The Costs Of Buying a Massachusetts Home
Do you know the Massachusetts closing costs for a home buyer? Closing costs in MA can be confusing when you’re not making a purchase every day.
If you are like most people, buying a home is one of the more expensive purchases you will make. But even if you have a good idea of the financial decision ahead, unless you are a Realtor, you probably do not know in detail the full range of costs and fees associated with a home purchase.
There can be a surprising number of additional fees to complete the sale, costs you will want to be aware of as you head into your real estate deal.
For this reason, I have prepared a detailed list of closing costs in MA, along with additional home buying expenses.
This is a list of possible fees you may encounter when buying your home. Also known as closing costs, some are standard for any home purchase, while others you may or may not deal with depending on the nature of your purchase.
A buyer’s closing costs will differ from closing costs for a home seller.
It is essential to be well educated about your costs before jumping into the real estate market as a buyer. Surprises are never a good thing when it comes to spending money.
Expected Closing Costs in MA
Let’s take a deep dive into the closing costs of buying a Massachusetts home. These are known as homebuyer closing costs. These are all real estate terms to know when buying a home.
Property Taxes
You may need to pay some of the property taxes due for the year you are purchasing the home. This usually involves paying the property tax from the date you buy the house through the end of the year.
Real Estate taxes are pro-rated from closing until the end of the tax year. As a Massachusetts home buyer, you are required to pay your fair share of taxes on a property.
Once you own the property, you can appeal your real estate taxes if you feel you’re being unfairly taxed. Some folks discover they are being taxed disproportionately compared to their neighbor’s properties.
Closing/Escrow
Typically, a title company or attorney will ensure the closing meets all state standards. This escrow fee runs around $2.00 for every thousand dollars of the purchase and another $250 on top of the total price.
See a complete explanation of what a title company does. You may not have this closing cost in MA because real estate brokers often hold escrow funds, not title companies.
Home Inspection
Having the property, you consider purchasing inspected for problems by a licensed home inspector usually costs between $400 and $800. The inspection is a home buying necessity to ensure there are no issues with the house you are interested in calling home.
Home inspections are a Massachusetts home buying fee that is worth every penny. As a home buyer, the last thing you want is to be stuck dealing with the owner’s problems. The most common home inspection issues can not only cost a lot of money to fix but could also affect your good health and well-being.
Technically a home inspection is not one of the closing costs in MA, but it is worth mentioning because it is a typical fee most buyers will pay.
Title Company Search
The cost of a title search will depend on the home you are buying and the company you use. You want to do a title search to ensure no one else has any claim to the property you are about to pay for. The lender’s attorney typically performs the title search.
The purpose of a title search is to ensure no defects or encumbrances will cloud the title. If a lender is involved, a Massachusetts home purchase should come with a clean title.
The cost of a title search is usually rolled into the closing costs on the loan charged by the lender.
Recording Fees
The county where you purchase the home will charge a fee to make the purchase part of the public record. The price varies by county. Recoding fees are one of the closing costs in MA that everyone pays.
Owner’s Policy Title Insurance
Title insurance protects you if someone ever claims ownership of the property you buy. Costs can vary by insurer. Lenders will always carry title insurance. Homeowners, however, have the option to pay for title insurance that covers them as well.
First American Title provides a handy calculator that will estimate the cost of title insurance in your area. If you are buying a home in Massachusetts, just plug in the location, and it will give you a ballpark figure for the cost of your title insurance policy.
Flood Determination
Is the home you’re buying suspected to be in a flood plain? Typically costing around $20, this will determine whether your new home is located in a flood zone or not.
If it is, you will need to purchase flood insurance. Flood insurance is expensive but well worth it. Not having flood insurance can be a devastating, life-changing event.
While you will want to consult with a local insurance agent about the cost of an insurance policy, Flood Smart answers some commonly asked questions about the cost of flood insurance.
Closing Costs MA Associated With Financing
When you borrow money to pay for a Massachusetts home, you will encounter additional fees for taking out a loan. Here are the mortgage costs of buying a house in Massachusetts.
Mortgage Application/Pre-approval
Many years ago, it used to be more common for a mortgage lender to charge to give a mortgage loan pre-approval. Rarely is that the case today. It is possible for a very few select mortgage companies that you may see a charge of a few hundred dollars.
The mortgage pre-approval letter says how much the lender feels you can borrow. The letter is used to show your financial strength to a seller.
Pre-approval letters are designed to make a seller feel more comfortable that you are a creditworthy borrower and will have no problem getting the needed financing.
