ClosingCorp: Average Closing Costs Accounted for Less Than One Percent of Loan Amount in 2020


The average closing costs for a single-family residential property refinance in 2020 were $3,398 including taxes – $2,287 excluding taxes – according to ClosingCorp, a provider of residential real estate closing cost data and technology for the mortgage and real estate services industries.

Conversely, average closing costs for a home purchase were $6,087 including taxes – $3,470 excluding taxes.

In its report, ClosingCorp notes that most states do not impose transfer and other local taxes on refinances nor is owner title insurance and a number of inspection fees typically required.

The national average tax bill at closing was $1,111 for a refinance as compared to $2,617 for a purchase transaction.

Most third-party fees, including lender title, settlement service and land surveys were also lower for refinances, the report found.

On average, the only major fee that was higher for refinances than for purchases was appraisals: $530 for refinances vs $519 for purchase. 

However, in 2020 appraisals were waived on a significant percentage of refinance transactions. For example, in August, the Urban Institute reported that waivers were accepted on 63% of rate/term refinances and 26% on cash-out refinances.

ClosingCorp refinance cost calculations include lender’s title policy, appraisal, settlement, recording fees and various state and local taxes. ClosingCorp uses home price data from CoreLogic to estimate closing costs for an average home at the state, core-based statistical area (CBSA) and county levels. ClosingCorp uses ranges, rather than single values, to more accurately capture fees associated with the real transactions. 

“Our first national refinance report analyzed data on more than 3.4 million single-family refinance transactions that ran through our Fees platform last year,” says Dori Daganhardt, chief data officer of ClosingCorp. “Adjusting for the fact that borrowers shopped multiple lenders and other scenarios, this was nearly 40 percent of the total 2020 refinance market. We are reporting ‘market-specific’ rates and fees not just network averages charged by the most active settlement services providers in each geographic area.” 

“The Federal Reserve’s actions in 2020 created a once-in-a-generation opportunity to refinance no matter how low a rate you already had,” says Bob Jennings, CEO of ClosingCorp. “More than 6.7 million homeowners took advantage of this opportunity, and refinance volume jumped by more than 50 percent.”

“The cost of all the services needed to manufacture the average national residential refinance loan came to just 0.87 percent of the loan without taxes; 1.29 percent with them. So, in 2020, homeowners were able to get an amazing deal on both interest rates and closing costs. In fact, the average borrower is now saving more than $2,000 annually.”

Jennings attributed much of the cost control to the increased use of technology by both lenders and settlement services providers which enabled the industry to scale up capacity while holding the line on closing costs.

States with the highest average closing costs, including taxes, for 2020 were: District of Columbia ($13,722), New York ($8,256), Pennsylvania ($6,376), Washington ($4,687), and New Jersey ($4,645). The states with the lowest closing costs, including taxes, were: Missouri ($1,290), Indiana ($1,396), Arizona ($1,662), Arkansas ($1,785) and Iowa ($1,803). 

States with the highest average closing costs, excluding taxes, were: New York ($4,420), Hawaii ($4,154), Texas ($3,494), New Jersey ($3,278), and Florida ($3,251). The states with the lowest closing costs, excluding taxes, were: Missouri ($1,290), Wisconsin ($1,371), Illinois ($1,374), Indiana ($1,396) and Michigan ($1,494).


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