I won’t try and hide my disappointment.
A 2013 survey of state’s closing costs doesn’t include any closing costs of the states; only lenders and third parties such as credit reporting and appraisal fees.
The report would be more appropriately titled as 2013 Lender closing costs: ranked by state.
The survey says it ranks closing costs. But it fails to list any state imposed costs including the cost of recording a mortgage or deed of trust.
Lender Closing Costs Ranked by States
In a 2014 update a disclaimer says that, “the survey excludes taxes, title insurance and title search.” In the 2013 version it mentioned, “your fees may be higher.”
When I saw the closing costs associated for a $200,000 loan in Virginia listed as $2,479 I knew something was wrong.
As an example, let’s look at what a few of the Virginia state specific costs would be based on the example in the article. In 2013, they used a loan amount of $200,000 with 20% down payment. The new first trust loan would be $200,000 and the purchase price would be $250,000.
Title insurance is a state regulated cost and therefore state specific. Using the above example the owner’s title insurance premium in Virginia would be $545 and the lender’s policy is $581. The quote for the owner’s policy is the limited coverage. The enhanced coverage is an additional $195.
Another state specific charge in Virginia is the cost to record the Mortgage or lien ($56) and the Deed ($43). Total is $99. This goes to the clerk of the county in which the subject property is located.
The next state specific charges are the trust and deed tax. They are similar to a sales tax. They are each calculated by charging 3.333 per $1,000 of deed and sale price. The cost for the trust is $666.60 (200 X 3.333) and for the deed is $833.25 (250 X 3.333). This is a combined state and county expense.
The combined costs for title insurance and recording in Virginia more than doubled the $2,479 figure from the article.
I would like to see a revised list based only on state specific costs. I think the order of the list would be shaken up quite a bit. Lender’s fees are always negotiable. The amount of state specific fees are never negotiable. The only thing that can be negotiated is who actually pays for them.
This survey is not measuring what the specific state’s closing costs would be for a loan but what lender’s are willing to charge in each of the states. Most, if not all of my clients and those colleagues I know in the industry would find this odd. If anything I believe it gives an incomplete view. Misleading? Perhaps. Anything that muddies the water for consumers should no longer be tolerated. What do you think?
Thanks to Federal Title and Escrow’s quote page which we used to check Virginia’s closing costs.
The original surveys by bankrate.com can be found on their website.