When you purchase a new home or go under contract in the state of Pennsylvania; your Realtor should and will review an estimate of closing cost. This will occur with any piece of Pennsylvania Real Estate. Aside from the mortgage fees which should be handled by a reputable mortgage company there are other closing costs to be aware of during the buying process.
PROPERTY TRANSFER TAX: As a Buyer in the purchase of your new home you are responsible for 1/2 of this tax at settlement. Except in Philadelphia Real Estate the state Transfer Tax is 1%. If purchasing in the city you will pay 2% of the contractual price. (ie. you purchase a $200,000 home the tax is $2000 or $4000 in the city of Philadelphia.
TITLE INSURANCE FEE: As a Buyer you have the choice of the Title Company you would like to use. Now most Real Estate Agencies such as Coldwell Banker will have a Title Company available for your convenience. But ultimately the decision is in the Buyer's hand. Title insurance rates are consistent throughout the state. If the home you are purchasing has been owned for less than 10 years you are entitled to what is know as a reissue rate. Please ask your real estate professional if the home you are purchasing might qualify.
Most Title Agencies will charge minor fees at settlement which should include notary fees, deed preparation, closing service letter, title endorsements, overnight shipping fees and possibly others. Always check with your real estate professional concerning these fees.
MISCELLANEOUS FEES: When you buy a home you also will have to pay for a Home Inspection, termite inspection, radon testing, lead paint testing, or even mold testing. All these fees are optional.
Most offices will charge a Broker Coordination Fee or Conveyancing Fee. This is a common practice. This fee should be charged(with in reason around $300) for the handling of your file by the Real Estate office Conveyancing Department. Though this fee will vary from office to office.
HOMEOWNERS INSURANCE POLICY: All mortgage companies will require at time of settlement a paid Home Owners Insurance Policy for one year. This is the Buyers responsibility to obtain from a reputable insurance agency.
PROPERTY TAXES AND ESCROWS: Be prepared at settlement to pay also at least one year property taxes on your new home. Keep in mind you must reimburse the current owner for taxes paid and the mortgage company at this time will set up your escrow account for future tax and home owner insurance premiums.
SELLER ASSISTANCE: If your contract includes seller's assist (up to 6% FHA, Unlimited VA, or up to 6% Conventional Mortgage) than the agreed upon amount by both parties in the Agreement of Sale will apply to the closing cost as mentioned above.
Finally included in the Mortgage Fees is INTERIM INTEREST. Every day the mortgage is alive on a piece of Pennsylvania Real Estate it accumalates a certain amount of interest to its next payment. As an example if you settle on a property June 21, 2009 your first mortgage payment will be due on August 1, 2009. The period between June 21, 2009 and June 30, 2009 is 10 days. If you interim interest is $40 a day then your interim interest would be $400 in the transaction. of course every transaction can be different.
Please be as thorough and aware of all possible fees when you go to settlement. The Realtor will supply you with a Buyer's Estimated Cost Sheet when you sign the Agreement of Sale and your Mortgage Company will also follow the Truth in Lending Rules and supply you with an estimated closing cost sheet at time of mortgage application. At settlement feel free to question any line on the HUD 1 settlement sheet before you sign!!
Purchasing a new home is an exciting time but it also is your money. Ask questions!! Get answers!!
