Home Closing Costs – How to Budget For Philadelphia Real Estate

So whether you’re looking to purchase your first home or are in the market to buy a new home you have to consider the costs. How much money are you going to need to take the plunge or make a move? If you’re living in Philadelphia, closing costs are more than just a chunk of change.

Buyers and sellers of Philadelphia real estate are faced with 4% realty transfer tax. This tax consists of 3% Philadelphia tax and 1% state tax. Each is shared between the buyer and seller. From the start, buyers need to understand transfer tax alone will cost 2% of the sale price.

In addition you will be responsible for paying mortgage fees. These will vary from lender to lender, but usually include the following: appraisal fee, credit report fee, tax service fee, flood certification, underwriting fee, processing fee, origination and discount points. On average, mortgage fees will cost around $1000 assuming you are not paying points to buy down your interest rate and are looking at homes priced $500,000 or below. Real estate priced higher will have higher fees associated with the purchase.

Don’t forget about the title fees. These are additional costs you need to anticipate and the most expensive being title insurance. This premium is determined by the amount of money being financed and can be rather pricey. The more expensive the home, the more expensive the title insurance premium you can expect. Other common title fees include: notary fee, endorsements, recording fees, closing protection fees, etc.

The Philadelphia real estate professionals general rule of thumb recommends a buyer be prepared to pay 4% of their sales price towards their closing costs. Sound like a lot? Don’t let this ruin your dreams of home ownership. You can always negotiate a seller’s assist when purchasing a home. This is when a seller agrees to pay all or a portion of your closing costs.

By: Tara Gore