Boston Real Estate for Sale

11 Hidden costs in buying a Boston Seaport condo. In today’s blog post I’ll go over the 12 hidden costs when buying a Seaport condo, whether it’s closing costs, insurance costs, or utility costs. When many Boston real estate for sale buyers consider the cost of buying a home, the mortgage payment is typically the expense that immediately comes to mind. Whether you are a first time home buyer or an experienced buyer you will want to familiarize yourself with all the costs of buying a downtown Boston condo.

Boston Real Estate Buyers Agent

First let me star off with, Boston Real Estate Buyers Agent is no cost to the buyer. This is one thing some buyers don’t realize. You do not pay your (Ford Realty Inc) as a buyer. The seller pays the listing firm. The listing firm then pays the cooperating firm a percentage. The cooperating firm then pays the Real Estate Agent. This is how Boston Realtors get paid.

Boston Real Estate Mortgage

While the mortgage payment is indeed an important cost factored into a home purchase (unless you are paying all cash), there are several other lesser-known costs that are a necessary aspect of buying a Seaport condo. Some of these are one-time costs, whereas others recur long after buying a condominium

Boston Real Estate less known costs

The list below are the  most common costs you will incur when buying a Boston real estate

  1. Earnest money
  2. Closing costs
  3. Property taxes
  4. Homeowner’s insurance 
  5. Funding the escrow account 
  6. Private mortgage insurance 
  7. Interest rate 
  8. Moving costs
  9. Utilities
  10. Boston condo fees
  11. Maintenance and repairs 

Wondering what these terms mean? Let’s delve into defining these terms and explain what each cost means for your wallet:

1. Earnest Money Down

When you find the Seaport condo you wish to buy, you will be required to submit an earnest money deposit to the seller. This deposit is your way of telling the seller you are serious about buying the condo and aren’t going to get the seller’s hopes up and then go off and buy a different home. The earnest money is placed in an escrow account that is typically handled by the buyer’s real estate agent, and the seller cannot access the funds. When you close on the home, the earnest money deposit typically goes towards the purchase of the property. On the flip side, if you are unable to obtain a mortgage or decide to walk away from the deal, you may lose that deposit, depending on how your contract is worded.  

The earnest money amount varies, but it typically ranges between 5 and 20 percent of the purchase price.

2. Closing Costs

On average, Seaport condo buyers will pay between two and five percent of the purchase price in closing costs. Typical closing costs include:

  • Loan Application Fees
  • Points
  • Appraisal Fee
  • Inspection Fees
  • Transfer Taxes
  • Escrow Fees
  • Attorney Fees
  • Recording Fees
  • Title Insurance
  • Title Search Costs

These fees, as well as the down payment, are typically paid at the closing table. Some of these fees are fairly small, such as a recording fee which tends to be about $50. Other fees, such as the home inspection fee, may be several hundred dollars, and mortgage points may be thousands of dollars. While there is not cost for a mortgage approval there are costs associated with your lender. If you cannot afford the closing costs, it is possible to roll them into your loan payment. While this will bring your mortgage payment up, it will mean paying less money at the closing table.

3. Property Taxes

In the state of Massachusetts, there is no statewide property tax. 

Property taxes will differ from city to city and county to county.

When buying a Seaport home, it is important to consider the rising value of the property – especially if you are buying in a hot market. For example, your home may be valued at a certain price when you purchase it, but may increase in value in the months after you close on the home. If the county assesses your home at a higher value than when you bought it, you may receive an increase in your tax bill, As your property increases in value over the years, your taxes will also rise, making your monthly mortgage payment higher, so that is something you will also want to account for when projecting home costs.

4. Homeowner’s Insurance

Homeowner’s insurance provides coverage in the event your home is affected by a fire, theft, natural catastrophe, etc. Many mortgage companies require homeowner’s insurance because they want to ensure their investment in your home is protected in the event it is destroyed or severely damaged. There are different types of homeowner’s insurance available; some insurance companies may pay to repair or replace the belongings in your home that have been destroyed. Other forms of homeowner’s insurance may also include coverage in the event that a visitor is injured while visiting your home.

