Recent reports showed that closing costs on home loans have seen dramatic spikes over the past year as a new survey conducted by Bankrate.com reflected a jarring 37 percent leap on estimated closing costs.

While Bankrate.com maintained that actual costs were indeed pushing upwards, it clarified though that the actual movement could be a little lower than the 37 percent contained on its report as it noted that the increase may have been caused by consumers more realistic payment costs.

Brian Sullivan of the Department of Housing and Urban Development said that lenders would not be able to jack up on their estimates anymore as an order issued on January required them to employ good-faith measures of conducting their loan estimates.

Sullivan said that the new regulation should be able to slash closing costs by as much as $700 though he admitted that some loan cost would be increasing as loan companies implement modification to meet the requirements of new regulations, stricter underwriting standards and the revised appraisal procedures.

To cope with the dilemma, a number of companies opted to adjust their fees upward and create a buffer zone for some slips that could come up during the whole process as Dick Lepre of RPM Mortgage stressed that loan companies would end up filling the void in the event of underestimation by an agent.

On the other hand, Lepre said that no fees were required for overestimated fees but ha gave assurance that no charges would applied for third party fees that loan applicants did not incur.

The Bankrate survey sampled the projected closing cost of a $200,000 purchase mortgage in major cities of every state, and against the sampled cities of San Francisco, Los Angeles, New York and Arkansas, the average cost emerged as $3,741, clearly moving up from last year’s average of $2,739.

The survey reminded that again actual costs should be higher as the study decided to exclude third-party charges that were usually passed on to property buyers such as taxes, recording fees, homeowners insurance, mortgage interests and the discount points pitted against the interest rate of the loan.

Bankrate also noted that the survey did not touch on the costs of refinancing a loan, which is stated should be quite lower than the actual cost of the purchase mortgage.

Keith Gumbinger of HSH Associates lauded the impact of the new regulations which seemed aided consumers in acquiring a far more realistic estimate on their closing costs yet he pointed to the reality on the field that actual closing costs were not getting anywhere down as intended by the HUD.

Gumbinger said that as shown by figures furnished by the Federal Housing Finance Agency, initial fees and other charges on purchase loans were up by 0.8 percent as against the loan balance in June, which the agency said was the highest level posted since July of 1999.

The FHFA explained that the increase could be traced to the retreating incidence of ‘no-point mortgages’ where property buyers waived other fees but had to face up the prospect of higher interest rate.

As of June this year, FHFA said that only 30 percent of purchase loans were of no-point nature, sliding steadily from the 45 percent seen last year, which is characterized by Gumbinger as a scenario that forced consumers to swallow some fees to avail the lower rate.

Bankrate’s Greg MacBride enjoined would-be borrowers to explore good-faith estimates from numerous lenders, urging them to base their decisions on the “basis of fees charged, specifically the lender fees.”