Frequently Asked Questions

For BUYERS

1. What do I need to bring with me to a closing?

For purchasers, the only items you will need are the funds necessary to close and two forms of identification. The closing funds must be in the form of certified check (which should be made payable to you) or sent to us via wire transfer. We will provide you with the figures at least 24 hours prior to closing. Please also bring two forms of identification, one of which must be a valid, government-issued photo identification (i.e. driver’s license, passport). The second form may be non-photo identification (i.e. credit card, social security card). You should also bring your personal checkbook just in case there are any last minute adjustments at closing.

2. What homeowners insurance do I need and what is an insurance binder?

In most cases your mortgage lender will require that you purchase homeowner’s insurance for the premises and pay the first-year’s premium in full. You will need to obtain such insurance prior to closing and provide our office with an insurance binder naming your lender a secondarily insured. The insurance binder is essentially a statement of coverage certifying that the insurance coverage has been bound. Our office will coordinate the binder with your insurance agent.

3. Do I need to purchase homeowner’s insurance if I am buying a condominium unit?

If you are purchasing a condominium unit, your lender may require you to purchase your own homeowner’s insurance, called an HO-6 policy, which covers the interior of the unit and everything inside it. In other cases, the Condominium’s master policy will be sufficient for the lender. We will still need a binder for closing and we will contact the Condominium’s insurers to obtain it. Most condominium master policies will pay only to rebuild the unit to its existing walls, but will not pay to repair or replace any items inside the unit (i.e. cabinets, appliances, fixtures, carpets and personal items). If you need to obtain interior coverage, we often recommend that you examine purchasing coverage from the same insurance company that writes the Condominium’s master policy. This way both the “exterior” and “interior” contents are covered by the same company and they cannot attempt to disclaim coverage for an item by claiming that it falls under your other company’s policy.

4. What is an escrow account?

An escrow account is established with a lender to pay for recurring expenses related to your property, such as real estate taxes and homeowner’s insurance. It helps you to anticipate and manage payment of these expenses by including these expenses as a portion of your monthly mortgage payment. At the time you establish an escrow account, your annual real estate taxes and homeowner’s insurance are estimated, based on your most recent bills and premiums. An incremental amount of these expenses is added to your monthly mortgage payment, in order to cover these expenses when they are due.

Each year, your escrow account is reviewed to determine if the amount being escrowed each month is sufficient to pay for any change in your real estate taxes or homeowner’s insurance premiums. At closing, we will collect sufficient funds to start your escrow account, typically 2-3 months worth of real estate taxes and up to a 12 months of homeowner’s insurance.

5. Why is my lender escrowing money for my homeowner’s insurance if I have already paid the first year in full.

Although you have paid the first annual premium in advance, the lender needs to begin collecting money to pay next year’s annual premium. Since the lender will be paying the annual premium for you next year, they need to be sure that they have enough money in their account to pay that bill approximately one year from your closing. Because you will not make a mortgage payment in the month after your closing occurs and the lender usually pays the bill in the month before it is due, you will likely only have made 10 payments by the time they pay the bill. Thus, they need to collect 2-3 months at closing so that they will have sufficient funds to pay the bill.

6. How do I make sure that the Seller has paid all of the utilities before I take possession of the premises?

Services provided by municipal entities such as water and sewer (and in rare cases electric) are billed to the property and remain with the property until paid, regardless of a change in ownership. Therefore, these items are always “adjusted” at closing. This means that either 1) we require Seller to pay all such municipal charges prior to closing or 2) funds are subtracted from the Seller’s proceeds at closing to pay such municipal charges. However, items provided by private entities such telephone service, cable, and in most cases electricity, the charges are the responsibility of the person not the property. Thus, if a Seller vacates the premises without paying those bills, the Seller will remain liable to the provider. It should not affect your ability to obtain new service as a new owner.

