Closing cost: Cash vs. Mortgage

West Chester, PA · Member since 2012 · 14 posts · 0 votes

Does anyone know (or have a rule of thumb) of the cost differential of closing cost between a cash buyer and a mortgage buyer for a personal residence?

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Fred Shatzoff
Lender · Member since 2019 · 604 posts · 160 votes
7y
Cash buy has very little costs their attorney title work and payment of taxes. Mortgage has appraisal, points, lender fees and tax escrows. Big difference.
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Michael Campbell
Flipper/Rehabber · Philadelphia, PA · Member since 2010 · 151 posts · 71 votes
7y
Hi @Esther S, it depends completely on what your lender requires. Your best bet would be to call up a few lenders and ask about all the costs involved. Ask about the items that @Fred Shatzoff mentioned.
With cash purchase your biggest costs will likely be Transfer Tax and Title Insurance. You can look up your local Real Estate Transfer Tax online and you can contact a title company to ask about the cost of title insurance for the price house you are looking at.
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James Mc Ree
Rental Property Investor · Malvern, PA · Member since 2016 · 1k+ posts · 934 votes
7y
The answer will vary a bit depending on the amount of the loan and the property. Here is a ballpark if you are looking for numbers:
1% - Origination fee
$$$ - Points to buy down rate if you choose to do so
$600 - Appraisal (you might get one with a cash buy, but it is required for a mortgage) More $$$ with complexity.
$$$ - Flood insurance if required (optional with cash buy, varies with amount of insurance and flood zone)
$200 - Mortgage recording (varies depending on # of pages and county)
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