What are the typical closing costs for a $175,000 house in PA?

Asked by Phillies In 08!, Pennsylvania Thu Oct 16, 2008

We're first time homebuyers, and the bid we just placed on a the house we really like was accepted. I'm trying to wrap my head around the closing costs/settlement costs (is there a difference?) and how much we'll be out after all is said and done. We're prepared to put 10% (17,500) down and will most likely be going with a 80-10-10 loan to avoid PMI. We're figuring about 5% in closing costs (about $8,000) for a grand total of about $25,000 due at settlement. Does this sound correct? Our agent did a potential closing cost breakdown and it had the total settlement cost at close to $13,000!

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Carol Cei, Agent, Maple Glen, PA
Thu Oct 16, 2008
BEST ANSWER
Go Phillies in o8!

Your fees do sound a bit high, however, please remember that if you are purchasing in Philadelphia, there is a 2% transfer tax that will add on $1750. Also, how much are your real estate taxes? If you tell me that number I will give you a very close estimate of what you should need. Off the top of my head I am guessing that purchasing in Philly, you may be closer to $10,000.

Also, are you sure you can still get an 80/10/10? It is my understanding that much of the second mortgage financing has dried up because of market conditions. Or maybe you are paying an exhorbitant rate for it. Make sure your mortgage person gives you numbers both ways....with PMI or without PMI. Also, how about Lender Paid MI? That could work out well for you too. Make sure you are dealing with someone who knows all of the programs. Since you are first time buyers, you may qualify for the PHFA money and the rate is now about 6-6.25%. That might be your best bet. You will also get a 25% discount on your title insurance and other REDUCED FEES. If your mortgage broker can't help you, get yourself to the closest bank, like Sovereign, Wachovia, etc. and they will help you.

Don't miss out on this great deal! I use it all the time for my buyers.
0 votes
Kelly Gidzin…, Agent, Philadelphia, PA
Thu Oct 16, 2008
It sounds like either your lender fees are really high or you are purchasing a home with high annual real estate taxes. Either one of those things can drive up your closing costs at settlement. If you haven't already asked to see the good faith estimate from your lender, get one and review it with your agent. Typical fees you will see from the lender are:
Appraisal fee $300-400
Credit report $20-50
Application, Admin or Underwriting fee $325 - 600.
If you are paying points or there are numerous fees under the above names, then I would consider another lender. All in all I wouldn't want to pay more than $1,300 for the above fees.

Regarding real estate taxes.... you will have to pay money towards the set up of your escrow account. Your escrow account is an account the lender sets up for you and uses to pay your real estate tax bills every year. You will have to start the account out with some funds in it and then a portion of your mortgage goes into it every month. Secondly you will pay the seller back for the real estate taxes they have already paid for this year. That is often called your tax prorations. It is calculated from the day of settlement to the end of the bill period. Typically that is the end of the calander year, but sometimes school taxes are run on a fiscal year cycle.

Other fees in your closing costs will be title insurance fees, homeowner's insurance, a broker conveyance fee (if your real estate agent's company charges one), transfer tax and some smaller ancillary fees.

Look closely at the lenders fees and the real estate taxes (both the escrow account set up amounts and the pro-rations back to the seller.) I bet you will find your answer to why it is so high in one of those areas. Good luck and I hope this was a help to you.

Create a great day!

Kelly Gidzinski
Long & Foster Real Estate, Inc.
Servicing Delaware County Area
Web Reference:  http://www.YourLifeMoves.com
1 vote
Joe, , Philly
Tue Nov 4, 2008
The $8k is pretty close as long as you are not paying any points. I am a mortgage professional in the Philadelphia area and can show you ways to avoid monthly PMI without taking out a second mortgage. Email me at jcafiero@supmort.com for more details.
0 votes
Keith Sorem, Agent, Glendale, CA
Wed Oct 22, 2008
Phillies in '08
I just spent ten minutes posting to your other question, it was deleted, and all my posting went to outerspace.

So just to give you my two cents, the upshot of your question means that if you want this home, and the sellers insist on doing the repairs, you have two options:
The work, if done by the sellers, just be subject to your approval and inspection. Further I would recommend having a contingency fund in escrow that you can use to re-do any repairs to your satisfaction up to 90 days after you take ownership.

I would further insist that all work be completed by licensed professionals that will provide a written warranty. Otherwise you are opening up a can of worms.
0 votes
Carol Cei, Agent, Maple Glen, PA
Mon Oct 20, 2008
Hi, Phillies In 08!

Please remember that you are never really "getting around" closing costs. You can pay up front and have a lower mortgage payment, or you can have the seller pay it, pay more for the house and then have a higher monthly payment.

The other important factor to remember is that sometimes, when mortgage people suggest raising the sale price to accomodate a give-back you can possibly create a problem with the appraised value. The appraiser doesn't give you extra credit for financing your closing costs unless you are doing a VA loan. Be careful that your realtor is confident that the house will appraise if you do, in fact, choose to inflate the value.

Good luck!
0 votes
Fred Glick, Agent, Mountain View, CA
Mon Oct 20, 2008
If it's in the city, then because of the 2% transfer tax and the title insurance along with the rest of the costs, that's about right depending on the taxes. There are ways to get around this! It involves having your agent renegotiate the contract and having the seller pay costs.

You will pay more monthly, but the savings up front can be huge.

There are more ways to do this other than just the standard seller contributions. Have your agent contact me and I will explain the details.

Fred
Web Reference:  http://usloans.cm
0 votes
Michael D De…, , 18969
Mon Oct 20, 2008
I usually figure 7-8 % closing costs. swhat most people seem to forget is that the Lenders escrow your yearly taxes and homeowners insurance, This adds a little to the bottom line. I am not sure of your taxes, but I came up with about 10k of closing costs.
the very best of luck to you. GO PHILLIES!
Michael

Michael D Delp
Mortgage Pro
4802 Old Bethlehem Pike,
Telford Pa. 18969
Ph- 215-453-1025
Fax- 215-453-1012
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0 votes
Chris & Step…, Agent, Philadelphia, PA
Thu Oct 16, 2008
Congrats on your deal ! Hopefully everything goes through. A good rule of thumb for Philadlephia properties, as the prior pro mentioned, approximately 5 percent of the sales price (less for higher priced homes) which would be around $8,500 to $9,000 so your estimate is accurate. The variance would be how much your mortgage closing costs would be... other than that, it is pretty much fixed. The Philadelphia city and state transfer tax alone is 2 percent, so that part alone is $3,500.

Now if you are getting grants or sellers assist, the amount would be lower. Also what you need at settlement would be this amount minus what you have on deposit. So maybe that is what your agent was referring to ?

Either way, you are on track and good luck with your deal !

Chris Somers
Web Reference:  http://www.thesomersteam.com
0 votes
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