SOUTHERN UTAH – Utah currently has the 3rd highest real property loan closing costs in the nation, according to a recent report by Bankrate.
According to the report, origination and title fees are up 8.8 percent on a national average from 2010.
That translates to a difference of $329 in a standard $200,000 mortgage for a borrower with good credit.
The states that hold first and second place with the highest fees are New York and Texas, respectively.
The states with the least expensive fees include Arkansas, North Carolina and Indiana, according to Bankrate.
According to Bankrate, most of the increase is due to fees charged by the lenders, which they say is directly tied to stricter mortgage regulations.
This, in contrast to what is generally perceived to be the primary cost on a loan – the interest rate.
“Interest rates get a lot of attention, and rightfully so, but it’s also important for consumers to compare lender fees when shopping a loan,” said Greg McBride, Chartered Financial Analyst, a senior financial analyst for Bankrate, Inc.
Origination fees and lender charges for services like underwriting and processing contribute to loan costs, as well.
Matt Hickman of Academy Mortgage in St. George said the fact that it is currently a buyers market plays a role in the increase.
Hickman said that lenders offer incentives to buyers, such as the paying of closing costs, leaving the buyer with mainly the concern of interest rate. But some of those closing costs are fixed regardless of home price, and ultimately have to be paid.
“In Utah alone, the number of loan officers has decreased from roughly 140,000 to 2,000 in the last two-and-a-half years,” Hickman said.
In a supply and demand sense, the attrition of lenders combined with the number of distressed properties and the current buyer’s market atmosphere, make for a situation where closing costs actually go up despite the downturned economy.
Utah has held the 3rd place ranking for both 2010 and 2011 with origination fees averaging at $1,680 and title and closing fees averaging at $3,226, totaling $4,906. This in contrast to New York in 1st place with a total at $6,183 and Idaho in 5th place with a total at $4,643.
Copyright St.George News 2011
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