender who may have a slightly higher rate, but lower fees."
Pennsylvania has no survey requirement; New Jersey does, she said.
Excluding the transfer tax from Bankrate.com's equation didn't stop Pennsylvania agents from attacking it.
"Cut the transfer tax to a more sensible number, encourage buyers with lower closing costs, and allow city budget planning not based on the ups and downs of a fluctuating real estate market," said Prudential Fox & Roach's Joanne Davidow.
Closing Costs in Pa. and N.J.
The average fees charged for a loan of $200,000:
Lender origination fees Pa. N.J.
Points $479 $537
Application $343 $343
Document preparation N/A $50
Broker, originator or lender $693 $716
Processing $495 $495
Tax service $70 $70
Underwriting $200 $200
Wire transfer $25 $25
Third-party fees
Appraisal $360 $359
Attorney, closing $305 $493
Credit report $16 $16
Employment verification $15 $15
Inspections $125 $125
Flood certification $8 $8
Postage/courier $35 $35
Survey $680 $675
Title search/ insurance $2,334 $2,036
Totals $4,236 $4,110
Note: Figures do not add up to the totals because banks charge some, but not all, of the fees.
SOURCE: Bankrate.comEndText
Top 10 States For Closing Costs
Rank/State Total 1. New York $5,623
2. Texas $4,708
3. Utah $4,605
4. Calif./
San Francisco $4,566
5. Calif./ L.A. $4,406
6. Alaska $4,327
7. Oklahoma $4,254
8. Pennsylvania $4,236
9. New Jersey $4,110
10. Idaho $4,077 SOURCE: Bankrate.com
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