Credit Report
The lender you use will want to know what type of risk you present in order to decide on your loan amount and interest rate. Having a good credit score is essential.
The company will request a credit report to get this information, which usually costs about $30. This fee is typically wrapped in the costs associated with giving you the loan. Running credit is one of the expected closing costs in MA and many other locations.
While there is a minimum credit score to purchase a house, you can get better loan terms when your credit score increases. Mortgage brokers and real estate agents recommend working on your credit scores before buying a home for good reason.
Appraisal Fees
The mortgage lender will collect appraisal fees to hire a licensed professional appraiser. Before a lender loans money on a home, they’ll conduct an appraisal to verify the property is actually worth what you are paying for it.
This way, if you default on the loan and the lender needs to sell the property for payment, it knows that the home will sell for enough money to cover the loan amount.
As the buyer, you will likely be the one paying for the appraisal, which can cost anywhere from $300 to $500. Again, this fee is typically wrapped in the cost of getting a mortgage. It is typical of Massachusetts closing costs.
Processing Fee
Home loans require a lot of paperwork, which you are expected to pay for. The process of looking over your loan application and finalizing your loan may cost upwards of $1,000. This is also a fee that will be wrapped into your loan costs.
Lender’s Policy Title Insurance
This demonstrates to the lender that you own the home and that the mortgage is legitimate. The cost of this title insurance will vary by company. This is a mandatory fee that will be associated with any mortgage company.
Underwriting Fee
The lender will charge another fee for reviewing the complete loan application for approval. Known as underwriting, this fee can cost as much as $795. This is another fee that is rolled into the total cost of obtaining a mortgage.
Underwriting fees are Massachusetts closing costs that can vary from lender to lender. Make sure you do some mortgage due diligence.
Pre-Paid Interest
The mortgage lender will expect you to pay the interest on your loan, paid up to the point where you are 30 days away from your first loan payment. The actual cost will vary based on the total loan amount and interest rate.
Pre-paid interest is a closing cost in MA to plan for because you never know when the closing date will end up on the house, you eventually purchase.
Mortgage Insurance
The commonly used term for mortgage insurance is PMI. While lenders usually prefer that you have 20% down on the home you buy before giving you a loan, many buyers do not have the complete 20%. If this is your situation, you can often still get a loan – you will just need to purchase mortgage insurance to get the loan.
Mortgage insurance is designed to protect lenders against you defaulting on the loan. You are considered a greater lending risk because you do not have the 20%, and the lender will want coverage through mortgage insurance.
This type of insurance will be based on several factors, including the amount of your mortgage, your down payment, your credit score, and loan terms. An average rate for mortgage insurance is around $50 per $100,000 of the loan.
Lot survey
One of the things that a lender will do as part of their obligations when a borrower gets a mortgage is a mortgage plot plan or lot survey. These are not as accurate as a tape survey and essentially just locate the house and any other structures within the property’s lot lines.
These surveys are done to ensure that the property conforms to local zoning laws. The cost of a survey will be a few hundred dollars and is yet another cost that will become part of the buyer’s financing costs. Locating lot lines and finding issues is not that uncommon.
All of these fees are commonly referred to as Massachusetts closing costs!
Optional Home Purchase Costs
You might need to save a few other fees depending on the home you are purchasing. These are the costs of buying a Massachusetts home that is essentially optional but certainly recommended.
Pest inspection
Most home inspectors will check for bugs when inspecting a home. It is part of the standard service they provide. There are, however, some buyers who want a separate inspection from a pest expert.
There is some fear of termites, ants, or other rodents. Expect a general pest inspection to run anywhere between $100-$200.
Radon in Air Inspection
Radon is an odorless gas that can cause lung cancer. Ask the seller if the home has been tested recently. If not, it is probably worth testing for safety reasons.
At-home tests can be gotten reasonably cheaply, while a professional inspection with a monitoring machine can cost around $300.
If radon is detected above 4.0 pCi/L, it is recommended to get a radon mitigation system installed in the home. Generally, this is a seller’s expense. However, no definite rules say a seller has to mitigate radon.
If the seller does not agree to install a radon mitigation system, expect to pay anywhere from $900-$1500. The installation of said system is easy enough and highly recommended for safety.
It is believed that radon in a home is the potential cause of lung cancer. In fact, it is the highest cause among those who have never smoked cigarettes.
