Where you live can have a big impact on how much you pay in closing costs when you buy a home. And it’s not always the more expensive areas that have the higher fees.

Just look at Delaware and Pennsylvania home buyers. These are two states with home prices well below the national average, but buyers pay more closing costs (as a percentage of the total home price) at 5.9% and 4.2%, respectively, than buyers. States with higher prices.

Like everything else in the real estate market, closing costs have become more expensive. According to analysis of data from ClosingCorp, the national average closing costs for single-family homes in 2020 was $ 6,087 (5.9% more than in 2019); and $ 3,470 if you do not include taxes.

Forbes Advisor looked at state-by-state closing costs in Q4 2020 to see which states were the most economical for mortgage fees and which are more difficult on your bank account.

Closing costs by state – Q4 2020

We also looked at:

States with the highest total charges as a percentage of the sale price

Typically, closing costs are largely based on the purchase price of the house, but some states with lower average house prices may have higher closing costs as a percentage of the house price. For example, Delaware is one of the most affordable states when it comes to the average home price (at $ 300,604), but the diamond state’s closing costs are the highest when it comes to the percentage of total sale price. Here’s where the other highest percentage states rank.

States with the lowest total fees as a percentage of the sale price

On the opposite end of the spectrum, states like Missouri not only have some of the lowest average home prices, but also the lowest closing costs as a percentage of the sale price (at 0.71%).

Colorado also had one of the lowest closing cost percentages despite doubling the average home price compared to Misssouris. And while California has some of the most expensive real estate in the country, it’s still on the list of the 10 states with the lowest closing cost percentage.

States with the highest assessment costs

Appraisals are a relatively inexpensive line item in the grand scheme of closing costs, but every little bit counts when you’re spending your savings on a home. If you live in the Pacific Northwest or just the west in general, you will likely pay more for your assessment than your southern counterparts. Here are the top 10 states with the highest average assessment costs.

States with the lowest assessment costs

The East Coast and Midwest dominate the list of top 10 states for cheapest home ratings. Most of these states all fall within a range of $ 40 of each other, and $ 485 or less for an appraisal.

10 states where closing costs have risen

Delaware saw the largest increase (25%) in year-over-year price increases, with total fees, as a percentage of sale price, increasing 5.9% in 2020 from 4.7 % one year earlier. New Hampshire was in second place with a 12.3% increase, and Washington, DC was in the top 10 with a lower price increase of just 3.2%.

10 states where closing costs have gone down

On the other hand, Missouri saw the biggest drop in closing costs (as a percentage of the total sale price), falling to 0.71% in 2020 from 1.02% in 2019. Washington was far behind with a closing costs fell 17.1%, followed by Vermont (-15.6) and South Carolina (-14.4%).

What first-time homebuyers need to know about closing costs

For buyers saving for the down payment and closing costs, be sure to anticipate price appreciation, because as home prices rise, so do closing costs.

“Nationally, house prices are up 17.2%, so the nest egg you need to save has to be 17% more to buy you,†says Frank Nothaft, senior vice president and economist in chief of CoreLogic. “You have to save [for] a bigger down payment, more for higher closing costs, and you still need money in reserves.

Closing costs often surprise first-time homebuyers, especially if their lender decides not to disclose all the money they need to finalize the loan to “make their offer more competitive,” says Mike Tassone, co- founder of Own Up.

Tassone says if closing costs aren’t disclosed adequately, it can be a bomb as the borrower gets closer to closing and receives their closing number. Borrowers should ask their lender what the total loan amount will be, including all closing costs, so that there are no surprises as the closing date approaches.

There are a plethora of down payment assistance programs available to eligible buyers, including grants, matched savings accounts, and low-interest loans. While these assistance programs are referred to as down payment assistance programs, the funds can usually be applied towards closing costs as well.

The great thing about many of these programs is that homebuyers can use them in place of their savings, which is a major financial boon when they become homeowners. Most experts recommend keeping around six months of spending in reserve to avoid paying for unforeseen emergencies with credit cards or personal loans.

How (and when) to negotiate closing costs

Closing costs include all costs associated with the mortgage transaction. These charges are generally between 2% and 6% of the purchase price. The charges entered in closing costs typically include appraisal, tax service charges, title insurance, government taxes, and prepaid expenses like home insurance, mortgage interest, and property taxes.

You can categorize the fees that buyers are required to pay into three groups:

• Owner’s fees and prepaid expenses
• Lender fees
• Third Party Fees

Sellers typically pay the real estate commission for the buyer’s and seller’s agents and transfer tax, which transfers property rights to the buyer.

If a seller is motivated to unload his property, he may offer to pay closing costs; sometimes it is in exchange for a higher sale price. This scenario gives buyers more leeway when it comes to how much money they need up front. However, in a bustling seller’s market, fewer sellers are willing to cover closing costs.

“We moved very quickly from a market where it was common for sellers to pay closing costs to a market where it is increasingly rare,†says Kris Lindahl, CEO of Kris Lindahl Real Estate in Fort Collins , Colorado. “The lack of inventory that we are seeing nationwide has given sellers a lot of control. In many cases, sellers will overlook an offer asking them to pay closing costs because they will have other offers on the table that don’t ask them to make those concessions.

But even when sellers have the edge, buyers can have a bargaining chip if they need more time to find their next home. Lindahl says that if the buyer is willing to extend the closing date so that the seller can lock a house, the seller could “thank them by paying closing costs.”

Tassone says the best chance for buyers to lower their closing costs is to apply for loans from lenders, which are unrelated to whether it is a buyer’s or a seller’s market. These fees have a direct impact on the lender’s bottom line, so it depends on the extent of the lender’s needs for your business.

“This is often the area in which savvy borrowers will have the most ability to negotiate, as a lender may choose to reduce their profit margins by offering significant lender credit to win a deal,†says Tassone. “In an age when rates are low and lenders have abundant volume, they are less likely to offer larger concessions. However, in higher rate environments and more competitive markets, it is common for lenders to reduce their profit margins and be ready to negotiate. “