MReport November 2021

TheMReport — News and strategies for the evolving mortgage marketplace.

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M REPORT | 45 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Closing Costs Kept in Check Although the average home price increased by nearly $45,000, closing costs, excluding taxes, have been found to have only increased by $400. A nalyzing the sale data of more than 1.9 million single-family homes in the first half of 2021, ClosingCorp has found that while property values continue to climb, closing costs have not kept up the same pace. ClosingCorp, a provider of residential real estate closing cost data and technology for the mortgage and real estate services industries, has found that the average closing costs for a single- family home including taxes rose 12.3% to $6,837 year over year or a 10.5% increase or $3,836 without taxes. The District of Columbia was found to have the highest closing costs nationwide—with an average home price of $753,631, closing costs accounted for 4.03% of the purchase price or $30,352 ($6,524 without taxes). Delaware followed the District of Columbia where the average home price was $313,899 buyers paid closing costs equal to 5.68% (the highest percentage in the nation) of the purchase price of their home. This resulted in costs of $17,831 or $3,848 without taxes. The two states with the cheapest closing costs were Missouri and Indiana. The average home in Missouri costs $238,276 and buyers can expect to pay 0.88% of their purchase price on closing, or $2,102. In Indiana, the average home costs $229,867 and buyers could expect to pay $2,193 or 0.95% of their purchase price. "In the first half of 2021, buyers faced significantly higher home prices; in June, for example, the average national price hit a new high of $373,664, and in July leading home price indices registered their highest ever year-over-year gains, said Bob Jennings, CEO of ClosingCorp. Although the average home price increased by nearly $45,000, the closing costs, excluding taxes, on that property only increased by $400. In fact, closing costs as a percentage of purchase prices declined this year, going from 1.06% of the transaction in 2020 down to 1.03%. So, in addition to keeping up with high demand, the mortgage industry is doing a good job in holding down the costs it can control." ClosingCorp closing calculations include lender's title policy, owner's title policy, appraisal, settlement, recording fees, land surveys, and transfer tax. The company uses home price data from CoreLogic to estimate closing costs for an average home at the state and county levels. In addition, the company uses ranges, rather than single values, to more accurately capture fees associated with the real transactions. Seniors Overwhelmingly Want to Stay in Their Homes Over half of America's seniors have now paid off their home, are living without a mortgage, and view their home as the best financial decision they ever made. A new report from American Advisors Group (AAG) has found that senior homeowners overwhelmingly want to remain in their homes for as long as possible as they age as it is the place feel safest amid the pandemic. According to the survey from the California-based reverse mortgage company, 92% of seniors plan to live out their golden years in the safety of their own home while only 8% want to move into some sort of assisted-living facility. This includes 82% who said they do not plan to ever move, no matter the circumstances. Seniors are now also viewing their house as more than a place they live—but instead as their most valuable asset—as 73% of seniors now say it is worth more in the current market than all of their other investments combined. The COVID-19 pandemic only strengthened seniors' thoughts about living at home for the rest of their lives. Fifty percent more seniors agreed with this sentiment and felt safer at home after the events of the 18 months than they did before the pandemic. The report also found that 55% of seniors have paid off the mortgage on their homes and are now living debt-free in that aspect while 40% of those who have not paid off their mortgages are exploring reverse mortgages in order to leverage their equity against the remaining monthly payments on their home. "Buying a home is one of the largest purchases someone can make, and for many seniors, that purchase has turned into an investment," AAG Chief Marketing Officer Martin Lenoir said. "Our data shows that older Americans are well aware of what their homes are worth and are looking to utilize the equity they have gained, which is a big reason why we're seeing so many seniors interested in reverse mortgages. Homes not only embody the journey that seniors have lived, they also represent a possible retirement strategy for the future." America's seniors also see value hidden in their homes that goes beyond finances. Sixty- three percent of seniors say they have an emotional attachment to their home while 40% of seniors answered that "independence" is the most important benefit to continuing to live in their current home. Their overall "happiness" was the second most popular answer at 25%. AAG's Importance of Home Survey was conducted on June 2, 2021, and included 1,552 participants. Responses include numerous formats, including yes-and-no answers, ranking preferences, and multiple- choice replies. The survey was conducted digitally so that participants could answer from the safety of their homes. All participants were selected randomly with age (60-75-years- old) and homeownership being the only qualifying factors.

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