Massachusetts Home Buyer Guide

The following audio is from an interview on April 21, 2016, on Boston Herald Radio's Bizsmart show with host Rick Shaffer.

Rick Shaffer, who is a lawyer and a well-known Boston area financial speaker and writer, has had financial and other shows on various Boston area radio stations for more than 20 years. Buyers Brokers Only, LLC's co-founder and co-owner Rich Rosa discussed the history of Buyers Brokers Only, LLC; the difference between a typical real estate agent and an exclusive buyer agent; the real estate market; how to obtain a home loan, mortgage programs; and other home-buying tips. 

April 21, 2016

Rick Shaffer: Welcome back. Hour number two of Biz$mart. Before we get into it let me correct myself. The Red Sox actually were tied eight to eight. They hadn't gone ahead, but now Tampa Bay has gone ahead nine to eight. I think they're in the eighth inning. In any event Rich Rosa, who you've heard here many times before, Buyers Brokers Only, joins us today. In the interest of full disclosure, I should mention that Buyers Brokers Only LLC is a sponsor here on Biz$mart and Boston Herald Radio and we're very glad to have them as such and very glad to have Rich join us again. How are you Rich?

Rich Rosa: I'm well. How are you, Rick?

Rick Shaffer: Not too bad.

Rich Rosa: Glad to be here again.

Rick Shaffer: I'd like a little bit warmer weather but other than that, having gotten over my flu, I'm much happier.

Rich Rosa: We're getting there. Today was pretty good.

Rick Shaffer: Yeah. Very quickly give us a brief overview of what Buyers Brokers LLC does, who its clients are, and what areas of service you provide them with.

Rich Rosa: Sure. Buyers Brokers only is an exclusive buyer agent real estate firm. What that means is that we only represent buyers. We never list property for sale, thus avoiding the conflicts of interest that could arise when one agent is representing both the buyer and the seller or one agent from the firm is representing the buyer and another agent from the same firm is representing the seller. We avoid that by only representing homebuyers. I'm one of the co-founders of the company along with my business partner Dave Kres. We started the company back in November of 2005 so it's been about ten and a half years or so since we started the company.

We're up to a total of twenty-eight of us now, brokers. One of the things that make us unique besides the fact that we only represent home buyers is that we're all attorneys. We only hire attorneys as our brokers and there's twenty-eight of us in total. We cover the greater Boston area including the South Shore, North Shore, Metro West, the Upper Cape, Southeastern Mass., and Southern New Hampshire.

Rick Shaffer: Just to clarify, and we're going to talk about this more later, the importance of attorneys, all of your brokers are attorneys but they don't act as, they can give advice obviously, but they don't act as attorneys for their clients. They act as brokers for their clients.

Rich Rosa: That's correct. We're not a law firm and we don't practice law. We're real estate brokers and all of our brokers are attorneys, but no, they're not providing legal advice for our clients.

Rick Shaffer: Right. I'm not trying to diminish that because somebody who's an attorney is going to have, in many cases, they're just going to be able to give more common sense and specific advice than somebody who's a broker but not an attorney.

Rich Rosa: And what I tell clients is that we're not going to be your attorney and we're not going to necessarily give you legal advice, but the reason why we hire only attorneys, and why we decided to go that route, is because attorneys are advocates. That's what we learn in law school, to advocate on behalf of our clients. Attorneys are also pretty good at dotting the I's and crossing the T's which is something that pretty good if you want to have good representation as a home buyer. And of course, if we do see a legal issue that arises we're going to say, "Hey, this is something you should talk to your attorney about."

Rick Shaffer: Right. We're in for the 2016 home buying selling market. A couple of questions. How is this years market in general and more specifically, how is it compared to last year, especially given the under-supply of properties which really, I think, was the big news, at least in the Greater Boston area, and most affected last year's real estate market in Greater Boston and throughout a large part of Massachusetts.

Rich Rosa: Well, the first thing I'll say about 2016 is there was really no slowdown because we had a relatively mild winter. There were properties coming on the market and open houses all winter long, so there wasn't much of a slowdown. It's certainly picking up at this point now that it's spring, but the winter market was actually fairly busy, certainly compared to last year's winter market where we had feet of snow for many weeks.

Rick Shaffer: This spring-summer market had already hit the ground running so to speak.

