How Much Are Closing Costs in Massachusetts? Avoid Surprises with Our Guide

How Much Are Closing Costs in Massachusetts? Avoid Surprises with Our Guide

Curious about how much are closing costs in Massachusetts? Learn the typical expenses for buyers and sellers.

Marcio VasconcelosMarcio Vasconcelos

Published on May 23, 2024

How much are closing costs in Massachusetts? If you're buying or selling a home in the Bay State, it's crucial to understand the closing costs involved in the transaction. 

These fees can vary significantly based on the property's price, location, and other factors. In this comprehensive guide, we'll break down everything you need to know about closing costs in Massachusetts, including the typical costs for buyers and sellers, who pays for what, and how to calculate your expenses.

What Are Typical Closing Costs for a Buyer in Massachusetts?

In Massachusetts, buyers typically pay closing costs ranging from 2% to 5% of the purchase price. Here’s a detailed list of the common closing costs for buyers:

1. Loan Origination Fee:
Charged by the lender for processing the mortgage application. If you're debating mortgage broker vs loan officer, it's important to know that loan origination fees usually range from 0.5% to 1% of the loan amount.

2. Appraisal Fee:
The cost of a professional property appraisal, generally between $300 and $500.

3. Home Inspection Fee:
A professional home inspection costs around $400 to $600.

4. Credit Report Fee:
Lenders charge a fee to obtain the buyer's credit report, typically $25 to $50.

5. Title Search and Title Insurance:
A title company will conduct a title search to verify that the seller has clear ownership of the property, costing around $300 to $500.

Title Insurance protects the buyer and lender against title defects. Premiums usually range from $1,000 to $1,500.

6. Recording Fees:
The local county charges fees to record the property deed and mortgage documents, typically around $100 to $150.

7. Survey Fee:
A property survey may be required to confirm boundaries, costing around $400 to $700.

8. Attorney Fees:
Legal fees for representing the buyer at closing, usually ranging from $800 to $1,200.

9. Prepaid Property Taxes and Insurance:
Buyers prepay property taxes at closing, covering 2 to 6 months worth. Also, the first year's premium of homeowners insurance is typically paid upfront, ranging from $800 to $1,200.

10. Private Mortgage Insurance (PMI):
If the buyer’s down payment is less than 20%, they may be required to pay PMI, which is typically 0.5% to 1% of the loan amount annually.

How to Calculate Closing Costs for Buyers in Massachusetts

To estimate your closing costs, consider the following formula:

Determine Loan Amount:
Loan amount = Purchase price - Down payment

Calculate Percentage-Based Costs:
Loan Origination Fee: Loan amount × 1%
Title Insurance: Loan amount × 0.5% to 1%

Add Fixed Costs:
Appraisal Fee: $300 - $500
Home Inspection Fee: $400 - $600
Attorney Fees: $800 - $1,200
Recording Fees: $100 - $150
Survey Fee: $400 - $700

Include Prepaid Costs:
Property Taxes: 2 to 6 months of tax payments
Homeowners Insurance: $800 - $1,200

Example Scenario:
Purchase Price: $500,000
Down Payment: 20% ($100,000)
Loan Amount: $400,000

Closing Cost

Calculation/Details

Amount ($)

Loan Amount

Purchase Price - Down Payment

$400.000

Percentage-Based Costs

   

Loan Origination Fee

Loan Amount × 1%

$4.000

Title Insurance

Loan Amount × 0.75%

$3.000

Fixed Costs

   

Appraisal Fee

$300 - $500

$400

Home Inspection Fee

$400 - $600

$500

Attorney Fees

$800 - $1,200

$1.000

Recording Fees

$100 - $150

$120

Survey Fee

$400 - $700

$500

Prepaid Costs

   

Property Taxes

Annual Property Tax = Purchase Price × 1.2%

Prepaid Property Tax (3 months) = Annual Tax ÷ 4

$1.500

Homeowners Insurance

$800 - $1,200

$1.000

Total Closing Costs

 

$13.020

What Are Typical Closing Costs for a Seller in Massachusetts?

Sellers in Massachusetts usually pay closing costs ranging from 6% to 10% of the property’s sale price. Here’s a detailed list of common closing costs for sellers:

1. Real Estate Agent Commission:
Commission fees are typically 5% to 6% of the sale price, shared between the buyer’s and seller’s agents.

2. Attorney Fees:
Sellers often hire an attorney to draft the closing documents and represent them, costing around $800 to $1,500.

3. Title Search and Title Insurance:
Sellers pay for a title search to confirm ownership, costing around $300 to $500. Also, sellers often cover the buyer’s title insurance premium, ranging from $1,000 to $1,500.

4. Transfer Taxes (Excise Tax):

Massachusetts charges transfer taxes on property sales, typically $4.56 per $1,000 of the sale price. Some towns impose additional local taxes.

