With its diverse cultural and geographical landscape, the Keystone State presents potential buyers with ample opportunity to settle down affordably.

But whether you’re a seasoned real estate buyer or new to the

Pennsylvania

market, the house-hunting process can be a daunting one.

Lucky for you,

Jerry

is here to help! Experts in all things

insurance

, we’ve compiled some tips and tricks for making the home buying process easier. This homebuyer's guide has all the information you need to lock down the perfect Pennsylvania property for you or your family.

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* checking your rate won’t affect your credit score

Figure out your finances

Before you start house hunting, it’s important to evaluate your financial situation. Most aspects of the home buying process will come down to what you can afford; that means getting familiar with your credit score and DTI (debt-to-income ratio) before you can seriously start looking.

You may be tempted to jump into your search right away—house hunting is very exciting! But before you start cruising Zillow, break out that calculator, bank statements, and any relevant financial records so you can be sure you know what you can afford in Pennsylvania.

Check your credit score

If there’s one number that will determine how this process goes for you, it’s your credit score. Check your credit score before your start.

Most conventional loans require a credit score of 620 or higher. If your credit score is lower than the requirement, you may want to take some time to raise your credit score before you’re ready to buy a house.

If your credit score is below 620, don’t panic! You have options to raise your score.

Build your credit over time. This may take a bit, but it’s your best bet if you want to qualify for a better mortgage. This will also give you time to save for your down payment. While you may still qualify for a low-credit loan, taking time to raise your score will benefit you long-term.

The Federal Housing Administration (FHA) and Veterans Administration (VA) can offer you a mortgage with a credit score as low as 530 and 500, respectively, though VA loans are only available to former or current members of the military.

Calculate your debt-to-income (DTI) ratio

Mortgage lenders need to be assured that you’ll be able to make monthly payments. That’s where your debt-to-income ratio, or DTI, comes in. You can calculate your DTI by adding up your monthly payments and dividing them by your pre-tax income. Payments that contribute to your DTI include:

Car payments

Rent or house payments

Credit card payments

Student loans

Alimony or child support

It’s best to keep your DTI below 36% if you want a conventional mortgage, though some lenders may approve loans for DTIs as high as 43% if you have an impressive credit score.

Determine your down payment

Deciding how big a down payment you can make is a major part of determining what kind of house you can afford. This mostly depends on what kind of mortgage you expect to get. Conventional mortgages will generally require a down payment of at least 20%

If that sounds a little steep to you, a loan from the Federal Housing Administration (FHA) or a Veterans Administration (VA) home loan might be a good choice. Here’s the difference between the two:

FHA loan: a mortgage for low-and-moderate-income homebuyers insured by the Federal Housing Administration. This is especially good for first-time homeowners.

VA home loan: a mortgage for service members, veterans, and eligible surviving spouses insured by the Veterans Administration.

If your credit score is good enough (generally 580 or higher), you can make a down payment on an FHA mortgage for as little as 3.5%. If you qualify for a VA loan, you might not have to make a down payment at all! A VA loan will also offer competitively low-interest rates and lower closing costs on average.

If you’re still looking for a little assistance with your down payment, Pennsylvania’s HOMEstead program can help! The HOMEstead program offers a loan of up to $10,000 for homebuyers who meet certain income and purchase price requirements. They’ll charge you 0% interest and forgive 20% of your debt in 5 years, as long as you don’t sell or refinance the home.

Key Takeaway Your down payment is the largest up-front cost you’ll pay when buying a house, and you’ll likely have to save for it.

Prepare for closing costs and other fees

That’s right—even closing on a property has fees attached. While this may seem intimidating, there’s an easy way to estimate what you might pay in “closing costs” along with your down payment.

Buyers tend to pay around 2-5% of a property’s price in closing costs. According to

Zillow’s Home Value Index

, you can expect to pay an average of $211,224 for a house, which amounts to $4,224-10,561 in closing costs. Like your down payment, these fees will come out of pocket, so make sure you’ve saved enough to cover these up-front costs before you start house hunting.

But what do these closing fees go towards? Generally, your closing costs will cover the following:

Home inspection fee

House appraisal fee

Mortgage origination fee

Credit report fee

Property taxes

Mortgage insurance

Homeowners insurance

According to ClosingCorp’s Pennsylvania data, you can expect to pay an average of $9,437.44 in closing costs after taxes, approximately 3.15% to 4.72% of the house’s final price.

MORE: How to make a counter offer after a home inspection

Key Takeaway Make sure you have enough in savings to cover the up-front costs of a house, i.e. down payment and closing costs.

Look for homeowners insurance

While homeowners insurance factors into your closing costs, it isn’t just a one-time thing. Insurance is an expense you’ll have to get used to if you’re serious about purchasing property. U.S. homeowners can expect to pay an average of about $1,387 per year or $115 per month in insurance.

In addition to your homeowners policy, you may pay more for flood insurance if you buy in an area impacted by heavy flooding, such as Schuylkill, Lebanon, and Dauphin counties.