Rich Rosa: Oh yes. Yeah. It's very active right now. More properties are coming on the market but there's a lot of pent-up demand from buyers because, as you mentioned, inventory is really low. I believe we are something in the neighborhood of four years of year over year months of declining inventory. In other words, I think it's been over forty-eight months of declining inventory in terms of year over year each and every month. Inventory just keeps going down statewide, and then it's particularly low in the Greater Boston area.

Rick Shaffer: I don't know if you have this figure but you've given a figure in the past where the average time it takes for a property to sell is a month or two months or three months or four months and that has been way down over the last year or two. Do you have any figures like that now?

Rich Rosa: Yes. The general rule is about six months worth of inventory is considered about a balanced market between buyers and sellers. When the market was down in 2010, 2011, there were cities and towns around Boston that had nine, ten, eleven months worth of inventory. Now there's cities and towns around Boston that have two months, one and a half months, even less than a month of inventory. That's how much of a swing we've had over the last five years or so.

Rick Shaffer: Just to clarify, that doesn't mean, if you have the six months worth of inventory, that doesn't necessarily mean your property's going to take six months to sell, it's just how over that six months most of the property in a normal market will have sold and you move onto the next. But when you only have two months worth of inventory, for every one property there's three, four, five potential buyers and that favors the sellers but it's not a balanced real estate market. People say, "Well if their sellers that want to have an under-supply if they're buyers they want an over-supply." But the best thing for everybody is to have a normal, balanced market generally.

Rich Rosa: I agree and to some extent, that's what we had in 2012. We had plenty of buyers. We had plenty of inventory and there was, the real estate market, I don't know exactly what the amount of inventory was throughout 2012 but I can just remember it being very balanced and there being plenty of opportunities for buyers and at the same time sellers were selling their properties fairly quickly and then things started to slant towards the seller starting in 2013.

Rick Shaffer: I would assume from your standpoint, and your company's standpoint, having an under-supply is a good thing. Am I correct or no?

Rich Rosa: No, it's not because we only represent buyers and we want our buyers to have plenty of opportunities to buy the house that they want. The biggest challenge we have is that we have buyers that are being outbid two, three, four, five times before they're actually able to buy a house that they want.

Rick Shaffer: You've got plenty of clients, but you don't have houses to show the clients that they may want to buy.

Rich Rosa: Absolutely. That's exactly the problem we're having is there's not enough to show them. Then in some communities that are so popular, literally any decent house that comes on the market is getting a half a dozen to a dozen offers.

Rick Shaffer: Are you finding that there are more and more bidding wars going on or no?

Rich Rosa: In certain communities, places like, for example, Brookline or Melrose, offers over asking price are the norm. It's fairly common and has been for quite a while.

Rick Shaffer: How about people, if somebody and most people just don't have the ability to do this, but if somebody comes in and offers a full price offer but they're willing to pay cash, does that push them to the top of the list so to speak, or no?

Rich Rosa: It may, however in some of those places that I just mentioned, they may offer full price cash but someone else may require financing, but they may go twenty thousand over the list price. If you're a seller you have to ask yourself, well, do you want the sure thing with the cash or would you rather have the twenty thousand dollars more? I think that if the financing looks solid, I think that the seller would be crazy not to take the twenty thousand more.

Rick Shaffer: I agree. But one thing that does come out of that is as a buyer these days, you don't need, and most people, as I mentioned and you agree, most people don't have six hundred thousand dollars or three hundred thousand dollars to pay cash for a piece of property, but you do have to have a very strong commitment letter for financing when you make an offer on a piece of property.

Rich Rosa: Oh, absolutely. That pre-qualification letter, or pre-approval letter as it's often called, it's important that it not only say how much you're pre-approved for, pre-qualified for, but it should really state what the loan officer has reviewed as part of the pre-qualification. In other words, the letters I like the best are the letters that say, 'We've reviewed W-2's, pay stubs, tax returns, bank statements and credit scores to do this pre-approval." State it right in the letter that they've done all those things. I think that really shows that it's a strong pre-approval.

I had someone hand me a pre-approval a few weeks ago and it literally said, "Congratulation. You're pre-approved for three hundred and fifty thousand dollars," and then the next sentence said, "All this information is based on verbal information that you've given me." Well, that's worthless. I told these clients, I said, "Look, you've got to get a letter that says that they've actually checked these things, not just that you've told them."

