Introduction:

The costs of purchasing a home in Pennsylvania include home inspections, earnest money, and mover’s fees. While some expenditures are only a few hundred dollars, the closing costs are thousands. If you don’t account for them in your home-buying budget, you can leave the closing with the keys to your new home but less money in your bank account than anticipated!

In Western Pennsylvania, top agent Matt Durbin has 14 years of expertise working with homebuyers. He adds, “Many times, people miscalculate what they’re going to need in total cash at closing to get a purchase done in our area, especially if they’re moving from another state.”

Here is the information you need to know about closing expenses in Pennsylvania so you will be aware of the situation.

What are closing costs?

Closing fees are expenses related to buying a house.

They are due on the closing date, which is the formal date of the transaction. Some of these expenses, including real estate taxes and insurance, are inherent to homeownership. Others, including interest and origination fees, are directly connected to getting a mortgage.

Most of the time, closing costs and the down payment for a mortgage are paid via wire transfer or certified check, according to Richie Helali, a senior mortgage advisor licensed and employed by HomeLight Home Loans. Even though it is not part of your closing fees, a down payment is usually due simultaneously.

Sometimes lenders will permit you to roll the closing costs into the total amount of your loan, minimizing the amount of cash you have to bring to close if the sum of your closing fees plus your down payment is financially overwhelming.

To demonstrate how this all works, we’ll briefly give some examples of closing charges.

Who pays for closing costs in Pennsylvania?

In Pennsylvania (PA), the responsibility for closing costs can vary depending on the terms negotiated between the buyer and the seller and local customs and market conditions. In a real estate transaction, closing costs usually fall between the buyer and the seller. However, the details may be agreed as part of the sales contract.

Here’s a general breakdown of how closing costs might be divided between the buyer and the seller in Pennsylvania:

Buyer’s Closing Costs:

Loan-related fees: These expenses include loan origination fees, appraisal charges, credit check fees, and other lender-related costs. They are tied to getting a mortgage.

• Title insurance and title search fees: These costs protect the buyer’s interests in the property’s title and ensure no ownership disputes.
• Home inspection fees: If the buyer chooses to have a home inspection done, they would be responsible for covering the cost.The buyer usually pays attorney fees if an attorney participates in the transaction.

• Prorated property taxes and homeowners association (HOA) fees: Buyers typically pay a portion of these expenses based on the closing date.
• Prepaid interest, property insurance premiums, and property tax reserves: Buyers may need to pay for these in advance.
• Mortgage insurance premiums: If applicable, buyers might have to pay for private mortgage insurance (PMI).

Seller’s Closing Costs:

• Real estate agent commissions: The seller pays the agent’s commission fees.
• Transfer taxes: In some cases, sellers are responsible for paying transfer taxes on the sale of the property.
• Prorated property taxes and HOA fees: Sellers usually pay their share of these expenses until closing.
• Any outstanding liens or judgments: Sellers are generally responsible for paying off any outstanding debts or liens on the property.
• Attorney fees: If an attorney represents the seller, the seller typically pays their attorney fees.

It’s important to note that these are general guidelines, and the specific breakdown of closing costs can vary based on the negotiations between the parties involved and local market practices. Buyers and sellers should review their purchase agreement and work closely with their real estate agent or attorney to understand their respective responsibilities for closing costs in a Pennsylvania real estate transaction.

How much are closing costs in PA?

The exact closing costs in Pennsylvania (PA) vary widely based on several factors, including the property’s purchase price, the type of financing used, local market conditions, and the terms negotiated between the buyer and the seller. As of my last knowledge update in September 2021, I can provide a general estimate of the closing costs you might encounter in Pennsylvania.

Closing costs are typically expressed as a percentage of the home’s purchase price, ranging from 2% to 5% of the purchase price or even higher in some cases. Here’s a breakdown of some typical closing costs and their estimated ranges in Pennsylvania:

1. Loan Origination Fees: These fees, charged by the lender for processing the loan, can vary. They are often around 1% of the loan amount.
2. Title Insurance and Title Search: Title insurance costs vary, but a rough estimate is around 0.5% to 1% of the purchase price.
3. Appraisal Fees: Appraisal fees typically range from $300 to $500.
4. Home Inspection Fees: Depending on the size and nature of the property, home inspection prices could range from $300 to $500 or even more.
5. Attorney costs: If you decide to hire a lawyer, their costs might differ. Some charge a flat price, while others charge hourly rates. Set aside between a few hundred and a thousand dollars.
6. Recording Fees: Recording fees for transferring the property’s ownership typically range from $50 to $150.
7. Transfer Taxes: Transfer taxes can vary depending on the municipality or county. They are often split between the buyer and the seller and can range from 0.5% to 2% of the purchase price.
8. Fees for Owners Associations (HOAs): If the property is part of an HOA, you may need to pay dues upfront. These vary widely.
9. Prepaid Expenses include property taxes, homeowner’s insurance, and prepaid interest. The amount will depend on the timing of your purchase and the specific terms of your loan.

Keep in mind that these are just approximate figures, and actual costs may vary. To better understand the closing costs you might incur when buying a home in Pennsylvania, you must speak with lenders, real estate agents, and other experts who can provide precise figures based on your situation and the property you’re interested in. In addition, keep in mind that rules and fees may have changed after my September 2021 update, so it’s a good idea to look up the most recent sources.

Buyer closing costs in PA:

In Penn (PA), buyer closing costs might change depending on the home’s purchase price, the kind of mortgage used, the market customs in the area, and agreements between the buyer and seller.

