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Closing Fees - How They Have Eased Up


Owning a home is the American dream, for many the fees that are associated with purchasing a home can cause a struggle. Buying a home requires putting a down payment on the house, ideally 20 percent to avoid paying private mortgage insurance, along with additional closing costs that can add thousands of dollars to the initial purchase price.

The good news is that these fees are decreasing. A recent report, which was released within the last week from, announced that closing costs decreased an average of seven percent from 2011 to 2012. These costs also include the mortgage origination fees that are part of the closing costs. The fees for mortgage origination decreased one percent from 2011 to 2012. Other fees, such as title insurance, fell significantly more. It went down 12 percent in one year.

This report is based on a survey conducted by Bankrate in June. It utilized information from up to ten lenders from each state, including the District of Columbia. Each lender was responsible for giving an estimate of the fees that would be associated with a $200,000 mortgage to collect the data. These fees included the add-on fees that are added into the origination fee. Some lenders leave this as one large fee, while others split the fee into five or six different fees. Consumers should add all the fees together and consider it as one cost of getting a mortgage, recommends Bankrate’s senior financial analyst Greg McBride.

These reductions have reduced closing costs significantly from where they were in 2010. The drop can be credited to more competition between mortgage lenders and accurate estimates of the added third party fees. The ten percent limit instituted by the Department of Housing and Urban Development also applied to services such as surveys and appraisals that are required when purchasing a home. It also applies to title insurance.

The origination fees given by the lenders must be disclosed using a good-faith estimate. The lender has to give a new estimate, in good-faith, if the costs of any recommended service increase by more than ten percent during the home buying process.


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