CT competitive on home closing costs

Connecticut is well-known as a high cost state, but apparently not when it comes to costs associated with closing on a home.

A new study released Wednesday by Bankrate, Inc. reveals that while the costs associated with buying a home are on the rise, it’s becoming more affordable to do it in the Nutmeg state.

Connecticut was ranked as the 39^th most expensive state to close on a home, with the total price tag, including origination and title fees, equal to about $3,391. In 2009 Connecticut was ranked as the 24^th most expensive state to close on a home.

This year’s total price is well below the national average of $3,741, which is up from $2,732 in 2009.  

But despite Connecticut’s ranking improvement, the costs to close on a home in the state increased dramatically from 2009, when the total price to tag was equal to $2,700.

New York leads the nation at an average fee of $5,623, with Texas, Utah, San Francisco, and Los Angeles rounding out the top five.  Arkansas is the least expensive area with an average fee of $3,007, replacing Nevada, now number 34, at the bottom of the list.

One of the reasons for such a dramatic rise in the average closing costs across the nation has to do with new regulations implemented in January of this year, according to Bankrate.  

When providing a potential borrower a Good Faith Estimate (GFE) of costs, regulations now require lenders to provide a title and closing fee estimate within 10 percent of what the final cost will be. In previous years, estimates could fall lower on the spectrum without penalty for the lender.  

“The big rise in average closing costs may scare some homebuyers, but it’s important to keep things in perspective,” said Greg McBride, senior financial analyst for Bankrate.com. “Increased regulation on lenders’ GFEs means more accurate estimates and less expenses popping up for consumers on the back end.”

For the study, Bankrate surveyed one area in 49 states, two areas in California, and the District of Columbia.  Researchers picked a zip code in some of the largest cities in each state and requested information on the closing costs for a $200,000 loan.  They requested fees on a 30-year, fixed-rate mortgage for a borrower with a 20 percent down payment and good credit to buy a single-family house.  Bankrate’s survey includes lenders’ origination fees and title and settlement fees, and not taxes or prepaid items.