The Bay State is truly a great place to live, with its rich history, unique culture, and beautiful seasons. There’s something for everyone with such a diverse range of ecosystems — mountain views, miles of coastline, bustling cities, sleepy hamlets, and more. But there are a few things you should know before you start looking for a place to call home.
At Dovetail Mortgage, a top mortgage broker in Massachusetts, we recognize that the home buying process can be a little overwhelming, especially for first-time home buyers. That is why we have put together The Ultimate Guide to Buying a Home in Massachusetts. Continue reading the article below to learn how to make finding – and financing – your future home a little easier.
The Ultimate Guide to Buying a Home in Massachusetts
Step 1: Gather your team.
To find your dream starter home, you’ll need to assemble your own dream team. Your dream team should include a realtor, a real estate attorney, and a mortgage broker who can work in perfect harmony.
Working with seasoned professionals who can leverage their knowledge and experience to ensure that the process goes as smoothly as possible is in your best interest when buying a home. Your broker, realtor, and attorney should put your needs first at every step of the process, from selecting a mortgage product to selecting a property.
Step 2: Explore All Options Available To You
With so many loan options to choose from, it can feel like you’re in over your head. FHA, USDA, VA, Conventional, Jumbo — with so many loan options to choose from, it can feel like you’re in over your head. It’s important to remember that not all mortgages are created equal, and that some will be a better fit for your specific needs than others.
Step 3: Look for Grants and Programs that are Available
A variety of organizations and associations offer grants to help you pay for your down payment and supplement your mortgage. These are some of them:
The US Department of Housing and Urban Development’s (HUD) Good Neighbor Next Door initiative aims to “encourage renewal of revitalization areas by providing an opportunity for law enforcement officers, firefighters, emergency medical technicians, and teachers to purchase homes in these communities.” Qualified first-time home buyers in Massachusetts who commit to staying in the property for at least 36 months are eligible for a 50% discount off the list price of homes in the HUD’s inventory.
The HomePath ReadyBuyer Program was created by Fannie Mae to “[break] down the home buying process into easy-to-grasp lessons online,” and buyers who participate are eligible for up to 3% closing cost assistance when purchasing a HomePath property.
“Helping local governments foster housing opportunities for low-to-moderate-income families and address specific community needs by offering them the opportunity to purchase qualified HUD-owned homes for $1 each,” according to the HUD Dollar Homes initiative.
Down Payment Assistance (DPA) (and/or closing cost assistance) up to 5% of the mortgage loan amount is available from the National Homebuyers Fund in all 50 states.
Many states have their own first-time home buyer programs and grants; to find out which are available in Massachusetts, contact your city or town officials or check out HUD’s list of home buyer programs by state.
Step 4: Get Pre-Approved
Once you’ve determined which loan type makes the most sense for you, the next step is to apply for mortgage pre-qualification. Although it isn’t a mandatory stage of the mortgage application process, pre-qualification can be helpful because it gives you an estimate of how much money you’re approved to borrow before you begin your house hunt and it makes a seller more likely to accept your offer.
To obtain pre-qualification, you must submit the following documents:
Proof of Income
- a letter of employee verification
- stubs from the previous two months’ pay
- W-2 forms from the IRS and tax returns from the previous two years
Proof of Assets
- 401(k) savings plan (k)
- Dividends on stocks
- Statements of investment accounts
- Your tri-merge credit report is a report that combines your three credit reports into one.
- Your debt-to-income ratio
It’s important to note that being pre-qualified for a mortgage does not mean you’ve been approved; you’ll still need to go through the standard loan application process to secure funding. This means you’re not obligated to work with the lender who pre-qualifies you; in fact, you can shop your pre-qualification to other lenders to get a better deal. Because they can act as a liaison between you and lenders, a mortgage broker can be a valuable asset in this situation.
Get Pre-Approved Today (hyperlink to apply link -> Sign Up – Dovetail Mortgage, LLC (blink.mortgage)
Step 5: Start Your Search!
We’d like to tell you that this is the easy part, but we’ve worked with enough first-time home buyers in Massachusetts (and other states) to know that finding the perfect home can be both exciting and exhausting. Before you schedule your first viewing, there are a few things you should think about to simplify your search:
- What is your budget/how much home can you afford?
