While many buyers focus primarily on the price of the home and the funds needed for a down payment, closing costs are also part of the equation.
For example, if you borrow $400,000, your closing costs could range from $8,000 to $24,000. If you borrow $500,000, your closing costs could range from $10,000 to $30,000.
Closing costs include fees and taxes that are required to settle a real estate transaction, such as lender and owner title insurance policies, appraisal fees, settlement fees, recording fees, land surveys and transfer taxes, according to ClosingCorp, a provider of residential real estate closing cost data and technology.
Rising home prices contributed to the increase in closing costs during the first half of 2021, according to a new report by ClosingCorp. Nationally, the average closing costs for a home rose to $6,837, up 12.3 percent compared to the same period in 2020. Excluding taxes, average closing costs were up 10.5 percent during that same period to an average of $3,836.
ClosingCorp’s data for the first half of 2021 found that closing costs range from less than 1 percent to 5.68 percent of the sales price of a home depending on the jurisdiction. While actual closing costs were up, closing costs as a percentage of the purchase price declined in the first half of 2021 compared to the first half of 2020, according to ClosingCorp.
“Although the average home price increased by nearly $45,000, the closing costs, excluding taxes, on that property only increased by $400,” Bob Jennings, CEO of ClosingCorp, said in a statement. “In fact, closing costs as a percentage of purchase prices declined this year, going from 1.06 percent of the transaction in 2020 down to 1.03 percent. So, in addition to keeping up with high demand, the mortgage industry is doing a good job in holding down the costs it can control.”
The states (and D.C.) with the highest average closing costs, including taxes, during the first half of 2021 were:
⋅ Washington, D.C.: Average closing costs, $30,352
⋅ Delaware: Average closing costs, $17,831
⋅ New York: Average closing costs, $17,582
⋅ Washington state: Average closing costs, $13,909
⋅ Maryland: Average closing costs, $12,056
The states with the lowest closing costs, including taxes, during the first half of 2021 were:
⋅ Wyoming: Average closing costs, $2,509
⋅ Kentucky: Average closing costs, $2,355
⋅ North Dakota: Average closing costs, $2,321
⋅ Indiana: Average closing costs, $2,193
⋅ Missouri: Average closing costs, $2,102
To see the full report, click here.