For first-time buyers, today’s housing market can look promising. Home prices have leveled off in many areas, and mortgage rates remain near historic lows, making ownership more attainable than in decades past. But while buyers may celebrate lower home prices, there’s a hidden expense waiting at the finish line: closing costs.
According to Bankrate’s annual survey, closing costs have jumped nearly 9% in just one year. Since 2009, fees on a $200,000 mortgage have soared almost 50%, from $2,739 to $4,070. For many buyers, that means thousands more out-of-pocket cash needed on top of down payments, inspections, and moving costs.
So what’s driving these increases — and what can buyers do about it?
Why Closing Costs Keep Rising
Much of the rise in closing costs can be traced back to the wave of financial regulations that followed the 2008 housing crash. New rules were designed to protect consumers and improve transparency, but they also forced lenders to spend more on compliance, staffing, and reporting.
Naturally, those added costs have been passed on to borrowers. Today’s mortgage process is more accurate and transparent, but also more expensive, slower, and harder to qualify for.
And the changes aren’t over. The most controversial reform yet — the Qualified Residential Mortgage (QRM) rule — is expected to reshape lending even further.
What Is the QRM Rule?
The QRM rule aims to distinguish between “safe” loans and “risky” ones for securitization. To qualify as a QRM, a mortgage must meet certain criteria:
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Equity: Strong down payment requirements
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Debt-to-income ratio: Stricter affordability limits
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Credit score: Higher minimum requirements
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Loan features: Limited riskier adjustable-rate options
If a loan doesn’t meet QRM standards, lenders must keep a 5% stake in the loan when selling it to investors. The goal is to ensure banks have “skin in the game.”
But the reality? Smaller lenders may be pushed out, leaving only big banks with the capital to originate non-QRM loans. That could make mortgages harder to get — and more expensive — for anyone without perfect credit.
What Homebuyers Can Do Now
If you’re planning to buy a home or refinance, acting sooner rather than later may help you avoid rising costs. Here are four smart moves:
1. Know Where You Stand
Your credit score directly impacts your interest rate and fees. Review all three credit reports for errors and correct them before applying. Even a small score increase can save thousands.
2. Consider a Fixed-Rate Loan
Future regulations may make refinancing trickier. A fixed-rate mortgage locks in stability for the life of your loan and protects you from rising rates.
3. Shop Around Aggressively
Not all lenders price the same. Even with new regulations, there are still wide differences in fees and rates. Compare multiple offers before you commit.
4. Don’t Overlook Smaller Lenders
While large banks dominate the market, independent mortgage bankers often provide more competitive terms as they fight for market share.
Bottom Line
Closing costs are rising — and financial reform is one reason why. While regulations may bring more clarity, they also make mortgages more expensive.
For homebuyers, that means preparation is key: check your credit, shop smart, and move while rates and fees are still relatively low. At Creditvana, we believe informed buyers make the best decisions — and keeping closing costs in check is one of the smartest ways to protect your financial future.
