Purchase loan closing costs fell 2.9% in 2025, LodeStar says

LodeStar Software Solutions, a provider of mortgage closing cost and fee data, said that purchase loan closing costs at the national level fell 2.9% year over year in 2025, driven largely by declining home prices that reduced transfer tax burdens in many markets.

The findings, which come from the company’s Year-Over-Year Mortgage Closing Cost Report, published Tuesday, compare 2024 and 2025 data across all 50 states and the District of Columbia using quotes generated through its closing cost calculator platform.

Overall, 27 states and D.C. saw declines in closing costs, while 23 recorded increases.

The most significant change occurred in Washington, D.C., where closing costs dropped 21.1%. LodeStar said the decline was tied to lower average home prices, which reduced transfer tax costs in a jurisdiction known for some of the highest such fees in the country.

Despite the drop, D.C. still ranks as the most expensive market nationally in dollar terms for closing costs.

Delaware saw the largest increase, with closing costs rising 4.5% as home prices edged higher. The state also remained the most expensive in the country relative to sale price at 3.06%.

Other findings from the report showed refinance activity rising 7.8% year over year, with refinance closing costs averaging less than half those associated with purchase loans.

LodeStar also found that refinance costs were notably higher in New York and Florida, where taxes are structured around loan or note amounts rather than property transfers, affecting both purchase and refinance transactions.

In addition, the company said it’s seeing a growing trend of recording fees being redirected to fund non-real estate programs such as affordable housing and homelessness services, often with limited borrower awareness.

“The connection between closing costs and housing affordability is often overshadowed by other components of the equation, like interest rates and down payments,” said Ron Carvalho, director of data operations at LodeStar.

“However, our data shows that decisions made at the state level on recording taxes and document fees have a direct impact on borrowers’ total financial ability to purchase or refinance their home. Knowing what’s happening with these costs helps lenders provide accurate guidance to their borrowers in their homeownership journey.”

LodeStar said its dataset is drawn from its closing cost calculator platform used by mortgage lenders nationwide. Each record represents a distinct quote rather than a funded loan, and duplicate quotes for the same loan scenario are excluded.

Closing costs are reported both with and without recording fees and transfer taxes due to significant jurisdictional variation that can distort cross-state comparisons. The report uses state-level averages, and results may vary depending on loan amount, property value, transaction type and title provider selection. Average figures represent the mean of state-level averages.

This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication.