How Much Will Your Mortgage Be in Pennsylvania?
Broadly speaking, the Pennsylvania housing marking is strong, offering affordably-priced homes with stable growth in the market itself. Philadelphia and Pittsburgh, as metropolises, are going to have more expensive home, as one might expect.
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Factors That Can Affect Your Pennsylvania Mortgage Calculations
Property Taxes in Pennsylvania
Property taxes will be a significant factor as it relates to your mortgage payments, and property taxes can differ considerably depending on the county. In Philadelphia County, for instance, can be less than 1% but well over 2% in other counties. As with most property taxes, these go to fund local services such as schools and roads. Also. as in most states, it may be possible to claim an exemption through the homestead or disabled veteran exemption.
Thankfully, you can find relatively inexpensive homeowners insurance in Pennsylvania, some of the least expensive insurance in the country in fact, thanks to the low risk of natural disasters such as floods or tornadoes or earthquakes in the state. The average policy could cost you as little as $800 per year.
The Pennsylvania FAIR Plan can offer you basic homeowners insurance in the event that you can't secure insurance privately.
Pennsylvania Closing Costs
Make sure you realize how much you could be paying upfront by way of closing costs. The first to consider is your home inspection—prior to finalizing your contract, you need to hire a home inspector to inform you of the state of the house you'd like to buy. There are laws on the books in Pennsylvania pertaining to what a home inspector should cover and what they are not allowed to do.
You can expect to pay between $300 and $500 depending on the size of your house. These inspections will examine the condition of the roof, electrical, plumbing, and structure systems to help you make a better estimation as to the home's actual value.
Closing costs will also include fees for having all final documents signed, the price of which depends on the location, and costs for your lender and anyone else involved in the mortgage and the property itself.
In all, closing costs can run you between 3.3% to 6.1% of the home's value. Part of this amount will be due to your mortgage lender by way of origination fees which can include underwriting the loan, broker charges, tax service, commitment fees, points, and preparation of documents.
The cost of any attorney who is retained, flood certification, appraisals, surveys, and credit reports will fall under closing costs as well. Your lender will probably charge you for a title insurance policy as well to cover the lender’s interest on your property to protect themselves from any potential losses stemming from a title dispute on the property such as unpaid taxes, liens, easements or other issues.
Pennsylvania Housing Market
The state of Pennsylvania is home to nearly 13 million people, making git the 6th-largest in the US by population. The biggest cities include Philadelphia, Pittsburgh, Allentown, Erie, and Reading, with Philadelphia being the 6th-most populous city in the nation.
Homebuyers and homeowners both are in a good position in Pennsylvania when it comes to homes with negative equity, the percentage of homes decreasing in value, and the number of days a home tends to stay on the market. The cities with the strongest housing markets in the state are Castle Shannon, Broomall, Franklin Park, Plum, and Shiloh. The average number of days a home will stay on the market in Pennsylvania is 193 days, and the median home price statewide comes to $171,900.
Home in larger cities like Philadelphia will not surprisingly cost you more and are in high demand. All things considered, however, the city is considered an affordable place to buy a home: median home values being $157,500 and median listing prices $229,900 as of September 2019. Home prices rose 4% between 2018 and 2019.
Pittsburgh is also a desirable place to live, with median home values at $146,600 and the median home price at $225,000.
Pennsylvania Job Stats to Consider
The state of Pennsylvania is home to a number of industries including jobs in natural gas and energy, manufacturing, plastics, life sciences, and tourism. Oil and natural gas even saw employment more than double between 2007 and 2012, making it one of the state's biggest sectors, thanks in large part to the large uptick in shale gas production.
21 Fortune 500 companies are located in the Keystone state, and Rite Aid, Kraft Heinz, Comcast, PNC Financial, and Aramark are headquartered here. Highly reputable educational institutions such as the University of Pennsylvania and Carnegie Mellon are also large employers in the state along with Walmart, and the city of Philadelphia.
In September 2019, the state’s unemployment rate was 4%, only slightly higher than the national average of 3.7%. The per capital income in Pennsylvania is $56,225, just over the national average of $54,420.
Job Stats (Civilian Labor Force, Employment, Unemployment)
Other Pennsylvania Costs That Can Affect Pennsylvania Mortgage Calculations
Income Taxes in Pennsylvania
Anyone working in Pennsylvania will be required to pay state income taxes. Income is taxed at a flat rate of 3.07% with no standard deductions or exemptions. That being said, you are able to claim itemized deductions for things like medical savings account contributions, a health savings account contribution, and contributions to a 529 college savings plan.
Cities and municipalities will also collect income tax from you, roughly 6% of your earnings.
PMI in Pennsylvania
Pennsylvania loans made after July of 1999 require lenders to cancel payments of Private Mortgage Insurance (or PMI) as soon as the balance of the loan drops below 78% of the purchase price. This is not the same things as achieving 22% equity in your home, which can happen faster in the case of rising property values.
This means you are completely justified in canceling your PMI as soon as your equity hits 20%, no matter the original purchase price of your home. Once you reach 20% equity in your home, you’ll need to inform your mortgage lender of your desire to cancel PMI payments and submit proof that you have achieved at least 20% home equity.