Average closing costs for a single-family home refinance in Texas were among the highest in the nation, according to a CoreLogic report.
In Texas, the average closing costs, excluding specialty taxes, was $3,588. In Dallas-Fort Worth it was $3,162— 1.78 percent of the average loan amount. The average refinance loan in the metro area was $177,250.
The lone star state ranked fourth in the U.S. in average closing costs for refinances, behind Hawaii ($4,730), New York ($4,679) and Florida ($3,956). The state ranked just above Washington, D.C., which had an average closing cost of $3,370.
Though Texas ranked more middle-of-the-pack in terms of closing costs for home purchases, its average of $4,548 in 2021 was still 1.5 percent of its average home price of $302,672.
The major difference between average closing costs for refinances and those for home purchases is that owner title insurance and several inspection fees common for purchase transactions are not typically required for refinances. Still, most third-party fees, including lender title, settlement service and land surveys, were also lower for refinances, according to the Dallas Business Journal.
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“As the mortgage industry comes off two years of record-low interest rates and red-hot consumer demand, lenders are now pivoting to address increasing headwinds from higher loan origination costs and lower origination volumes,” said Bob Jennings, an executive for CoreLogic Underwriting Solutions.
“The Mortgage Bankers Association recently reported lender origination costs show a 13.2 percent year-over-year increase, which corresponds closely to the 13.4 percent increase we are seeing on purchase mortgage closing costs. As the market tightens in 2022, it will be interesting to see how lenders and borrowers respond and how these key metrics move.”
Climbing interest rates in 2022 are clouding the forecast for mortgage lenders and borrowers on both the new purchase and refinance fronts. Mortgage rates, which started the year at around 3.1 percent for a 30-year loan at the beginning of the year, are now closer to 5.1 percent — the fastest upward move in rates in 35 years.