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July 23, 2014

The Cost of Getting a Loan is on the Rise

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The Cost of Getting a Loan is on the Rise

Closing costs for a mortgage averaged $4,143 last year, which is 12.4 percent higher than in 2010, Bankrate.com reports. 

Despite record low mortgage rates, borrowers are finding the cost of getting a loan is on the rise. 

Origination fees have posted some of the biggest increases, rising 12 percent in 2011 to $1,045, according to Bankrate.com data. Attorney costs and other settlement fees now average $544, a 9.6 percent increase. Appraisal fees have risen 7.8 percent, averaging $406. 

Closing costs vary quite a bit among lenders so it can pay for borrowers to shop around, housing experts say. For example, origination fees can range anywhere from $123 to more than $2,000.

Analysts say part of the reason behind the increase in fees is the increased cost to lenders of processing loans with more paperwork required nowadays. 

Last week, the Consumer Financial Protection Bureau proposed new rules to limit certain fees lenders require borrowers to pay at closing. One of the fees the agency said it hopes to ban is a fee referred to as “origination points” that buyers sometimes must pay at closing. 

“Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” Richard Cordray, the director of the Consumer Financial Protection Bureau, told The New York Times. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.”

Source: "Rising Costs Hit Homeowners Chasing Lower Rates," The Wall Street Journal (May 9, 2012) and “Consumer Bureau Proposes Mortgage Fee Limits,” REALTOR® Magazine Daily News (May 10, 2012)

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