Massachusetts closing costs
Buying a home in Massachusetts? Set aside 2% to 3% of its price for closing costs
If you’re buying a home in Massachusetts, you’re probably curious about the closing costs. Failing to know this can lead to a lot of stress if you're unprepared to pay costs beyond the quoted house price. So, what are closing costs in Massachusetts?
The average price of a home in Massachusetts is $604,986. Homebuyers, on average, are looking at closing costs of approximately $7,964, or 1.32% of the home’s price. If you are considering buying a home in the Bay State, read on to learn how to cut down your closing costs.
The average closing cost in Massachusetts is 2% to 3% of the property's purchase price.
Jump to insightSome lenders offer credits for closing costs in exchange for a higher interest rate.
Jump to insightYou can reduce closing costs by getting quotes from different service providers and negotiating the best deal.
Jump to insightWhat are closing costs in Massachusetts?
If you can’t cover the closing costs, some lenders might offer you credits to cover them. However, that often raises your mortgage interest.
Closing costs are expenses you must cover in addition to the home's price before the deal is sealed. They’re the costs you pay for the services that facilitate the transaction.
In Massachusetts, you can expect to pay closing costs like appraisal fees, origination fees, title insurance, credit report charges and more. Some of these charges are expensive, and total closing costs can be in the thousands.
To avoid unexpected expenses, you should anticipate and budget for closing costs while looking to buy a home.
What closing costs are Massachusetts buyers responsible for?
If you work with a real estate attorney, you must also pay their costs.
If you're buying a home in Massachusetts, you’ll be expected to pay several closing fees before the property is yours. Below is a breakdown of the expected costs:
- Application fees: Some mortgage companies in Massachusetts charge application fees to process your application.
- Home inspection fee: It's always advisable to conduct a professional home inspection to ensure the home is in good condition and there's no hidden damage or hazard that could cost you more money down the line.
- Appraisal fees: Most mortgage companies require an appraisal to ensure the property is worth the proposed loan.
- Title fees: These include title search and title insurance fees. A title search ensures the home has no outstanding legal issues. On the other hand, title insurance protects you if problems arise with the title.
- Discount points: Some lenders in Massachusetts offer discount points. You pay more upfront to receive a lower interest rate.
- Origination fee: Mortgage companies charge an origination fee to cover administrative costs. Origination fees are calculated as a percentage of the total loan amount and are often the most significant charges you need to pay to close your mortgage.
The list above covers only a handful of the closing costs you might need to pay when buying a home in Massachusetts. You should work with your real estate agent to understand all the closing costs.
Who pays closing costs in Massachusetts, buyer or seller?
Closing costs in Massachusetts are split between the buyer and the seller, with most of the burden falling on the seller. However, some expenses are negotiable and can be paid by either party.
Generally, the seller pays closing costs like agent commissions and additional fees like prorated property taxes and attorney's fees.
Buyer | Seller | |
---|---|---|
Title fees | ||
Origination fee | ||
Credit fee | ||
Real estate commissions | ||
Transfer taxes | ||
Attorney's fee |
It's important to note that recent changes in real estate rules could shift how agent commissions work. Starting in August 2024, sellers can negotiate traditionally fixed commissions with agents (both sellers' and buyers' agents.)
The new rules will benefit sellers and buyers because sellers can negotiate lower commissions with their agents while buyer agents will likely compete for clients by offering lower commission rates.
How much are closing costs in Massachusetts?
If you're buying or selling a house in Massachusetts, you need a rough estimate of how much you should budget for closing costs. Overall, buyers pay average closing costs of 1.32% of the home's value. Now let's look at a more detailed breakdown:
Average cost in Massachusetts | |
---|---|
Loan application fee | $500 or less |
Loan origination fee | 0.5%-1.5% |
Home appraisal fee | $400-$700* |
Real estate attorney | $257 |
Courier fee | $30-$50 |
Credit report fee | Under $50 |
Title search fee | $80-$200 |
Title insurance fee | $146 up to $39,000; $3.65 per $1,000 from $40,000-$1,000,000; $2.05 per $1,000 from $1,001,000-$8,000,000 |
Discount points | 1% of the mortgage value |
Transfer tax | 0.46% |
Home inspection fee | $300-$500 |
Homeowners insurance | $1,545 |
Recording fee | $48 |
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How to save on closing costs in Massachusetts
While closing costs sound like small expenses, they can stack up and push you over your budget. Fortunately, you can do a few things to reduce your closing costs significantly. Let's look at some of the most effective ones.
- Shop around for services: Escrow agents and title companies often compete by offering clients better deals than their competitors. Get quotes from different companies and choose the best deal. Remember to ask whether they offer discounts or bundling services.
- Negotiate with service providers: While some closing costs, like government services, are fixed, others are not. Compare loan estimates from different lenders and highlight any discrepancies. You can then use them to negotiate for the lender to pay closing costs.
- Negotiate with the seller: Your closing costs are negotiable in Massachusetts. So, it’s always advisable to negotiate with the seller to pay some of your closing costs to make buying the property less of a hassle.
- Time your purchase: If you buy the home toward the end of the month, you'll pay lower prepaid interest.
If you'd like to learn specifically how to negotiate closing costs down, read our detailed guide on negotiating your mortgage closing costs.
FAQ
Are closing costs in Massachusetts high?
No, closing costs in Massachusetts are 1.32% of the buying price, or $7,964 on average. This is lower than the national average of 1.81%.
How can I reduce title insurance in Massachusetts?
Some possible ways to reduce title insurance are to comparison shop with different providers, ask for a discount for purchasing both owner’s and lender’s title insurance and request a reissue rate, a lower rate some insurers have for properties that had a title policy in the past.
What happens if I can't afford all the closing costs upfront in Massachusetts?
Most lenders in Massachusetts can give you credit for your closing costs. However, this often increases your interest rate, so you should weigh your options before committing.
Bottom line
Closing costs can be high — we get it. But you will need to pay them if you want the keys to the house. While these closing costs can often stack up and push you beyond your intended budget, using some of the cost-saving measures discussed can help you reduce the burden so you can enjoy your new home.
Article sources
- CoreLogic, “Average Closing Costs for Purchase Mortgages Increased 13.4% in 2021, CoreLogic’s ClosingCorp Reports.” Accessed June 24, 2024.
- National Association of Realtors, “Appraisal Survey.” Accessed June 24, 2024.