Texas has the highest processing fees for home loans in the nation, according to a recent Bankrate report, but don't bother asking why. The banks won't tell you. The report zeroed in on closing costs -- the combination fees charged by lenders for processing plus third-party fees for things like appraisals and credit checks. For a typical $200,000 home loan, closing fees averaged over $3,000 in the state.
"We've been doing the survey for 12 years and Texas is usually in the top five," says Holden Lewis, a spokesman for Bankrate. Lewis is a Dallas native but is based in Florida now. "And it's kind of a mystery to me. I don't know why."
The report traditionally measures factors such as appraisal, broker, application and inspection fees. In the annual study, Bankrate collects data from the largest city in each state, in our case Houston, as numbers don't vary much between larger cities. For the Texas home-buying experience, what sucks in Houston typically sucks in Dallas.
One possible explanation is that Texans simply don't shop for banks as much as residents of other states, but overall, the first rule of banks is that they don't talk about banks. "The bottom line is, we just don't know why costs are so high. They don't talk about pricing to outsiders," says Lewis. "Lenders are really tight-lipped about pricing. You question why they're charging more in Texas than Connecticut, the answer is that they don't talk about pricing."
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So if you're kicking yourself, wondering why you moved from New York to Dallas to escape high home costs -- New York placed third, by the way -- we really have no words of comfort for you. "Growing up there and seeing that Texas is always toward the top, I feel a sense of impatience. Like, why do they stand for it? I don't know if there's anything that can be done," says Lewis. "Is it something that can be addressed in a regulatory manner? Frankly I doubt that the political climate is such that anyone would want to address it. People would say that you can't fault lenders for making a profit, and that would be the winning argument."