Virginia promises homebuyers are a wealth of different landscapes in which to live. From small towns to big cities, the state is one of the most diverse in terms of ethnic makeup and demographics. The northern part of the state also borders D.C., which means many Virginia residents end up working in the nation's capital. Virginia is also home to a number of great beaches and wineries, and it's also one of the states that prides itself on its higher education. But the cost of living can be high in the state, where median home values in 2018 were $248,400— well above the national average of $184,700. 

But it isn't just the price of a home prospective buyers need to consider before making a purchase in the state. Virginia also has some of the country's highest closing costs, ranking within the top 20 in the nation. Lender fees and third-party costs are some of the things to consider when factoring in closing costs into the final purchase price of a home. 

Average Closing Costs in Virginia

Homebuyers seeking to purchase a residence in Virginia should be aware of the total closing costs associated with the transaction. Closing costs are all of the fees, taxes, and charges needed to transfer the property from seller to buyer and originate the loan for the buyer. The closing is performed by a settlement attorney, who finalizes all of the paperwork, collects the closing costs and transfers the title, often through the title company. The basic closing costs in the state of Virginia add up to around $2,114 on average and include the lender origination fees and various third-party fees. The total closing costs also include a number of additional charges. The following is a breakdown of the total closing costs for a $200,000 home purchase in Arlington, Virginia.

Closing Cost Fees in Virginia

According to Bankrate.com, the average origination fees charged by lenders on a $200,000 property loan is $970, combined with an average of $1,144 in third-party fees for a total of $2,114. Unfortunately, this can be very misleading to new homebuyers because it does not really account for all of the upfront monies needed at closing. The small print states that the closing costs exclude the bundle of additional required fees.

The third-party fees average $461 for appraisal, $543 for settlement attorney, $25 for a credit report, $10 flood certification, $100 for postage and courier services and $510 for a survey. Fees charged to the buyer vary depending on the lender. The sum of all listed third-party fees is around $1,649.

Title Company and Title Insurance

The title company runs a title search to validate the ownership of the property and confirm that there are no outstanding liens or issues. It handles the legalities of the real estate transaction. The title company fees total around $800 and include the $543 attorney fee for settlement.

Once the title is determined to be free of any issues, the company provides owner and lender insurance to protect both sides in the event of a title dispute down the road. The lender insurance is required and insures the loan at a cost of 0.03% of the purchase price, which would be $600 on a $200,000 loan. The owner insurance option is 0.02% of the purchase price, which would be $400 on the loan. The total cost of the title insurance fees is $1,000. 

Pre-Paid Taxes and Interest

Virginia requires 0.0066% of the sales price to be paid under deed and trust taxes. The deed portion and trust portion are both charged at 0.33% for the total of 0.66%. This amounts to $1,320 on the $200,000 purchase price. There is an additional recording fee of $125 for the state to record the transfer of ownership.

Escrow Account

An escrow account is technically not a fee or cost, but is more like a deposit into a savings account, since the funds are eventually returned to the buyer. Lenders require a minimum of three months of mortgage payments and prepaid interest, which amounts to around 0.7% of the sales price, totaling $1,400. Lenders also require the first year of homeowners' insurance to be prepaid, which should average around $700, for a total of $2,100 needed to fund the escrow account at the closing.

The Bottom Line

When including the aforementioned fees, charges and payments, the total closing costs in the state of Virginia on a $200,000 mortgage would be over $8,000. This doesn't include the initial down payment on the property or option points paid at closing. Homebuyers have an option to roll the closing costs into the loan if they choose a no-closing cost mortgage, which comes with a higher interest rate. Buyers can also negotiate with sellers to cover some or all of the closing costs associated with the purchase.

West Virginia (WV): Average Closing Costs

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