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Closing costs involve a number of fees and pro-rated items such as taxes
and fuel bills. If the Buyer is financing the property, the lender will
provide a good faith estimate of closing costs as part of the financing
application procedure. In addition, you will receive a settlement sheet
prior to closing that details the final costs. Even these, however, are
subject to last-minute changes, and the exact costs are often not precise
until the day of closing.
| Passing Papers and Settlement Costs |
The closing must follow the exact provisions of the purchase
and sale agreement, which is why the attorneys' prior
involvement is so important. The attorneys compute the
adjustments for taxes, fuel, etc., and prepare a closing
statement showing the amount owed by buyer to seller. The
deed, mortgage and other documents are inspected for accuracy
and signatures. Both buyer and seller sign agreements to
reimburse buyer's bank for losses in connection with smoke
detectors, lead paint, and other substances.
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| Seller's Costs |
Seller's normal expenses include:
- Attorney's fee, which usually covers negotiations, drafting documents, correction of title defects, removal of liens, etc.
- Massachusetts tax transfer stamps
- Recording costs of instruments necessary to clear title real estate
- Broker's commission
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| Buyer's Costs |
Buyer's normal expenses include:
- Attorney's fee, including negotiations and drafting documents
- Cost of the title examination
- Cost of preparing mortgage documents
- Bank attorneys' fees (note that you will be obligated for this fee even if you have separate representation)
- Recording charges for deed, mortgage, and municipal lien certificate
- Plot plan
- Lender's title insurance
- Owner's title insurance
- Bank application fee
- Loan acquisition fees ("points")
- Miscellaneous expenses, such as courier fees
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| Title Insurance |
The vast majority of lenders require that a lender's title
insurance policy be procured at the closing. This policy is
part of the costs paid by the buyer at the closing. At the
same time the buyer may elect to purchase for an additional
one-time premium an owners title insurance policy which will
protect your equity interest against any claims that might
arise during the period of time you own your home.
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