Texas has the nation's second-highest mortgage closing costs, which include fees charged by lenders, appraisers, title companies and other parties involved when a home changes hands, according to a new survey by Bankrate.com.
According to Bankrate, a respected financial information website, Texas homeowners last year paid an average of $4,944 to close the sale of a $240,000 residence with a $200,000 mortgage. That compared to a U.S. average of $4,070.
New York led the nation at $6,183. Bankrate analyst Greg McBride said that likely represented the state's requirement that real estate transactions be closed at an attorney's office, rather than at a title company as in other states, including Texas. New York and Texas have held Bankrate's top spots for five years.
Arkansas had the lowest average fees, at $3,378.
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Bankrate said average closing costs rose 10.3 percent from 2010, mostly because of higher fees charged by lenders. Those in the business said that's because of increased scrutiny in the wake of the subprime mortgage scandal that precipitated the financial crisis.
In Texas, fees charged by lenders to originate the mortgage totaled $1,951, according to Bankrate's review of estimated closing costs. Other fees totaled $2,994, likely led by the cost of title insurance, an expense that Bankrate did not identify separately.
Jack Rattikin III of Rattikin Title in Fort Worth said the regulated rate in Texas for a $240,000 home is $1,591for a policy insuring the owner against a bad title. Another $175 covers a policy for the lender.
In Texas, that premium is all-inclusive, meaning it covers the expense of researching a property's title and any other examinations that must be performed, Rattikin said.
David Eaton, a professor in the LBJ School of Public Affairs at the University of Texas at Austin, said that while title insurance is important, its price varies widely by state. And he said title insurance tends to be the most expensive in states where premiums are set by regulation.
In addition, he said, unregulated fees can be substantial.
Both Eaton and McBride said the wide variation in costs show that consumers need to shop around when considering which lender to use and where to close a home sale.
Bankrate surveyed as many as 10 lenders in each state in June. The good-faith estimates of closing costs, required by federal law, weren't necessarily what borrowers actually paid.
Jim Fuquay, 817-390-7552