By Stacey McCarthy
Q: My mother is moving to the new 55+ community in the Far Northeast and I want to buy her house in Fox Chase. What settlement charges do I need to pay? Also, do I need a contract?
A: The good news is that parent to child transfers of real estate in Philadelphia are exempt from the dreaded 4 percent Philadelphia property transfer tax, so you will save a huge chunk of cash there. Just make sure you both bring your birth certificates to settlement to prove your relationship to the state. Spouse-to-spouse and sibling-to-sibling transfers are exempt as well. Grandparent -to-grandchild must be proved.
You will need to hire a title company and pay for a title search. This cost of the title search is based on the sale price. If you are getting a mortgage, your mortgage company can suggest an abstract or title company to do the search for you. Also, you will need to obtain homeowner’s insurance, which you will pay at settlement. If you mother has paid taxes for the year, you will need to reimburse her for the remainder of the year.
There will also be costs associated with a mortgage, like an appraiser and mortgage fees. Make sure your lender gives you a “Good Faith Estimate” in writing so you know exactly what you will be paying at settlement. Also, most mortgages require a termite inspection, so ask if yours does, and it usually costs around $90.
Should you choose to get a home inspection or purchase a home warranty, that is also part of the cost. Double check with your mortgage lender or title company to find out if there will be any other charges involved.
If you are paying cash, you don’t need an agreement, but it’s probably better to have one so there’s no future disputes. If you are getting a mortgage loan to purchase it, you will not only need to qualify for the loan, but they will ask for a contract. You and your mother can hire a lawyer to draft an agreement or you could find a real estate professional that will do it for you for a flat fee.
Stacey McCarthy is a real estate agent with the McCarty Group of Keller Williams Real Esate. Her Real NEastate column will appear on NEastPhilly.com every Wednesday.