This is a little odd: The cost of closing on a mortgage in Rhode Island has apparently plunged from 14th-highest in the country down to 41st-highest over the past year, according to Bankrate’s annual survey.
Origination and title costs on a $200,000 mortgage in Rhode Island average $3,705 this year, down from $3,972 in 2010, Bankrate said. Closing costs rose 8.8% nationwide to average $4,070, with the highest costs in New York ($6,183) and the lowest in Arkansas ($3,378).
It’s possible that Rhode Island’s small size leads to noisy findings in Bankrate’s surveys. Over the past three years, the state has bounced from No. 42 in 2009 to No. 14 in 2010 to No. 41 in 2011.
It’s also possible last year was an outlier, which would mean Rhode Island is indeed one of the least expensive places in the nation to close on a mortgage.
Here’s how Bankrate explained its findings:
Most of the rise in closing costs is tied to fees charged directly by lenders. … Origination fees include lender charges for services such as underwriting and processing.
“Interest rates get a lot of attention, and rightfully so, but it’s also important for consumers to compare lender fees when shopping for a loan,” said Greg McBride, CFA, senior financial analyst for Bankrate, Inc.
Bankrate surveyed up to 10 lenders in each state in June 2011 and obtained online good faith estimates for a $200,000 mortgage to buy a single-family home with a 20 percent down payment. Costs include fees charged by lenders, as well as third-party fees for services such as appraisals and title insurance. The survey excludes taxes, property insurance, association fees, interest and other prepaid items.
Bankrate has more information on the survey here. Single-family home sales in Rhode Island were down 22% in June compared with a year earlier (as predicted), the Realtors said this week.