When determining the cost of a new home, potential buyers tend to overlook one crucial fee: the closing costs, but now, due to a piece of legislation known as RESPA, closing costs are down across the board. RESPA is the Real Estate Settlement Practices Act, a law that requires lenders to provide a “good faith estimate” within 10% of the amount the buyer will end up paying of any third-party fees associated with the purchase.
Closing fees, which encompass all the extraneous charges by the lender like processing fees, organization fees, and title insurance, are falling rapidly thanks to RESPA. According to Bankrate’s annual survey of closing costs, the average cost of closing a home on a $200,000 mortgage in the United States is $3,700, a full seven percent, or about $300 less, than the previous year. New York leads the nation with the highest closing costs — $5,500 on average — and Missouri has the lowest, around $3,000. Texas is near the middle of the list, with closing costs around $4,600 on a $200,000 mortgage.
These types of closing costs are flexible, and differ considerably from lender to lender in most cities and can often vary by more than $1,000, so it’s important that potential buyers to carefully compare the closing costs of all the prospective lenders in the area, as the terminology for the fees doesn’t remain the same between lenders. One lender’s “processing fee” may be another lender’s “appraisal fee” and not all closing fees are negotiable.
A large portion of closing costs are charges associated with title insurance and services. The survey by Bankrate indicates that the normal cost for title insurance and the auxiliary fees is around $2,100. Borrowers are entitled to choose their own title insurance, allowing consumers to seek out the best price. Many states have a set rate for their title insurance premiums, but the fees associated with the purchase may not be regulated, so shopping around can still pay off.
Finding the best prices might seem like a lot of work, but you can save big by minimizing your closing costs. And with such a large number of Erath County homes for sale, we’re looking forward to helping you put that money towards your Stephenville dream home.