Closing costs in Massachusetts, line by line

Buyers budget for the down payment and are blindsided by the second number: the cash you need at the closing table on top of it. In Massachusetts that is typically 2–4% of the purchase price for a financed purchase — $9,000–18,000 on a $450,000 home. Here is where it goes.

Lender charges

• Origination or underwriting fee: 0–1% of the loan. Some lenders charge none and price it into the rate.
• Appraisal: $500–800. Ordered by the lender, paid by you, usually before closing.
• Credit report, flood certification, tax service: small line items that add up to $100–200.
• Discount points, if you buy the rate down: 1 point = 1% of the loan for roughly 0.25% off the rate. Optional, and a great use of gift money because it lowers the payment for the life of the loan.

Title and attorney

• Massachusetts is an attorney state: a closing attorney handles the transaction. The lender's attorney fee ($800–1,500) is on your side of the ledger, and having your own buyer's attorney review the P&S is another $500–1,000 that is worth every dollar.
• Lender's title insurance: required, about $2–3 per $1,000 of loan. Owner's title insurance: optional, one-time, about $3.50–4 per $1,000 of price — and the one line most first-time buyers should not skip.
• Title search, plot plan, recording fees: $400–700 combined.

Prepaids and escrow

• First year of homeowners insurance, paid in full at closing: $1,200–2,500 depending on the house and how close you are to the coast.
• Prepaid interest from the closing date to the end of the month. Close late in the month and this shrinks to a few days.
• Escrow deposit: 2–3 months of property taxes and insurance so the lender can pay them when due. This is your money, held on your behalf, but it is cash you need on the day.

What you can actually shrink

Shop the lender fee and the title agent — both are negotiable and both vary. Ask the seller for a closing-cost credit in the offer; in a balanced market 1–2% is common. And fund the rest with gifts: closing costs are exactly the kind of documented, one-time expense that lenders accept gift funds for, which is why 'Closing costs' is the first sub-jar on a Closing Day Jar.