If you are considering a move to Massachusetts or are already a resident and would like to buy a home, there are several things you should know. 

Steps To Buying A House 

Massachusetts has a strong job market and there are many rental opportunities in the state. 

Boston is the largest city in Massachusetts and is growing quickly. There are many opportunities for employment. The median list price for a Boston home has increased 7.1% to $745,937 over the past year. 

Massachusetts is currently a seller's market where real estate is concerned, which means that competition for homes can be fierce. 

If you are ready to buy a house or condo in Massachusetts, it's important to understand the steps and get started choosing a mortgage type and lender. 

There are a few distinct advantages associated with purchasing a home in Massachusetts. Dual agency (home buyers and home sellers represented by a single agent) is permitted. The agent still has a fiduciary duty to act in the best interests of the party they represent, so both the buyer and the seller must sign a Disclosure Regarding Real Estate Agency Relationships before proceeding with the transaction. 

When you purchase a Massachusetts home, a lead paint statement is the only required disclosure. While this can make the process of purchasing a home a bit easier, you must also have an attorney present at closing to assist the process, according to state law. 

1. Understand Your Financial Position 

Before you start house shopping, it's crucial to understand your financial position. Your lender has the final say on the requirements to buy a home in Massachusetts. In general, you can expect them to require the following: 

• Good credit: Many lenders consider a FICO score of 670 or higher "good". Credit scores above 740 are better and can help you secure a lower interest rate. 
• Debt-to-income ratio: Lenders determine your debt-to-income ratio by adding up your monthly payments and diving that total by your gross monthly income. In general, lenders prefer a debt-to-income ratio of 36% or less. If your ratio is higher, you may pay more interest on your loan or be denied a mortgage.¹
• Financial documentation: Before you can get approved for a mortgage, you must be able to prove that you can easily make the potential monthly payments with your current income. Your lender may ask for pay stubs, bank statements, W-2s, and tax returns to help paint a picture of your current financial situation. 
• Down payment: Potential home buyers must have access to funds for a down payment. Your lender can help you understand the rules that apply to these funds, and whether you can use funds from a personal loan for a down payment. The majority of lenders require a down payment of at least 3.5%. Depending on the type of loan and the lender's requirements, you may or may not be able to use funds from a gift to help make the down payment. Before proceeding with the process of getting a mortgage, make sure you understand the rules and have sufficient funds set aside to make sure you can get approved for the mortgage. 

Because you'll work so closely with your lender throughout the home buying process, it's crucial to choose a lender that has a reputation for excellent customer service. Many potential homebuyers choose to work with a local credit union that can provide direct access to an experienced loan officer willing to provide assistance throughout the process. 

2. Get Preapproved for a Mortgage 

When you are ready to buy a home, it's crucial to get prequalified for a mortgage. The prequalification process is typically quick, and it helps you understand how much money you may be approved to spend on a home. 

Your lender can help you get preapproved and will issue a preapproval letter to let sellers know that you are serious about your offer and have a good chance of getting approved for a mortgage. Without a pre-approval letter, your agent may not be willing to write an offer on a home. In this tight housing market, you may not have time to get a preapproval letter after you find your ideal home. 

The loan officers at BFCU are ready to walk you through the pre-approval process, which typically takes less than 24 hours. 

After you get your preapproval letter, you can start looking for a home in your price range. The preapproval process can help you focus your attention on homes that you can potentially afford. 

3. Consider Programs for First-Time Homebuyers in Massachusetts 

The Commonwealth of Massachusetts provides several programs designed to help potential homeowners work through the process of purchasing a home. 

Massachusetts partners with agencies to provide mortgage programs and education to help you find the right home. 

• My Mass Mortgage: Detailed guide for first-time homebuyers with information about education courses, mortgage products, and counseling for homebuyers new to the process. 
• ONE Mortgage Program: Affordable mortgages for low and moderate-income homebuyers purchasing their first home. 
• MassHousing: This site provides education and resources for people who want affordable housing in Massachusetts. You'll find information for homebuyers who want to get a mortgage, homeowners hoping to secure funds to renovate or refinance, renters who need an affordable apartment, and developers who want to finance potential rental housing. 
• Affordable homes in Massachusetts: If you are looking for affordable homes, you can access a list of homes for sale to income-eligible homebuyers interested in purchasing their first home by calling (617) 573 - 1100. 

4. Find a Real Estate Agent 

Finding a real estate agent that you can trust to help you through the process of buying a home can be challenging. Talk with friends or family who recently purchased a home to get recommendations. Remember to also speak with your loan officer to find out if they have recommendations for a local agent that specializes in helping buyers in situations similar to yours. 

Your real estate agent can make or break your ability to purchase the home you want, so choose carefully. Be sure to interview a few agents and look at their online reviews from home buyers. 

Your agent will help you find and shop for listed homes. They may have access to homes that aren't yet listed on the MLS. An experienced and well-connected real estate agent can also provide you with access to a trusted network of home inspectors, appraisers, and real estate attorneys. 

Buyers don't pay real estate agent fees. The seller's agent and buyer's agent typically split the commission on real estate sales. The agents' pay comes out of the sale price of the home, so it's in your best interests to hire a real estate agent as opposed to sharing one with the seller. 

5. Choose a Home and Make an Offer 

Your agent can help you narrow your choices, so you can spend time looking at homes that meet your criteria and are within your budget. When you find a home you'd like to make an offer on, your agent will handle the paperwork. 

If the seller accepts your offer, your agent will help you get through the next steps, as well.

Each lender has its own rules, but getting an appraisal on the home is a universal requirement. An appraisal helps determine the market value of a property and helps confirm that the amount of money you'd like to pay for the home conforms to the lender's requirements. 

6. Meet With Your Lender 

After the seller has accepted your offer, there are a few more steps you must complete before closing on the loan. It's important to communicate your progress to your lender. 

Depending on its requirements, you may need to start the official underwriting process and provide your lender with more documentation to support your ability to make the mortgage payments. 

7. Hire a Real Estate Attorney 

In Massachusetts, you must use a real estate attorney to help facilitate closing on your mortgage. Your agent works with real estate attorneys regularly, so ask them for recommendations. 

8. Hire a Home Inspector 

Your home inspector helps you understand potential issues with your home. They will go over every square inch of the location. Their official report may include the following: 

• Structural elements 
• Safety 
• Grounds 
• Roof 
• Exterior surfaces 
• Attic 
• Interior plumbing 
• Electrical system 
• Appliances 
• Heating and cooling systems 
• Basement 
• Garage
• Insulation and ventilation 

Your home inspector will provide you their report, and with your real estate agent's help, you can use that information to ask for an adjustment to the home's selling price. You can also ask sellers to make repairs to problems found by the inspector. 

9. Close On Your Mortgage 

By now, you've gone through each step of the Massachusetts mortgage process and must meet with your real estate agent and real estate attorney to sign the appropriate paperwork. Be sure to ask questions throughout the process so you understand the terms of your loan when your first payment is due, and whether you'll pay taxes and insurance through an escrow account or on your own. 

When you are ready to buy a home in Boston or the surrounding areas, turn to the Massachusetts mortgage loan experts at BFCU. We are here to help you successfully navigate the process so you can reach your goal of becoming a homeowner.

¹Beth Buczynski, 2022, Understanding Debt-to-Income Ratio for a Mortgage, [NerdWallet.com], Accessed March 31, 2022.