LodeStar Finds Mortgage Closing Costs Dip Year over Year

LodeStar Software Solutions, Conshohocken, Pa., reported purchase loan closing costs declined by 2.9% between 2024 and 2025, largely driven by falling home prices, which reduced transfer tax burdens across many markets.

In total, 28 states saw closing costs decrease, while 23 states experienced increases, LodeStar’s Mortgage Closing Cost Report said. The report analyzes distinct mortgage quotes across all 50 states and the District of Columbia, drawn from the company’s closing cost calculator platform.

The most dramatic single-market shift occurred in Washington, D.C., where closing costs dropped 21.1%. “Because D.C. has one of the highest transfer tax rates in the country, the significant decrease in the average purchase price here had a compounding effect on closing costs, (though the area still has the highest dollar-value closing costs nationally),” the report said. “Conversely, home prices in Delaware rose modestly, pushing closing costs up by 4.5%, keeping it the most expensive state as a percentage of sale price at 3.06%.”

Other key findings from LodeStar’s 2024 vs. 2025 Year-Over-Year Mortgage Closing Cost Report include:

 •            A 7.8% surge in refinance volume, with refinance closing costs averaging less than half of purchase closing costs;

•             Higher-than-average refinance closing costs for New York and Florida borrowers, driven by taxes structured around the loan or note amount, rather than a property transfer, which then applies to both purchase and refinance transactions; and

•             A growing trend of recording fees being redirected to fund non-real-estate programs, such as affordable housing and homelessness services, with little to no borrower visibility.

Ron Carvalho, director of data operations at LodeStar, noted the connection between closing costs and housing affordability is often overshadowed by other components in the equation, such as interest rates and down payments. “However, our data shows that decisions made at the state level on recording taxes and document fees have a direct impact on borrowers’ total financial ability to purchase or refinance their home,” he added. “Knowing what’s happening with these costs helps lenders provide accurate guidance to their borrowers in their homeownership journey.”

LodeStar’s dataset is drawn from the company’s closing cost calculator platform. Each record represents a distinct quote (not a funded loan), identified by a unique search ID. Where lenders run multiple quotes for the same loan, only distinct transactions are counted.