An annual look at mortgage closing costs reports New Jersey is climbing the ranks of states with the most expensive fees.
According to a Bankrate.com survey of closing costs, released Monday, Garden State homebuyers can expect such costs to be around $4,589, which ties New Jersey with Oklahoma for the seventh highest on the list. Last year, New Jersey ranked as the ninth most expensive.
New York tops the list with average closing costs of $6,183, and Arkansas rounds out the bottom with costs of $3,378. Nationwide, average closing costs rose 8.8 percent from last year’s survey.
“Increased regulations are driving up costs for lenders, and those are being passed along to borrowers through higher fees,” said Greg McBride, senior financial analyst for Bankrate.com.
McBride said lenders are seeing big jumps in estimated costs, as regulations now require them to be more precise when presenting estimates to consumers.
“They have to be precise on the origination fees charged by the lender, and they were permitted only a 10 percent variance on the fees charged by third parties,” McBride said. “Because there isn’t wiggle room, you’re seeing higher costs being reflected … at the closing table, fees can always be lower, but there’s no tolerance for them to be higher.”
Bankrate.com used good-faith estimates from up to 10 lenders in each state during June for $200,000 mortgages. The costs included fees charged by lenders and third parties, but not taxes, property insurance, association fees or interest.
“Although New Jersey was tied for the seventh-highest costs in the survey, the good news is the origination fees — the fees charged by lenders — were the lowest,” McBride said. “Those are the fees that, when they’re quoted on the good-faith estimate, the lender is bound to those fees. There is a bit of silver lining.”
McBride said consumers can expect the price of closing a mortgage to continue to increase, but getting quotes from multiple lenders and multiple third-party providers can ensure borrowers get the best price possible.