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Home buyer guideClosing costs in Pennsylvania and New Jersey
Closing costs are the one-time charges due at settlement on top of your down payment: lender fees, the appraisal, title insurance and settlement charges, government recording fees and transfer taxes, plus prepaid interest, homeowners insurance and the first deposits into your escrow account. The total depends on the price, the loan program and the municipality. You see every line on the Loan Estimate within three business days of applying, and on the Closing Disclosure at least three business days before you close.
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What is in the total
| Group | What it covers |
|---|---|
| Lender charges | Origination or underwriting fees, and discount points if you choose to buy the rate down. |
| Third-party services | Appraisal, credit report, flood determination, and a survey or inspections where needed. |
| Title and settlement | Title search, lender's and owner's title insurance, and the settlement or closing fee. |
| Government charges | Recording fees for the deed and mortgage, and realty transfer tax where the buyer shares in it. |
| Prepaid items | Interest from closing day to month-end and the first year of homeowners insurance. |
| Escrow deposits | The opening balance for property taxes and insurance, so the bills can be paid when they come due. |
Prepaid items and escrow deposits are not fees. They are your own taxes, insurance and interest, paid in advance. They are also the part that moves most with the closing date and the tax calendar, which is why two buyers of similar homes can need different amounts of cash.
What is different in Pennsylvania
- Who runs the closing: usually a title company or settlement agent.
- Realty transfer tax: Pennsylvania charges a state transfer tax, and the municipality and school district add a local one. The total is higher in some places, Philadelphia among them. By custom the buyer and seller split it, but the split is set by your agreement of sale.
- Title insurance: premiums follow rates filed with the state, so the premium for a given price is the same from one title agent to the next. Service and settlement fees can still differ.
- Property taxes: billed separately by the county and municipality and by the school district, on different calendars. They are prorated between buyer and seller at closing.
What is different in New Jersey
- Who runs the closing: attorneys in most of North and Central Jersey; title or settlement companies are more common in South Jersey. Contracts prepared by real estate agents carry a three-business-day attorney review period.
- Transfer fees: the Realty Transfer Fee is customarily the seller's cost. An additional fee applies to higher-priced sales, and the rules on who pays it have changed, so ask your attorney how current law applies to your contract.
- Title insurance: premiums follow filed rates here too.
- Property taxes: billed quarterly by the municipality and adjusted between buyer and seller at closing. They are a large part of a New Jersey payment, so the escrow deposit can be significant.
Ways to bring less cash to closing
- Seller credit: the seller can agree to pay part of your closing costs. Each loan program caps how much.
- Lender credit: a credit toward costs in exchange for a higher rate. We show you both versions side by side.
- Assistance programs: PHFA in Pennsylvania and NJHMFA in New Jersey offer help with the down payment and closing costs for eligible buyers.
- Gift funds: allowed on many programs when the gift is documented.
- Closing date: closing late in the month reduces prepaid interest.
Wire fraud is real. Before you send closing funds, confirm the wiring instructions by calling your title company or attorney at a phone number you already know, not one from an email. Treat any message that changes wiring instructions as suspect until you have confirmed it by phone.
Common questions
How much should I budget for closing costs?
It depends on the price, the property taxes, the loan program and the town, so a single percentage can mislead. Ask for a Loan Estimate, or tell us the address and price and we will prepare an itemized estimate for that property.
Can closing costs be added to the loan?
On a purchase, generally not. Costs can be covered by a seller credit, a lender credit or assistance funds instead. Certain program fees, such as the FHA upfront mortgage insurance premium, the VA funding fee and the USDA guarantee fee, can usually be financed.
Who chooses the title company or closing attorney?
You may shop for title and settlement services. Your Loan Estimate lists which services you can shop for. In practice many buyers use the provider their agent or attorney recommends, but the choice is yours.
What is the difference between the Loan Estimate and the Closing Disclosure?
The Loan Estimate is the itemized estimate you receive within three business days of applying. The Closing Disclosure is the final version, which you must receive at least three business days before closing. Comparing the two shows what changed.
When do I pay, and how?
At closing, by wire transfer or certified funds, for the amount on your Closing Disclosure. Your earnest money deposit is credited against it.
This guide is general information, not a commitment to lend or a quote. Program rules change and lender requirements can be stricter than agency minimums. Your loan officer confirms what applies to your file.
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