What Are Closing Costs?
Closing costs are the fees and expenses you pay when finalizing a real estate transaction. In Pennsylvania, these typically range from 2-5% of the purchase price for buyers and 6-10% for sellers.
Let me break down exactly what you'll encounter.
Buyer Closing Costs
1. Loan-Related Fees (1-2% of loan amount)
Origination Fee: $1,000 - $2,000
What it is: Lender's charge for processing your loan application
Discount Points: Optional, 1 point = 1% of loan
What it is: Pre-paid interest to lower your rate (often worth it if staying 5+ years)
Appraisal Fee: $500 - $700
What it is: Professional valuation required by lender
Credit Report: $25 - $50
What it is: Lender pulls your credit history
Flood Certification: $15 - $25
What it is: Determines if property is in flood zone
2. Title and Escrow Fees (1-2% of purchase price)
Title Search: $200 - $400
What it is: Ensures seller has clear ownership rights
Title Insurance: $1,000 - $3,000
What it is: Protects you and lender from title defects. PA uses promulgated rates, so shop around.
Settlement/Escrow Fee: $300 - $800
What it is: Title company charges for coordinating closing
Recording Fees: $100 - $300
What it is: County charges to record deed and mortgage
3. Property-Related Costs
Home Inspection: $400 - $600
What it is: Professional examination of home's condition (highly recommended!)
Radon Test: $150 - $200
What it is: Common in PA, tests for radon gas levels
Well/Septic Inspection: $300 - $500 each
What it is: Required for properties with private systems
Survey: $400 - $800
What it is: Confirms property boundaries (sometimes waived)
4. Prepaid Expenses and Escrow
Homeowner's Insurance: $1,000 - $2,000 annual premium
What it is: First year paid at closing, then monthly via escrow
Property Taxes: Variable
What it is: Prorated amount to cover period until next payment cycle
HOA Dues: Variable
What it is: Prorated if property has HOA
Escrow Reserve: 2-3 months of taxes and insurance
What it is: Cushion for lender to pay these bills on your behalf
5. Pennsylvania-Specific Costs
Transfer Tax: 1-2% of purchase price
What it is: State (1%) + local (varies 0-1%) tax on property transfer. Often split 50/50 with seller, but negotiable.
Example: $300,000 home in Cranberry Township
- State transfer tax: $3,000 (1%)
- Cranberry local tax: $3,000 (1%)
- Total: $6,000 (typically split: $3,000 each)
Total Buyer Costs Example
Purchase Price: $300,000
Down Payment (10%): $30,000
Loan Amount: $270,000
Estimated Closing Costs:
- Loan fees: $2,700
- Title/Escrow: $2,000
- Inspections: $800
- Prepaids/Escrow: $4,000
- Transfer tax (buyer's share): $3,000
- Total: ~$12,500 (4.2% of purchase price)
Seller Closing Costs
1. Realtor Commission (5-6% of sale price)
Largest expense for sellers. Typically split between buyer's and seller's agents.
Example: $300,000 sale @ 6% = $18,000
2. Transfer Taxes
Seller typically pays 50% of combined state and local transfer taxes.
Example: $300,000 sale = $3,000 (seller's half of 2% total)
3. Title Fees
Owner's Title Insurance: $0-$500
Seller sometimes provides owner's policy for buyer.
4. Property-Related
Home Warranty: $400-$600 (optional)
Many sellers offer 1-year home warranty to buyers.
Repairs from Inspection: Variable
Negotiated repairs or credits from inspection findings.
5. Prorations
Property Taxes: Credit to buyer for unused portion
HOA Dues: Credit to buyer if paid ahead
Total Seller Costs Example
Sale Price: $300,000
Estimated Costs:
- Commission (6%): $18,000
- Transfer tax (seller's share): $3,000
- Repairs/credits: $2,000
- Misc fees: $500
- Total: ~$23,500 (7.8% of sale price)
- Net Proceeds: $276,500
Ways to Reduce Closing Costs
For Buyers:
- Shop Lenders: Compare loan estimates from 3-5 lenders
- Negotiate with Seller: Ask seller to cover some costs (common in buyer's markets)
- Close at Month-End: Reduces prepaid interest
- Skip Points: Unless you're certain you'll stay long-term
- Compare Title Companies: Rates vary significantly
- Use First-Time Buyer Programs: Some offer closing cost assistance
For Sellers:
- Negotiate Commission: Some agents offer lower rates (but watch service quality)
- Price Strategically: Multiple offers = less likely to give concessions
- Prepare Home Well: Fewer inspection repairs needed
- Time it Right: Spring/summer markets typically stronger
PA Transfer Tax Variations by County
Combined state + local rates:
- Allegheny County: 2% (1% state, 1% county)
- Philadelphia: 4.278%
- Delaware County: 2%
- Montgomery County: 2%
- Butler County: 1.5-2% (varies by municipality)
The Closing Day
Expect to bring:
- Government-issued ID
- Cashier's check or wire transfer confirmation
- Proof of homeowner's insurance
- Any required documents from lender
Process takes 1-2 hours. You'll sign ~50 documents. Read carefully—especially the CD (Closing Disclosure) provided 3 days prior.
Important Timeline
- Day 1: Offer accepted
- Days 3-7: Inspections completed
- Days 7-10: Inspection negotiations
- Days 20-30: Loan underwriting
- Day 27: Final walk-through
- Day 30: Closing (typical timeline)
My Role in Your Closing
As your REALTOR®, I:
- Review all closing documents before you sign
- Explain every line item on your settlement statement
- Negotiate costs on your behalf
- Ensure no surprise fees at closing
- Coordinate with all parties (lender, title, attorneys)
- Problem-solve any last-minute issues
My construction background helps identify which repair requests are reasonable and which aren't—protecting you from unnecessary expenses.
Common Questions
Q: Can I roll closing costs into my loan?
A: Sometimes. Depends on loan type, LTV ratio, and lender. Often seller-paid concessions are easier.
Q: Are closing costs tax-deductible?
A: Some are (points, mortgage interest, property taxes). Consult your tax advisor.
Q: What if I don't have enough for closing costs?
A: Options include seller concessions, lender credits, gift funds, or down payment assistance programs.
Q: Can closing costs be negotiated?
A: Absolutely! Who pays what is negotiable. Strong markets favor sellers; weak markets favor buyers.
Get Your Personalized Cost Estimate
Every transaction is unique. Let's sit down and I'll provide:
- Detailed cost breakdown for your specific situation
- Recommendations for trusted lenders and title companies
- Negotiation strategy for your market position
- Timeline and process overview
- Answers to all your questions
No surprises. Just informed, confident home buying or selling.