Rick Shaffer: It's like the pre-approved credit card you always get with the big asterisk and the asterisk always says, "We reserve the right to, for any reason we come up with, because the sun is yellow and the sky is blue, that we're not going to"- It's not a pre-approval. In fact, it's almost out and out lying. You want a pre-approval that says, as you said, we've checked everything and this is based on an appraisal and maybe one or two other things which there's no way you can get for the mortgage company or the bank before you find the property.

Rich Rosa: Yes. That's just one of the things that could help you in those multiple offer situations because there's a lot that goes into drafting an offer when you know that there's going to be five or six or seven offers. It's not always the best price that gets the offer accepted. Certainly, if someone is offering way more than everybody else then that might be the deciding factor, but if there's a bunch of offers and they're all relatively close in price, give or take a couple thousand dollars, a seller is going to start looking at other things in that offer. Who has a solid pre-approval and things like that. There are ways to draft an offer to make it more appealing to a seller.

Rick Shaffer: I'm not sure how to word this question, but when you get into that type of minutia you represent the buyer, the sellers broker represent the seller, but how much can you yourself sit down with the sellers broker and point things like that out to him and try and convince him that this is a very strong buyer. Look at their commitment letter, so on and so forth.

Rich Rosa: What I like to do is, typically you're emailing this offer. You're emailing an offer. You're emailing a copy of the first deposit check, which is typically a thousand dollars. You're emailing the pre-approval letter. You may be emailing some disclosures that the seller provided that you're had your client sign off on. I think what's important is I like to give the listing agent a nice, complete package, make sure they have all the documents they need so they're not searching for anything, and then I like to write a detailed email pointing out things like this is a solid pre-approval. If my client is able to, it's typical that you get ten days for a home inspection, but a lot of times they're going to do it on the weekend anyway, so I'll tell my clients, "Well look, it's Monday now. You're most likely going to do this home inspection on Saturday and Sunday. Let's put seven days in the offer instead of ten days."

I'm opposed to waiving the home inspection and I know some people are doing that stuff right now. I think it's a mistake for ninety-nine percent of the people out there.

Rick Shaffer: Right. I'd say ninety-nine point nine percent so I agree with you.

Rich Rosa: But there are other things you could do like shorten the time of the home inspection, shorten the time that you're going get to the purchase and sale deadline, to sign the purchase and sale agreement. These things are important to a seller because in this market, believe it or not, if a house hasn't sold in about a week, people start thinking, "What's wrong with it? Why hasn't this house sold?" If you're a seller the worst thing that could happen to you is that you can accept and offer and then have that offer fall apart a week or two later and then have to put it back on the market and now you've got this market history and people are saying, "Well, why is it still on the market?" If you could shorten the amount of time for all those deadlines and still make sure your client -

Rick Shaffer: Is protected.

Rich Rosa: ... is protected, exactly, then that is helpful.

Rick Shaffer: All right. We're going to take a break and then we're going to come back with more Biz$mart. We're talking with Rich Rosa who is one of the co-founders of Buyers Brokers Only LLC right here on Biz$mart on Boston Herald Radio.

Welcome back. This is Biz$mart. I'm Rick, I can't talk today, Rick Shaffer. I'm joined in studio by Rich Rosa who is one of the co-founders of Buyers Brokers Only LLC. We'll be talking about his company and the real estate market in general. Late in 2015 there were some changes, specifically in the mortgage industry which, as we've just been talking about, is very important to the real estate industry. Specifically, something known as T-R-I-D Tell us what T-R-I-D stands for. What changes have you seen, more importantly, since T-R-D's regulations went into effect?

Rich Rosa: T-R-I-D, or referred to in the industry as TRID, stand for Truth in Lending RESPA integrated Disclosure. What it is, it's new regulations that have to do with disclosures that the mortgage industry has to provide borrowers when they're purchasing a home. The new rules took effect October 3rd.

Rick Shaffer: Before you, I'm just going to play devil's advocate, before you go forward because there were disclosure regulations before these and a lot of sellers, I think, or buyers rather, maybe sellers too, are going to say, "I was pulling my hair out dealing with these documents before. Are they just making it worse?" Let me add to the questions I asked you, which is, did they make it worse or did they actually make it better for consumers?