- Would you rather live in the city, the suburbs, or in the country?
- What kind of property do you want to buy? (For example, a single-family house, a duplex, a condo, a townhouse, a co-op, and so on.)
- Do you require a certain number of bedrooms and bathrooms? (Be realistic; it’s pointless to say you need eight bedrooms when you really only need three.)
- What are your must-have home features, and which features would be nice to have?
- What are the things that are most important to you? (For example, a good school district, proximity to work, room to expand, and so on.)
Keep in mind that every house hunt entails some compromises, but having a clear idea of what you want will make the process go more smoothly and help you achieve your goals. When you first start looking at houses, make sure to test the plumbing and electrical systems, as well as look for structural problems, water damage, and mold. FindLaw has a handy home inspection checklist to get you started.
Step 6: Submit Your Offer
So you’ve found a home you like and are ready to make an offer — now you need to figure out how much you’re willing to pay. List prices aren’t set in stone, and your realtor can work with sellers to negotiate based on the home’s location, length of time on the market, and whether it needs repairs or upgrades. Within a few days of submitting your initial offer, you should schedule an official home inspection; a home inspector can provide a definitive report of any pre-existing issues with the property, which you can use to renegotiate your offer — or, in the worst-case scenario, withdraw it.
Step 7: Submit a Mortgage Application
You have 90 days after submitting your final offer to apply for a mortgage. The good news is that you’re already prequalified if you completed Step 4, so you’re in good shape.
You’ll want to bring in your mortgage broker at this point in the process. Your mortgage broker will assist you throughout the application process and serve as a point of contact between you and the lenders. Although you can apply for a home loan through your bank, mortgage brokers work with a wider range of lenders, provide more personalized customer service, have a larger network of connections, and are committed to negotiating favorable mortgage terms for you.
After your application is submitted to the preferred lender, an underwriter will examine it to determine your ability to repay your debt based on factors like your credit score, credit history, employment history, income stability, debt-to-income ratio, assets, and so on. The pre-qualification process is similar to the underwriter approval process.
The underwriter will either approve, deny, or suspend your application based on their findings. If your application is approved, you can proceed to Step 8, which will bring you one step closer to receiving final approval. If your application has been suspended, the underwriter will most likely require additional information before proceeding; it is your responsibility to provide the requested information. If your application is denied, don’t worry; the underwriter will explain why, so you can work with your mortgage broker to resolve the issue and reapply.
Step 8: Complete Your Home Appraisal
Before issuing a final mortgage application approval, underwriters require borrowers to obtain a home appraisal from a lender-approved appraiser; this appraisal provides the lender with an objective estimate of the home’s value and ensures that the home owner does not overborrow.
The appraiser will look over the following items at this point in the process:
- Current Market Trends
- The general condition of the home
- Square footage
- The number of bedrooms and bathrooms
- Additional space (basement, attic, crawl space)
- Building materials
- Foundation type
- Home improvements, upgrades, and added amenities
- Neighborhood characteristics,
- Lot size
- Comps in the area
Once the appraisal is completed, the appraiser will submit their findings to the underwriter for final review and approval. Before closing, your mortgage broker will work with the lender to lock in your interest rate.
Step 9: Close On Your New Home….Congratulations!
You’re finally ready to close on your new home. During closing, your broker will work with you to review and sign all loan documentation, and you’ll be responsible for paying closing costs, which could include an appraisal fee, an origination fee, legal fees, title search and insurance, escrow fees and more. Closing costs vary depending on your mortgage option, loan amount, the type of property you buy, and its location; depending on which loan type you choose, you may be eligible for closing cost offsets like monetary gifts from family and friends.
Congratulations! It’s been a long road, but you’re on your way to becoming a first-time home buyer and then a first-time homeowner. We hope you find this guide useful and that you enjoy making your new home your own while exploring everything Massachusetts has to offer. If you have any additional questions about becoming a first-time home buyer in Massachusetts, please see the FAQ section below or contact Dovetail Mortgage directly.