Last year New Jersey ranked the ninth highest in real estate closing costs. This year New Jersey has jumped to the number seven spot. Closing costs nationwide have risen 8.8% from last year as stated by Bankrate in the article by Sarah Portlock of the Star Ledger, entitled N.J. has the 7th highest closing costs, says Bankrate. According to Greg McBride, who is the senior financial analyst for Bankrate.com, the rising costs are due in part from stricter lending regulations that lenders have to deal with, which bring about the higher rates. Origination fees also saw a rise nationwide with an increase of 10.3%. The increased loan origination fees lead to the climb in overall closing costs.
With the stricter loan regulations from the federal government cracking down on the mortgage industries issuance of bad loans, which should never have been approved over the past several years, costs in real estate transactions have risen as a result. In addition, the recent downgrade of the federal credit rating will likely bring about even more costs due to a domino effect of various state and municipal bonds and mortgage-backed securities, along with other investments. These areas will see a downgraded rating and most likely lose a large amount of money that they will have to come up with in some other way.
The rising costs, in turn, trickle down to the consumer in an already struggling economy and devastated real estate market. Due to the troubles in the housing market and the lack of, or limited, business for most professionals in the industry, cancellation fees are starting to be charged by some real estate attorneys for a cancellation arising from issues with an appraisal or inspection.