Rich Rosa: I think it's questionable whether or not we needed all these new disclosures and they needed to change everything. As you remember, it wasn't all that long ago, I think maybe 2008, 2009 or so, that what we used to call the HUD settlement statement was changed and that was changed in a way that was supposed to make it simpler to understand but I think everyone pretty much agreed that it wasn't simpler.

Rick Shaffer: No. Not it did not.

Rich Rosa: But there is, and I'll tell you what that is in a second, but there was a positive outcome. The funny thing about this is that you remember back in 1999 we had Y2K right? It was going to be the end of the world. Nobody's computer was going to work when the clock struck midnight of 2000.

Rick Shaffer: I remember the New Year's Party well and waiting for everybody to disappear.

Rich Rosa: That's sort of how a lot of people in the real estate industry were looking at these new regulations, that it was going to cause delays and confusion and that sort of thing and it turned out to not really be that. I think that if you work with a good loan officer, and you've got a good closing attorney, then it was a pretty smooth transition. The cornerstone of the disclosure is that the lender has to give the borrower, the home buyer, three business days prior to closing the final settlement statement. You can remember in the past sometimes a buyer would get that HUD settlement statement the morning of the closing or late in the afternoon.

Rick Shaffer: Sometimes they didn't get it until they got to the actual closing table which a lot of sellers and buyers didn't like.

Rich Rosa: No, and you can't blame them. Now there's a rule that says that you have to have that three business days prior to your closing. The concern was that basically any changes to the documents triggered another three-day disclosure and the concern was that that was going to trigger all sorts of delays.

Rick Shaffer: Right.

Rich Rosa: Right before the rules went into effect the organization, the federal agency that created these rules, which is called the Consumer Financial protection Bureau, clarified and basically said there was going to be three things that triggered a new disclosure; a one-eighth percent change in APR higher.

Rick Shaffer: Okay. I don't know if you can figure this out, but people get confused with APR so how would that translate into a rate? Like if you had a four percent rate, about how much of a difference in the note rate would trigger this additional three days?

Rich Rosa: You have the interest rate, like you said, it may be four percent, but the APR factors in all the other costs of borrowing, stretches it out over, let's say, the thirty year term of the loan, and then that gives you a better idea of what the total cost of borrowing is.

Rick Shaffer: Yeah.

Rich Rosa: If you add in all the closing costs, that four percent rate over thirty years might be four point one seven or something like that, give or take. Under these rules if that APR, that total cost of borrowing, changes by more than an eighth of a percent then that would trigger a new three-day waiting period, a new three-day disclosure period. The other thing that would trigger it is if suddenly a pre-payment penalty was added to the load which I, frankly, have never seen in more than, between being a real estate broker and being a lawyer before that, for twenty years I've never seen one with a pre-payment penalty.

Rick Shaffer: I may have seen one and I think it was in the commercial area. I can't recall seeing one in the residential area either.

Rich Rosa: And then the third thing is just if the loan product itself changes, it goes from, let's say, a fixed rate mortgage to an adjustable rate mortgage.

Rick Shaffer: Right.

Rich Rosa: Those are the only three things that are going to trigger that new disclosure and that was a relief because people were concerned that things like utility prorations that change the day of the closing might trigger that and the Consumer Financial Protection Bureau said "No, those types of small things aren't going to trigger it." It's turned out to be not too big of a deal.

Rick Shaffer: I'm surprised because a lot of times the agencies don't understand the machinations of how different industries work and the things that you mentioned, different prorations in the utilities, they just change all the time and it's nobody's fault. It's just a lot of times the utility company won't release the information until a day or two before the closing and there's no way of getting around it. I guess my question, before you go on, relative to those three changes, which if you change from a fixed rate to an adjustable rate, then you definitely want to have that information. And the other one, I forget the third-

Rich Rosa: Pre-payment penalty was one of them.

Rick Shaffer: The pre-payment penalty which-

Rich Rosa: And then the APR change.

Rick Shaffer: The APR thing, I'm wondering how much, have you seen anywhere the APR has changed enough so that it triggered the three days, another three-day notice period?

Rich Rosa: No. I think that lenders are very cautious now and are making sure that isn't going to happen. You might remember that even before this, closing costs, not necessarily the APR, but closing costs had to be within ten percent of what was in the Truth in Lending Statement that as given to the borrower when they apply for the mortgage so they already had restrictions. Your closing cost couldn't go up by more than ten percent. There was already some protections in place.

