Refinancing in Pennsylvania

Refinancing costs materially less in title work than buying, for two reasons that are worth understanding separately.

No deed, no transfer tax

Realty transfer tax is charged on the transfer of property. A refinance transfers nothing — you already own the house, and the deed does not change hands. So the 2% to 5% that dominates a Pennsylvania purchase simply does not arise. On a $300,000 property in the city, that alone is $15,000 you are not paying.

The Non-Sale Rate

Pennsylvania's filed schedule has two columns. The Sale Rate applies to owner's policies on a purchase. Loan policies are rated on the Non-Sale Rate, which is lower at every bracket. Since a refinance produces a loan policy and nothing else, that is the column that applies.

On a $240,000 refinance the Non-Sale premium works out around $1,530, against roughly $1,823 if the Sale Rate were applied.

There is no Pennsylvania reissue rate

This trips people up, particularly anyone who has refinanced in another state. Many states offer a percentage discount when a prior policy exists. Pennsylvania does not have a reissue rate at all — the lower Non-Sale column does that job instead. If someone offers you a Pennsylvania reissue discount, ask what schedule they are quoting from.

Alabama, by contrast, does have a 40% refinance credit. The two states work nothing alike, which matters if you own property in both.

What you will still pay

• The loan policy premium, on the Non-Sale schedule
• Recording the new mortgage
• A closing protection letter, if your lender requires one
• Settlement and search fees

Note: general information for Pennsylvania and Alabama property owners, not legal or tax advice. Rates, taxes, eligibility and deadlines are set by statute and by each state’s filed rate schedules and can change. Confirm the specifics with us and with a qualified professional before relying on them for a transaction.