5. Recording Fees:
Fees for recording documents with the local county clerk, generally around $100 to $200.

6. Mortgage Payoff and Prepayment Penalties:

Mortgage Payoff:
Sellers must pay off any remaining mortgage balance.
Prepayment Penalties:
Some lenders charge prepayment penalties for paying off a mortgage early.

7. Property Taxes and Utility Bills:
Sellers must settle any unpaid property taxes and utility bills before closing.

How Much Does a Closing Attorney Cost in Massachusetts?

Closing attorney fees in Massachusetts typically range from $800 to $1,500, depending on the complexity of the transaction and the attorney's experience. The attorney’s role includes:

  • Reviewing purchase agreements and loan documents.
  • Conducting title searches and resolving title issues.
  • Preparing and reviewing closing documents.
  • Representing the client at the closing table.

Learn more:
What Are Local Zoning Laws And Why Are They Important?

Who Pays Most Closing Costs in MA?

Custos de fechamento em Massachusetts
Image: Canva

In Massachusetts, closing costs are usually split between the buyer and seller, but the seller often pays a larger share due to agent commissions and title insurance. Here’s a general breakdown:

Buyers typically pay for loan-related fees, inspection costs, and prepaid expenses. Seller, in turn, usually covers agent commissions, transfer taxes, and title insurance.

How Can I Lower My Closing Costs in Massachusetts?

Reducing closing costs in Massachusetts is achievable with a strategic approach. Here’s a simple yet detailed guide for both buyers and sellers on how to lower these expenses:

For Buyers

1. Shop Around for Lenders:
Lenders have varying fees for loan origination and other services. Obtain quotes from at least three different lenders and compare their fees, interest rates, and overall loan terms.

2. Negotiate Loan Origination Fees:
Some lenders may be willing to reduce or waive loan origination fees. Ask your lender if they can lower the origination fee, or look for "no-closing-cost" mortgage options.

3. Choose a Higher Deductible for Homeowners Insurance:
A higher deductible often results in a lower annual premium. Evaluate your financial ability to cover a higher deductible and adjust your homeowners insurance policy accordingly.

4. Apply for First-Time Homebuyer Assistance Programs:
First-time homebuyers can benefit from state and local assistance programs that offer reduced closing costs. Explore programs like MassHousing, which provides down payment and closing cost assistance, and check eligibility requirements to apply early.

5. Bundle Title Services:
Some title companies offer discounts for bundling title insurance and settlement services. Ask your lender or real estate agent to recommend title companies with bundle offers and compare bundled service costs with individual pricing.

6. Review the Loan Estimate Carefully:
The Loan Estimate provides a breakdown of closing costs. Review the document carefully for errors or unnecessary fees, and challenge any suspicious or unclear charges.

7. Opt for a No-Points Loan:
Paying points up front lowers interest rates but increases closing costs. Choose a no-points loan to reduce immediate expenses, and weigh the long-term interest rate savings against the upfront costs.

8. Ask the Seller to Contribute:
Sellers may agree to cover some of the buyer's closing costs as part of negotiations. Request a seller concession in your offer, and limit the request to reasonable amounts based on market conditions.

For Sellers

1. Negotiate Agent Commissions:
Real estate agent commissions make up a significant portion of seller closing costs. Negotiate lower commission rates with your agent, or consider working with a discount brokerage that offers reduced rates.

2. Pre-Inspect the Property:
A pre-listing inspection helps identify major issues before listing the home. Address any significant problems that could impact the selling price, and provide the inspection report to potential buyers to avoid surprises.

3. Provide Incentives Instead of Repairs:
Offer credits or concessions instead of spending on repairs. Offer a credit for repairs instead of fixing them yourself, and emphasize the opportunity for buyers to customize the property.

4. Minimize Staging Costs:
Staging helps attract buyers but can be costly. Use existing furniture creatively to stage key rooms, or opt for a virtual staging service to save on physical staging.

5. Shop Around for Closing Attorneys:
Attorney fees vary, and finding the right attorney at a reasonable rate can help save on closing costs. Obtain quotes from at least three different attorneys, and choose an attorney with reasonable fees and positive reviews.

6. Negotiate Transfer Taxes:
Some buyers are willing to share or cover the transfer tax as part of the negotiation. Discuss transfer tax responsibility with your real estate agent, and negotiate with the buyer to share the cost.

FAQs about Closing Costs in Massachusetts

1. What are typical closing costs for a buyer in Massachusetts?

Buyers typically pay closing costs ranging from 2% to 5% of the purchase price, including loan origination fees, appraisal fees, title insurance, and attorney fees.

2. How much does a closing attorney cost in Massachusetts?

Closing attorney fees usually range from $800 to $1,500.

3. What are the highest closing costs?

The highest closing costs include agent commissions, title insurance, transfer taxes, and loan origination fees.

6. Does a seller need an attorney at closing in MA?

Yes, sellers are required to have an attorney represent them at closing.

Conclusion

Closing costs in Massachusetts can vary widely based on the type of transaction, property value, and other factors. Understanding these expenses can help buyers and sellers budget more accurately and avoid surprises at the closing table.
 

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