Rick Shaffer: Now have these TRID regulations replaced, or have they layered on top of, the previous disclosure laws?

Rich Rosa: They've replaced them. One of the things that has happened is we have two new forms now as part of the closing process. The first one I'll talk about is what's called the loan estimate, and this is what I think is actually one of the good outcomes of these new regulations. Under the new rules if you provide a lender with certain pieces of information; your name, your income, your social security number, a property address, what the house is worth and how much money you want to borrow, buy law now they have three business days to give you a loan estimate. I think what's good about this is it makes it very easy now for consumers to shop around for a mortgage because now they have this piece of paper, it's a loan estimate, it's in writing, it has all the figures on it and it's based on information that they've given a lender, and now they can go to another lender and give those same pieces of information and get that same loan estimate. I think consumers have a tool now that makes it a little bit easier to shop around for a mortgage.

Rick Shaffer: Okay. Now again, the estimate is based on the information the consumer gives them so if they don't give enough information it's not binding, but if they give the same information to five different lenders then they're going to get five different estimates and if there's other information that they forget to give them, it's going to change but it's probably going to change the same amount, so to speak, with the different lenders.

Rich Rosa: You're exactly right and I think the reality is that they only have to give these pieces of information and then the lender's required to give the estimate. But I think it would be good practice to provide the lender with more information to get a more accurate because this is not a loan commitment. This is not a guarantee that they're going to lend. This is just hey, here's what we think it's going to cost you based on what you're told us. The more that you can tell a lender, I think the better off you are.

The other document-

Rick Shaffer: It's the difference between, we've talked about this before, the difference between a pre-qualification and a pre-approval, and a pre-qualification, which is valuable to do shopping around with, doesn't mean anything beyond that. It's just a pre-qualification which is, given what you gave us, this is what we can give you but we have to check all that now.

Rich Rosa: Well, and those rules have changed a little bit too. They didn't change as part of TRID, but not long ago all what we always call pre-approval letters, are actually all supposed to be pre-qualification letters now. My understanding is that a lender could only give you a pre-approval letter, a letter that says pre-approval on it, is only if you've provided all of the documents necessary and underwriting has actually reviewed the documents.

Rick Shaffer: Okay.

Rich Rosa: In order to get an actual pre-approval you have to provide them all the documents, underwriting has to look at the documents, and then at that point they could write pre-approval on it. Other than that they all supposed to say pre-qualification but again, going back to what we talked previously about, is that it really is important to just give the lender all the documents and let them do their thing rather than just trying to quickly get a pre-approval letter or a pre-qualification letter.

Rick Shaffer: And if you do do that and then you pick whatever lender you pick, then they've got the information and they say, "well, we may need a little bit more information," but they've got pretty much all the information that they need, then go through the process, have it go to underwriting and get back to you much more quickly with moving from the pre-qualification to the pre-approval, the commitment.

Rich Rosa: Yeah. That's an excellent point and I often tell my clients when I meet with them, give the lender everything now because when you get to that point of having an accepted offer, it's pretty hectic. You've got an accepted offer, you've got to hire an attorney, you've got to formally apply for the loan. You got to have a home inspection, you got to sign a purchase and sale. There's a lot going on. If you already have gathered all those documents and given them to your lender that's one less headache you have to worry about during that period of time when you're doing all these other things that have to do with buying the house.

Rick Shaffer: Okay. Anything else that people should know about TRID?

Rich Rosa: Well, there's one other form. You had said about replacing, so there's something called the closing disclosure. That replaces the HUD settlement statement. There's no longer a HUD settlement statement. It's called the closing disclosure. What it is, it's a five-page document that details all the costs associated with your loan, and as I mentioned before, it has to be provided to the borrower three days prior to the closing, disclosing all of the figures that are on there.

Rick Shaffer: Is there somewhere on the TRID forms which have replaced the old form, the HUD form-

Rich Rosa: Yeah. The closing disclosure replaces the HUD. Yeah.

Rick Shaffer: Do they still have the APR box there because one of the things I found was that always confused people, and I always ended up spending all kinds of time trying to explain to people that- People would look at that and it would always get them confused because the APR was almost virtually, almost always, higher than the note rate and, of course, it was always, "Well, they told me I would be getting a four percent rate and the APR says four point five," or whatever. You had to explain to people that, as you were explaining before, no, the APR just tells you if you take the rate and you add in all the costs and average it out over thirty years, this is what it would average out to.

