By Stephanie Sims
Home mortgage rates are hovering near a record low. And home prices are still lower than a few years ago. But that doesn’t mean Texans are getting a break when it comes to some of the largest mortgage processing expenses.
The Lone Star State has the second highest mortgage closing costs in the nation, according to a new report by Bankrate Inc. On average, it costs $4,619 to close on a home mortgage in Texas, compared to $3,754 nationwide, Bankrate found. Texas also held the No. 2 spot last year.
Only New York state – which average $5,435 closing costs – was higher than Texas.
Closing costs are partly based on the price of the property being purchased, so the premium Texas home loan borrowers pay is even more pronounced than in many more expensive housing markets.
Texas has traditionally had high costs for home closing – which include origination fees, processing fees, title insurance, and other upfront costs. But there is some good news: Bankrate said the most recent cost average for Texas is actually down 7 percent from last year. These comparisons were based on estimates for a $200,000 mortgage to buy a single-family home with a 20 percent down payment. Does this mean Texas buyers might be a bit harder to come by? Not necessarily, as home sales have steadily increased in Houston and shadow inventory has decreased, but high mortgage closing costs combined with tight lending rules could mean some deals have potential to fall through.
In case you were wondering, following New York and Texas, other high-cost mortgage closing markets are Pennsylvania, Florida and Oklahoma. The cheapest places to get a home loan are in Kansas, Colorado, Iowa and Arkansas.