After several years of languishing in slow growth since the housing bubble of 2007, the housing market in Montana may be ready for a breakout performance in 2016. Slowing population growth and a dearth of sellers had kept a lid on sales activity through 2013, when pockets of the state started experiencing greater demand, especially in and around the urban areas of Bozeman and Billings. As home values increased, more sellers were encouraged to enter the market in 2015, which spurred the biggest uptick in sales activity since 2007. As the inventory of existing homes began to shrink, a wave of new construction throughout the state has been trying to keep up with demand. All in all, Montana is experiencing a healthy housing market, which can be a challenge for homebuyers looking for their ideal home. As homebuyers chase increasing home prices, they need to remain cognizant of closing costs, which can add several thousand dollars to the cost of a home purchase. Closing costs in Montana are among the highest in the country, so it pays to shop around and compare lenders in order to gain a better understanding of the closing costs that a homebuyer can encounter.

Average Closing Costs in Montana

Based on a home loan of $200,000 with a down payment of 20%, homebuyers in Montana pay an average of $1,062 for lender fees and $855 for third-party fees, for a total of $1,917 in average closing costs. That is above the national average of $1,847 and the ninth highest of all the states. By comparison, the neighboring states of Idaho and Wyoming both have some of the lowest closing costs in the country, at less than $1,700 each.

Not all lenders charge for closing costs in the same way. For the most common closing costs, homebuyers in Montana pay an average of $1,112 for origination fees, $517 for an appraisal, $425 for legal and settlement fees, $613 for a lot survey, $125 for inspections, $100 for courier services, $75 for tax services and $10 for flood certification. Not all costs are listed, because lenders vary in what and how they charge for certain costs. Title insurance fees can add as much as $1,000 to closing costs, but are not included here because they need to be calculated separately for each home purchase.

What Goes Into Closing Costs in Montana

In Montana, the items included in closing costs tend to vary from lender to lender. However, homeowners can expect to see the following, more common closing costs on the good faith estimate provided by the lender.

Loan origination fees: This is the largest fee charged by lenders to cover the costs for processing the loan. These costs include origination, underwriting, document preparation and funding. The fee is charged as a percentage of the loan and stated on the good faith estimate as origination points. Each point is equal to 1%. Buyers can ask the lender to add points to the closing costs in return for a lower interest rate.

Appraisal fee: Lenders must be able to verify that the property is worth at least what the buyer is paying for it, so an independent appraisal is ordered.

Settlement/closing costs: In Montana, lenders delegate the legal aspects of settling title to an attorney or a legal representative of the title company. Homebuyers can have their own attorney review the settlement for their own protection, but it is a separate cost to be paid at closing.

Survey: Some properties require a lot survey to verify the official property lines and ensure there has been no encroachment by neighboring structures.

Title insurance: Buyers are responsible for purchasing title insurance on the lender to ensure its position as the first lien holder, should any title defects emerge after the final sale.

Nebraska (NE): Average Closing Costs

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