Closing Costs for Buying a Home Have Risen Along With Rates

Real estate agents and lenders typically suggest loan settlement providers and insurance agents they are familiar with, but borrowers don’t have to go with their recommendations and can shop around, Ms. Cornelissen said.

Steve Gottheim, general counsel with the American Land Title Association, which represents the title insurance industry, said the cost of the insurance had fallen about 8 percent nationally over the past two decades. Most of the cost of title insurance pays for searches of county deed records, he said.

The consumer bureau’s post also said higher fees for credit reports, for which mortgage lenders have recently reported steep fee increases, “warrant further scrutiny.” Home buyers have no say over these fees, which credit bureaus charge to lenders.

Here are some questions and answers about loan closing costs:

The most effective thing that home buyers can do is to shop for mortgage quotes from multiple lenders, Ms. Thompson of the consumer bureau said. “Most people don’t,” she said. But research shows that if they do, they can get lower rates, saving up to several thousand dollars over the life of their loan.

Calculate the “break even” point for your loan. On a $300,000 fixed-rate mortgage at 6.5 percent over 30 years, your monthly payment for principal and interest would be about $1,896. If you bought one discount point for $3,000 and lowered your rate to 6.25 percent, you would pay about $1,847, saving $49 a month. Dividing $3,000 by $49 means you would need to own the home roughly five years before selling or refinancing for the extra fee to pay off. (Financial sites like Nerdwallet offer calculators.)

Costs for discount points are generally deductible, according to TurboTax. You must itemize deductions on your return, however, rather than taking the standard deduction.

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