FOR SELLERS

1. What do I need to bring to the closing with me?

When selling your home, there are several items you need to obtain in order to complete the sale of your home. If you are working with an experienced real estate broker, they will likely have obtained many of the necessary items for you. Furthermore, if we are representing you, our office will prepare the deed and any other recordable documents for you to sign at closing. You should also bring a check book to closing in case is there are any last minute closing adjustments.

The other items that either you or your broker should obtain are:

a) Smoke Detector Certificate – You must have your City/Town Fire Department issue you a certificate stating that the premises contain working smoke detectors in compliance with applicable law.

b) Final Water Bill – You must obtain a final water bill from your municipal water. You should pay the water bill and bring a paid receipt to closing. If you live in an existing condominium in which the water bill is paid by the condominium association, you will likely not need a final water bill. But, you will need a certificate of no common expenses (see below). Please contact us if you have any questions about whether you need to obtain a water bill.

c) 6(d) Certificate – If you live in a condominium, you will need to obtain a certificate of no common expenses (a.k.a. 6(d) certificate) stating that the all condominium fees and charges have been paid through the last day of the month in which you are closing.

d) Keys – Bring all sets of keys for the premises that you have in your possession.

e) Identification – Please also bring a valid, government-issued photo identification (i.e. driver’s license, passport).

2. What are tax stamps and how much do they cost?

In Massachusetts, the state requires that a real estate Seller must pay a stamp tax on the sale at the time of the recording of the deed. The tax is equivalent to $2.28 for every $500 of sale price (except Barnstable County which is $5.70 per thousand). Thus, if you are selling your home for $500,000 .00 – the tax stamps would be $2,280.00. This amount will be subtracted from the Seller’s proceeds at closing and paid by the closing agent at the Registry. The Registry places a stamp place on the deed at the time of recording, hence the name “tax stamps.”

3. When will my sale proceeds be available to me?

The net proceeds from your sale will be available to you at the time the deed is recorded. The closing agent may not record the deed unless the funds are available in his/her account. Thus, once the deed is recorded at the Registry you may deposit your funds. If you prefer a wire transfer, please let us know.

FOR REFINANCES

1. Why does the payoff of my existing mortgage seem higher than I thought?

In many cases, borrowers will focus only on the “principal balance” figure in their mortgage statement. However, this figure does not provide the complete figure necessary to pay off the loan. You must also pay any unpaid interest calculated up to the time that they actually receive the payoff check. Mortgage interest is not like traditional rent in which the monthly payment is for the upcoming month. Mortgage interest is paid in arrears, or backwards. Thus, your monthly mortgage payment is allocated partially to principal, but also pays the daily interest accumulated during the last month.

Therefore, if your refinance loan is funding on August 15, we must pay off your existing principal balance plus the interest that accumulated from August 1 to August 15 (plus additional days necessary to get the payoff check to the bank). That unpaid daily interest makes your payoff is higher than just the principal balance. Frequently included in your payoff is also a $75.00 registry discharge recording fee and a fee to issue a payoff statement (usually between $10.00 to $60.00).

2. When will my refinance proceeds be available?

Federal law requires that any person who grants a mortgage on their primary residence (unless it is for the purpose of purchasing the residence) must be given three days to rescind the transaction. This is commonly referred to as the “three-day right of rescission.” You cannot waive this right of rescission. Therefore, your lender cannot fund your loan until such rescission period has expired. When calculating the rescission period, the day that the closing occurs, Sundays and Holidays are not rescission days and are not counted. Thus, if your closing occurs on a Thursday, it will fund on the following Tuesday (Friday, Saturday and Monday being the three rescission days – Thursday of closing and Sunday not counted).

3. Should I pay the next tax bill due after my closing?

If your next tax bill is due within 60 days of closing, our office will administer payment that tax bill. The lender will require our office to take the necessary funds from you at closing and pay that tax bill. This is the case regardless of whether you are escrowing your taxes with the lender or not. If you are escrowing taxes with the lender, our office will administer payment of tax bills due within 60 days and the lender will administer payment of any tax bills thereafter. If you are not escrowing your taxes, we will administer payment of tax bills due within 60 days of closing, and you will have to pay any tax bills thereafter.