Don’t Feel Like a Chump When You Close on Your New Mortgage
Mortgage closing costs dropped 7 percent over the past year, falling to $1,847 on a $200,000 loan, according to a new analysis by Bankrate.
Typical closing costs varied by state, ranging from $2,163 in Hawaii to $1,613 in Ohio. You can find the average rate for your state in the table below.
Lenders compete for business, so shopping around with at least three mortgage providers can help you reduce the fees associated with your loan. “Homebuyers have more say over closing costs than they think,” Bankrate Senior Mortgage Analyst Holden Lewis said in a statement.
Even as banks lower their mortgage fees, they’re increasing fees in most other categories, according to MoneyRates.com.
While lower mortgage fees are good news for homebuyers and those refinancing their loans, the average saving amount to just $140. That’s not much relative to the total costs associated with buying a house. The average down payment for homebuyers in the first quarter of 2015 was $57,710, for example.
Related: Want Your Own Home? Here’s How to Do the Math
The costs don’t stop once the buyers move in. On top of mortgage payments, homeowners face an average of more than $6,000 in additional costs related to their house, including homeowners insurance, property taxes and utilities.
The National Association of Realtors expects home prices to increase 6.5 percent this year to a median $221,900, which would put them at the same level as their 2006 record high.
For buyers, better news than the lower mortgage fees is that rates remain relatively low, falling to 3.98 percent last week, per Freddie Mac.
Closing costs | |||
---|---|---|---|
State | Average origination fees | Average third-party fees | Average origination plus third-party fees |
Alabama | $1,066 | $776 | $1,842 |
Alaska | $935 | $922 | $1,857 |
Arizona | $1,208 | $761 | $1,969 |
Arkansas | $1,057 | $760 | $1,817 |
California | $937 | $896 | $1,834 |
Colorado | $1,192 | $719 | $1,910 |
Connecticut | $1,074 | $960 | $2,033 |
Delaware | $904 | $924 | $1,828 |
District of Columbia | $1,077 | $718 | $1,794 |
Florida | $1,028 | $778 | $1,806 |
Georgia | $1,058 | $821 | $1,879 |
Hawaii | $1,033 | $1,130 | $2,163 |
Idaho | $894 | $788 | $1,682 |
Illinois | $1,080 | $767 | $1,847 |
Indiana | $1,067 | $770 | $1,837 |
Iowa | $1,161 | $762 | $1,923 |
Kansas | $1,047 | $753 | $1,800 |
Kentucky | $1,060 | $737 | $1,797 |
Louisiana | $1,060 | $817 | $1,877 |
Maine | $897 | $830 | $1,727 |
Maryland | $1,093 | $742 | $1,835 |
Massachusetts | $905 | $851 | $1,756 |
Michigan | $1,072 | $746 | $1,818 |
Minnesota | $1,067 | $689 | $1,757 |
Mississippi | $1,046 | $837 | $1,884 |
Missouri | $1,040 | $792 | $1,833 |
Montana | $1,062 | $855 | $1,917 |
Nebraska | $1,047 | $770 | $1,817 |
Nevada | $1,002 | $848 | $1,850 |
New Hampshire | $1,084 | $750 | $1,835 |
New Jersey | $1,181 | $913 | $2,094 |
New Mexico | $1,076 | $876 | $1,952 |
New York | $1,032 | $879 | $1,911 |
North Carolina | $1,036 | $875 | $1,911 |
North Dakota | $1,045 | $791 | $1,836 |
Ohio | $933 | $681 | $1,613 |
Oklahoma | $1,027 | $734 | $1,761 |
Oregon | $1,080 | $785 | $1,864 |
Pennsylvania | $1,055 | $678 | $1,733 |
Rhode Island | $1,093 | $802 | $1,896 |
South Carolina | $1,058 | $837 | $1,895 |
South Dakota | $1,055 | $704 | $1,759 |
Tennessee | $1,033 | $773 | $1,806 |
Texas | $1,031 | $833 | $1,864 |
Utah | $909 | $788 | $1,697 |
Vermont | $1,074 | $862 | $1,936 |
Virginia | $1,050 | $787 | $1,837 |
Washington | $1,077 | $824 | $1,901 |
West Virginia | $1,067 | $904 | $1,971 |
Wisconsin | $1,047 | $723 | $1,770 |
Wyoming | $874 | $814 | $1,689 |
Average | $1,041 | $807 | $1,847 |
Bankrate.com surveyed up to 10 lenders in each state in June 2015 and obtained online Good Faith Estimates for a $200,000 mortgage to buy a single-family home with a 20 percent down payment in a prominent city. Costs include fees charged by lenders, as well as third-party fees for services such as appraisals and credit reports. The survey excludes title insurance, title search, taxes, property insurance, association fees, interest and other prepaid items.
