Home prices and mortgage rates aren’t the only costs on the rise when it comes to buying a house these days. Expect higher closings costs as well, according to a new study by Bankrate.com.
The average closing cost, which includes origination plus third-party fees, is $2,402, up 6 percent from last year.
Lenders appear to be boosting fees before the rise in mortgage rates turns borrowers off and makes it harder for lenders to attract new customers, a George Mason University real estate and finance expert told Bankrate.
“”They know when rates go up, loan applications plunge, so they are trying to generate more earnings on anticipation of lower application volume and lower profits,” Anthony Sanders said.
Lenders say the increased costs reflect more federal regulation from the Consumer Financial Protection Bureau.
Bankrate looked at origination and third-party fees. Origination fees include items such as points, a calculation used to compensate loan officers; and payments for the loan application, other document preparation, loan processing and broker or originator fees. Third-party fees include payments for such items as the appraisal, closing attorney, inspections and surveys.