Closing costs bundle lender fees, title insurance, appraisal, attorney or settlement fees, recording costs, prepaid interest, and tax escrow, typically running 2% to 5% of the purchase price. Your Loan Estimate itemizes every line.
The Big-Picture Range
Closing costs are the collection of fees you pay to finalize your mortgage and transfer ownership, and for most buyers they run somewhere in the range of 2% to 5% of the purchase price. On a $400,000 home, that is roughly $8,000 to $20,000, money that comes on top of your down payment.
The range is wide because the mix of costs varies by lender, by county, and by the property. Pennsylvania's settlement process and its transfer taxes are part of why costs here can sit near the higher end of the range, especially in Philadelphia. The good news is that every cost must be itemized on your Loan Estimate and your Closing Disclosure, so nothing is a mystery if you read the forms.
The Lender-Related Fees
A big portion of closing costs comes from the lender. An origination fee covers the lender's work to process the loan, and it is often quoted in points: one point is 1% of the loan amount. You may also see an application fee, an underwriting fee, and a rate-lock fee, though lenders package these differently.
Comparison is key here. Two lenders can quote the same rate with very different fee packages, which is why the Loan Estimate exists to give you an apples-to-apples comparison. Fees that are negotiable, like origination, deserve your attention, while third-party costs like the appraisal are set by their providers.
Title, Settlement, and Recording Costs
Pennsylvania is a settlement state, and its closing process adds specific costs. Title insurance protects you and the lender against problems with the property's ownership history, and you pay a title search and title insurance premium, with the lender's title policy almost always required.
You will also pay for the settlement itself, handled by a title company or real estate attorney, plus recording fees to officially file the deed and mortgage with the county. In Pennsylvania it is common for buyers to have a real estate attorney review the contract, adding an attorney fee that varies by firm. None of these are junk fees, but all of them should be itemized so you know what you are paying for.
Prepaids and Escrow
Some of your closing costs are not fees at all, they are prepayments. Your lender will collect prepaid interest for the days between your closing and your first mortgage payment, and it will fund your escrow account with taxes and homeowners insurance. In Pennsylvania, the seller's property taxes are prorated, so part of your closing statement reflects the timing of the tax year.
These prepaids can look large on the Closing Disclosure, but they are money you would pay anyway, just collected upfront. Your first monthly payment is usually due about a month after closing, and the escrow cushion means the monthly number stays stable.
Pennsylvania Transfer Tax
One of the largest line items on a Pennsylvania Closing Disclosure is the realty transfer tax. In most counties the combined state and county rate is around 2% of the sale price, and in Philadelphia it is higher, roughly 4.6% effective mid-2025, with the customary split between buyer and seller.
Who pays and who splits is set by the agreement of sale, so your contract is the first place to look. When you budget closing costs, confirm the transfer tax rate for the exact county or city, and confirm the contractual split, because this single line can dominate everything else.
Smarty's Advice
Budget for closing costs as a separate pool of money, not an afterthought. I tell buyers to plan on 2% to 5% of the purchase price on top of the down payment, and to ask for the Loan Estimate from their lender before they make an offer.
Read the Closing Disclosure the week before settlement and question anything that changed from the Loan Estimate. In a market like ours, where transfer taxes and settlement fees are significant, knowing your closing costs before you bid lets you price your offer honestly.
Call 215-598-6848 or schedule a free consultation, and I will help you estimate your true closing costs in any county.
Smarty's Advice Expert Insight
John Smart (Smarty) · Smarty Home Solutions / eXp Realty Agent, AI Certified Agent
The Loan Estimate is the document that turns closing costs from a mystery into a list. You receive it within three business days of applying for a mortgage, and it itemizes your loan terms, projected payments, and every closing cost in one place. It also shows your cash to close, which is the number that matters for your budget.
The form divides costs into sections: loan costs like origination and appraisal, other costs like taxes and insurance, and the summary of your cash to close. Comparing Loan Estimates from different lenders is easiest when you line up these same sections side by side.
Before settlement, you receive a Closing Disclosure that must match the Loan Estimate within narrow tolerances. If a cost jumps without a valid reason, you have the right to ask questions and delay closing until it is resolved. Reading both documents carefully is the single best protection against surprise costs at settlement.
It is worth knowing that the Loan Estimate is a good-faith projection, and some costs, like title insurance and recording fees, can shift slightly by the time of closing. The rules allow small changes in certain third-party costs, but lender fees and the rate are tightly controlled. If a lender fee changes, that is a red flag worth challenging, while a small recording-fee adjustment is usually normal.