Mortgage closing costs in Colorado ranked the 12th highest in the U.S. in June, at an average of $1,910,
The Bankrate survey is based on good-faith estimates for a $200,000 single family home loan, with a 20 percent down payment and excellent credit. As many as 10 lenders in 50 states and the District of Columbia were surveyed in June . The survey excluded taxes, title fees, property insurance, association fees and interest.
Nationwide, mortgage closing costs dropped 7 percent over last year to $1,847 from $1,989. Origination fees dropped 22 percent to $1,041, while third party fees rose 22 percent to $807.
Colorado’s origination fees were above the national average at $1,192; however, third party fees were lower at $719.
Last year, mortgage closing fees totaled $2,436 for Colorado buyers.
Origination costs include include broker, originator, lender and tax-services fees. Third-party fees include appraisals, attorney and settlement fees, inspections and credit reports.
Hawaii led the nation in closing costs of $2,163, followed by $2,094 in New Jersey and $2,033 in Connecticut. Maine buyers had the lowest closing costs at $1,727.
Costs vary from lender to lender, so Bankrate’s senior mortgage analyst Holden Lewis advised buyers to shop around, comparing at least three options.
Most first-time homebuyers get fixated on saving for a down payment and finding a cheap mortgage rate and overlook closing costs, Lewis said. When buyers shop only the mortgage rate they might not necessarily find the best deal, Lewis said.
“This is kind of news to first time homebuyers every year,” Lewis said. “You can sure shop around. You don’t have to go with the lender your agent suggests.”
On Oct. 3, the current good-faith estimate — a document highlighting closing costs — will be replaced by a new loan estimate document that adds up closing costs and the interest rate, and will detail a homebuyer’s first 60 monthly payments clearly on the front page. Lewis said this should give consumers a good sense of the best mortgage deal.
Closing costs often include a sum used to establish an escrow account that lenders use to pay taxes and insurance, but buyers seem to think that closing costs are reasonable in Colorado, said Anthony Rael, al spokesman for the Colorado Association of Realtors.
“There’s really not a whole lot of variance on lender closing costs, but it depends whether or not the lender is changing an origination fee,” he said.
Tiffany Swisher, loan officer at Colorado-based Home Mortgage Alliance, said she was surprised to see Colorado’s mortgage closing costs rank so high.
“It may have to do with rising (home) prices here,” she said. “Colorado is becoming a little bit more expensive.”
Two and a half years ago, lenders revamped the way they handle appraisals, which requires them to go through a third party, further contributing to rising costs, she said.
Also, more lenders are choosing to add a 1 percent origination fee compared to a flat fee.
Both could be contributing factors in increasing closing costs, she said.
Amy Edelen: 303-954-1440, aedelen@denverpost.com or twitter.com/amyedelen
