Where Do Home Buyers Pay More for Closing Costs?

Where Do Home Buyers Pay More for Closing Costs?

The average homebuyer spends a lot of time considering the cost of their potential home. They counter the asking price. They ask for items to be included – or discounts to be applied – for things like older roofs and air conditioners. They shop around for contractors if they’re going to get work done to their new place, but they often pay out too much when it comes to deciding where they will close and the fees associated with closing.

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What States’ Closing Costs Cost the Most?

Some things you can control like where you close within your state but others — like which state you close in — is up to where you’re buying or where you live. According to BankRate.com (based on a $200,000 home with 20% down), the most expensive states to close in are:

Hawaii: average closing cost = $2,655

New York: $2,560   

North Carolina: $2,409

Delaware: $2,358

South Carolina: $2,322

The least expensive states are:

Pennsylvania: $1,837

Wisconsin: $1,863

Kentucky: $1,874

South Dakota: $1,904

Oklahoma: $1,911

According to the Federal Reserve a general rule of thumb for closing costs is 3% of your home cost. However, in some areas you’ll pay more like 5-6%. It can be less if the state has a flat-fee for title insurance. The national average for closing costs on a $200,000 home is $2,128, with $1,058 going to lenders.

It’s Easy to Shop for Closing Costs

Since October 2015’s TRID rule went into effect it’s a lot easier for homebuyers to comparison shop for closing costs. Prior to this, many fees and final costs were a moving target until right before close. Now they are well documented and must be signed off on by the buyer.

Know what you can shop

If you check the top of page 2 of the Loan Estimate, you’ll see the services you can shop for (like title insurance and pest inspection) and those you cannot (like property appraisal). Your lender or real estate agent may give you a list of preferred vendors but you don’t have to use them. Sometimes independent organizations can provide the lowest fees because there aren’t affiliate relationships in place, that ultimately cost you more money.

Price homeowner’s insurance

Another component of closing costs is homeowner’s insurance. Make sure you shop around for that. Florida does have some restricted options due to its high-risk assessment but it is still a good idea to check out what’s available.

Understand reissue

If the home you’re purchasing was sold within the last three years, prior to this purchase, you may be eligible for a discount (around 30%) on your title insurance policy. You need a copy of the seller’s policy, which you can get from them or from the issuing title company. This simple request could save you hundreds.

Are you looking to save money on your closing costs? It’s time to shop home buyers title services and other components of the closing costs. Contact Bay National Title Company today to see how we can save you money.

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