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Boston Real Estate for Sale: A Quick Guide to Closing Costs

Boston condo buyers face a long list of expenses and fees. Some of these costs are fixed, but others can be reduced with a little negotiation.

How many checks they’ll have to write, and for how much, will vary. Some of these closing costs may be fixed, while others can be reduced by shopping around for certain services or by negotiating with the seller or lender.

Nationwide, closing costs for a single-family home, taxes included, averaged $6,044 in 2020, according to ClosingCorp, a real estate data firm.

Before You Start Your Boston Downtown Real Estate Search

Before even starting a home search, buyers, especially first timers, should consider working with a lender and getting preapproved for a mortgage — this can help in their budgeting. As you move further along the buying process, the costs for closing will become clearer. Lenders are required to provide a loan estimate at the time of an initial application and then a “closing disclosure” with locked-in costs and specific amounts just before closing.
The loan estimate could be used to compare costs among lenders, some of whom might be willing to waive or lower certain fees, like those involving loan origination, or tacked-on costs like courier fees. In some instances, sellers might agree to absorb some of the closing costs as part of their negotiations with buyers.

Here is a quick look at some of the main closing costs.

Most lenders charge a fee for initiating and underwriting a mortgage. This will typically include application and commitment fees and might also involve a fee to lock in the interest rate of a loan. It is here, too, where borrowers may see a charge for mortgage discount points, which they may opt to pay to lower the rate. A point is equivalent to 1 percent of the mortgage amount and can be bought in increments. (Over the last five years, a typical 30-year, fixed-rate mortgage carried 0.5 to 0.7 discount points, according to Freddie Mac.)

Boston Real Estate Appraisal Fee

The appraiser will evaluate the home’s condition, among other things.

To ensure there are no issues with the ownership of a Boston high rise condo, or liens or judgments against it, a title search is conducted. Buyers could theoretically do this on their own by examining public records, but most real estate and mortgage brokers recommend hiring a professional. Title companies can charge from around $150 to $500 for a title search.

Nearly all lenders will require title insurance as an added protection against any potential disputes after the closing — this is usually paid by the buyer in a one-time premium. 

Some states require that buyers have a real estate lawyer present for the closing transaction.

The lawyer will typically review all the necessary paperwork and documentation and advise on any issues. Legal fees will vary widely, usually depending on the location and the type of property being purchased. Expect to pay either a flat fee or an hourly rate, usually starting at around $150 an hour. Some law offices may offer a discount if they’re hired to represent a buyer in both the selling and purchase of a home.

credit report will be ordered to determine your creditworthiness. Some lenders may cover this cost; otherwise, expect to pay from $30 to $50 per report. You could pay more, however, if there are inaccuracies in a report that need to be corrected.

There are also fees for recording the deed or mortgage

And of course taxes, buyers will be required to keep at least two months of property taxes in an escrow account, and to pay at least the first year of homeowners’ insurance before closing. Insurance costs vary by state, though the national average is $1,477 a year, according to Bankrate.com.

 Have You Budgeted for Closing Costs?

What Are Closing Costs?

According to Trulia,

When you close on a home, a number of fees are due. They typically range from 2% to 5% of the total cost of the home, and can include title insurance, origination fees, underwriting fees, document preparation fees, and more.”

For those who buy a $250,000 home, for example, that amount could be between $5,000 and $12,500 in closing fees. Keep in mind, if you’re in the market for a home above this price range, your costs could be significantly greater. As mentioned before,

Closing costs are typically between 2% and 5% of your purchase price.

 Trulia gives more great advice, saying,

“There will be lots of paperwork in front of you on closing day, and not enough time to read them all. Work closely with your real estate agent, lender, and attorney, if you have one, to get all the documents you need ahead of time.

The most important thing to read is the closing disclosure, which shows your loan terms, final closing costs, and any outstanding fees. You’ll get this form about three days before closing since, once you (the borrower) sign it, there’s a three-day waiting period before you can sign the mortgage loan docs. If you have any questions about the numbers or what any of the mortgage terms mean, this is the time to ask—your real estate agent is a great resource for getting you all the answers you need.”

Boston Real Estate & The Bottom Line

Let’s get together to discuss the Boston condo buying process, to be sure your plan includes budgeting for what you need to purchase your dream home – without any surprises.

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