Despite the busiest hurricane season on record, the housing market in Hawaii is the strongest it has been since before 2008. In 2016, the median home price in the state surged past its prior pre-housing bubble peak of $547,000, reaching $557,000 in April. However, a surge in sales activity has led to a steep reduction in housing inventory, which, in the face of increasing demand, is pushing housing prices higher. The median days on the market for single family homes is 18, with more moderately priced homes selling within hours. That is a hot housing market. For the fortunate homebuyer who does make an offer on a house, she is not only paying the full asking price; she is also paying the highest closing costs in the country. Closing costs can vary widely in Hawaii, from market to market and from lender to lender, which make it all the more important to shop and compare them.

Average Closing Costs in Hawaii

For a state-by-state comparison of closing costs, a survey was conducted among lenders from each state based on the purchase of a $200,000 home with a 20% down payment. In Hawaii, homebuyers pay an average of $1,033 in origination fees and $1,130 in third-party fees for a total average of $2,163 in closing costs. That is the highest in the nation, which averages $1,847.

A breakdown of lender and third-party closing costs shows a homebuyer in Hawaii pays an average of $638 for an appraisal, $490 for settlement costs, $17 for a credit report, $10 for flood certification, $125 for a pest inspection, $100 for courier services and $795 for a survey. These average closing costs do not include title insurance, because lenders have difficulty estimating it. Title insurance fees can add more than $1,000 to the total costs.

What Goes Into Closing Costs?

Homebuyers in Hawaii can expect to pay between 3 and 5% of a home’s value in closing costs. Closing costs in Hawaii vary depending on the size of property, the market in which it is purchased and the lender. These are the typical closing costs found on a good faith estimate provided by the lender.

Loan origination fee: This fee covers a range of services performed by the lender, including processing underwriting, document preparation and funding for the loan. The fee is calculated as a percentage of the loan and stated as “points,” with 1% equaling one point. Points can be added to the closing costs if the homebuyer wishes to reduce the loan interest rate.

Appraisal fee: An appraisal is required by the lender to ensure the property value supports the sale price and is reasonable in comparison to similar properties in the area.

Settlement/closing costs: The title company is responsible for handling the legal aspects of closing the sale. Homebuyers can hire their own attorneys to review settlements, but they will pay additional costs.

Title insurance: Lenders require buyers to purchase title insurance, which protects lenders against any defects in titles that might cause them to lose their first position on loans. Sellers are required to buy title insurance on buyers to guarantee clear titles.

Survey: Depending on the type of property and its location, some lenders may require a survey to ensure the integrity of the property lines. This is for the protection of both the lender and the buyer.

Home inspection: The buyer typically pays the cost of a pest inspection, and, if she requests it, the cost of a home inspection.

Tax service: Since property tax liens usually take precedence over first mortgages, the lender protects itself by setting up and monitoring a property tax payment account to ensure payments are always current.

Montana (MT): Average Closing Costs

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