Is that confusion still there?

Rich Rosa: Well, I'm pretty sure it's on there because that is one of the things that triggers a new three-day disclosure period, so it's on there in some form.

Rick Shaffer: Okay.

Rich Rosa: Yeah. Of course, you're right. It does cause confusion until you explain to the borrower that this factors in all the other costs that were related to borrowing. Also too, one thing that's different that you might remember, is the HUD settlement statement had both the buyer and the seller's figures on the same form. The seller gets a completely different closing disclosure and the buyer gets their own. It's two separate disclosures now.

Rick Shaffer: Does it make it less confusing? Because the way they did it unless you've had experience with it before, it could be confusing.

Rich Rosa: Yeah. I know exactly what you're talking about because you see the figures kind of going back and forth on the old one.

Rick Shaffer: Right.

Rich Rosa: I think this one is a little simpler along those lines. Again, it's hard for all of us to sort of get used to because we do it one way for so many years and now all the sudden we're looking at something completely different. But that's a really good point and I think that is simpler because the buyers just focusing on their own figures and not really looking at what the seller has on their side.

Rick Shaffer: We're talking with Rich Rosa who is one of the co-founders of Buyers Brokers Only LLC. We'll take a break and then we'll come back and finish up today's version of Biz$mart right here on Boston Herald Radio.

Welcome back to the Thursday edition of Biz$mart. I'm Rick Shaffer. Rich Rosa, who is a co-founder of Buyers Brokers Only LLC has been joining me this hour. Most home buyers, including first-time home buyers, have heard that mortgaged interest rates are low, which is good, so two questions, one short and one much longer. About where are rates now, but the more important question is, what other things surrounding getting a financing should potential buyers beware of?

Rich Rosa: Rates are low. They're hovering around four percent, give or take. They move around as we've talked about in the past. They can change daily, what the rate is. But I know that a couple weeks ago it was well under four. It's somewhere around four.

Rick Shaffer: Around four percent, and that's with no points but paying closing cost. Okay.

Rich Rosa: No points but paying closing costs. Yep. It's been around that area for quite a while in terms of around four percent. Actually since, the big talk was when the Federal Reserve finally moved the fed interest rate up in this December, that interest rates were going to finally go up. They've actually are lower now than they were when the fed raised interest rates. That rate, and mortgage interest rates, aren't actually tied together as closely as people think. The other reason why interest rates have stayed down is the stock market's been kind of volatile and when the stock market's volatile interest rates seem to go down a little bit.

Rick Shaffer: Well the other thing, it has been like seven years before the fed had raised rates and what'd they raise them, an eighth of a point or a quarter of a point?

Rich Rosa: Quarter of a point, something like that. Yeah.

Rick Shaffer: And almost immediately, certainly within a week or two after they raised the rates, they presented it as, "Okay, now the economy's coming back. We're raising rates." We probably expect another raise in rates in two months or three months or four months, but almost as soon as they raised the rates there was more uncertainty in the economy so they went right back to saying, "We don't know when rates are going to go up again."

Rich Rosa: Right.

Rick Shaffer: Which I thought was what was going to happen. I think that the only reason they raised the rates when they did was because they'd been crying wolf so much they had to almost. I think afterward they said, "Well, you know, things aren't as healthy as we thought they were so we're going to hold back for a bit." But in any event-

Rich Rosa: And I think it's important for home buyers to know, especially first time home buyers, is that the rate isn't everything. Different loan programs have different rates and sometimes, depending on the program, a slightly higher interest rate might be preferred because of other benefits you're getting from the loan such as if you're only putting down, let's say, five or ten percent and instead of paying private mortgage insurance, you're not paying that because it's a special program so that interest rate might be slightly higher but it's worth it to you because maybe you're monthly payment is seventy-five or eighty dollars more because of a higher interest rate, but you're saving two hundred and fifty or three hundred bucks by not paying the mortgage insurance.

Rick Shaffer: What home buyers have to realize across the board, a first time home buyer or not, that what the advertised, especially when they're comparing rates, the advertised rate is almost always what the person with the best, who's putting twenty percent down and has a very high FICO score and a very good income to debt ratio and what have you, they're the ones who get that rate but generally when a company advertises a rate, that's not necessarily the rate you're going to get.

