Average Closing Costs in Indiana

Closing costs in Indiana average $1,837, based on a typical sale involving a 20% down payment and a $200,000 loan. The largest share of costs goes to loan origination fees, which average $1,067 in the state. Fees for third-party services account for the remaining $770 in average costs. While actual spending can vary substantially depending on the homebuyer, the lender, the size of the loan and the property, average costs for common closing services include $540 for a property survey, $417 for a property appraisal, $500 for settlement fees and $125 for a home inspection. Other typical costs include $100 for postage and courier services, $80 for document preparation, $75 for tax services, $21 for a credit report and $10 for flood certification. Certain highly variable costs are not included in state averages, including title insurance, homeowners' insurance and homeowner's association fees.

Indiana's closing costs come in just under the national average of $1,847. While origination fees tend to be slightly cheaper outside of Indiana, fees for third-party services are a bit more expensive nationally. One of Indiana's neighbors, Ohio, is home to the cheapest closing costs in the country at $1,613, followed by Idaho at $1,682 and Wyoming at $1,689. At the high end of the scale, Hawaii closing costs average $2,163, which is 17% higher than Indiana's closing costs. 

In 2016, the Indiana housing market entered its seventh consecutive year of growth, reaching a statewide median sale price of $134,000 in March, up 5.6% compared to the prior year. March sales surpassed 6,600 homes, up 11.1% year on year, while statewide housing inventory fell to 4.8 months' worth of sales, down 17.2%. As the market continues to tighten through the spring and summer high season, median prices are expected to exceed the all-time high of $142,500 set in the summer of 2015. Growth in home prices means higher closing costs for many Indiana homebuyers, so it is more important than ever to look closely at these expenses.

What Goes Into Indiana's Closing Costs

Loan origination fee: Mortgage lenders charge an origination fee for preparing and processing a home loan, which is generally quoted as a percentage of the loan amount. For most homebuyers, this fee is the primary expense associated with closing a home sale. Loan origination fees may be negotiable based on the size of the loan, the interest rate on the loan or the general conditions in the marketplace.

Appraisal fee: Homebuyers typically pay the costs of a property appraisal to verify that the actual value of a home supports the agreed purchase price and, thus, the size of the loan. The appraisal is generally overseen by the lender.

Survey fee: A survey is typically required in Indiana to verify, at minimum, that no new structures are encroaching on a property since the last survey was completed. The lender may require a full property survey to confirm the location of property boundaries, easements, setback lines and other physical features.

Home inspection fees: Lenders may require a professional inspection to evaluate a home's structural condition. Most homebuyers should opt for a professional inspection regardless of requirement, as the process identifies safety issues and defects that may not be apparent to the untrained eye. Home inspection is a regulated profession in Indiana, so seek out a properly licensed inspector.

Settlement fee: A settlement fee goes to the agent, who handles the transaction settlement process. Since this agent is generally working primarily in the service of the lender, a homebuyer may choose to hire a real estate attorney for representation during the settlement process.

Title insurance: A lender usually requires the purchase of a title insurance policy to protect its interests in the event that a title defect, such as a judgment, lien or other encumbrance, is identified after the home sale closes. The initial title search is often conducted by the same title insurance company writing the policy. A title insurance policy for the homebuyer is optional.

Mortgage insurance: Lenders generally require private mortgage insurance in transactions that include a down payment of less than 20%. The policy protects the lender in the event that the homebuyer stops making loan payments.

Iowa (IA): Average Closing Costs

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