 Here’s a list of potential buyer closing costs in PA:

Loan-Related Fees:

• Loan origination fees
• Appraisal fees
• Credit report fees
• Mortgage application fees
• Underwriting fees

Title and Settlement Fees:

• Title search and examination fees
• Title insurance premiums (lender’s title insurance and optional owner’s title insurance)
• Closing or settlement agent fees

Home Inspection Costs:

• Fees for a professional home inspection
• Pest inspection fees

Attorney Fees (if applicable):

• Legal fees if the buyer chooses to have an attorney represent them during the transaction

Recording Fees:

• Fees for recording the deed and other documents with the appropriate county office

Prepaid Expenses:

• Prepaid property taxes
• Prepaid homeowner’s insurance premiums
• Prepaid interest on the mortgage from the closing date to the end of the month

Mortgage Insurance Premiums:

• If the down payment is less than 20%, private mortgage insurance (PMI) is required.

Escrow Account Funds:

• Funds placed in an escrow account for property taxes and homeowner’s insurance payments

Homeowner’s Association (HOA) Fees:

• Prorated fees if the property is part of an HOA or a condo association.

Survey Costs:

• If a new survey of the property is required or desired

Courier and Wire Transfer Fees:

• Fees for transferring funds and documents securely

Home Warranty:

• Optional home warranty costs provide coverage for certain repairs after the sale.

It’s essential for buyers to carefully review their Loan Estimate (LE) and Closing Disclosure (CD) provided by the lender. The LE will outline estimated closing costs early in the process, and the CD will give a more precise breakdown of the closing costs a few days before the closing date.

While this list covers many potential buyer closing costs, not everything applies to every transaction. Buyers should carefully work with their real estate agent and lender to understand the closing costs related to their marketing and ensure they have enough money to cover them.

Seller closing costs in PA:

Seller closing costs in Pennsylvania (PA) can vary depending on several factors, including the property’s sale price, the terms negotiated in the purchase agreement, and the specific closing practices in your area. However, here are some typical seller closing costs that you might encounter when selling a property in Pennsylvania:

Real Estate Agent Commission: The estate agent’s payment, usually a percentage of the transaction price, makes up almost all the seller’s closing costs. The commission, divided between the listing agency and the buyer’s agent, is open but often ranges from 5 to 6 percent of the transaction price.

1. Transfer Tax: In Pennsylvania, a state transfer tax of 1% of the sale price the seller is responsible for paying. Additionally, some municipalities in Pennsylvania may impose a local transfer tax.
2. Unpaid Property Taxes and Utilities: Sellers are typically responsible for paying any property taxes due up until closing. This can also include any unpaid utilities or homeowners association dues.
3. Title Protection: To safeguard the buyer against any possible property title problems, the seller is often responsible for supplying the buyer with a title insurance policy.
4. Prorated Property Taxes and HOA Fees: According to the closing date, property taxes and owners association (HOA) dues are often divided between the buyer and the seller.  Sellers may need to reimburse the buyer for the taxes and fees covering the time the seller owned the property during the tax or billing period.
5. Documentary Stamps: In Pennsylvania, sellers may need to pay a state documentary stamp tax on the deed. This tax is based on the sale price and is typically around $1.10 per $500 of the sale price.
6. Seller Assist: If you agree to provide the buyer with a seller assist, this would be a portion of the buyer’s closing costs you agree to pay on their behalf.
7. Home Warranty: If you have offered a home warranty as part of the sale, this cost would be considered a seller closing cost.
8. Attorney or Settlement Agent Fees: Sometimes, sellers might hire an attorney or settlement agent to handle the closing process. Their fees would be a seller closing cost.
9. Home Repairs or Credits: If you’ve agreed to make repairs or provide credits to the buyer for repairs, these costs would be considered part of the seller’s closing costs.
10. It’s important to note that these costs can vary, and this list is not exhaustive. Before  closing, it’s recommended to work closely with your real estate agent, attorney, or other relevant professionals to understand the  closing costs you’ll be responsible for in your particular situation.

How can I estimate my closing costs in PA:

To estimate your closing costs in Pennsylvania (PA), you can follow these steps:

Contact a real estate agent to contact a local real estate agent who is experienced in your area. They can provide you with an estimate of the typical closing costs based on the sale price of your property.

1. Use Online Calculators: Many online closing cost calculators can help you estimate costs. These calculators typically consider the sale price, location, and property type. Some websites also provide specific calculators for Pennsylvania closing costs.
2. Request a Preliminary Closing Statement: Once you have a buyer and are under contract, you can request a preliminary closing statement from your real estate agent, attorney, or settlement company. This statement will outline the estimated closing costs you’ll be responsible for as the seller.
3. Review the Purchase Agreement: Examine the terms of the purchase agreement to understand any agreed-upon concessions, credits, or repairs you’ll be responsible for. These can affect your closing costs.
4. Research Local Fees: Research any specific fees or taxes applicable to your local area or municipality. For example, Pennsylvania has a state transfer tax, but some cities also impose their transfer taxes.
5. Consult Professionals: Consult a real estate attorney or a settlement company. Based on your unique circumstances, they may examine your scenario and provide a more accurate estimate of your closing expenses.
6. Factor in Negotiations: Remember that some closing costs might be negotiable between you and the buyer. For instance, you can negotiate who pays for specific fees or request the buyer to cover part of the closing costs.
7. Check for Changes: Remember that estimates can change as you progress through the closing process. New information might affect the final costs.
8. Review the Closing Disclosure: Before the closing date, you should receive a Closing Disclosure from the title company or attorney. This document outlines all the actual closing costs you’ll need to pay. Please review it carefully to make sure everything is accurate and as expected.

Remember that while estimates can be helpful, actual closing costs can vary. Working closely with professionals with experience in Pennsylvania real estate transactions is a good idea to get the most accurate estimate of your closing costs.