Average Closing Costs in Iowa

Closing costs can vary widely based on the property, the lender, the size of the loan and the local market. However, based on a typical residential property transaction with a $20,000 down payment and a $200,000 mortgage, Iowa has average closing costs of $1,923, the eighth-highest rate in the nation. Loan origination fees in the state average $1,161, which is substantially above the national average of $1,041. Third-party service fees are $762 in Iowa, less than the national average of $807. Breaking the costs down further, Iowa homebuyers pay an average of $588 for a land survey, $444 for settlement fees, $432 for a property appraisal and $125 for a home inspection. Other common fees include $60 for document preparation, $76 for tax services, $10 for flood certification and $21 for a credit report.

The overall nationwide average for closing costs is $1,847. Hawaii has the highest rate in the country at $2,163, followed by New Jersey at $2,094 and Connecticut at $2,033. On the low end of the scale, Ohio has the nation's cheapest closing costs at $1,613. Other low-rate states include Idaho at $1,682 and Wyoming at $1,689. 

The median price for residential property in Iowa rose to $142,500 in April 2016, which marks the fifth-consecutive year of price growth in the state. Prices were up 5.6% from April 2015 and 23.9% overall since April 2011. Sales volumes were also up substantially in recent years, rising 17.6% in the last 24 months alone. As the market continues to show signs of further tightening, price momentum is expected to remain high through the 2016 spring and summer buying season. Higher prices means higher closing costs for most Iowa homebuyers. Given the fact that Iowa already has relatively high closing costs compared to other states, it is more important than ever for local homebuyers to take a close look at these expenses.

What Goes Into Closing Costs in Iowa

Loan Origination Fee: Homebuyers must pay a loan origination fee to the mortgage lender to cover loan processing and preparation costs. This fee is usually the primary expense associated with closing a residential property sale and is generally quoted as a fixed percentage of the loan amount. The loan origination fee may be negotiable depending on market conditions, the size of the loan and the interest rate on the loan.

Appraisal Fee: The homebuyer is generally responsible for the costs of a property appraisal, which confirms that the market price of a home supports the agreed sale price and the size of the loan. The lender typically handles the oversight of the appraisal process.

Survey Fee: A lender may require a land survey to verify the location of property boundaries, setback lines and easements.

Home Inspection Fee: In Iowa, home sellers must complete an official disclosure form revealing all known defects in a home prior to sale closing. Although the lender may require a professional home inspection, this service is usually optional to the homebuyer. That said, a home inspection is generally a good idea, as a professional may be able to identify defects or safety issues unknown to the seller and invisible to the untrained eye.

Title Examination: A home seller in Iowa is generally required to locate and update the abstract of title associated with a property. Once updated, the homebuyer must pay for an independent examination of the abstract to confirm that it is free of defects. The lender's attorney typically handles this examination.

Title Insurance: Lenders typically require homebuyers to purchase a policy covering the interests of the lender should a previously unknown title defect, such as a lien or judgment, be found after the closing of the home sale. In Iowa, title insurance is available through Iowa Title Guaranty, a state-operated organization. As of May 2016, the cost for a lender's title insurance policy was $110 for coverage on a residential transaction valued up to $500,000, plus $1 per $1,000 over the $500,000 mark. When purchased together with a lender's policy, a title insurance policy covering the homebuyer's interests is free of charge.

Settlement Fee: A settlement fee goes to the agent responsible for handling the transaction settlement process. Since this agent generally serves the interests of the lender above any other party, a homebuyer may wish to hire a real estate attorney for independent representation during the settlement process.

Kansas (KS): Average Closing Costs

Related Articles
  1. Personal Finance

    How To Negotiate Your Closing Costs

    Closing costs can't be avoided altogether, but you can lower them. While there are a lot of fixed costs, there are also variable ones you can save on.
  2. Personal Finance

    How Do Mortgage Lenders Get Paid and Make Money?

    When homebuyers educate themselves on how mortgage lenders get paid and make money, they are more likely to save thousands of dollars on their mortgages.
  3. Personal Finance

    Watch Out for "Junk" Mortgage Fees

    So many fees are tacked onto a mortgage, that it's easy to pay more than you have to.
  4. Personal Finance

    Mortgage Fees That Can Trash Your Refinance Deal

    Before deciding that refinancing your mortgage at a lower interest rate is a good deal, factor all the fees into your calculations.
  5. Insurance

    5 Mistakes to Avoid When Buying a New Home

    Don't make these common blunders on your way to buying a new home.
  6. Personal Finance

    How to Lower Refinance Closing Costs

    Refinancing a mortgage can save you money but it isn't free. There are closing costs associated with a refinance and how much you pay for them depends on you.
  7. Investing

    First-Time Homebuyer's Guide

    Buying a home for the first time can seem daunting. Learn the buying process & what to watch out for in order to be a successful first time home buyer.
  8. Personal Finance

    Shopping for Mortgage Rates

    A step-by-step guide to finding and locking in the best rate for a mortgage.
  9. Personal Finance

    How to Pick the Right Lender When Refinancing a Mortgage

    Refinancing your mortgage has never been easier with the range of lenders and access to information that are available to you.
  10. Investing

    Commercial Real Estate Loans

    Obtaining a commercial real estate loan is quite different from borrowing for residential real estate. Here's what to expect and how to get what you need.
Frequently Asked Questions
  1. When Does a Corporation Decide to Refinance Debt?

    Favorable market conditions or the strengthening of a credit rating may lead to corporate refinancing.
  2. What is the difference between an inter vivos trust and a testamentary trust?

    The difference between inter vivos trusts and testamentary trusts.
  3. Who are Target's (TGT) main competitors?

    Learn more about the discount retailer Target and its competitors. Find out some of the things discount retailers do to increase ...
  4. Why would a company issue preference shares instead of common shares?

    Learn about some reasons corporations might issue preference shares and why investors might value them more than common shares.
Trading Center