Average Closing Costs in Minnesota

Fortunately for Minnesota homebuyers, average closing costs in the state rank among the lowest in the country. Average closing costs in Minnesota come to $1,757, based on a typical transaction that includes a 20% down payment and a $200,000 mortgage. Loan origination fees account for $1,067 of the total, while fees for third-party services run to $689. Breaking these fees down further shows that homebuyers pay an average of $429 for a property appraisal, $375 for settlement fees, $350 for a survey and $125 for a home inspection. Other common fees include $80 for document preparation, $76 for tax services, $50 for postage and courier services, $10 for flood certification and $21 for a credit report. Actual fees vary, depending on the size of the loan, the lender, the property and the local market. Additionally, these figures do not include certain related costs, such as county transfer taxes, title insurance and homeowner's association fees.

On a nationwide basis, closing costs average $1,847, which is about 5% above the Minnesota average. Third-party fees are more expensive nationally, with an average cost of $807, while origination fees tend to be slightly cheaper outside Minnesota, with a reported national average of $1,041. Among all states in the country, Minnesota has the eighth-lowest closing costs. Ohio is home to the country's cheapest closing costs, at $1,613. Closing costs of $2,163 make Hawaii the most expensive state, followed by New Jersey at $2,094 and Connecticut at $2,033. 

After four consecutive years of price growth, the Minnesota housing market has begun to threaten market highs last seen in 2007. The median price for homes in the state reached $209,000 in April 2016, up 7.2% compared to the year prior and more than 60% compared to the market bottom in early 2012. Upward price momentum is expected to continue in the face of rising sales volumes and falling inventories. Minnesota's statewide housing inventory fell to just 3.7 months' worth of sales in April, down from 4.7 months the year prior. As Minnesota home prices rise, so too do the costs associated with closing a home sale. 

What Goes Into Closing Costs in Minnesota

Mortgage lenders are required to provide prospective borrowers with a good-faith estimate (GFE) of all associated closing costs within three business days of receiving a loan application. This document enables homebuyers to compare lenders during the loan-shopping process. In Minnesota, a GFE may include the following fees.

Loan origination fee: The lender charges an origination fee, sometimes known as an underwriting fee, for the services associated with processing and preparing a loan. The fee is typically quoted as a percentage of the loan amount. Fees may be negotiable, depending on the size of the loan, the interest rate and the general conditions in the market.

Appraisal fee: Lenders generally require borrowers to pay for an appraisal to verify that the sale price of a home is in line with its actual market value. A Minnesota homebuyer has the right to ask for a copy of the appraisal.

Settlement fee: In Minnesota, licensed closing agents often handle the transaction settlement process for a fee. Some homebuyers choose to hire a real estate attorney or another professional who is qualified to act as a closing agent, such as a title insurance agent.

Title insurance: Lenders require borrowers to pay for title insurance to protect against costs arising from unidentified property liens, legal judgments or other title deficits. Title insurance companies conduct a title search as part of the underwriting process. An insurance policy covering the lender is required, while a policy covering the homebuyer is optional.

Mortgage insurance: Private mortgage insurance is generally required in transactions that include a down payment of less than 20%.

Home inspection fees: While a lender may require a home inspection, this inspection is generally optional for the homebuyer. A professional inspection is usually considered an important step in the homebuying process, as it identifies safety issues and other problems that could go unnoticed by the homebuyer prior to the sale closing.

Survey fees: A lender may require a survey to confirm the location of property lines.

Missouri (MO): Average Closing Costs

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