Average Closing Costs in South Dakota

South Dakota homebuyers also benefit from some of the lowest closing costs in the country. Based on a $200,000 house with a 20% down payment, South Dakota homebuyers pay on average $1,055 for loan origination fees and $704 for third-party fees, for total average closing costs of $1,759. That is below the national average of $1,847 and the ninth-lowest of all the states. Closing costs vary from lender to lender and from home to home, depending on the sticker price. In comparing closing costs in South Dakota, it helps to know what you are paying for and what the typical homebuyer pays; it's good to start by understanding what the average homebuyer pays to cover those costs.

On average, borrowers pay the lender $80 for document preparation, $1,104 for an origination fee and $75 for tax services. Third-party charges include $487 for an appraisal, $408 for closing or settlement, $21 for credit reports, $10 for flood certification, $125 for pest inspections, $100 for postage or couriers and $495 for a survey. These average closing costs do not include title insurance because lenders have difficulty estimating average title insurance costs, which can add more than $1,000 to the total costs.

Lenders provide buyers with a good faith estimate listing all of the costs and the fees charged. Lender origination fees should be fixed, while third-party fees may vary by as much as 10%. Within three business days before the closing of the loan, the lender should provide a closing disclosure statement outlining all the fees. Compare this with your good faith estimate to see if there are any variances. If there are, ask for an explanation. 

Since the housing bubble in 2007, the housing market in South Dakota has defied conventional norms. As the rest of the nation watched housing prices plummet, South Dakota saw its prices increase by 6% between 2007 and 2010. While housing prices in most of the nation began to recover in 2012, the market in South Dakota zigged and zagged its way to lows it had not seen since before 2006. As of May 16, 2016, the housing market in South Dakota was strong once again, relying heavily on a steady economy and low unemployment. At $177,000, the median price of a home is as high as it has ever been, but the low overall cost of living in the state makes it affordable for its growing population.

What Goes Into Closing Costs

In South Dakota, closing costs tend to vary based on the lender, where the home is located and the value of the home. These closing costs are fairly typical for most mortgage loans in South Dakota.

Loan origination fee: This is the fee lenders charge to cover the cost of processing the loan paperwork, including origination, underwriting, document preparation and funding. The fee is calculated as a percentage of the home's value and stated as points. The typical origination fee is 1%, or one point. Buyers can choose to pay more points to lower the interest rate. In some cases, they can roll their points into the loan amount to reduce out-of-pocket expenses.

Inspections: Although they are not required for conventional loans, a lender may request a pest inspection if there is any indication of a possible problem in the appraisal.

Survey fee: In some cases, the lender hires a surveyor is hired to verify property lines.

Appraisal fee: Lenders require an appraisal to verify that the property is worth at least the sale price and is reasonable compared with similar properties in the area.

Title insurance: In South Dakota, buyers are required to purchase title insurance for the lender to protect it against unforeseen liens or encumbrances on the property. Sellers are required to buy title insurance for the buyer to guarantee a clear title on the sale of the property.

Settlement/closing fee: The title company is tasked with handling all of the legal aspects of settlement for which it charges a fee. Although South Dakota doesn't require that an attorney be used in the closing process, buyers are advised to hire one to ensure their interests are protected.

Ohio (OH): Average Closing Costs

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