What Leads to Higher Closing Costs?

Many American consumers overpay by thousands of dollars in total closing costs when they purchase their homes, according to a new nationwide report from the Urban Institute. The study found that there are significant and unsupported variations in loan charges, title fees and other closing costs charged to homebuyers, and that minority borrowers pay hundreds of dollars more in total loan origination fees than do non-minority home buyers.
In A Study of Closing Costs for FHA Mortgages, noted economist Dr. Susan Woodward analyzed more than 7,500 mortgages originated in May and June of 2001, a period of relative interest rate stability. The Urban Institute’s study found significant disparities in closing costs even when it compared borrowers with identical credit scores, loan terms and mortgage amounts. In addition, variations appeared to be based on education level, geography, race and ethnicity. Even after accounting for these factors, there remain very substantial variations in what consumers pay at settlement. RISMEDIA