What Does a Closing Cost? What are Closing Costs? What?

Boston Brownstone & Dogwood - Photo by Annie Bergen
Boston Brownstone & Dogwood – Photo by Annie Bergen

You did it!  You finally bought your very own home.  Well, almost.  The closing is just a week away and all is going well.  All you need to do is make sure you have everything everyone is asking for on closing day.  But you’re a little confused because your attorney and the agents and your lender keep tossing terms about as casually as breathing, all the while expecting you to understand exactly what is going on and how it affects you.  You’re going to sign things that say this is so after all!

So what, exactly, are “closing costs” anyway?  Is that the price of a closing?  Well, kind of.  But it’s not like you say, “Hey that looks like a nice closing, I’ll take one of those please.”  Closing costs for each buyer and each transaction will always be unique based on their particular financial circumstances and the agreed-upon terms of the deal as negotiated and declared in the signed Purchase & Sale Agreement.  Sound a little overwhelming?  Not to worry, that’s what this blog is here for.

Follow me.

First, it is indeed true and accurate to say that “closing costs” are particular amounts of money that you (the buyer) will be expected to pay on “closing day” -the day the place you are buying officially transfers ownership (by way of recording in the registry of deeds) to you from the seller.

These mysterious “costs” often include one or more of the following: attorney’s fees, title insurance, recording fees, loan origination fees and/or discount points, prepayments of real estate taxes and insurance premiums, appraisal fee, credit report cost, and underwriting fees.  All in all, closing costs typically end up ranging from about 2% to 6% of the loan amount depending on the area.

There is no set list of items nor are there fixed dollar amounts, but here is one typical collection of closing costs to use as a general guideline:

  • Attorney Fees (for closing, title exam, and document preparation): $500-$1000 +/-
  • Premium for title insurance, if needed
  • Discount Points (1 point=1% of loan, etc.)
  • Appraisal fee, credit report fee
  • Property Tax Reserves
  • Prepaid interest
  • Recording Fee
  • Tax Stamps ($4.59 per $1000)

Sometimes the seller will contribute to these costs as part of the deal.  Always check with your lender for final closing cost numbers and details -they will give you an estimate early on (called a Good Faith Estimate and now required by law) and then the actual numbers usually a day or two before your closing.

So there you have it.  Closing costs are not quite as scary as one might think!  The important thing to remember is to ask questions early and often.  Between your attorney, your lender, and your real estate agent, you should have a team of experienced professionals who can make sure you’re prepared and knowledgeable at every turn.  Don’t hesitate to ask about each and every term mentioned in this blog and anything else you come across on the way to closing.  There is no question too small!  The closing officer will also walk you through the Settlement Statement on closing day –this form itemizes all the costs being paid by the sellers and the buyers, so take your time reading through it and ask questions about anything that you don’t recognize or understand.  Finally, the closing officer will ask for a check for your down payment and closing costs.  This is it!

You are now not only a homeowner, but one who understands closing cost lingo like it’s nobody’s business.

Once again, thank you for tuning into the Marston Beacon Hill real estate blog.  Do not hesitate to get in touch with any questions!

Until next time,

Annie Bergen and the Marston Beacon Hill Team

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Dude, What Car?

Boston's Beloved MBTA - Photo by Annie Bergen

Boston's Beloved MBTA - Photo by Annie Bergen

Do you spend a large majority of your waking hours looking for parking, talking about parking, worrying about parking -or one of my best friend’s all-time favorites -telling really great stories about parking?

Well then maybe it’s time to lose your car!

Owning a car in downtown Boston can be time consuming and expensive.  It can be wonderfully liberating to live without a car.

Let me tell you why.

Four Reasons to Live without a Car in Boston

Reason Number One: No More Parking Tickets!

How happy would it make you to never have to pay a parking ticket again? Oh the things you might do, the places you might go –you’ve got extra spending money!

Reason Number Two: Say Goodbye to the Street-Cleaning Sweats

You know what I’m talking about.  Did you read that sign correctly?  Or did you read the wrong sign altogether?  Did a city ordinance have all the signs changed in the middle of the night?  Imagine not having to care one way or the other.

Reason Number Three: No More Snow Emergencies

You’re bundled by the fire after a day on the slopes, far from the city, only to realize your car is parked on a major artery back in Boston, and a snow emergency requires it to be removed.  Imagine not having to worry about where your car is, ever.

Reason Number Four: No More Registration, No More Insurance, No More Parking Stickers.

Enough said.

So, are you thinking the car-less life doesn’t sound too bad after all and want to learn more?

Well then read my list of . . .

Four Ways to get around Boston without a Car

Way Number One: You Can Walk Places.  Cardio is good for you and Grrrreat for the environment too!

Walking is liberating and fun.  You will see things you’ve never noticed before.   You can work on your waistline.  You experience Zen moments with the morning birds and squirrels before you get to the office.  And that’s all great for your health –but it doesn’t stop with just your well-being alone, it’s great for the planet, too.

~ MBTA Red Sox Art ~ Photo by Annie Bergen

~ MBTA Red Sox Art ~ Photo by Annie Bergen

Way Number Two: Tired of Walking?  Ride the T!

The T is still better for the environment than your car.  If your commute is too long to walk, you can combine walking with riding the T.  If you need to, you can drive to a T parking lot and then ride the rest of the way into Boston. Some things you can do on the T:

            1. You Can Meet New People.  You have at least one full stop to get them to like you and they are a conveniently captive audience.
            2. You Can Read That Book you started twenty times, but don’t have time to read at home.
            3. You Can Just Relax.
            4. You Can People Watch.
            5. You Can Check Out the Art!  (See picture to right.  That’s a wall painting at the Fenway T stop).

Way Number 3: Maybe the T’s not for you?  Ride a Bike.

Don’t have your own bike?  Don’t despair.  The Hub’s got a wicked new bike sharing program.  Check it out here: www.hubway.com.  PS: Don’t forget your helmet -it’s a matter of safety as well as a fashion statement.  Now get on your bikes and ride!

Way Number Four:  I Really Need a Car.  OK then, Just Zip It!

If you really just can’t live without the wheels, maybe you can at least live with –sharing the wheels!  Zipcar is a fantastic company that exists solely to get you from place to place in a car.  Just sign up for a membership then jump in a car wherever they’re parked. It’s that simple and cars are available all over town.

See how simple life can be?

Until next time,

Annie Bergen and the Marston Beacon Hill Team