Average estimated closing costs spiked 37% nationally this year from 2009, according to Bankrate's annual mortgage fee survey. Bankrate suggest one reason for this increase is the government requirement for lenders to provide accurate good faith estimates (GFE's) of closing costs. GFE's give borrowers an idea of how much the loan will cost to close and, until this year, were non-binding. This means that the lender could provide an inaccurate or lower statement to the borrower without being penalized. Since May, however, lenders are penalized for undershooting a GFE.
Bankrate also stated that another cause for the jump in closing costs could be the increase in expenditure labor lenders go through to comply with tighter underwriting standards and background checks.
The annual survey of online lenders was conducted by obtaining online good faith estimates for a $200,00 mortgage in the most populated city in each state, with the exception of California where both San Francisco and Los Angeles where surveyed. The survey includes lender's origination fees and title and settlement fees.
If you are in the market to purchase a home don't let this substantial climb in the average closing costs scare you. It's important to understand that stiffer regulations on lenders good faith estimates translates in more accurate estimates and less additional expenses popping up for consumers on the back end.
Bankrate also stated that another cause for the jump in closing costs could be the increase in expenditure labor lenders go through to comply with tighter underwriting standards and background checks.
The annual survey of online lenders was conducted by obtaining online good faith estimates for a $200,00 mortgage in the most populated city in each state, with the exception of California where both San Francisco and Los Angeles where surveyed. The survey includes lender's origination fees and title and settlement fees.
If you are in the market to purchase a home don't let this substantial climb in the average closing costs scare you. It's important to understand that stiffer regulations on lenders good faith estimates translates in more accurate estimates and less additional expenses popping up for consumers on the back end.
Arcticle Source: http://www.suntimes.com
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