Rich Rosa: That's correct, and another thing that people are surprised to find out is that when you do pay mortgage insurance, how much you pay for it is, in part, determined by how high a credit score you have.

Rick Shaffer: Are there other things that you can think of off the top of your head that people should be looking at when looking for financing?

Rich Rosa: I think, going back to the whole interest rate thing, I think that people think, " Okay, all I have to do is call a few places, find out what the interest rate is, and get myself a loan." When I meet with clients we spend a lot of time talking about financing and I talk to them about what their particular situation is because there's all sorts of different loans out there that they could choose from. Some have mortgage insurgence. Some don't have mortgage insurance even though you have less than twenty percent down. Whether you have twenty percent down or whether you have less that twenty percent down or whether you have a lot of money saved or high income, different loans fit different peoples circumstances and it's important to understand what they are and learn about as many as you can.

I also tell people, "You really have to learn on your own about as many as you can because depending on what loan officer you're talking to, that may not offer all the loans, and they're not going to tell you about loans that they don't offer."

Rick Shaffer: They may not be aware of it because they're new or they just some aren't that good.

Rich Rosa: Or because they don't offer them, they never even heard of them.

Rick Shaffer: Right.

Rich Rosa: I think its' important to learn that too. And then, I think we've talked about in the past too, is that a lot of people hear FHA and they think, "Oh, well, FHA, three and a half percent down. That sounds like a good loan for me because I don't have a lot of money saved for a down payment." However an FHA loan comes with a lot of extra costs.

Rick Shaffer: Yep.

Rich Rosa: It's a very expensive loan and what I tell people, "It's really for someone who has a really low credit score." That's the real benefit is that basically the federal government is the last sub-prime lender in the nation.

Rick Shaffer: Yeah.

Rich Rosa: There's no other ones except for the federal government and with FHA you could go as low as, I believe you can go as low as about five eighty with the credit score, although I think most lenders won't go below six twenty because I think they need six twenty to sell the loan on the secondary mortgage market.

Rick Shaffer: Right.

Rich Rosa: Whereas most other loan programs are going to require at least a six sixty to get into them.

Rick Shaffer: Speaking of different mortgage programs that people, and some mortgage brokers, aren't aware of, are there mortgage programs that are specific to, and only available in, Massachusetts?

Rich Rosa: Yes. Two very good programs. They sound alike but they're completely different. One is called the Mass Housing Partnership and they have a mortgage called the One Mortgage. You may have heard in the past, there was a mortgage called the Soft Second, well this One Mortgage has replaced that Soft Second. The benefits of this One Mortgage are as little as a three percent down payment, no mortgage insurance, and if you qualify income-wise, a discounted interest rate so whatever the market rate is, this interest rate's going to be even lower. But there are strict income guidelines. It's about seventy-seven, seventy-eight thousand dollars depending on where you live, for a household income, not just the borrower, but a household income. There's also a cap on liquid assets that you could have. That's a great program if you're qualified but obviously in the Greater Boston area, that income doesn't allow you to buy a lot of what's available on the market.

Rick Shaffer: Now who is that run by? Is that the state government? Is it something that's over seen by the state government but you go through a regular mortgage lender to get it? How do you access that?

Rich Rosa: You go through a regular mortgage lender to get it. It's only offered by banks. Mortgage companies do not offer it. There's only about, I would say, about thirty banks in the state that offer the One Mortgage, and that's the only way to access it. That's a particular program, perfect example, if you're talking to a mortgage company, they're not going to talk about that program because they can't even offer it.

Rick Shaffer: Right.

Rich Rosa: It's something you have to make yourself aware of.

Rick Shaffer: If you've heard of it and you call the mortgage company, or you call a bank for that matter, and said, "Do you offer the One Mortgage program," and they don't immediately know what you're talking about then you can pretty much presume that they don't offer it.

Rich Rosa: Most likely not. Exactly. Right. If they offer it they're going to know about it. Another requirement of that mortgage is that you have to take a home buyer class, a pretty extensive home buyer class. It's required before getting the loan.

Now another Massachusetts only program, which is a little bit more common for people to get because you can make more money, is the Mass Housing Mortgage, which is another great program, as little as three percent down. They have an option where there's no mortgage insurance. They have an option with mortgage insurance. If you pay mortgage insurance they have something called MI Plus where they'll pay your mortgage for up to six months if you lose your job. It's an added benefit of having the mortgage insurance through them.

