Massachusetts Home Buyer Guide

There are many arguments for and against renting a home as opposed to owning one, but above all else the numbers have to work for a potential home buyer. 

The housing data for Massachusetts and New Hampshire clearly show home sales and median prices are on the rise, while real estate inventory has declined over the past year. 

Despite the market turnaround in 2012, many people (and not just real estate agents) would argue that with home prices just off the bottom of the market lows of the past few years and historic low interest rates (below 4 percent) home buyers have an opportunity in the real estate market.

There's another pretty good reason to make the jump from renter to homeowner. Rents in the Greater Boston Area continue to rise. Not only did rents increase 6.4 percent in December 2012 compared to the previous December, according to a report published by Trulia, but asking rents also increased 4 percent. 

Many people are quite surprised at how much money they might save over a 10-year period owning a home as opposed to renting one. Even if it is a breakeven proposition, most people would prefer their own place rather than living in the landlord's place. 

The Ginnie Mae Web site has a handy "buying v. renting" calculator to help you decide what makes the most sense for you. Keep in mind that the longer you stay in a home the more potential savings. In the mortgage interest rate box, you could use 4 percent. Taxes are about 1.5 percent (varying from town to town), and 0.5 percent annual appreciation is a fairly conservative number going forward.

The buying v. renting calculator takes into account a lot of variables, but obviously it cannot account for every possible expense. For example, buying a home you can afford may mean moving a bit further away from your job. The calculator doesn't take into account transportation expenses. The cost of maintenance is another expense that should be factored into your evaluation.   

Using rough numbers, a person paying $1,400 in rent could purchase a $400,000 home at a 4 percent interest rate and 5 percent downpayment ($20,000) and save more than $15,000 over 10 years. These numbers are based on real estate taxes of 1.5 percent annually ($6,000) and annual property value appreciation of 0.5 percent per year (about $20,000 over 10 years).  

Depending on the first-time home buyer program, additional savings may be possible with regards to the mortgage interest rate and mortgage insurance, commonly referred to as PMI.