Closing Costs in Pennsylvania
When you’re ready to enter into an agreement of sale for a house in Pennsylvania, it’s important to know that there are costs, in addition to the value of the home, you’ll likely be responsible for.
Both the buyer and seller must pay certain expenses and fees associated with closing on a home, which is referred to as the closing costs.
It may seem frustrating to realize that a real estate transaction is so expensive, but the charges help guarantee a legal property exchange and protect the buyer and seller.
Why It’s Important to Know About Closing Costs
No one likes to have unexpected expenses. But if you aren’t aware of the closing costs, you’ll be surprised by the full cost of buying or selling a home.
In Pennsylvania, your real estate agent is required to provide you a statement of estimated cost and return, a document that offers the buyer and seller a closing cost estimate. It includes the expenses that a buyer and seller are likely to pay.
If you’re a buyer, this statement can help you predict the full amount of money you are likely to need, in addition to the home’s down payment, to close on the house. This helps with planning and budgeting.
The closing costs are important to sellers, too, because they offer insights into how much you could profit from the sale of your home after paying the fees and expenses.
Average Closing Costs
Closing costs vary by state. The average closing costs in Pennsylvania rank as some of the highest in the country after taxes.
Typically for a buyer, closing costs are about 5% to 6% of the value of the home.
In Pennsylvania, the total average closing cost before taxes is about $4,000. After taxes, closing costs average about $10,000. You can expect your total closing costs to range between $6,000 and $15,000, based on the value of the home and region of Pennsylvania.
Here’s a quick breakdown of some of the fees you’ll be expected to pay as a buyer:
- Appraisal Fee (about $600)
- Courier Fee (about $25)
- Closing Protection Letter ($125)
- Deed Transfer Tax (Buyers and sellers typically split this fee 50/50, though it is dependent on the sales contract. It costs 1% of the home’s sale price, and some municipalities charge an additional 1%.)
- Title Insurance (The cost of title insurance varies based on the house you want to buy, and is determined by the PA Department of Insurance.)
- Per-Diem Interest (Interest on your loan from the closing date to the last date of the month)
- Prorated Property Taxes (calculated so you pay taxes on the number of days you will own the property)
- Mortgage Lender Fees
- Prepaid Homeowners Insurance
- Broker / Transaction Coordination Fee
Homebuyers are likely to see several other fees that can contribute to the overall closing cost total. Not everyone will have all of these fees, and there might be others required of you.
Typical seller closing costs might include the broker services, document preparation, home warranty, realtor commission, any seller contributions, and paying off any mortgage owed.
If you have questions, it’s important to work with your real estate agent so you can understand the closing costs that will be expected of you and even how to structure an offer. Homeway Real Estate is a full-service real estate agency. Visit our website to learn more about how we can help.