Report: Average home mortgage closing costs increased 13.4 percent in 2021

(Source: CoreLogic) — A new report compiled by CoreLogic’s ClosingCorp shows that the national average for home mortgage closing costs for a single-family property in 2021 were $6,905 including transfer taxes and $3,860 excluding transfer taxes. These figures represent a 13.4 percent and 11.2 percent year-over-year increase, respectively.

CoreLogic is a leading provider of residential real estate closing data and technology for the mortgage and real estate services industry. 

The Purchase Mortgage Closing Cost Report’s key findings are:

– The average U.S. home price increased by more than $50,000 last year, while the average purchase closing costs increased by $818 including taxes and $390 excluding taxes. 

– Despite an increase in the absolute dollar amounts of closing fees, closing costs as a percentage of home sales prices were down slightly from 2020.

– Average purchase fees as a percentage of the average sales price in 2021 were 1.81% compared to 1.85% in 2020 and when taxes are excluded, were 1.01%, down from 1.06% in 2020. 

D.C., Delaware have highest costs; North Dakota among the lowest

Digging deeper into data among the 50 states and the District of Columbia, the report finds the following…

States with the Highest Closing Costs: States with the highest closing costs, including transfer taxes, are: Washington, D.C. ($29,888), Delaware ($17,859), New York ($16,849), Maryland ($14,721) and Washington ($13,927).

States with the Lowest Closing Costs: The states with the lowest closing costs, including taxes, were Missouri ($2,061), Indiana ($2,200), North Dakota ($2,501), Wyoming ($2,589) and Mississippi ($2,756).

The report finds the most significant drivers to differences in closing costs were the types and percentages of imposed specialty and transfer taxes.

Many North Dakotans struggle with closing costs as lenders face ‘headwinds’

LCD Group Housing Director Lisa Pogatshnik notes that while North Dakota is one of the states with the lowest closing costs, many North Dakotans struggle to meet pay these costs.

“We see people, especially first-time homebuyers, struggle all the time to pay these costs. This is why our DREAM Fund is so important,” says Pogatshnik.

In their report, CoreLogic noted that lenders are now addressing higher origination costs and lower origination volumes.

“As the mortgage industry comes off two years of record-low interest rates and red-hot consumer demand, lenders are now pivoting to address increasing headwinds from higher loan origination costs and lower origination volumes,” said Bob Jennings, executive, CoreLogic Underwriting Solutions.

“The Mortgage Bankers Association recently reported lender origination costs show a 13.2% year-over-year increase, which corresponds closely to the 13.4% increase we are seeing on purchase mortgage closing costs. As the market tightens in 2022, it will be interesting to see how lenders and borrowers respond and how these key metrics move.”

About the CoreLogic’s Calculations

Cost calculations include the lender’s title policy, owner’s title policy, appraisal, settlement, recording fees, land surveys and transfer tax. The calculations use home price data from CoreLogic to estimate closing costs for an average home at the state, core-based statistical area (CBSA) and county levels. Ranges, rather than single values, are used to more accurately capture fees associated with the real transactions. 

Click here to read the full report