Where Are the Cheapest Closing Costs?

Home prices and mortgage interest rates are slowly inching upward, so buyers need to look for a variety of ways to save money on their new home purchases. Closing costs can really drive up the amount of cash a buyer needs to fork over when buying a house, although, sometimes, closing costs are paid by the seller. While it isn’t practical for everyone to pick the location of their next house based on low closing costs—and the variation by state isn’t huge—it can be helpful to understand the norms and lowest possible closing costs when negotiating a home sale.


According to a survey conducted by Bankrate, a well-known financial publisher, closing costs are up overall, and the national average is about $2,400 on a $200,000 home purchase. Five states were ranked as the lowest, and the results only represented a modest savings on closing costs among them.

The cheapest closing costs

The state of Wisconsin takes the prize for the lowest closing costs. The report stated that residents of America’s Dairyland state pay only about $2,120 on average. Most of that money goes to lender origination fees of about $1,440, with the balance covering third-party fees.

Missouri ranked as the state with the second-lowest closing costs. The Show Me State residents pay just a bit more than Wisconsinites, about $2,190 on average for a $200,000 house. That’s a savings of just under $200 from the national average, but, when cash is tight, it is $200 which could help pay for something else, like some of the new curtains, rugs and other accessories so often needed right after moving into a new home.

Kansas nearly tied with Missouri with the average in closing costs at $2,193 on a $200,000 home. The difference here is negligible, so anyone who works in the Kansas City area, or other regions where workers could choose to live in either Kansas or Missouri, will need to look for other advantages to choose one over the other.

Average closing costs in Michigan and Washington state were just a few dollars more, at $2,203 and $2,208, respectively. Most of that is paid toward loan origination fees, which were reportedly around $1,600 in both states.

Expensive closing costs

Home buyers in the state with the highest closing costs paid more than the amount saved on average in the lowest-ranking states. Hawaii topped the list with closing costs coming in at around $2,920, with about $1,970 of that going to loan origination fees and a steep $950 toward third-party fees.

Buyers in most other states with higher-than average closing costs only shelled out about $200 more than the national average. Alaska, South Carolina, California and New Mexico ranked in the top five, ranging from a high of $2,675 in Alaska, down to about $2,570 in New Mexico.

In California, those buying a home paid about $2,640 in closing costs. According to Zillow.com, median home prices in California are around $400,000, so buyers in the Golden State can expect to have a lot more cash ready to pay for closing costs on bigger mortgages.

Know the market

While there isn’t a wide variation in closing costs around the country, there can be regional variations within a state, particularly in fast-moving or very slow housing sales markets. Knowing the national and state averages for closing costs can help buyers get an edge in negotiating terms of a home loan and can be a good way to spot a poor deal.

To learn about rates on mortgages and other information, spend some time at our mortgage page.

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Shirley is a staff writer for MyBankTracker who covers personal finance trends, money habits, mortgages and foreclosures.

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