Diversions March 19, 2015

Don’t Forget the Closing Costs

Which counties have the lowest and highest closing costs when buying a home?
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Surprisingly, the price of a home may not reflect the amount of its closing costs, according to a survey by SmartAsset.

According to AJ Smith, managing editor of SmartAsset, the national average of a home closing costs is 2.2%, based on a 30-year, fixed-rate mortgage. “It’s not exact, but it can be used as a yardstick,” she tells PLANADVISER. “A lot of the nation is right around that 2.2%, but then a few were quite a bit less.”  

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And some were quite a bit more, SmartAsset found. Buying a home is one of the biggest financial decisions people make, Smith says, and people don’t always consider closing costs when they try to calculate whether they can afford a home, or when they weigh renting versus buying. “Closing costs can sneak up on people,” she says, “and it’s usually not a small number. We wanted to show people what they can expect to pay, and also look at how counties differ.”

Hamilton, Indiana, takes top place for the lowest closing cost—at an average of $3,045. The median home value is $214,400, and the closing cost expressed as a percentage of the home’s value is 1.4%.

Quite a contrast is Kent, Delaware, with the highest closing cost: $9,634. Home value in Kent is $205,100, generating a closing cost of 4.7%.

Overall, Indiana took five places out of ten for lowest closing costs in counties nationwide, followed by Iowa, which has four. Perhaps unsurprisingly, six counties in New York have the highest closing costs—but only one is in New York City. Think it’s Manhattan? Guess again. Closing costs in the Bronx, where the median home value is $99,300, average $3,816. As Smith points out, the cost is somewhat unpredictable: “It’s good to keep it in mind as a number to think about,” she says.

All home prices in the lists are median home values, and the closing cost is expressed as a percentage of that valuation. The top ten highest closing costs in counties throughout the U.S. are:

  1. Kent, Delaware: $9,634 based on a median home value of $205,100 (4.7%)
  2. Sussex, Delaware: $11,278,based on $241,800 (4.66%)
  3. New Castle, Delaware: $11,699, based on $251,200 (4.65%)
  4. Washington, DC: $18,124 based on $443,000 (4.1%)
  5. Cattaraugus, New York: $3,059 based on $79,600 (3.84%)
  6. Steuben, New York: $3,274 based on $85,200 (3.84%)
  7. Chautauqua, New York: $3,154 based on $82,100 (3.84%)
  8. Wyoming, New York: $3.816 based on $99,300 (3.84%)
  9. Bronx, New York: $14,591 based on $380,900 (3.83%)
  10. Armstrong, New York: $3,513 based on $92,300 (3.8%)

Using home prices as median home values, with the closing cost expressed as a percentage of the home value, the top ten lowest closing costs in counties in the U.S. are:

  1. Hamilton, Indiana: $3,045 based on a median home value of $214,400 (1.4%)
  2. Johnson, Iowa: $2,632 based on $183,100 (1.4%)
  3. Dallas, Iowa: $2,627 based on $182,700 (1.4%)
  4. Boone, Indiana: $2,638 based on $182,300 (1.4%)
  5. Teton, Wyoming: $10,057 based on $692,700 (1.5%)
  6. Porter, Indiana: $2,442 based on $166,600 (1.5%)
  7. Dearborn, Indiana: $2,381 based on $161,700 (1.5%)
  8. Hendricks, Indiana: $2,378 based on $161,500 (1.5%)
  9. Story, Iowa: $2,370 based on $160,700 (1.5%)
  10. Madison, Iowa: $2,357 based on $159,600 (1.5%)
Data & Research March 18, 2015

SSgA Survey Finds Financial Stress Levels Creep Higher

There’s no escaping financial stress, according to a survey by State Street Global Advisors (SSGA), which finds 60% of employees are significantly burdened by financial woes.
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Student loan debt, mortgages and health care costs are the biggest stressors to workers, according to the State Street Global Advisors (SSgA) retirement survey—which means that no one age group is immune to financial stress. On top of that, many employees expressed an unsettled feeling of not having done enough to prepare for retirement.

It’s common knowledge that financial concerns are usually top of mind for individuals and families, says Fredrik Axsater, global head of defined contribution at SSgA, but the survey’s findings demonstrate the level of concern individuals have about finances.

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“Financial and workplace stressors have the greatest impact on work quality and productivity, which confirms what we are hearing from employers—we need to address workplace financial demands beyond retirement savings,” Axsater maintains. “A more holistic approach is needed, providing tools and opportunities for employees to reduce stress and improve their financial well-being.”

At risk, Axsater says, is workplace productivity, which suffers when employees are financially troubled. The survey underscores the importance financial wellness, which is now part of nearly all conversations with employers. When employees have the resources and tools to help them improve their financial lives and alleviate daily financial stress, he points out, plan sponsors are then able to refocus their employees’ attention to retirement savings. “A holistic approach creates the opportunity to address roadblocks to retirement readiness while increasing engagement around financial well-being,” Axsater says.

Overall financial well-being is a challenge, the survey found, with a significant number of survey participants pointing to rips in their safety nets. More than half were confident they could pay for a financial emergency that required up to $1,000. But just under half acknowledged living paycheck to paycheck—implying that a large financial setback would have a serious impact.

For most, the heaviest debt burdens are mortgages, car loans and credit cards. Debt patterns shift through life phases from auto/student loans to credit cards to a mortgage. For most, loans for their children’s education are among the last loan challenges.

Most respondents cited high cost and lack of convenience as the top the reasons for not engaging in a financial wellness program.

Other survey findings are:

  • Nearly 60% of employees are emotionally stressed and distracted by their financial situations;
  • Nearly 50% live paycheck to paycheck;
  • 37% acknowledged financial stress has caused their productivity at work to suffer; and
  • 25% have missed work because of stress from a personal financial situation.

SSgA, the investment management business of State Street Corporation, surveyed approximately 1,000 employees between the ages of 20 and 69 for its semi-annual employee retirement survey, conducted online by TRC Market Research from January 7 to January 11. The median age of respondents was 45; 48% were male and 52% were female; and 90% of respondents were employed full time.

More insights on the survey are available on State Street Global Advisors’ website.

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