You’ve found the perfect home in Pittsburgh. What is the next step to reach your real estate goal of home ownership? Finding the right mortgage with the best terms and closing costs for you. But what exactly are closing costs?
Here is a list of the most common closing costs:
- Title Fees – These include the title search and title insurance, and the associated attorney fees.
- Recording Fees – The government charges a fee to record the change of ownership of real estate.
- Mortgage Application Fees – These fees are usually an upfront fee if your lender would require it.
- Appraisal Fee – Appraisals are required by the lender to ensure that the value of the property is equal to that of the loan. The appraisal will also make sure there are not any underlying problems that detract from the property value.
- Discount Points – Your lender may charge a percentage of the principal loan amount to reduce the final interest rate of the loan.
- Underwriting Fees – The buyer pays underwriting fees to the lender to pay for the costs of determining if the buyer qualifies for the mortgage loan.
- Property Tax – Taxes are paid to the local municipality, county and school district. The amount is based on the predetermined market value of the property. The buyer may need to establish an escrow account that collects 1/12 of the annual payment monthly so that the lender can pay the taxes when they are due. The property taxes are prorated and a buyer will see this breakdown at closing.
- Home Owner’s Insurance – The buyer is responsible for purchasing a one-year home owner’s policy at the time of the home purchase. The lender may establish an escrow account to collect 1/12 of the annual premium. This money is collected to be sure the home owner’s insurance is paid when it comes due again for the following years.
- Transfer Tax – Transfer taxes are charged by the state and local taxing bodies. Taxes are collected at the time any real estate is transferred by deed. These taxes are typically split equally between the buyer and the seller. Here is the link to the PA Department of Revenue website to learn more about transfer tax in Pennsylvania: http://www.revenue.pa.gov/GeneralTaxInformation/Tax%20Types%20and%20Information/RTT/Pages/default.aspx
- Homeowner’s Association Fees – If the home being purchased is in a Homeowner’s Association the buyer may be responsible for paying a monthly assessment along with a one-time capitalization fee that goes into the home owner’s association reserve fund to pay for future repairs covered by the HOA. If the seller has prepaid monthly assessments, the buyer may have to reimburse the seller on a pro-rated basis.
Above are some of the common fees included in buyer closing costs. Not all lenders charge the same. Not only do you want to look for the lowest rate, you also want to be aware of what closing costs are being charged for the loan. A lender can calculate what you can expect to pay in closing costs once you have identified a home you would like to purchase.
I can answer your questions concerning closing costs and help you find the right lender. I would be happy to schedule a free private consultation. Contact me by phone at 412-848-3907 or email at firstname.lastname@example.org. I look forward to hearing from you!