NEW YORK (CNNMoney) -- Federal regulations are helping to
significantly reduce the amount new homebuyers are paying come closing
time.
The average cost of closing on a mortgage has fallen by
7.4% over the past year, according to a recent survey by Bankrate.com.
At the end of June, a homebuyer looking to close on a $200,000 mortgage
with 20% down paid an average of $3,754, $300 less than 12 months
earlier.
Included
in those costs are origination expenses, such as application fees and
the cost of doing credit checks, and third-party fees, such as those
paid for title searches and insurance.
The decline can be
attributed to new regulations that require lenders to be more accurate
when estimating closing costs for borrowers, said Greg McBride,
Bankrate's senior financial analyst.
The regulation, which was
put in place two years ago as part of the Real Estate Settlement
Practices Act requires lenders to provide a "good faith estimate" of
third-party fees that is within 10% of the actual amount the buyer will
pay.
"The big drop in third-party fees indicates the lenders are
doing a better job at estimating what the costs will be," said McBride.
The most expensive state for closing on a home was New York, where
total origination fees and closing costs averaged more than $5,400 for a
$200,000 mortgage, according to Bankrate. Texas, Pennsylvania and
Florida also cost far more than the national average.
Missouri
was the cheapest, with total borrowing costs averaging just over $3,000.
Other states where closing costs remain low include Kansas, Colorado
and Iowa, Bankrate said.
.
