Are you ready to buy a house in Massachusetts? Maybe you’ve lived in the state for years and you’re tired of renting. Perhaps you’re moving to Massachusetts for a job or to be closer to family and you need to buy a home. If it’s your first time buying a home, you may have a lot of questions about what to expect, where to buy, and how much it will cost. This COMPLETE guide will help you buy a house in Massachusetts like a pro.
How to Buy a House in Massachusetts
Buying a house in Massachusetts isn’t as difficult as you may think. There are only a few major steps and you will have professionals by your side at every step including your real estate agent, loan officer, and closing attorney. Here is how to buy a home in Massachusetts with tips to help at every step.
Set a Realistic Budget – How Much Does it Cost to Buy a House in Massachusetts?
Before you start house hunting or even choosing a neighborhood, you want to know what you can afford. If you are only used to renting, you may be surprised about the amount of hidden costs of homeownership plus closing costs, insurance, and taxes.
A good rule of thumb is to spend no more than 28% of your monthly gross income on your PITI payment which includes Principal, Interest, Taxes, and Insurance. Remember that there are other expenses on top of this and you don’t want to end up house poor.
It may help to understand the average home price in Massachusetts. In fall 2020, the median home price in Massachusetts reached $480,000, up 14% year-over-year for single-family homes. The median price for a condo hit $425,000, up 6%. The cost to buy a home in Massachusetts depends on where you live, however.
In Greater Boston, the median price for single-family homes hit $720,000 while the median cost of a condo reached $568,000.
The highest prices were in Central Middlesex County areas like Concord, Acton, and Stow with a median single-family home price of $957,000. Eastern Middlesex areas like Burlington and Winchester were more affordable at $655,000. In the Metro Boston area, the median home price was $792,000 or $660,000 for a condo.
The average homeowner in the U.S. pays $9,080 in unexpected costs of homeownership. In Boston, the typical homeowner pays over $14,000 in unplanned costs and maintenance. Don’t forget to plan for these expenses which include:
- Closing costs which are $4,000 to $8,000 for most Massachusetts homebuyers.
- Homeowner’s insurance. The average cost of homeowner’s insurance in Massachusetts is $1,400 per year ($115/month).
- Maintenance expenses. You should plan about 1% of your home’s purchase price per year.
- Property taxes. The average property tax rate in Massachusetts is $14.91 per $1,000 in assessed value. This is one of the highest rates in the country. The average property tax bill in Massachusetts is $4,899.
- Utilities. Massachusetts homeowners have among the country’s highest utility bills. You’ll pay an average of $469 per month for electricity, gas, water, internet, and cable.
Qualify for a Mortgage – Get Pre-approved
Once you’re confident you can afford a home, you’ll want to get pre-approved for a home loan. Mortgage pre-approval is an important step to take before house hunting in Massachusetts because it demonstrates your offer is serious.
The process of getting pre-approved for a mortgage is much like the loan approval process you’ll formalize after making an offer on a home. The lender of your choice will need documentation for the following:
- Asset verification. You will need to submit statements for brokerage, retirement, checking, and savings accounts.
- Debt verification. You will need documentation showing your debt amounts and monthly payments.
- Income verification. Be prepared to verify income for the last 2 years with 1099s, W-2s, and documentation of rental income or any other source of income.
- Rental verification. Demonstrating proof of paid rent for the last 12+ months can strengthen your mortgage application. It may be needed if you have a lower credit score or other issues.
- Gift letter. This is necessary if you use gifted money for your down payment.
A pre-approval will also require a credit check. Lenders usually require a minimum credit score of 620. For the best mortgage rates, a FICO score of 760 or higher may be needed.
Choosing a Massachusetts Real Estate Agent & Closing Attorney
When you’re ready to start your search for a home, you’ll probably want to choose a real estate agent to help you. Your buyer’s agent serves may roles:
- Protects your best interests
- Helps you find a home
- Prepares your offer with you
- Assists with other details like the home inspection, negotiation, market analysis, and executing the purchase and sale agreement
Here are some tips for choosing a buyer’s real estate agent and important questions to ask.
