Closing on a house in Pennsylvania isn’t as simple as signing a document and obtaining the home’s title. You will have to pay the closing costs in guaranteed funds to finalize the purchase.
Promissory note and deed of trust
If you are receiving financing to buy the house, then your lender may want you to sign a promissory note and a deed of trust. The promissory note holds you solely responsible for paying off the home loan. A deed of trust grants the lender the legal right to sell your house if you can’t repay the loan.
You have to pay the closing costs in full on the day you officially close on the house. Both buyers and sellers have closing costs they need to pay. A lender or attorney will let you know during closing exactly how much the closing costs are. In Pennsylvania, it can range from $4,000 to $14,000, and it’s possible for the closing costs to be higher. Closing costs tend to be higher for more expensive homes.
Deed transfer tax
Transactional real estate law in Pennsylvania charges a fee for transferring a deed. Typically, the buyer and seller split the deed transfer tax in an agreed-upon percentage. You will have to check your contract to know if this is the case and in what percentage. It’s most common for buyers and sellers to do a 50/50 split. Pennsylvania taxes the deed transfer at a rate of 1% of the property’s sale price. Some school districts and municipalities charge their own fee as well at a rate of 1% of the property’s sale price.
Expect to sign a lot of documents and pay the closing costs in guaranteed funds when you close on a house in Pennsylvania. You will likely see an attorney, a notary and other professionals during closing to ensure that the process is in line with the law. The home’s previous owner may or may not be there, but you are welcome to bring your own real estate attorney.