Closing Costs: What You Need To Understand When Buying A Pittsburgh Home
When you're ready to buy a Pittsburgh home, you need to consider closing costs. Many buyers are surprised when they speak with a mortgage lender to find out about closing costs. Closing costs are due at the time of closing. A portion of your closing costs is related to your mortgage. State or local municipalities require additional fees, and the lender may collect funds to set up escrow accounts.
But what exactly are closing costs?
Here is a list of the most common costs related to closing on your new home:
Title Fees – Title fees include the title search, insurance, and the associated attorney fees.
Recording Fees – The government charges a fee to record the change of ownership of the real estate.
Mortgage Application Fees – If your lender requires it, this will be an upfront fee.
Appraisal Fee – The lender requires appraisals to ensure that the property’s value is equal to that of the loan and that there are no underlying problems that detract from the property value.
Discount Points – Some lenders charge a percentage on the principal loan amount to reduce the loan’s final interest rate as part of your closing costs.
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 based on the property’s predetermined market value established by the county. The lender may need to set up an escrow account that collects 1/12 of the annual payment monthly to pay the taxes when due. The buyer may also be responsible for reimbursing any taxes the seller paid in advance as part of their closing costs.
Homeowner’s Insurance – The buyer is responsible for purchasing a one-year homeowner’s policy at the home purchase time. The lender may establish an escrow account to collect 1/12 of the annual premium to ensure the homeowner’s insurance is covered when it comes due again for the following years.
Transfer Tax – The state and local taxing bodies charge transfer taxes when any real estate transfers by deed and are typically split equally between the buyer and the seller. Depending on the state regulations where you are purchasing your home, you may or may not have this charge as part of your closing costs.
Homeowner’s Association Fees – If the home 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 homeowner’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.
The above closing costs are some standard fees that will be included in a buyer’s closing cost estimate. However, the lender charges may vary depending on the mortgage company. Therefore, evaluating a loan not only for interest rates but also for closing costs is essential. A lender will estimate closing costs once you have identified the home you would like to purchase.
The SAYHAY Team offers a buyer’s consultation to help you understand the buying process. Our dedicated buyer’s agents are ready to help you find your Pittsburgh home. Contact us at 412-755-3600 to schedule your free consultation.