Note that Massachusetts law requires that an attorney preside over closing residential real estate transactions. The closing attorney is responsible for reviewing all documents, ensuring the title is clear and ready to be transferred, and more. Massachusetts buyers and sellers are typically each represented by their own attorney. The seller’s attorney represents the seller’s interest while the other attorney represents the lender’s interest but may also represent the buyer.
House Hunting in Massachusetts: Where Should You Live?
What is the best place to buy a house in Massachusetts? Once you’ve narrowed down your options to a city and hired a buyer’s agent to represent you, you can start the most exciting part of buying a house in Massachusetts: the home search!
Your agent will help you review the most important things you’re looking for such as number of bedrooms, commute time, home type, and amenities. They will recommend neighborhoods and areas that seem like a good fit for you then show you homes that are within your budget.
Be prepared to make some concessions because you won’t find a home that has everything on your wishlist. Need a little help figuring out where to start? Here are some guides that can help you decide where to buy a house in Massachusetts.
- Moving with kids? Our guide to the best schools in Boston can help parents choose a Metro Boston neighborhood or suburb. This overview of Boston suburbs for families can also help!
- Boston: This complete guide to living in Boston covers everything to know about Boston with a look at top neighborhoods.
- Lowell: Here’s an overview of the top neighborhoods in Lowell, one the largest cities in Massachusetts. You can also check out this in-depth guide to living in Lowell, MA.
- Cambridge: Find out the best places to live in Cambridge, Boston’s neighbor and one of the state’s largest cities.
Make an Offer on a Home in Massachusetts
Found the home of your dreams? Your real estate agent and attorney will work with you to create a purchase offer. Your agent will show you market analysis including comparable sales to arrive at a fair offer price. They’ll also review and recommend contingencies that should be included.
When the seller gets your offer, they can accept it as-is, reject it, or make a counteroffer. It’s rare for an offer to be outright rejected unless there are multiple offers. If they make a counteroffer, they may ask you to remove contingencies, make a higher offer, or reduce the seller assistance you are requesting. After an agreement is reached and the purchase agreement is signed by both parties, you are under contract. Now escrow will begin and, within two months or so, you’ll be a Massachusetts homeowner!
Closing: the Final Step! – What to Expect
During escrow, you will work with your lender to make sure your mortgage is approved. Funds will be transferred and all contingencies must be met such as a satisfactory home inspection. When contingencies are met, your agent and attorney will meet with you to sign the final documents and close your real estate transaction.
At closing, you will get the keys to your new home and your adventure of buying a house in Massachusetts will be nearly over. All that’s left is moving in!
First Time Home Buyer Programs in Massachusetts
Are you ready to buy your first home in Massachusetts? There are tons of first time home buyer grants in Utah plus down payment assistance and loan options. Here’s a quick look at the top programs for a first time home buyer in Massachusetts.
- Down Payment Assistance Program from MassHousing. Get up to 5% of your purchase price to use toward your down payment. The down payment loan has a 2% fixed interest rate for 15 years.
- Operation Welcome Home gives active-duty military members, veterans, and qualifying family members up to $3,000 in closing cost assistance.
- MassHousing Mortgage is an affordable home loan program from the semi-public housing agency of Massachusetts. This loan option comes with low down payments, low interest rates, and mortgage payment protection.
- The One Mortgage Program offers a 30-year fixed rate mortgage with a low interest rate plus 3% down payment assistance and no private mortgage insurance. It’s available for first time buyers who meet income guidelines.
- The ONE+Boston First Time Home Buyer Loan is available for first time buyers in Boston. It combines a low interest fixed-rate mortgage with down payment assistance of up to 5%. The interest rate is even lower than that for the standard One Mortgage thanks to funds from the City of Boston.
Don’t forget to overlook nationwide first time home buyer loans. An FHA loan requires a down payment of only 3.5% and it’s popular with first-time buyers with limited credit. A VA loan is the best option for qualifying military members and veterans with no down payment, no mortgage insurance, and low, flat closing costs.
Want to learn more? Check out our complete guide to programs for first time home buyers in Massachusetts!
Nothing is quite as exciting as becoming a homeowner. Once you’ve settled on the right city and neighborhood and have an offer accepted to buy a house in Massachusetts, give us a call at Mass Bay Movers. We’ll give you a free moving estimate to make settling into your new home easy and stress-free.