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When buying or selling a home in Massachusetts, one of the key aspects of the transaction that both buyers and sellers must account for are closing costs. These are the fees and expenses incurred when transferring property ownership from the seller to the buyer. Closing costs are often overlooked in the excitement of securing a new home, but they can add up significantly, impacting the overall cost of a home purchase or sale.
In Massachusetts, as in many states, the responsibility for paying closing costs can vary depending on whether you are the buyer or the seller. While some costs are shared, there are specific fees that one party is typically responsible for over the other.
This article will walk you through the essential elements of closing costs in Massachusetts, including who typically pays these costs, an overview of the 2025 closing cost projections, and important details every buyer and seller should know before heading to the closing table.
What Are Closing Costs?
Before diving into who pays what, it’s important to understand what "closing costs" actually are. Closing costs encompass a wide variety of fees and charges that are required to complete a real estate transaction. These costs are in addition to the sale price of the property and can include:
- Lender fees (for buyers taking out a mortgage)
- Title insurance
- Appraisal fees
- Attorney fees
- Home inspection costs
- Property taxes
- Recording feeswho pays closing costs in massachusetts
- Escrow fees
In Massachusetts, closing costs for buyers typically range between 2% to 5% of the total purchase price. For example, on a median-priced home of $660,000, buyers could expect to pay up to $33,000 in closing costs. While this number can fluctuate based on the type of transaction, lender requirements, and the specific terms of the sale, it's essential to budget for these expenses.
Who Pays Closing Costs in Massachusetts: Sellers or Buyers?
Buyer’s Closing Costs
For the buyer, closing costs in Massachusetts are generally higher due to mortgage-related expenses. Below are some of the typical buyer closing costs in Massachusetts:
1. Loan Origination Fees: Lenders often charge fees for processing the mortgage. These fees can vary but are typically a percentage of the loan amount.
2. Appraisal Fees: Before approving a loan, lenders often require an appraisal to determine the home's value. This ensures that the house is worth the price being paid.
3. Title Insurance: This insurance protects the buyer and lender against any potential disputes over property ownership. Buyers usually pay for title insurance unless the seller negotiates to cover it.
4. Inspection Costs: Home inspections are crucial in identifying potential issues with a property. Buyers typically pay for the cost of hiring an inspector.
5. Recording Fees: These are fees for recording the sale with the local government, which officially documents the new ownership.
6. Attorney Fees: Massachusetts is one of the few states that requires buyers to have an attorney for the closing process. The attorney’s fees for reviewing contracts and other documents are an added expense for buyers.
7. Escrow Fees: If an escrow company is used, there will be fees associated with managing the funds and documents during the closing process.
8. Prepaid Taxes and Insurance: Buyers will also have to pay for a portion of property taxes or homeowners insurance at closing, which can vary depending on the time of year and when the payment is due.
Seller’s Closing Costs
Sellers in Massachusetts are also responsible for specific costs when selling a property. Some of these may be negotiated with the buyer, but generally, sellers can expect to pay the following:
1. Real Estate Agent Commissions: One of the largest closing costs for sellers is the real estate agent commission, which typically ranges from 5% to 6% of the sale price. This fee is often split between the buyer’s and seller’s agents. For a median-priced home of $660,000, this can amount to around $33,000.
2. Outstanding Mortgage Balance: If the seller still owes money on the property, the remaining mortgage balance must be paid off at closing. This will reduce the proceeds from the sale.
3. Title Insurance: In some cases, the seller may agree to cover the buyer's title insurance, though this is not a universal practice. In Massachusetts, it's typically the buyer's responsibility unless the seller offers to pay.
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who pays closing costs in massachusetts - Who Pays Closing Costs in Massachusetts: Sellers or Buyers?