Radon in Water Inspection
I am giving this its own category because many buyers forget about testing radon in the water or are not informed by their Realtor that it is a good idea to check. Removing radon from well water is far more costly than removing it from the air.
Expect to pay $4000-$6000 for removing radon from water depending on the type of system installed. There are two types of systems worth noting. One is called a radon aeration system, and the other a granular activated carbon system.
Aeration is the preferred method of removal but also the more costly of the two procedures.
Mold Inspection
If the home has a history of leaks, a previously flooded basement, or other moisture problems, mold testing may be ordered. Mold inspections can cost between $250 and $350 for a qualified inspector who deals with mold testing.
Typically the home inspector you hire will visually check for mold, and if they see something suspicious, they will generally recommend follow-up with a mold specialist. Removing mold found in a home can be very costly. This is another expense that is common for the seller to remedy.
However, it is not mandatory, so if you are stuck footing the bill, the costs can vary tremendously based on the severity of the mold found. It is not uncommon to pay in the thousands for a medium to large mold removal.
Lead Paint
If you have small children, you may want to test for lead paint, costing between $200 and $400. In Massachusetts, there is lead paint law in place that says in any home built before 1978 where a child resides, the lead paint must be removed.
You can see information on the Massachusetts lead paint law here. Lead paint removal can be costly and is something to investigate before buying.
Well Water Inspection
If the Massachusetts home you are buying is serviced by a well and not public water getting a well inspection is a critical consideration. There are two aspects to testing a well. One is the quality of the water, and the other is the quantity. The portability of the water is essential, but so is having enough water.
A qualified inspector will take a water sample, which will be sent to a laboratory specializing in water quality. A detailed report will be generated indicating the safety of drinking the water. The cost of a well quality test can vary, but you should plan on spending at least a few hundred dollars. The quantity test will also run around $200 as well.
Massachusetts Title 5
The title 5 inspection is just another name for a septic system inspection. Most of the time, Title V inspections are a cost borne by the seller in a Massachusetts real estate transaction. However, there are certain occasions where a buyer will need to pay this fee, such as with some short sales or foreclosure purchases.
If you are looking at these types of properties, keep in mind there is a possibility you will be required to cover the cost. An excellent ballpark to use would be $800-$1000.
Miscellaneous Massachusetts Closing Costs, Fees, and Expenditures
The following items are Massachusetts closing costs that are optional or vary tremendously.
Massachusetts Homestead Declaration
Declaring a Massachusetts homestead is an optional expense but a very wise investment. A Massachusetts homestead declaration protects a homeowner for up to $500,000 of the equity in their primary residence if a lawsuit is brought against them.
We live in a very litigious society makes this one of the cheapest forms of insurance you will find. Most attorneys will charge $100-$125 to prepare and record the document. It is one of the least expensive Massachusetts home-buying costs but also one of the most important!
Home Insurance Policy
If you are taking out a mortgage, getting a homeowners insurance policy will be a mandatory requirement of the lender. Even if you are paying cash for a property, it would undoubtedly be a wise investment.
Home insurance will vary greatly depending on the type of home, the town you live in, and the extent of coverage you will be looking for. There are ways to save on your home insurance policy that you should certainly investigate when buying real estate.
Moving Expenses
Whether you are moving from an apartment or another home, don’t forget to budget for your move. If you are going to be moving with help from family and friends, that’s terrific. If not, understand that hiring a moving company can be expensive.
There is also a wide range of costs depending on how much you need to move. If you have a house full of furniture and other possessions, plan on spending a couple of thousand at least.
When you have many things to move, consider having a free donation pick-up or hiring one of the best junk removal companies.
By doing so, you can save on moving expenses and, in the case of a donation pick-up, help someone in need. Take a look at these moving tips to help plan in advance of your move. By planning, your moving day will be far less stressful.
Final Thoughts on Closing Costs in MA
As you can see, there are many Massachusetts closing costs. Some of them are necessary, while others are optional. Hopefully, this will serve as a good guide for understanding the costs of buying a home in MA.
Having a grasp of the required closing costs when getting a loan and the miscellaneous expenses are essential. Financial surprises are never fun! The average closing costs in MA for a buyer can be significant.
Additional Helpful Home Buying Articles
- What are some additional home buying expenses besides the house’s purchase via Maximum Real Estate Exposure?
- What are all the considerations for buying a home – there are many things to consider when buying a home besides closing costs. See some of the more essential ones via HUD.GOV?
About the author: The above Real Estate information on Massachusetts closing costs was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for 35+ Years.
Are you thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.
