Utah's real estate market has been a boon for homeowners, with values increasing after the housing bubble. From a bottom of about $192,000 in 2012, the median home value has risen to $310,800 as of August 2018. According to Zillow, prices have increased 10% between 2017 and 2018, and will likely increase another 8% in the next year. While the value of a home is higher than the national average of $216,700, Utah is still among the most affordable places to buy a home in the Western states. It also has some of the lowest closing costs in the country.

Closing costs are the fees that must be paid to complete the escrow process and transfer the title to the buyer. They often include lender or origination fees, recording fees, real estate taxes, mortgage insurance, inspection costs, survey costs and an appraisal. In most states, closing costs can average between 2 and 5% of the home sale price. These costs vary from state to state, lender to lender and even from home to home, so it is important to know what fees to expect.

Average Closing Costs in Utah

In Utah, the average origination fees charged by lenders in 2018 total $976. The average fees charged by third parties involved in the transaction are $915, which brings the total average closing costs to $1,891. That number is below the national average of $2,084, and is the fourth-lowest average in the nation, just above Oklahoma, Wisconsin and South Dakota. New York, Hawaii and Delaware have the highest closing costs, with more than $2,300 each.

On average, borrowers pay the lender $58 for document preparation, $868 for the origination fee and $76 for tax services. Third-party charges include $469 for an appraisal, $332 for closing or settlement, $25 for credit reports, $10 for flood certification, $33 for postage or couriers and $325 for a survey. These average costs won’t necessarily add up to the total averages because some lenders may not charge all of the fees. Lenders do not include title insurance fees in these averages because of the difficulty in estimating them, but these fees can add as much as $1,000 to the total closing costs.

The lender provides the borrower a good faith estimate, which lists all of the costs and the fees. Lender origination fees should be fixed, while third-party fees may vary by as much as 10%. Within three business days before the closing of the loan, the lender should provide a closing disclosure statement outlining all the fees. The borrower can compare this with the good-faith estimate to see if there are any variances, and should request an explanation for discrepancies.

What Goes Into Closing Costs

In Utah, closing costs can vary, depending on the lender, the location of the home and the type of property. The following closing costs are fairly typical for most home sales in Utah.

The loan origination fee covers the lender’s costs for processing the loan. The fee generally amounts to about 1% of the loan amount, and is one of the few items that can be negotiated.

Lenders require an appraisal for a fee to verify that the property value is worth at least the sale price on which the loan is based. An appraisal can be paid up front or can be included in the closing costs.

Title insurance protects both the lender and the buyer. In Utah, the buyer must purchase a title insurance policy for the lender in the amount of the loan, and the seller purchases a policy for the buyer.

Title fees include costs for recording, notary and couriers.

In Utah, lenders require at least one year of homeowners insurance to be paid in advance.

Although it is not required in some parts of Utah, having a survey of the home is highly recommended. This process helps establish the exact property lines.

Attorneys are not required at the time of settlement in Utah. The title company handles most of the legal aspects of closing the sale.

Sellers’ Closing Costs

In Utah, lenders allow the seller to pay for some or all of the buyer’s closing costs. Part of the negotiations with the buyer can be to roll the buyer’s closing costs into the loan. The seller then increases the sale price to compensate for the costs. Sellers have their own closing costs to pay, including sales commissions, home warranties, property taxes owed, title insurance and escrow fees. Seller’s costs typically total about 1% of the sale price.

The Bottom Line

Despite the affordability of closing costs in Utah, homebuyers should remember that these expenses can add up. These fees may change based on lender or even the price of the home. You may also be able to negotiate some of the fees involved, so it's always important to shop around in order to reduce the impact on your bottom line. 

Washington (WA): Average Closing Costs

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