New York's No. 1 in home closing costs

NEW YORK (CNNMoney.com) -- If you're getting a mortgage in New York, bring a fat checkbook to the closing table: Closing costs there are the highest in the nation, according to a survey by mortgage website Bankrate.com.

For a $200,000 mortgage, the fees average more than $5,600 now in New York, according to the survey. The state roared past Texas, last year's leader, where costs average about $4,700. In third place is Utah, where they slightly exceed $4,600.

Arkansas boasts the lowest closing costs, just over $3,000, followed by North Carolina and Iowa.

The Lone Star State is always among the most expensive, thanks to particularly high title insurance rates. Regulators mandate how much title companies can charge there and it's illegal to charge lower fees.

"There's strong lobbying by title companies and no competition," said Lewis, "It's always has some of the highest title insurance fees."

Statistically, the national average for closing costs seems to have soared in 2010, up 37% to $3,741 from just $2,732 in 2009.

But that's probably deceiving. What's new this year is that a revised government-mandated good faith estimate took effect and it requires all projected expenses be accurate within 10%. That way, there are no big surprises at closing.

"Lenders can't low-ball this," said Lewis. "They can't surprise buyers like they used to."

Homebuyers have to come into the closing knowing, within a few percentage points, exactly how much they'll lay out for their mortgages.

"Increased regulation on lenders' good faith estimates means more accurate estimates and less expenses popping up for consumers on the back end," said Greg McBride, Bankrates' chief financial analyst

In the past, lenders often concealed much of the final costs until closing day, when many homebuyers won't say "No" or walk away from the deal.

Today's higher closing costs may not be that much higher, but they're better disclosed to consumers, which is what Bankrate's survey reveals.

The survey's methodology is to plug in the same "dummy" application for a hypothetical borrower with a high credit score, putting 20% down on a $200,000 loan, to several lenders. Bankrate then compiles and averages the responses from the various lenders.

No matter how they're calculated, closing costs are a big and growing share of the cost of home ownership.

Bankrate reported that lender fees, everything from origination charges to courier or express mail charges, jumped 22.8%. Third-party fees - for things such as appraisals and title insurance - skyrocketed 47.2%.

Lenders say the cost of underwriting have risen dramatically the past few years. The mortgage meltdown means all applicants are subjected to careful analysis to better ensure that they can afford their loans.

That's a big departure from the boom years, when anyone with a pulse could get a mortgage and little scrutiny was applied to even some of the worst loan applicants.

All that extra manpower costs the lenders money, and they're pushing the added costs on to consumers.