Although home prices have been rising in the state of Utah as of May 2016, it is still among the most affordable places to buy a home in the Western states. The good news for homebuyers in Utah is that it 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 4% 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 2016 total $909. The average fees charged by third parties involved in the transaction are $788, which brings the total average closing costs to $1,697. That number is below the national average of $1,847, and is the fourth-lowest average in the nation, just above Ohio, Idaho and Wyoming. Hawaii, Connecticut and New Jersey have the highest closing costs, with more than $2,000 each.

On average, borrowers pay the lender $80 for document preparation, $942 for the origination fee and $76 for tax services. Third-party charges include $424 for an appraisal, $434 for closing or settlement, $21 for credit reports, $10 for flood certification, $125 for pest inspections, $100 for postage or couriers and $725 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.

Loan Origination Fee: This is the fee that 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.

Appraisal Fee: Lenders require an appraisal 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: 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: Title fees include costs for recording, notary and couriers.

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

Survey: Although it is not required in some parts of Utah, having the home surveyed is highly recommended.

Legal Fees: 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 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.

Washington (WA): Average Closing Costs

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