2021 Average Closing Costs for Purchase Mortgages Up 13.4%
MBA NewsLink Staff
It’s getting more expensive to own a home—and to close on one, too.
CoreLogic subsidiary ClosingCorp, Irvine, Calif., said its Purchase Mortgage Closing Cost Report showed in 2021, the national average for mortgage closing costs for a single-family property were $6,905 including transfer taxes and $3,860 excluding transfer taxes. These amounts represent a 13.4% and 11.2% year-over-year increase, respectively.
The report said closing costs kept pace with rapidly increasing home prices and purchase volumes. 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.
However, the report also noted despite an increase in absolute dollar amounts of closing fees, closing costs as a percentage of home sales prices fell slightly from 2020. Average purchase fees as a percentage of the average sales price in 2021 fell to 1.81% from 1.85% in 2020; and when taxes are excluded, fell to 1.01% in 2021 from 1.06% in 2020.
“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 with 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.”
Other report findings:
–States with the highest average closing costs, including transfer taxes, were 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, including taxes, were Missouri ($2,061), Indiana ($2,200), North Dakota ($2,501), Wyoming ($2,589) and Mississippi ($2,756). The most significant drivers to differences in closing costs were the types and percentages of imposed specialty and transfer taxes.
–States with the highest average closing costs, excluding taxes, were Washington, D.C. ($6,502), New York ($6,168), Hawaii ($5,879), California ($5,664) and Massachusetts ($4,904). States with the lowest closing costs, excluding taxes, were Missouri ($2,061), Indiana ($2,200), Nebraska ($2,210), Arkansas ($2,281) and West Virginia ($2,465).
–At the metro level, highest average fees with taxes were primarily in the Eastern region of the United States including Vineyard Haven, Mass. ($28,724); Salisbury, Md./Del. ($15,723) and Dover, Del. ($13,799). Comparatively, metros with highest average fees without taxes were in Santa Maria-Santa Barbara, Calif. ($7,063); Kahului-Wailuku-Lahaina, Hawaii ($7,016) and San Jose-Sunnyvale-Santa Clara, Calif. ($6,412).