The Anna Maria Island Sun Newspaper

Vol. 11 No. 6 - November 10, 2010


Closing costs on the rise

There’s always a good news/bad news story in real estate. The good news is the house you love is directly on the beach; the bad news is the cost of the homeowners insurance. The good news is the vacation condo you made an offer on is priced way below market; the bad news is it’s a bank foreclosure, and it will take months to get an answer. And in the world of mortgage finance, the good news is the rates are really low; the bad news is that it will cost you a lot more to close the deal.

According to’s annual closing cost survey, closing costs nationwide have increased by 36.6 percent. On a loan of $200,000, this year’s nationwide closing costs average $3,741 compared to last year’s $2,739. Fees charged directly by the lenders went up 22.8 percent ,while fees charged by third parties for things such as appraisals and title insurance rose 47.2 percent.

Although lenders indicated their fees did rise modestly, a more fundamental change happened this year when the government began requiring lenders to provide accurate good faith estimates of closing costs. Before this year, lenders were not penalized for underestimating fees in the good faith estimate. Now they are penalized for low-balling fees, even if it’s an honest mistake.

In addition, because of government intervention, more labor is required to get a loan done. For example, under Fannie Mae’s so called Loan Quality Initiative, every applicant’s tax documents are checked against an IRS transcript, as well as lenders matching up Social Security numbers and conducting fraud checks. There are also new regulations that may require multiple appraisals and more paperwork.

Also, until this year about 10 percent of mortgages were double checked, that is two credit reports were requested. Now, the second required credit check is pulled right before closing and is designed to find out whether a borrower has obtained or even shopped for new debt between the date of the loan application and the closing. If the borrower has made application for any type of credit, the closing could be put on hold pending additional research by the lender.

If the new credit is sizeable enough to affect the debt-to-income ratio calculated in the original mortgage approval, the deal could fall through. This is an important issue for all borrowers to be aware of whether you’re applying for a new mortgage or a refinance of an existing mortgage.

All of this additional paperwork has resulted in the lenders incurring higher costs to do business and passing it along to consumers. Consequently, some lenders are attempting to cover some of the cost themselves or eliminating certain fees, such as the application fee, in order to avoid driving consumers away.

Closing costs in Florida also went up, but by a much lower margin. The average closing costs on a $200,000 loan in Florida is $3,369, which is up only $381. Last year, Florida was the third most expensive state in the country and has now dropped to the 12th, Texas is the most expensive followed by New York.

According to the Wall Street Journal, the average closing costs on a $200,000 mortgage in New York State rose 67 percent this year to $5,623. Be thankful for little things. Keep in mind these increases do not yet take into account any additional lender costs that may occur as the result of the implication of the Bureau of Consumer Financial Protection set to kick in at the end of 2011.

I guess the good news is that the quality of the mortgages being approved will be better, and the bad news is that we’re all going to pay for it.

Real Estate Transactions
Closed sales between June 28 and July 31, 2010

Anna Maria

812 South Bay Blvd. Single family $880,000
114 Mangrove Ave. Duplex 645,000
213 Spruce Ave. Single family 605,000
5 Lakeview Pl. Single family 550,000

Bradenton Beach

1801 Gulf Drive N. #175 Condo $215,000
2412 Gulf Drive N. #220 Condo 152,900


4204 126th St. W. #505 Condo $240,000

Holmes Beach

105 78th St. Single family $575,000
514 69th St. Single family 490,000
504 75th St. Single family 445,000
320 64th St. Condo 439,000
613 Concord Lane Single family 428,000
716 Key Royale Drive Single family 399,900
3206 Sixth Ave. Condo 277,500
3503 Sixth Ave. Duplex 269,000
6812 Palm Drive Duplex 202,500
3805 E. Bay Drive #201 Condo 145,000
446 63rd St. Half duplex 132,000

Source: Manatee County Property Appraiser’s Office

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