Mortgage closing costs increase, Hawaii, Alaska top list

Mortgage closing costs are on the rise, and that might mean a more expensive time buying or refinancing a home.

Mortgage closing costs are on the rise, and that might mean a more expensive time buying or refinancing a home. 

The best Realtors can offer great advice to their clients, and there are some tips and tricks to save money when closing. However, it appears that the current market is witnessing rising fees compared to last year, according to Bankrate's 2013 Closing Cost Survey. 

Fees on the way up
The increasing closing costs may become a deterrent for homebuyers, but the changes have done little at the moment to slow a strong housing market. The 2013 survey reported that buyers with a $200,000 loan pay an average of $2,400 in fees, typically to loan originators or for a third party service, such as a home appraisal. That is a 6 percent uptick from 2012's number, which was an average of $2,264. 

Additionally, the top states this year were Hawaii, with lender's origination fees averaging $1,970, and Alaska, which saw the same fees average $1,925. The cheapest states for closing costs? Wisconsin and Missouri, with average fees of $1,438 and $1,542, respectively, according to the website.

The rising closing costs might be tied to low mortgage rates, George Mason University professor of real estate and finance Anthony Sanders explained to Bankrate. 

"Banks realize that rates are going to go up and are trying to capture fees early on," said Sanders. "They know when rates go up, loan applications plunge, so they are trying to generate more earnings on anticipation of lower application volume and lower profits."

Like other financial components, eventually the rising costs will have to steady and potentially drop. Sanders added that less homeowners refinance because of the fees, the more likely lenders will make changes to attract more borrowers. 

Real estate agents can help their clients by providing the best information available, such as mortgage records and property data easily compiled by Courthouse Retrieval System. This knowledge will help buyers find the best deals, and save on closing costs. 

Shopping for the best deal
Closing costs are a fact of life when buying or refinancing a home, but a Realtor has options for advising clients on the best way to proceed. 

For example, lenders have the ability to integrate the fees into the mortgage itself, according to Fox Business. A borrower just has to ask, but this may result in a higher mortgage rate. This is ideal for buyers who are looking to move relatively quickly, or possibly for an investor looking to finance a quick flip. 

Combining fees into the mortgage rate might end up costing more in the long run, so a buyer who is interested in living at that property for many years should look into other options, as well. 

Moreover, some lenders value loyal borrowers. A buyer who wants to stick with their community bank may be rewarded with lower closing costs, either when buying or refinancing. With several options, a Realtor can best advise their clients on how to save money in real estate. 

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