Understanding Closing and Title Costs Boston MA

When buying a new home in Boston, many owners think only of the check they will have to write to pay for the home itself. In doing this, they forget about the often substantial closing costs associated with real estate purchases. There are also title costs to consider and we’ll discuss both in the following article.

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The Barry Group
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South End Assoc
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118 W Concord St
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Understanding Closing and Title Costs

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  • Closing costs cover a number of fees involved in the transaction
  • An estimate will be provided when you submit your loan application
  • Should be paid with a cashier’s check
  • Nearly all lenders require title insurance
  • Title insurance protects your ownership of real property
  • The lender and owner will each receive title insurance
  • Rules for paying Title Costs vary from county to county

    When buying a new home, many owners think only of the check they will have to write to pay for the home itself. In doing this, they forget about the often substantial Closing Costs associated with real estate purchases. Closing Costs, also known as Settlement Costs, are paid when the transaction is completed to cover the professional services needed to buy and sell the property.

    The professional services paid for by closing costs usually are things like real estate commissions, appraisal fees, loan fees, escrow charges, advance payments like property taxes and homeowner's insurance, title insurance premiums, and pest inspections.

    When you submit your loan application, you are required to be provided with an estimate of your closing costs pursuant to the Real Estate Settlement Procedures Act. This estimate is not binding, but it is a good faith estimate of what you will have to pay in the end. When the payment is due, your charges will be itemized, but they are not in the estimate.

    You must pay your Closing Costs in one lump sum with a cashier’s check from an in-state institution. The lump sum is necessary because you are paying companies and people for services already rendered for which they have been awaiting payment for some time. The title and escrow companies must pay off debts they have accrued on your account and cannot wait. A personal check may not be accepted by the title and escrow companies and may delay the closing of the transaction. An out-of-state check may result in the same effect.

    Title insurance is not often thought about when buying a home, but it is important to learn what is involved in such insurance. You are not required to buy title insurance, but nearly all lenders require title insurance for the face amount of their deed of trust before they issue a loan. Title insurance is not expensive, usually just a small fraction of the Closing Costs, and one premium covers you and your heirs as long as you possess the property insured.

    Most of your title insurance payment goes to cover risk management. Title insurance companies have employees whose entire job is to search public records for information regarding properties they insure or may insure. Each company maintains its own database of information about property, sometimes dating back over 100 years. A ton of work goes into maintaining these databases so that when a question about a particular property comes up, the title company is well-prepared to deal with it in a quick and efficient manner, allowing you to clear up any recorded liens, legal actions, disputed interests, rights of way or other encumbrances on your title before making your purchase.

    While title insurance companies do most of their work in risk prevention, they are also able to help you with any problems that have escaped their attention with their staffs of trained claims professionals.

    Both the lender and the buyer can purchase separate title insurance policies. The buyer’s policy protects his/her claim to the property. Lender’s title insurance allows the lender to be certain that they can enforce any liens on your property, allowing them to sell your loan to someone out-of-state.

    Amazingly, there is no statewide standard for title insurance payments. In some counties, the buyer pays for title insurance, but in others, the seller is required to pay. The buyer is required to pay for the lender’s title insurance pretty much everywhere.

    For further information, talk to your title or escrow company. For legal or tax information regarding Title and Closing Costs, talk to an attorney.

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