When shopping for a home insurance policy, it’s important to compare rates from at least three different insurance companies to make sure you’re getting the best coverage for your money. Your car insurance company will usually give you the lowest rate, especially if you bundle your home and auto policies together.

If you want to compare insurance rates in seconds,

Jerry

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MORE:

Does home insurance cover flooded basements?

Key Takeaway Take homeowner’s insurance seriously when considering buying a house.

Get preapproved for a mortgage

There’s one last step before your house hunt begins! You need to get pre-approved for a mortgage. Getting preapproved will strengthen your financial footing in negotiations and get you on the ground looking at houses. Most sellers won’t even show you their house without a preapproval letter.

Here’s how to get preapproved:

Give your lender your Social Security number

Compile your banking information, employment history, debts, and assets

Complete a mortgage application

It’s fairly easy to get preapproved as long as you’re ready to buy. Your lender will use your information to make sure you can pay your loan, verify your DTI, and perform a hard credit check. If they find you’re not financially ready to support a loan, it can damage your credit score, making it harder to get approved once you’re actually ready in the future.

How to pick the right mortgage in Pennsylvania

Now that you’re looking for mortgages, your biggest concern should be mortgage term and interest rate. It’s most common for mortgages to have terms of 30 years and 15 years.

If you choose a 30-year mortgage term, your monthly payments will be lower, but you’ll be charged higher interest (an average of 3.5%). A 15-year term will have higher monthly payments, but your interest rate will be as low as 2.5%, or even lower. Compare loan options from multiple lenders before you commit to a mortgage.

Look for a house

Let’s look at houses! This is the best part; once you’ve gotten your financial planning out of the way, the house-hunting process makes it worth it.

Pick your city or neighborhood

Are you looking to live in a big city or a small town? Rural or suburbs? Consider culture, climate, and cost of living when determining your needs for your new property.

Some of the most expensive places to live in Pennsylvania include State College,

West Chester

, and

Doylestown

. Greenville, Oil City, and Sugarcreek top the list of most affordable places to call home in the Keystone State.

If you’ve already fallen in love with an area, make sure to check its housing market. If you’re looking for something family-friendly, schools and parks should be a factor in your search. If you’re looking for nightlife, consider proximity to bars, clubs, and urban centers.

Buyer’s market vs. seller’s market

When looking to purchase property, it’s important to pay attention to market trends. Knowing whether you’re in a buyer’s market or a seller’s market can inform your search.

In a buyer’s market, there are plenty of houses to go around, meaning you can probably negotiate for a lower price.

In a seller’s market, there are more buyers than houses available, meaning you should act quickly when putting in an offer.

You can easily check the status of your chosen area’s housing market by looking at recent home sales: find recently sold homes and compare their asking prices to final sale prices. If the asking prices seem to be consistently higher than what the buyers actually paid, you’re in a buyers’ market.

You can also factor in time on the market when determining market status. Seller’s markets sell houses quickly, while a house will typically be listed for longer if buyers have the upper hand.

In 2022, Pennsylvania seems to be a seller’s market, with houses in high demand for a high number of buyers. That means you’ll likely pay more than the asking price for your house, and you should act fast. There’s a solid chance someone will put in a better offer before you can throw your hat in the ring.

Find a real estate agent

If this whole process has you stressed, a real estate agent can help! Finding an agent with extensive experience in your chosen community can be a real lifesaver, especially if you’re moving somewhere that’s completely new to you.

Make sure you have strong communication with your agent—they’re there to help, so be clear about your priorities, what you’re looking for, and what you can afford.

Make an offer

You’ve done it—you’ve found the perfect Pennsylvania property for you. It’s time to put in your offer to the seller. Your agent can help you with the legwork, filling out paperwork, and calculating the best offer you can afford based on the market. If you’ve completed all the necessary steps, you’re ready to seal the deal and move in! Congratulations, homeowner!

How to save on homeowners insurance

Of course, there’s still the question of insurance. It’s not the most exciting part of the homebuying process, but it doesn’t have to be a chore.

Jerry

can take all the usual grunt work out of insuring your home. You can contact agents, manage paperwork, and of course, compare quotes in seconds with the number one insurance app out there. Jerry can even help you bundle your

home and auto insurance

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FAQs

How much money do I need to buy a house in Pennsylvania?

The amount of up-front cash you need depends on your house, your down payment, and your mortgage. With home values in Pennsylvania averaging around $249,137, you should have about $22,000 in savings to cover up-front expenses.

What credit score is needed to buy a house in Florida?

A conventional Pennsylvania mortgage will likely require a credit score of 620 or higher, but you can get loans for 500-530 if you go through the FHA or VA.

What is the best place to buy a house in Pennsylvania?

Urban centers like Philadelphia or Pittsburgh offer the best nightlife and diversity, but their property values are higher. If you’re looking for something cheaper in a quieter scene, try a suburb like Greenville or Brentwood.

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