Average Closing Costs in North Dakota

Based on a $200,000 home purchase with a 20% down payment, the average closing costs for a homebuyer in North Dakota are $1,045 for lender fees and $791 for third-party fees, for a total of $1,836 in closing costs. That is just below the national average, which is $1,847. In comparison, homebuyers in Hawaii, Connecticut and New Jersey pay more than $2,000 in closing costs, while homebuyers in Idaho, Ohio, and Wyoming pay less than $1,700.

Individual closing costs tend to vary because lenders have leeway to waive certain fees and to raise or lower costs based on circumstances. On average, lenders charge $1,093 for origination fees, $80 for document preparation and $75 for tax services. Average third-party fees include $489 for an appraisal, $425 for settlement costs, $125 for a pest inspection, $100 for courier services and $433 for a survey. Title insurance fees are calculated separately and can add up to $1,000 to the final costs.

After receiving a loan application, lenders must provide the buyer with a good-faith estimate of the closing costs. Generally, lender costs cannot be changed. Third-party costs can vary by as much as 10% between the estimate and the final costs. Buyers are provided with a cost disclosure statement at closing, and, if the fees vary too much from the estimate, buyers can elect to discontinue the process if they so choose. 

Due primarily to the unprecedented shale oil boom that took the state by storm, North Dakota’s housing market has experienced uninterrupted growth since 2006. With the constant flow of workers and businesses streaming into the state, the housing market in North Dakota was largely immune to the burst of the housing bubble as the state struggled to keep up with the constant demand. However, after reaching a new high in 2015, housing prices are beginning to show signs of softening as a consequence of the oil bust, and what had been a nonstop seller’s market may be turning into a buyer’s market for the first time in several years. As the housing inventory rises, buyers are finding themselves with more options and more time to make that all-important purchase. 

What Goes Into Closing Costs in North Dakota

Closing costs can vary widely based on the lender as well as the amount of the sale price. However, the following closing costs are typical of most home purchases in North Dakota.

Loan origination fees: This is usually the biggest closing cost because it is an all-inclusive fee that covers all of the lender’s activities in processing the loan. For most lenders, this fee amounts to 1% of the home’s value and is represented as a “point,” where one point equals 1%. With most lenders, points can be added to the closing cost if the buyer wishes to lower the loan interest rate. Lenders may also allow the buyer to roll the points into the loan amount as a way to reduce front-end costs.

Appraisal fee: Lenders have to verify the property value to ensure that it meets the loan requirements and is reasonable when compared to similar properties in the neighborhood. An independent home appraisal is ordered, which is paid from closing costs at the time of settlement.

Settlement/closing costs: In North Dakota, an agent from the title company takes care of the legal matters involved in settling the sale. Homebuyers are not required to hire their own legal representative, but they may do so at their own expense.

Survey: In some cases, lenders will require a survey to be conducted in order to verify the integrity of the property and building lines.

Tax service: In North Dakota, the counties become the first lien holder for tax liens filed in the case of a default. Depending on the amount of the loan and the down payment, lenders may establish a property tax impound account and monitor it to ensure payments are current.

Title Insurance: To protect the lender against possible title defects, buyers are required to purchase title insurance on the lender. Buyers are also provided with title insurance by the seller as a way to guarantee a clear title on the property.

South Dakota (SD): Average Closing Costs

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