Buyer Closing Costs in Massachusetts: What You Pay and How to Save

Your down payment is not the only cash you need to buy a home. You also pay closing costs: fees for your loan, your attorney, title insurance, recording, and money set aside for taxes and insurance. Here is what Massachusetts buyers usually pay and how to keep those costs down.

How much are closing costs?

Fannie Mae notes that closing costs generally run about 2% to 6% of the purchase price nationwide. Where you land depends on your loan, your price, your town’s tax bill, and when you close. Your lender must give you a Loan Estimate after you apply, and by federal law you must receive your Closing Disclosure at least three business days before closing. Compare the two carefully.

What buyers pay in Massachusetts

1. Lender fees

These cover making your loan. Fannie Mae says lender fees are usually 1% to 2% of the loan amount. They can include:

• Origination or underwriting fees
• Discount points, if you choose to buy a lower rate
• Appraisal (Fannie Mae puts a typical appraisal at about $300 to $600)
• Credit report and flood certification fees

2. Attorney fees

Massachusetts closings are run by attorneys, not title companies. In most financed purchases the closing attorney represents your lender, and the buyer pays that attorney’s fee as part of closing costs. The closing attorney handles the title search, prepares the settlement statement, and records your deed and mortgage.

Many buyers also hire their own attorney to review the Purchase and Sale Agreement and protect their interests. Sometimes the same attorney does both jobs, with your consent. Ask for each fee in writing up front.

3. Title insurance

Title insurance protects against problems with ownership, such as old liens or errors in public records. There are two kinds:

• Lender’s policy: Required by your lender and paid by you. It protects the bank’s interest.
• Owner’s policy: Optional, but many attorneys recommend it. It protects you for as long as you own the home.

Both are one-time premiums paid at closing. The lender’s policy is based on your loan amount, and the owner’s policy on the price. Ask your attorney for a quote early.

4. Registry of Deeds recording fees

Your documents are recorded at the county Registry of Deeds. Current state fees, including surcharges, are:

In Massachusetts the seller usually pays the deed excise tax (often called “tax stamps”), not the buyer.

5. Prepaid items and escrow

These are not really fees. They are your own future bills paid in advance:

• Homeowners insurance: Usually the first year’s premium is paid before or at closing.
• Escrow deposit: Most lenders set up an escrow account for property taxes and insurance. You often fund a few months of taxes and some months of insurance at closing.
• Tax adjustment: Property taxes are split between you and the seller based on the closing date. Many Massachusetts towns bill quarterly, so the adjustment depends on where you close in the billing period.
• Prepaid interest: Interest from your closing date to the end of the month.

6. Other possible costs

• Home, lead, radon, pest and septic inspections, usually paid before closing (see our inspection guide)
• Condo fees, a condo document fee, or a prorated share of monthly dues for a condo
• Mortgage insurance, depending on your loan type and down payment
• Your oil tank adjustment, if the home heats with oil and your contract says you will pay the seller for fuel left in the tank

Seller credits: how they work

A seller credit (also called a concession) is money the seller agrees to put toward your closing costs. It is negotiated in your offer or after the inspection. Lenders cap how much a seller can contribute. For conventional loans backed by Fannie Mae, the limits for a home you will live in are:

Seller credits can pay closing costs but cannot be used for your down payment. FHA, VA and other loans have their own limits, so ask your lender.

How to lower your closing costs

1. Compare lenders. Get Loan Estimates from at least two or three lenders on the same day and compare the fees, not just the rate.
2. Look at assistance programs. MassHousing and many cities offer down payment and closing cost help for eligible buyers. See our first-time buyer programs guide.
3. Negotiate a seller credit within your lender’s limits.
4. Ask about lender credits. Some lenders will pay part of your costs in exchange for a slightly higher rate. This can make sense if you plan to sell or refinance within a few years.
5. Ask for attorney and title quotes early, and ask what is included.
6. Pick your closing date with prepaid interest and tax timing in mind.

How Luis can help

Luis and our team can help you estimate your total cash to close, negotiate seller credits, and connect you with trusted local lenders and attorneys, in English or Spanish. Book a free 15-minute call through our contact page.