Massachusetts Home Buyer Guide

Some potential Massachusetts home buyers may be sitting on the real estate sidelines because of misconceptions about what it takes to secure a home loan, according to a recent survey by Wells Fargo and Ipsos Public Affairs. 

When it comes to buying a home – and making other important decisions in life – it's not what you don't know, it's what you don't know you don't know that should worry you. There are plenty of potential pitfalls Massachusetts home buyers need to be aware of and avoid. The following are just three common Massachusetts home-buying mistakes to know about. 

Several first-time home buyer programs require borrowers obtain a home-buying certificate in order to qualify for the loan program. MassHousing requires borrowers to participate in a home buyer class and obtain a certificate of completion in order to buy a home with one of its mortgages.  

Many potential Massachusetts home buyers may have heard the recent news that the Federal Housing Administration (FHA) reduced cost of private mortgage insurance (PMI), but there are two other important things to know about PMI as it applies to FHA mortgages. 

The real estate media, as well as many real estate bloggers, have been buzzing about the announcement that Fannie Mae and Freddie Mac will now offer first-time home buyers conventional mortgages with only a 3 percent down payment, but in Massachusetts home buyers already have two options for low down payment mortgages.

No home buyer wants to pay mortgage insurance (MI), commonly referred to as private mortgage insurance or PMI, but saving enough money for a 20 percent down payment to avoid PMI, especially in the high-cost Boston area real estate market, is easier said than done.

Massachusetts first-time home buyers have a lot to think about, and obtaining an affordable home mortgage is certainly one of those considerations. Fortunately, first-time home buyers have some options to obtain a straightforward, low down payment mortgage, with competitive rates.

There are a few home loan programs that benefit different types of first-time home buyers; however, the two best arguably are the Massachusetts Housing Partnership ONE Mortgage and the MassHousing Mortgage. Both mortgage options have income limits and other requirements. 

Several first-time home buyer programs require borrowers obtain a home-buying certificate in order to qualify for the loan program. MassHousing mortgages, as well as the Massachusetts Housing Partnership ONE Mortgage, require home buyers to participate in a qualified Massachusetts first-time home buyer class. 

BLUE, Inc., a not-for-profit organization, is offering a two-day class, Home Buying 101, at the Eastern Middlesex Association of Realtors in Reading, Massachusetts on September 20th and 21st. Participants who attend both days will receive a home buyer certificate required for MassHousing Mortgage loans.

In June of 2013 the Commonwealth of Massachusetts announced the creation of a homeownership compact, with the goal of bringing lenders together to provide 10,000 mortgage loans to first-time home buyers over five years. The compact included a commitment among participating lenders to originate a specific number of loans through MassHousing and the Massachusetts Housing Partnership (MHP) home loan programs. 

As part of the effort to provide Massachusetts first-time home buyers with lower and moderate incomes an opportunity to own a home, the state launched a new Web site to provide potential home buyers information about MassHousing mortgages and the MHP One Mortgage. 

Massachusetts homebuyers need to thoroughly understand the importance of the loan commitment date when purchasing a home and how failing to do so may result in the loss of their deposits.

The failure of a home buyer to receive a clean loan commitment letter, extend the loan commitment deadline or to terminate the contract with the seller before the loan commitment deadline passes puts him or her in jeopardy of losing deposits made at the time the offer to purchase and purchase and sale agreement were signed. For many home buyers, these deposits total 5 percent of the purchase price of the home they intend to purchase. 

The Boston Globe reported on July 9, 2014 that a few additional lenders have agreed to participate in a state program to provide loans to first-time home buyers through MassHousing and the Massachusetts Housing Partnership. What types of loans are available to first-time home buyers? Eligible first-time home buyers may qualify for mortgages with low down payments, no private mortgage insurance (PMI) and other benefits. 

The following are a few, but not all, of the loan programs available to first-time home buyers in Massachusetts.