The average mortgage closing costs total $4,876 nationwide, but some per-loan totals tracked at the state or local level can be much lower, according to ClosingCorp.
Borrowers pay much less for expenses like title, appraisal, recording fees, inspection services, land surveys, and, in some cases, transfer taxes, in certain states. These states tend to have lower average home purchase prices. But in some cases, a state with a higher average purchase price than another can have lower median closing costs. The same holds true at the local level.
"Closing costs can vary significantly, depending on what state or county a homebuyer lives in," said ClosingCorp CEO Bob Jennings in an October report on the geographic dispersion of average closing costs.
In particular, transfer taxes can cause closing costs to differ significantly from one area to another. The party or parties who pay transfer tax varies by jurisdiction. The buyer, seller or both may pay a transfer tax based on the property's sale price when a property changes hands.
Here's a look at the 10 states, plus Washington, D.C., where average closing costs are the lowest. The data, from ClosingCorp, was calculated by running preconfigured loan scenarios against verified rates and fees data that it maintains for service providers and tax authorities. The scenarios are based on live transactions from the second and third quarters of this year.
The various mortgage scenarios are based on loan type, loan purpose and loan amounts. The company assumed 80% loan-to-value ratio and applied the median sales price at the local level to the fee calculation formulas from its data to derive its fee estimates.