When you sell a house in Pennsylvania, you’ll pay roughly 2.0% of the total transaction price in seller closing charges. You’d spend roughly $5,035 for a $251,241 property; the average home value in Pennsylvania.
Closing expenses are usually deducted from your sales profits, although they are only a percentage of what you’ll spend at closing. You should budget for realtor fees, mortgage payoff, and other home-selling expenditures. If you don’t receive enough income for your house to cover these costs, you might just have to cover them from your pocket.
Since realtor fees are likely to be one of your largest expenditures, negotiating a cheaper rate is among the greatest methods to save money while selling. This article will provide you with extensive information and will assist you in learning more about the closing costs for a seller in Pennsylvania and who is normally responsible for them.
What Are Closing Costs?
These charges include a slew of fees for the many services and expenses necessary to close a mortgage. Closing fees must be paid whether you purchase or refinance a house. The buyer is responsible for the majority of the closing fees, although the seller is also responsible for a few, such as the real estate agent’s commission. These fees are typically 3% to 5% of the loan amount.
Typical Closing Costs
Closing expenses normally vary from 3% to 6% of the home’s buying price. As an example, if your purchase price for a new home is $200,000, your closing expenses might range from $6,000 to $12,000. Closing costs vary based on your state, mortgage lender, and type of loan, so it’s critical to keep track of these costs.
As per a 2019 survey conducted by ClosingCorp, a real estate closing cost statistics provider, homebuyers in the United States pay an average of $5,749 for closing expenses (including taxes).
The District of Pennsylvania ($10,076), Maryland ($11,876), New York ($12,847), Delaware ($13,273), and Columbia ($25,800), had the highest median closing expenses, according to the poll. Washington State’s average closing costs ($12,406) were likewise among the highest. Kentucky ($2,276), Iowa ($2,194), South Dakota ($2,159), Montana ($2,063), and Indiana ($1,909), had the lowest overall closing costs.
Upon receiving the mortgage application, a lender is obligated by law to offer you a loan estimate (home loan information) in three business days. This important document covers the projected closing expenses as well as other loan specifics. Though these estimates may change by closing day.
A lender must give you a closing disclosure document three business days before your closing. You’ll notice a column with the initial projected closing expenses and the actual closing costs, as well as another column with the difference if costs increased. If you detect new expenses that were not included in the initial loan estimate or realize that your closing costs have increased dramatically, contact your real estate agent or lender right away.
If you would like to know approximately what your closing costs will be, you may use a closing cost calculator to get a better estimate.
How Much Are Closing Costs?
Buyers pay all of these costs together on closing day to make things easier. Closing fees are paid to a third-party escrow corporation, which distributes each money to the appropriate party. This is far more convenient than having buyers pay for each expenditure separately.
Buyers must pay numerous closing costs, which are all included in the average Loan Estimate provided by each lender. However, the following are the most important fees to be mindful of.
- Broker or loan origination fee (0% to 1% of the loan amount): A fee charged by the lender or broker for its services. This charge can be highly negotiated because it is primarily used to cover lender expenses and contribute to the lender’s profit.
- Discount points or mortgage points (0% to 1% of the loan amount): These are optional upfront mortgage payments paid to reduce your mortgage loan interest rate immediately. The lender is not permitted to utilize this money for administrative or commercial purposes.
- Underwriting fee or processing fee ($300 to $900 each): This is a mortgage application fee levied to cover the costs of the lender’s staff who communicate with third parties like appraisers, gather data, then manually review the file ready for the loan approval.
- Title insurance and title search fee ($300 to $2,500+): Fees spent to search historical information for liens on the property to confirm that it may be lawfully transferred over to you.
- Escrow fee ($350 to $1,000+): Payments are made to a third-party escrow firm, which manages funds and enables the selling of a house.
- Home appraisal fee ($500 to $1,000+): Fees for determining the fair selling or refinancing value of a house.
- Home inspection fee ($300 to $500): A payment made to a professional home inspector who evaluates the condition of a home.
- Insurance and prepaid property taxes ($1,000 to $4,500+): When you close, you usually pay six months to a year’s worth of homeowners insurance and property taxes in advance.
- Real estate commissions (5% to 6%): When acquiring a new house, these costs are often provided by the seller and are payable to the buyer’s agent.
- Real estate attorney fee: A fee is incurred towards a real estate lawyer for evaluating property purchase contracts. Not every state mandates property sales to be handled by an attorney.
