According to Bankrate.com, a leading online aggregator of mortgage rate information, New Hampshire came in as one for the most affordable states in the nation in which to close on a home loan.
Bankrate.com, which regularly surveys thousands of lenders across the country to provide up-to-date information to consumers, recently surveyed all of the states regarding the overall costs of closing on a home. They ranked the states from most expensive in closing costs to least expensive and NH stood strong in Yankee thriftiness ranking 46th in closing cost expense. The survey encompassed one city in 49 states, two cities in California (Los Angeles and San Francisco) and the District of Columbia.
The survey, done in June of this year, asked up to 10 lenders for a good faith estimate on a $200,000 loan for a single-family home, assuming there was a 20 percent down payment and good credit. Costs include fees charged by lenders, as well as third-party fees for services such as appraisals and title insurance. The survey excludes taxes, property insurance, association fees, interest and other prepaid items.
Their mission was to average out the closing costs charged by the lending industry for a mortgage in each state.
The most expensive, perhaps not a surprise for those who have bought property there, was the state of New York with the closing costs averaging $6,183 for the pre-described loan, while New Hampshire came in at an average of $3,591.
Massachusetts ranked 15th place with the average closing cost of $4,244 and Maine ranked 40th position with closing costs for such a loan at $3,730 on average. The least expensive state was Arkansas ranking 52nd place with closing costs for the loan of $3,378.
So what goes into these closing costs?
This survey excluded taxes, property insurance, association fees, interest and other prepaid items but looked at closing costs of the actual loan and requirement of the lender. They are essentially the cost for all those people working to get you your mortgage, title, inspection, appraisals, and other tasks completed for your home purchase.
Some of these common closing fees include:
- Points: A point is equal to one percent of the total amount of your loan (not the home’s purchase price). For a $200,000 mortgage, one point is $2,000. There are two types of points. One is called an origination fee; essentially pays your lender for doing all the work involved with getting you a loan. There is also an option to buy “discount points”, which allows you to pre-pay interest up front to lower your long-term interest rate. For each point that you buy, your interest rate on a 30-year loan should decrease slightly, and this varies depending on the lender. Discount points are worth it only if you plan on keeping the home long-term.
- Application fees: Fee sometimes charged by lenders when you first apply for a loan. Some lenders waive this cost or use it like a deposit that you get back at closing.
- Appraisal fees: Covers the cost of an appraiser to assess the homes value and assure it is worth as much as you are borrowing.
- Credit report costs: Averages around $40 and covers the cost of pulling your credit report to obtain loan approval.
- Loan processing fee: Covers the cost of all the paperwork that must be completed to get the loan ready for the underwriter-who verifies all the info and approves the loan.
- Underwriting fee: Pays the person who verifies the credit information and all aspects of the loan and makes the final approval.
- Title insurance: Paid one-time, at closing toward the lender’s policy that protects the lender’s legal claim on the property until the mortgage is paid off.
- Transfer of taxes: The cost of transferring the property tax from the seller to the buyer’s name.
- Title fee: The cost from the title company to verify that the property is free of liens and any ownership dispute. It may include any survey fees to determine property boundary lines as well.
- Attorney fees: Some states require an attorney to complete the purchase.
- Home inspection fee: Not required but strongly recommended, this pays a professional outside person to inspect the home and report any serious issues that could be expensive to repair.
- Recording fees: This pays for the cost of the sale being recorded by the county government.
- Courier fees: Cost of mailing or paying a courier to deliver documents to and from the lender to complete the loan process.
A lot goes into this aspect of the loan’s closing costs and in New Hampshire it seems you get the most for your dollar when it comes to closing on your new home.