Nevada closing costs drop, now seventh lowest in U.S.

The average closing cost of buying a home in Nevada dropped to $3,414 this year, seventh-lowest in the nation and down 20 percent from a year ago, Bankrate.com reported in its June survey.

Last year, Nevada had the 15th-highest closing cost of $4,244, according to the online financial services provider.

Nationwide, closing costs declined 7 percent to $3,754. Title insurance and other third-party fees fell 12 percent from 2011, while origination fees edged down 1 percent. Fees are estimated for a $200,000 mortgage with 20 percent down payment.

This is the third year in which lenders are required to estimate third-party fees within 10 percent of the final cost, said Holden Lewis, mortgage analyst for Florida-based Bankrate.com.

"For years, people would go to closing and be surprised - unpleasantly surprised - that the costs were significantly higher than the good-faith estimate," Lewis said Tuesday. "HUD (Housing and Urban Development) actually has the authority to make this change, so they made a requirement that the final cost could not exceed 10 percent of the good-faith estimate."

That means third-party fees estimated at $2,000 cannot be more than $2,200 at closing. Anything above that comes out of the lender's pocket, Lewis said.

For the third straight year, New York has the nation's most expensive closing costs at an average of $5,435. The least expensive state is Missouri at $3,006.

Rick Piette, manager of Premier Mortgage Lending in Las Vegas, said third-party fees such as title company and escrow fees have never varied by much because they're regulated by the state.

"My guess is the drop in cost is one, people being more competitive, and two, the change in 2009 of how brokers get paid," he said. "If you're a mortgage broker, you now get paid by the lender, not the borrower, most of the time. So it basically reduced our closing cost to virtually nothing."

Lewis of Bankrate.com said closing costs can vary, depending on the lender. Some charge an application fee, some don't. Points, or money paid to lower the interest rate, can also vary from lender to lender.

The single largest closing fee in Nevada is the title search and title insurance, which costs an average of $1,392. Another big chunk is the mortgage broker's origination fee at $966.

Lewis advises consumers to shop around for at least three different estimates.

"Pay attention to the bottom line of lender charges," he said. "Don't get hung up on itemized charges, but do look at those charges and ask questions if you see something."

Joel Sarmiento, senior vice president for Wells Fargo Home and Consumer Finance Group, said he hasn't really seen a drop in fees.

"Most of our fees - 75 percent - come from third parties, so maybe their fees have dropped," he said.

Bankrate surveyed up to 10 lenders in all 50 states plus the District of Columbia. Costs include fees charged by lenders, as well as third-party fees for services such as appraisals and title insurance. The survey excludes taxes, property insurance, association fees, interest and other prepaid items.

Contact reporter Hubble Smith at hsmith@reviewjournal .com or 702-383-0491.