Congratulations! You’re almost finished with the homebuying process. But before you can officially get the keys to your new home, one of the last steps is to pay closing costs.
Closing costs are the fees and expenses associated with finalizing a real estate transaction and transferring ownership of a property from the seller to the buyer. If you’re feeling unprepared or overwhelmed, don’t worry. To help you budget for closing costs, this Redfin article will cover how much closing costs are in Pennsylvania, who pays for them, and which costs you can expect to pay as a buyer and as a seller.
How much are closing costs in Pennsylvania?
In addition to the down payment, homebuyers will also need to pay closing costs before securing the keys to their new home. Typically, you can expect closing costs in Pennsylvania to add up between 2%-5% of the purchase price. But it’s important to remember that this is just a range and the total amount will depend on a number of factors, such as the buyer’s loan program or negotiations made with the seller.
For example, if you’re buying a home in Philadelphia, which has a median sale price of $269,950, closing costs could range anywhere from $5,399 to $13,498. Or, let’s say that you’re buying a home in Pittsburgh, which has a median sale price of $235,000. Closing costs for a home here could be between $4,700 and $11,750.
Who pays closing costs in Pennsylvania ?
Generally, both buyers and sellers can expect to pay closing costs. But, each party’s closing costs amount will vary depending on what they are required to pay. Another thing to keep in mind is that buyers typically pay for closing costs out of pocket, while the seller’s closing cost payments are often deducted from the home sale proceeds.
Buyer closing costs in Pennsylvania
Closing costs in Pennsylvania for buyers typically range from 2%-5%. If you paid earnest money, this amount will be subtracted from your closing costs, which will reduce the total amount you owe at closing. Earnest money is typically between 1%-3% of the home’s price. Below are some of the common closing costs paid for by the buyer:
- Appraisal fee: Home appraisals, which typically range from $300 to $500, are usually paid for separately at the time of the service. However, if not, you’ll need to pay for this at closing.
- Inspection fee Although not required, a home inspection is highly recommended. Home inspections generally range from $300 to $500 in cost and are usually paid at the time of service. However, if not, it will need to be paid at closing.
- Loan origination fee: Some lenders charge a fee for creating your loan. As you shop around for lenders, inquire about what it covers and whether it’s negotiable to avoid high fees.
- Loan processing fee: Lenders may also charge a loan processing fee, covering underwriting and related services. Similar to the origination fee, check with your lender to understand its purpose and possible waivers.
- Loan discount points: If you buy discount points to lower your interest rate, you’ll pay a one-time fee at closing. These points can lower your rate by 0.25% to 0.5%, but consider your long-term homeownership plans before paying for a reduced rate.
- Private mortgage insurance (PMI): When your down payment is under 20%, you’re typically required to pay PMI. Some loans allow upfront PMI payment at closing, giving you the choice between higher upfront costs or increased monthly payments.
- Title insurance: Title insurance is a one-time fee paid as part of closing costs. Buyers typically cover both lender and owner title insurance policies.
- Homeowners insurance: In Pennsylvania , your annual homeowner’s insurance premium may be part of your closing costs.
- Homeowners Association dues: If your property is part of a homeowners association, you’ll likely pay one month’s dues upfront at closing. These fees vary and contribute to maintenance and operational costs.
- Property taxes: Buyers may have to prepay property taxes as part of their closing costs in Pennsylvania .
Seller closing costs in Pennsylvania
How much closing costs are in Pennsylvania for sellers will vary between each transaction, but below are some of the common fees and costs that a seller pays for:
- Real estate agent commission fees: These fees can be a significant cost for sellers. Commission fees may vary and are subject to negotiation. Sellers should discuss their options with their agent.
- Homeowners Association fees: Sellers are generally responsible for settling any outstanding HOA fees or assessments up to the closing date, and they may need to provide HOA documents to the buyer as part of the sale.
- Property taxes: Sellers are responsible for any property taxes that have accrued but not yet been paid up to the closing date. These unpaid property taxes are typically prorated for the months that you owned the property.
- Title insurance: As part of closing costs for sellers in Pennsylvania , sellers may pay for owner’s title insurance. Typically, this cost is based on the home’s sale price.
- Transfer taxes: In Pennsylvania , there is a state levied tax on the transfer of ownership of real estate. Sellers can expect to pay a one-time transfer tax as part of closing costs. There may also be additional taxes levied by local governments, such as counties and cities.
Median home sale price data from the Redfin Data Center during July 2024.
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