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Pennsylvania refinanceThe two percent transfer tax that stung at the purchase closing does not apply to a refinance, closings run through a title company rather than an attorney, and a discounted title rate is usually available. Those three things shape the break-even.
Pennsylvania's realty transfer tax is charged when a deed conveys title. A refinance replaces the mortgage and leaves the deed alone, so the state and local transfer tax that was part of your purchase closing costs is not part of a refinance. That single difference is why refinance closing costs in Pennsylvania are noticeably lighter than purchase closing costs on the same house.
Pennsylvania settles through title companies, not attorneys. Scheduling is simpler and the settlement fee is typically lower than in attorney states. You sign once, the three-day federal right of rescission runs on a primary residence, and the new loan funds after it expires.
Pennsylvania title insurance premiums are set by a statewide rate manual, and the manual includes a reduced rate for refinances when a prior policy exists on the property and the timing qualifies. Title agents apply it when asked. We ask.
County, municipal, and school district taxes are billed on separate cycles in Pennsylvania. On a refinance the new escrow account is set up from scratch, so expect a larger escrow deposit at closing than you are used to seeing on a monthly statement, and a refund of the old escrow balance from the paid-off lender a few weeks later.
Rate-and-term when the rate drop is real and you will keep the loan past the break-even month. Cash-out when equity is the cheapest money available for what you need. A conventional refinance to drop FHA insurance once you are past 20 percent equity. An FHA or VA streamline when you already have one of those loans and want the lighter paperwork. The refinance overview walks through each.
Three quick steps, no Social Security number. A licensed officer runs the break-even and calls you back.
No. Pennsylvania realty transfer tax applies when title changes hands, not when a mortgage is replaced. A refinance records a new mortgage, not a new deed, so the roughly two percent that came up on the purchase does not apply.
No. Pennsylvania closings, purchase and refinance alike, are handled by title companies. You may hire an attorney if you prefer, but the settlement itself does not require one.
Often. Pennsylvania title rates are set statewide and include a reduced refinance rate when a prior policy exists on the property and the loan is within the qualifying window. Ask the title agent to quote the refinance rate rather than the full basic rate.
Written by Steve Umansky, Sr. Branch Manager, NMLS #61764. General information, not tax or legal advice and not a commitment to lend.
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