Homebuyers interested in purchasing a property in Connecticut should be clear on the total closing costs involved. Online sites such as Bankrate.com provide the average closing costs by state, but the totals can be misleading. The website states that it excludes many fees and charges required for closing. As a rule of thumb, the total closing costs are in the range of 2 to 4% of the purchase price, depending on the various third-party fees, interest, taxes and lender. Connecticut requires settlement attorneys, not title companies, to conduct closings. The following is a comprehensive inventory of the total closing costs that must be paid before a title can be properly transferred in Connecticut.

Average Closing Costs in Connecticut

Closing costs in Connecticut  average around $2,033 for a $200,000 loan. This total is derived from an average of $1,074 in lender origination fees and an average of $960 in third-party fees. The survey fee is notably more expensive than that of neighboring states, at $1,250. This fee is more than twice as expensive as that of Maryland, with an average survey fee of $515, and Virginia's fee of $585. Connecticut is home to major insurance carriers and hedge funds commanding rich real estate premiums.

Third-Party Fees

Some of the third-party fees included by lenders in the closing costs are appraisal at $415, settlement attorney at $629, credit report at $21, flood certification at $10, pest inspection at $125 and postage and courier services fees at $100, and the aforementioned survey at $1,250. Additional inspections for lead, asbestos and radon can cost between $100 and $400 per report. While the settlement attorney average is quoted at $629 on the Bankrate website, this fee can be as high as $1,500 depending on the property location. Buyers are encouraged to have their own real estate attorneys present at closing.

Additional Costs

There are many additional costs required for closing. A title search to validate the property ownership can cost an average of $438. Once the title is confirmed clean, then title insurance costs an average of $650 on a $200,000 property. Recording and transfer fees average $200 for the state and county to update the records to reflect the new ownership. The buyer has to reimburse the seller for the portion of property taxes prepaid from the date of settlement to the end of the tax period. For example, if the closing is completed on March 31, then the buyer has to reimburse the seller for three months of property taxes that were prepaid up to July.

Escrow

While escrow is not technically a fee or cost, it still requires money up front. The exact terms of the escrow depend on the specific lender. The escrow account is like a savings account that refunds back the amounts when the property is sold or paid off. Lenders typically require three months of payments, a full year of home owner insurance premiums, prorated monthly loan interest prepaid and prepaid real estate taxes. Property taxes are paid semi-annually in January and July. Lenders usually require six months of property tax in escrow.

Negotiating Closing Costs

The total closing costs for the buyer can range from $5,000 to $10,000, depending on the time of the month and year of closing. If this is too much of a burden, the buyer can opt for a no-closing-cost or no-point mortgage that rolls over all the closing costs into the loan. This affects the interest rate and loan amount. Another option is to negotiate directly with the seller in regards to splitting or covering all the closing costs. Negotiation terms can include offering to pay the full asking price for the property if the seller covers all the closing costs, or negotiating certain upgrades or repairs in exchange for the seller covering or splitting the closing costs. There are many avenues to pursue, and it is best to consult with a real estate attorney and lender for more options.

Maine (ME): Average Closing Costs

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