- Homeowners Association Transfer fee: It is a cost that applies exclusively to residences in a planned community regulated by an HOA. It pays for the transfer of HOA payments from the seller to the buyer. Transfer costs are usually paid by the seller, although they can sometimes be paid by the buyer.
- USDA loan: Fee for upfront mortgage cover on a USDA loan application (1% of the loan amount)
- VA Loan: VA funding fee on a VA loan (1.4% to 3.6% of the loan amount) This fee charged to a borrower helps to fund the government’s VA loan program.
- FHA loan: Upfront private mortgage insurance premium for an FHA loan (1.75% of the loan amount)
Closing Costs in Pennsylvania
Seller closing expenses are the costs you incur when you sell your house in Pennsylvania. Many of these are inevitable, such as the expenditures of authenticating and transferring title to the buyer.
*Based on the average house value in Pennsylvania of $251,241. (Zillow January 31, 2022)
Closing expenses in Pennsylvania are around 2% of the total home purchase price, not counting broker fees.
Please be aware that all this is simply a rough estimate. While closing expenses are unavoidable, your realtor may frequently renegotiate who covers them; the buyer or you.
Sellers and buyers share the responsibility of settling for closing expenses at the conclusion of a property sale, though not for similar items. At closing, sellers in Pennsylvania generally pay for recording fees, transfer taxes, closing fees, and the title.
1. Closing fees and Title: 0.17%
Whenever you are selling your house, you must give the customer legal possession of the property. Your settlement broker will first do a title search to ensure that nobody else has any legal claim toward the property.
Title fees include the costs of the settling agent who performs the title transfer and search, in addition to other closing-related services. In Pennsylvania, the sellers and buyers normally pay towards their own closing agent or title company, but this is not always the case. If you’re unsure, consult with your realtor.
2. Owner’s or Lender’s title insurance: 0.78%
The owner’s title insurance coverage safeguards a buyer in the event that a problem with prior ownership of a title emerges. This encompasses everything from minor mistakes in documentation to full-fledged ownership conflicts. This title insurance coverage covers potential legal bills or the cost of recouping the value of a house if errors are made.
Pennsylvania’s Owner’s title insurance typically costs 0.78% upon your property’s final sale price or $1,948 for a $251,200 home. However, the exact pricing for your home may differ. In Pennsylvania, title firms frequently employ a pricing structure to decide what you’ll be charged for insurance based on the value of your house.
In Pennsylvania, the buyer is typically liable for the payment of the owner’s title insurance policy, however, it’s not unusual for both sides to discuss who covers this closing expense.
3. Pennsylvania transfer tax: 1.00%
The state of Pennsylvania charges roughly 1% of the sale price of your house to transfer the title towards the new buyer. You’d pay $2,510 if you sold for the median house value in Pennsylvania, which is $251,000. Your city or county, on the other hand, may levy their respective transfer taxes. Get advised by your realtor and title business to find out how much tax you’ll have to pay in your location.
4. Pennsylvania recording fees: $150
A fee is levied by your state or local government for officially documenting mortgage information and a property’s deed. In Pennsylvania, plan to pay roughly $150; however, you would be able to bargain for the purchaser to offset this expense.
5. Variable property taxes
In PA, your municipality may collect present year property taxes just at the close of the year. If this is the situation in your location, you will be required to pay real estate taxes at closure for the period of the particular year you occupied the property. As a result, the buyer does not have to offset taxes for the whole year even if they only held the property for several months.
In regions where property taxes are paid at the start of the year, the buyer will normally compensate you at closing in the remaining months.
6. Other Seller Closing Costs in Pennsylvania
Each Pennsylvania house transaction is unique, and many include a few unexpected expenses. For instance, you could want to pay for a fresh home assessment for your historical Philadelphia townhouse, and you might want to hire a real real estate lawyer to help you sell your Pittsburgh property rental. Whichever your circumstances, you ought to be ready to deal with a few unexpected charges. Here are a few examples of the popular ones:
- Prepayment and/or mortgage payback penalties
- Fees for Homeowners Associations (HOAs)
- Fees for property appraisal
- Attorney fees or a settlement
Your real estate agent can help to give you a better estimate of closing costs and closing dates based on the Pennsylvania community you’re going to sell in as well as other considerations.
Purchasing a house in Pennsylvania should not be difficult, but the intricacies of closing expenses can be a challenge for some. Having a reputable, trusted realtor on your side may be a huge help in making these decisions.
Additionally, we buy houses in Philadelphia and we can provide you with cash offers for your property in 24 hours as well as closing approximately within seven days. We also do not charge agent fees and will purchase your home in its current state.