Average Closing Costs in Rhode Island

Based on a survey of lenders in Rhode Island, average closing costs were calculated for a $200,000 home purchase with a down payment of 20%. On average, lender fees amount to $1,093, while third-party fees total $802, for total average closing costs of $1,896. That is above the national average of $1,847, but substantially less than the neighboring state of Connecticut, which averages $2,033.

Among the more common closing costs charged by lenders and third-parties are $1,146 for loan origination fees, $588 for attorney or settlement costs, $575 for a lot survey, $407 for a property appraisal, $125 for an inspection, $100 for courier services and $76 for tax services. Title insurance costs are not included in these averages because they are calculated individually for each home purchase. Pre-paid costs, such as property taxes and homeowners' insurance, are also not included. These additional costs can add several thousands of dollars to the final closing costs.

Rhode Island was hit particularly hard during the housing bubble, with home values falling sharply by more than 30%. Its economy and housing market has been slow to recover, moving mostly sideways until a surge in home sale activity in 2015. The city of Providence and its surrounding area in particular had been cited as one of the hottest real estate markets going into 2016. Unlike many hot real estate markets in the country, the housing market in Rhode Island remains affordable and favors buyers, due to oversupply. Rhode Island homebuyers also benefit from paying reasonable closing costs, which are right around the national average. However, closing costs can vary widely based on the lender and the type of loan, so homebuyers could benefit further by comparing them among several different lenders. As a basis of comparison, it helps to know what the average homebuyer can expect to pay for closing costs in Rhode Island.

What Goes Into Closing Costs in Rhode Island

Lender practices can vary as to what and how they charge for closing costs. However, these are among the more common costs homebuyers can expect to see on the good faith estimate provided by the lender.

Loan origination fees: Most lenders bundle all their loan processing costs together and charge a fee based on a percentage of the loan value. The fee is charged as an origination point, which is equivalent to 1%. Buyers can ask that origination points be added to the closing costs in exchange for a lower loan interest rate. Points can also be added to the loan amount for buyers who want to reduce their out-of-pocket costs.

Appraisal fee: Before approving a loan amount, lenders need to verify the property value to ensure that it is worth at least the amount of the sale price. An independent appraiser is hired by the lender to perform an appraisal of the home.

Settlement/Closing costs: In Rhode Island, an attorney or a legal representative of the title company is hired by the lender to handle all the legal aspects of settlement. Should homebuyers wish to have a private attorney review the settlement, they could do so for an additional expense.

Lot survey: With some properties, lenders may want to verify the official property lines to ensure compliance with local codes, and that neighboring building structures haven’t encroached on them.

Title search and insurance: For all properties, a title search is performed to verify legal ownership and ensure there are no title defects. To guard against possible hidden defects uncovered after the settlement, the lender requires the buyer to purchase a title insurance policy on the lender.

Vermont (VT): Average Closing Costs

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