Many mortgage lenders will also allow your homeowner’s insurance to be combined with your monthly mortgage payment, making it one less payment to have to think about each month.

5. The Escrow Account

When buying a Boston Seaport home, you will typically need to pay homeowner’s insurance payments,which is placed into an escrow account. This is all part of the home buying process. The phrase ‘escrow’ means that your funds are being held in an account you cannot touch. The bank will then withdraw the funds from the escrow account to pay the property tax and homeowner’s insurance. Lenders typically require that additional funds remain in the account as well in the event that insurance or taxes are higher than anticipated. If you sell your home and extra funds are in the escrow account, they will be paid back to you.

6. Private Mortgage Insurance (PMI)

If you are buying a high rise condo and putting less than twenty percent down, mortgage lenders will require that you pay private mortgage insurance. Private mortgage insurance protects the lender in the event you are unable to make mortgage payments down the line.

You won’t pay private mortgage insurance forever. Once you own 20 percent of your home, your lender will stop charging you for it. While private mortgage insurance amounts can vary.

7. Interest Rate

Most mortgage lenders calculate the interest rate based on your credit score, income, down payment, and work history.

If your credit score is under 620, you cannot afford a down payment of at least 10 or 20 percent, and you have recently switched jobs, it may be worthwhile to wait until your credit score has gone up (typically by paying off any outstanding credit card debt), save up for a higher down payment, and wait until you have been employed for a longer period of time. All of these factors will help you obtain a lower interest rate on your mortgage, leading to lower monthly payments and potentially saving thousands of dollars over the long term.

8. Moving Costs

The Seaport District is the hottest downtown Boston neighborhood, with individuals moving here everyday. Although moving is a one-time cost (as opposed to the other recurring costs highlighted above), it’s still an important one that can add up very quickly depending on your moving needs. 

9. Utility Costs

Typical utility costs for homeowners tend to include the following:

  • Electric
  • Water
  • Gas
  • Cable/Internet
  • Trash/Recycling
  • Parking fees (if applicable)
  • Homeowners association fees (if applicable, detailed below)

By detailing out the utility costs before buying the home you won’t be as shocked to see your monthly bills as you may have otherwise been.

In addition to paying these bills each month, some utility companies may also require an initial fee to set up the service.

10. Boston Condo Fees

Boston condo fees do not apply to all homeowners. These only apply to condominium buildings.  A homeowner’s association fee is a monthly fee that is paid to maintain the building’s common areas such as lobbies, elevators, swimming pools, landscaping, tennis courts, garbage disposal, and any other amenities. Prior to purchasing a home, your real estate agent should be able to inform you whether or not homeowner’s association fees will apply and how much they will cost each month.

11. Home Maintenance and Repairs

Home maintenance and repair costs typically vary depending on the age of the home you’re buying. If the home is newer, you may only spend a few hundred dollars a year on general upkeep. However, if the home is older, there may be major structural changes that are needed that can cost several thousand dollars a year. Regardless of the year the home was built, maintenance and repair costs always apply to a home, as wear and tear is normal and expected.

In addition to the costs outlined above, it is also helpful to think about the ‘fun’ purchases as well, such as buying new furniture and home décor, which are common purchases for new homeowners.

Boston Real Estate and the Bottom Line 

If you are feeling overwhelmed by this list, don’t be discouraged. If you have a great Realtor on your side you should know these costs ahead of time as they will prep you for them. .

One of the many positive aspects of working with a downtown Boston real estate agent is that they can provide guidance and detailed information regarding the various costs outlined here. It may also be helpful to speak with a financial advisor prior to buying a Seaport condo to help budget for the costs involved in homeownership.

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