Like I said, they allow you to make up to a hundred and twenty-eight thousand nine hundred and twenty-five dollars in Suffolk Country, Plymouth County, Norfolk County, Essex County, Middlesex County. That's a loan that's much more available and they also require a home buyer class.

Rick Shaffer: Actually on both those, the mortgage one, which I don't have a lot of experience with, but the Mass Housing programs I've had a lot of experience with and they do a great job. Do you feel that these classes that they require people to take are of benefit to people?

Rich Rosa: I think that there's a lot of different groups that put on the classes and I think it depend on which one you go to. I've actually taught the Mass Housing classes through a non-profit.

Rick Shaffer: Yeah.

Rich Rosa: It's extensive and we're talking two days, five or six hours a day. It's a lot of information. A mortgage professional talks, real estate people talk, lawyers talk. We try to get in home inspectors. Usually we'll bring in someone from Mass Housing to talk about their particular program, so they can be beneficial. Absolutely.

Rick Shaffer: My thought is that, and I've been saying this for years, they should have things like that taught in schools and not just on mortgages, but on finances in general, but we're never going to see that happen because nobody's going to pay for it.

Rich Rosa: What would be helpful is if there  was a requirement to take a class like that. I don't know how they would institute such a requirement, but if they had to take a class like that before they got started, because what does happen sometimes is they're taking the class last minute right before their closing and they've pretty much been through the process. I can remember teaching one class one time where I had people that were literally going to be closing on their property like the following week.

Rick Shaffer: Right.

Rich Rosa: And I was saying things and I could just see them looking at each other like, we didn't know that. No one told us that.

Rick Shaffer: Right. It would've helped them but it's too late to help them at this point.

Rich Rosa: It's too late now. Right. Exactly.

Rick Shaffer: There are some programs in Massachusetts that are geared, thankfully, specifically for veterans which is one of the groups across the country which are, I think, we do a total disservice to because we don't give back to them anywhere near what they do in service to this country. Nevertheless, in Massachusetts there are a least one mortgage program specifically geared towards veterans. Can you tell us what it's called, who it's through, and a little bit of how it works?

Rich Rosa: Yeah. Veterans typically will try to get a VA loan and the big benefit of a VA loan is one hundred percent financing, no money down.

Rick Shaffer: Right.

Rich Rosa: Massachusetts, just this past Veteran's day, through Mass Housing, started a new program called Operation Welcome Home. What it is, it's an alternative to the VA loan and basically it's a ninety-seven percent loan-to-value loan with a three percent no interest loan. It's essentially becomes a zero down payment program like the VA loan. One of the added benefits is they make it a little bit easier through this Operation Welcome Home program to finance condos. It could be a little difficult to finance certain types of condos with a VA loan so this new program is a great benefit for veterans.

Rick Shaffer: Rich, we've pretty much run out of time but before you go, tell us again how people cane get in touch with you, how they cane get information about, and or begin the process of hiring you or somebody else at Buyers Brokers Only LLC.

Rich Rosa: Best place to start is our website, buyersbrokersonly.com. That's buyersbrokersonly.com. They could also follow me on twitter at @RichRosa. I tweet a lot about our real estate related matters. They can also find us, our company, on Facebook, Buyers Brokers Only.

Rick Shaffer: Okay. But the best place to go is buyersbrokersonly.com which I sometimes wake up, I read the ad so much it's always in my head, but buyersbrokersonly.com is the place to go.

Rich Rosa: We have hundreds of pages of content about buying real estate on the website so that's a great place to start.

Rick Shaffer: And just, again, I don't know if you, give us your geographical area where you have people, where you have specialists.

Rich Rosa: North of Boston all the way into Southern New Hampshire, south of Boston all the way down to the Upper Cape, and all the way west out to Worcester County, and down in southeastern Massachusetts down to the Rhode island border.

Rick Shaffer: So most of Massachusetts and southern New Hampshire.

Rich Rosa: All of eastern Massachusetts. Yes.

Rick Shaffer: Rich Rosa, always a pleasure to talk to you. We'll see you in studio again soon. Again, if you're interested in talking to, finding out information about, or hiring somebody at Buyers Brokers Only, go to buyersbrokersonly.com. We'll see you again tomorrow in twenty-two hours right here on Biz$mart on Boston Herald Radio.

Rich Rosa: Thank you.