Mortgage interest rates have sunk to record lows nationwide but home buyers in Pennsylvania are still being hit with relatively high closing costs, a new survey shows.
Closing costs in the state were the third highest in the country this year at an average of $4,467, 19 percent higher than the national average of $3,754, according to an annual check by Bankrate.com. Costs were calculated based on a $200,000 loan, excluding property taxes and homeowner's insurance.
Only New York at $5,435 and Texas at $4,619 had higher closing costs.
New York and Texas also were the most costly in 2011, while Pennsylvania rose to No. 3 this year from No. 9 last year. The least expensive state was Missouri, where closing costs averaged $3,006.
Nationwide, the average fell 8 percent from a year ago, compared with a 1 percent decline in Pennsylvania, Bankrate.com said.
The survey looked at origination fees charged by the lender -- such as points and the application fee -- and third-party charges, such as appraisal and title fees. Altogether, the review included 17 individual closing costs.
Most of the individual fees in Pennsylvania closely tracked the national averages. The biggest reason that overall closing costs in Pennsylvania outpaced the nation was high title fees, the survey showed.
The cost for a title search and title insurance averaged $2,220 in Pennsylvania, or roughly 50 percent more than the national average of $1,461. Lenders require home buyers to purchase title insurance to ensure there are no hidden liens on a property.
In Pennsylvania, title search and insurance rates are set by a rating bureau and approved by the Pennsylvania Insurance Department. The rates are among the highest in the nation, according to a University of Pittsburgh professor emeritus who has studied the title insurance industry and wrote a 2008 book on the subject.
Joseph Eaton, a longtime advocate of title insurance reform in the state, also said that Pennsylvanians often end up paying more for title insurance than the set rates because title agents can tack on additional fees, which are not regulated.
The Bankrate.com survey was based on good faith estimates in June by up to 10 lenders in all 50 states plus the District of Columbia. Since 2010, lenders have faced government penalties for low-balling fees.
"It seems like [lenders] are getting more accurate, which helps explain the sharp [8 percent] decrease in these fees over the past year," Bankrate.com senior financial analyst Greg McBride said.
He noted that closing costs varied widely within the same state and urged consumers to compare estimates from at least three lenders to help get the best deal.
For the full report on closing costs, including a breakdown of individual fees in Pennsylvania, visit http://www.bankrate.com/finance/mortgages/2012-closing-costs/closing-costs-by-state.aspx.
Patricia Sabatini: email@example.com or 412-263-3066.