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Chart of the Day: 2019’s Lobbying Leaders
Roll Call reports that trade, infrastructure and health care issues including prescription drug prices “dominated the lobbying agendas of some of the biggest spenders on K Street early this year.” Here’s Roll Call’s look at the top lobbying spenders so far this year:
Can You Fix Social Security? A New Tool Lets You Try
The Congressional Budget Office released an interactive tool Wednesday that shows how some widely discussed policy changes would affect the long-run financial health of the Social Security system.
“This interactive tool allows the user to explore seven policy options that could be used to improve the Social Security program’s finances and delay the trust funds’ exhaustion,” CBO said. “Four options would reduce benefits, and three options would increase payroll taxes. The tool allows for any combination of those options. It also lets the user change implementation dates and choose whether to show scheduled or payable benefits. … The tool also shows the impact of the options on different groups of people.”
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Why Prescription Drug Prices Keep Rising – and 3 Ways to Bring Them Down
Prescription drug prices have been rising at a blistering rate over the last few decades. Between 1980 and 2016, overall spending on prescription drugs rose from about $12 billion to roughly $330 billion, while its share of total health care spending doubled, from 5% to 10%.
Although lawmakers have shown renewed interest in addressing the problem, with pharmaceutical CEOs testifying before the Senate Finance Committee in February and pharmacy benefit managers (PBMS) scheduled to do so this week, no comprehensive plan to halt the relentless increase in prices has been proposed, let alone agreed upon.
Robin Feldman, a professor at the University of California Hastings College of Law, takes a look at the drug pricing system in a new book, “Drugs, Money and Secret Handshakes: The Unstoppable Growth of Prescription Drug Prices.” In a recent conversation with Bloomberg’s Joe Nocera, Feldman said that one of the key drivers of rising prices is the ongoing effort of pharmaceutical companies to maintain control of the market.
Fearing competition from lower-cost generics, drugmakers began over the last 10 or 15 years to focus on innovations “outside of the lab,” Feldman said. These innovations include paying PBMs to reduce competition from generics; creating complex systems of rebates to PBMs, hospitals and doctors to maintain high prices; and gaming the patent system to extend monopoly pricing power.
Feldman’s research on the dynamics of the drug market led her to formulate three general solutions for the problem of ever-rising prices:
1) Transparency: The current system thrives on secret deals between drug companies and middlemen. Transparency “lets competitors figure out how to compete and it lets regulators see where the bad behaviors occur,” Feldman says.
2) Patent limitations: Drugmakers have become experts at extending patents on existing drugs, often by making minor modifications in formulation, dosage or delivery. Feldman says that 78% of drugs getting new patents are actually old drugs gaining another round of protection, and thus another round of production and pricing exclusivity. A “one-and-done” patent system would eliminate this increasingly common strategy.
3) Simplification: Feldman says that “complexity breeds opportunity,” and warns that the U.S. “drug price system is so complex that the gaming opportunities are endless.” While “ruthless simplification” of regulatory rules and approval systems could help eliminate some of those opportunities, Feldman says that the U.S. doesn’t seem to be moving in this direction.
Read the full interview at Bloomberg News.