Closing Costs on New Mortgages Up 36.6 Percent

The average origination and third-party fees on new mortgages are up 36.6 percent over last year. In 2009, the average costs for closing a mortgage totaled $2,739, but that cost is up to $3,741, based on BankRate.com's 2010 Closing Costs Survey.

The biggest difference is in third-party costs for appraisals and title insurance, which rose 47.2 percent. Some of that difference could be in the way lenders are quoting Good Faith Estimates (GFEs). Many include not only lender's title insurance but also buyer's title insurance, which could account for some of the increase. Also, under new rules, lenders can be penalized if the GFE is not within 10 percent of the final cost, so some lenders could be overestimating just to avoid penalties. (There are no penalties for overstating closing costs.)

"The big rise in average closing costs may scare some homebuyers, but it's important to keep things in perspective," says Greg McBride, senior financial analyst for Bankrate.com. "Increased regulation on lenders' GFEs means more accurate estimates and less expenses popping up for consumers on the back end." Prior to this change, consumers could be hit with hundreds if not thousands of dollars of unexpected charges at the closing table.