Purchasers Are Paying Less in Closing Fees

Closing costs dropped 7.1 percent year-over-year, tumbling from $1,989 in 2014 to $1,847 in 2015, as indicated by a recently newly released Bankrate.com survey. For its investigation, Bankrate asked for Good Faith Estimates from up to 10  lenders in the nation's largest cities for a hypothetical $200,000 mortgage for a single-family home assuming a 20 percent down payment.

While average origination fees were down about 22 percent in this year's survey, average third-party fees rose nearly 22 percent.

"My best guessis that third-party fees went up because of inflation and an increase in the cost of providing those services," says Michael Becker, branch manager for Sierra Pacific Mortgage in White Marsh, Md. "Origination fees probably dropped in light of a drop in mortgage rates." Becker includes that borrowers are paying less to secure a better rate these days than they were in 2014.

However, industry leaders are warning that mortgage lending and its costs will likely rise, notably on title insurance

Overall, regulatory compliance is increasing for lenders and those costs are usually passed on to borrowers, says Pava Leyrer, chief operating officer at Northern Mortgage Services in Grandville, Mich.

"Generally, our borrowers, on a purchase, are going to see a really pretty hefty increase in title insurance," Leyrer says. "A couple hundred bucks is a lot on a loan."

Becker urges borrowers to search for a home loan and investigate the expenses that fluctuate from bank to bank.

"Make sure you're comparing apples to apples," he says. "Take into consideration the interest rate and the lender fees out there."