Delaware is considered one of the country's most tax-friendly states. With its low state and property taxes, Delaware has been a magnet for retirees seeking tax relief from neighboring states. It is also one of several states including Alaska, Montana, New Hampshire, and Oregon, that does not impose a sales tax. These factors can be a big boon for current and prospective homeowners. 

First-time homebuyers are experiencing normal housing costs by exercising patience in a tight market, as housing prices gradually increase. By comparison, Delaware’s closing costs could also be considered normal – not among the highest, but also not among the lowest, in the country. Still, Delaware homebuyers can expect to pay between 2 and 5% of their home’s value in closing costs, which can add thousands of dollars to the home purchase. 

Here are some of the factors to consider when calculating your closing costs — whether you're a new or first-time homebuyer. 

Average Closing Costs in Delaware

On average, Delaware homebuyers are charged $950 for lender fees and $1,408 for third-party fees, for total average closing costs of $2,358. This is below the national average of $2,084 and the highest of all states. Lender practices vary in how closing costs are applied. However, on average, homebuyers pay $848 for loan origination fees, $612 for a lot survey, $723 for attorney fees, $463 for a home appraisal, $100 for courier services and $76 for tax services. Title insurance is not included in these averages because it is calculated individually. Some homeowners can also expect to pay out of pocket for property taxes and homeowners' insurance. 

After more than a decade of boom and bust volatility, the Delaware housing market may be normalizing. Few states saw their housing markets rise as far and fast, and then crash further and faster, as Delaware. Although sales activity has been tepid since 2012, the median home value has been staging a gradual comeback, reaching $231,200 as of August 2018.

What Goes Into Closing Costs in Delaware

Closing costs in Delaware can vary based on the lender and the loan product. However, there are several closing costs common to most home purchases.

For most home purchases involving a loan, the loan origination fee is the biggest cost. This amounts to about 1% of the loan value. The fee, which is charged as points, with one point equaling 1%, covers many of the costs lenders incur in processing the loan through funding. Homebuyers can lower their loan interest rates by asking the lender to add points to their closing costs. For homebuyers who wish to minimize their out-of-pocket costs, points may be rolled into the loan.

The cost of a title search and title insurance is typically the next biggest cost. Lenders utilize a title company to perform a search of the property’s records to see if there are any outstanding claims or encumbrances. Buyers must then purchase a title insurance policy on the lender to protect its position as the first lien holder.

Before a lender approves the loan amount, it must determine, through an independent appraisal, if the property’s value can support the sale price, and that it is reasonable when compared with other properties that have recently been sold in the area.

In Delaware, most of the legal aspects of the settlement, including document review and filing, are handled by an attorney hired by the lender. Although homebuyers are not required to hire their own legal representation, they may do so at an additional expense.

Because mortgages are subordinate to tax liens in the event of a default, lenders may require a tax escrow account to be set up by the buyer. The lender monitors the account to ensure property tax payments are kept current.

Florida (FL): Average Closing Costs

Related Articles
  1. Personal Finance

    How To Negotiate Your Closing Costs

    Closing costs can't be avoided altogether, but you can lower them. While there are a lot of fixed costs, there are also variable ones you can save on.
  2. Personal Finance

    Car Title Loan Requirements

    Here's a list of what you need to qualify for a car title loan. Most important: having sole ownership of your car with no liens.
  3. IPF - Mortgage

    What Are the Main Types of Mortgage Lenders?

    Shopping for a mortgage lender can feel confusing and a little intimidating. Understanding the differences among the main types of lenders can help you narrow down the field.
  4. IPF - Mortgage

    Shopping for Mortgage Rates

    Are you planning on buying a home? Here is a step-by-step guide to find and lock in the best rate for a mortgage.
  5. Investing

    Special Benefits for First-Time Homebuyers

    To encourage Americans to buy their first homes, the government offers credits and tax breaks. Here's the lowdown on who can qualify for each benefit.
  6. Personal Finance

    States That Allow Car Title Loans

    Only some states permit car title loans – and those that do may have restrictions. Check this list to see what to expect.
  7. Investing

    How to Get the Money to Flip a House

    If you want to get into house flipping but don't have the cash to invest, read on for options.
  8. IPF - Mortgage

    How to Choose the Best Mortgage

    Finding the right house is only half the battle. The other half is choosing the best type of mortgage. Learn how to pick a mortgage based on your needs.
  9. Investing

    Understanding The Escrow Process

    Learn the 10 steps that lead up to closing the deal on your new home and taking possession.
  10. IPF - Mortgage

    How to Pick the Right Lender When Refinancing a Mortgage

    Refinancing your mortgage has never been easier with the range of lenders and access to information that are available to you.
Trading Center