If you’re looking to buy in Pennsylvania, read on to learn about the regulations and tax laws specific to the state. We’ve summed up what you need to know below:
Home seller and buyer laws
In Pennsylvania, sellers are to disclose, in a seller’s property disclosure form, any known defects that might have a significant effect on the value of the home or the safety of inhabitants. This includes informing buyers about roof issues, structural problems, pest problems, and problems with the home’s plumbing, electrical, sewage and water systems. It also includes disclosing the presence of hazardous materials, as well as any outstanding legal issues. To see a copy of the form issued by the Pennsylvania Real Estate Commission, go here.
As a borrower, you should know that Pennsylvania is a judicial foreclosure state. This means that if you were to default on your mortgage, a lender would be required to go to court rather than working without court oversight. Under Pennsylvania law, a lender also has the right to a deficiency judgment, or the right to take you to court to collect any balance due if your foreclosed home sells for less than your mortgage.
Pennsylvania homeowners in danger of foreclosure may be able to receive a loan to pay their mortgages through the Homeowner’s Emergency Mortgage Assistance Program (HEMAP), which is administered by the Pennsylvania Housing Finance Agency (PHFA). According to state law, lenders are required to send a notice about HEMAP to homeowners facing foreclosure. To learn more about the program, see this fact sheet.
Divorce is never easy, and it can be challenging dividing assets jointly owned. For that reason, it’s important to know that Pennsylvania is also an equitable distribution, rather than a community property state. This means a court will attempt to divide a divorcing couple’s assets and debts as fairly as possible (rather than with a 50/50 split), considering factors like the length of the marriage, and individual differences in income and assets.
Closings in Pennsylvania are typically handled by either a licensed attorney or a title company.
If you are transferring ownership of property of any kind, most likely you’ll need to pay transfer tax. Once you’ve honed in a home you’d like to buy, your lender is responsible for disclosing exactly how much tax you’ll owe.
In Pennsylvania, the transfer tax is based on 1% on the value of the real estate, and both the seller and buyer are responsible for seeing that it gets paid. In addition to paying a state transfer tax, you may also have to pay a local transfer tax. Philadelphia, for example, currently has a 3.278% transfer tax.
According to tax.rates.org, the median annual property tax bill for Pennsylvania homeowners is now $2,223 per year, based on a tax rate of 1.35%. Still, some counties charge considerably more — or less. Chester County, for example, now collects the highest property taxes in the state, an average of $4,192 annually. By contrast, Forest County charges just $860 per year.
In Pennsylvania, certain homeowners may qualify for a reduction in the amount of property tax they pay. For example, disabled veterans may qualify for a property tax exemption that reduces the taxable value of their homes and lets them pay less taxes in the end. The state also offers a property tax rebate (up to $650) for low income seniors, widows and widowers, and people with disabilities.
Conforming loan limits
Most counties in Pennsylvania have a maximum conforming loan limit of $484,350 for single-family homes, and only Pike County now has a higher limit, $726,525.
Conforming loan limits are the maximum loan amounts borrows can take on for the conforming loans backed and ensured by two government-sponsored entities, Fannie Mae and Freddie Mac. If your mortgage qualifies as a conforming loan, you are more likely to receive a better interest rate and more flexible loan terms that you would with a jumbo loan that exceeds the conforming loan limit in your area.