What Closing Costs Does a Buyer Pay in Massachusetts?

The price on the purchase and sale agreement is not the whole cost of buying a house. On top of the down payment, a Massachusetts buyer pays a set of closing costs: some to the lender, some to the registry of deeds, some for insurance, and some to square up with the seller. None of them is mysterious, but they arrive on one long page on the day you have the least time to read it. This guide goes through them line by line, so the closing statement is something you have already seen.

The free Massachusetts Home Buyer's Checklist below lists every deadline and document in the purchase, and our closing cost estimator gives you a working figure for the registry and tax items while you are still shopping.

1. The lender's charges

If you are borrowing, the largest group of costs is usually the lender's. Typical items include:

• an origination or underwriting fee;
• discount points, if you choose to buy down the interest rate;
• the appraisal;
• the credit report;
• the flood certification.

Federal rules require your lender to give you a Loan Estimate within three business days of your application, and a Closing Disclosure at least three business days before closing. Put the two side by side. Some charges may not rise at all between the two, and some may rise only within limits. If a number has moved, ask why before closing day, not at the table.

2. Title insurance

Before anyone lends against the house, someone examines the title at the registry of deeds. That means checking the chain of ownership, the mortgages and liens recorded against the property, and any easements or restrictions. Two policies can follow from it:

• A lender's policy, which your lender will require. It protects the bank's loan.
• An owner's policy, which is optional. It protects you against covered title problems that surface after closing, such as a forged deed, an heir nobody knew about, or a recording error, for as long as you or your heirs own the home. It is paid once, at closing.

Buyers often skip the owner's policy because it is optional. We would rather you decided with the facts in front of you, so we quote it separately.

3. Registry of deeds recording fees

Your purchase is not complete until the deed and the mortgage are recorded at the registry of deeds. For Hampden County, that is the Hampden County Registry of Deeds in Springfield. The recording fees are statewide amounts set by statute:

The Declaration of Homestead is the cheapest line on the statement and one of the most valuable. Recorded at closing, it protects a substantial portion of your home equity from most creditors. Ask for it.

4. Prepaids and escrow

Lenders usually collect some costs in advance and hold them in an escrow account, so that property taxes and insurance get paid on time. Expect:

• the first year of homeowner's insurance, which your lender requires before closing;
• an initial deposit into escrow for property taxes, and often for insurance;
• prepaid interest from the closing date to the end of the month.

These are not fees in the usual sense. They are your own housing costs, paid up front. But they are real money at closing, and they surprise buyers who budgeted only for fees.

5. Adjustments with the seller

Massachusetts closings square up costs that run on a calendar, so that each side pays for the time it owned the house:

• Property taxes. If the seller has paid the current tax bill, you reimburse the portion covering the days after closing. If it is unpaid, the seller credits you for their portion.
• Fuel oil or propane left in the tank, where the agreement provides for it.
• Water and sewer. The town's final reading and the Municipal Lien Certificate confirm what is owed through closing. The certificate costs $80 and confirms there are no unpaid taxes, water or sewer charges riding along with the property.

Adjustments can run in your favour or against you, and they are why the final figure moves in the last week.

What the buyer usually does not pay

The Massachusetts deed excise, the state's transfer tax, is customarily the seller's cost. So is the seller's mortgage payoff, and the smoke and carbon monoxide certificate. The purchase and sale agreement decides who pays what, and it can change any of these. Read it, or have us read it, before you sign. Our purchase and sale checklist covers the clauses that matter most.

Before closing day

A few costs come before closing and are easy to forget in the budget:

• the home inspection;
• any specialist inspections it leads to (radon, septic, pests);
• the appraisal, if your lender collects it up front;
• the deposit under the offer and the purchase and sale agreement, which is credited to you at closing.

How we keep the numbers honest

We send you the full closing statement before you sign, with every line explained. We reconcile it against the purchase and sale agreement and your Closing Disclosure, and we flag anything that does not match. Our fee for representing you at a closing is a flat fee, quoted before you commit. Our guide to how a Massachusetts closing works explains the stages from offer to recording.

If you are buying in Western Massachusetts, call us before you sign the purchase and sale agreement, not the week of the closing.

Real estate closings office: 198 Belmont Avenue, Springfield, MA 01108 (by appointment) Phone: (413) 787-9955