Mortgage Rates Massachusetts: Buying Homes In A Competitive Market
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Buying homes in Massachusetts can be an uphill battle. The low housing inventory and high demand make it a very competitive market. Knowledge of the local mortgage and refinance rates help you find the best property deals. In this guide, we show you the latest mortgage rate in Massachusetts and share advice on how to finally get that dream home in Boston and beyond!
Mortgage Options In Massachusetts
As an American homebuyer, you have the choice of three loan options. Each kind of mortgage loan has its rate schemes, pros, and cons. Here, we explain all three of them.
Conventional Home Loan
Conventional mortgages are home loans that aren’t guaranteed by government entities. These home loans are commonly offered by banks and other private mortgage companies.
Conventional loans are subject to local loan limits set by the Federal Housing Finance Agency (FHFA). In the New England state of Massachusetts, limits vary between the national average of $548,250 and $822,375 in several areas.
Fixed-Rate Mortgage
Fixed-rate loans are one of the most common mortgages. Due to the constant interest rates, your monthly payment amount won’t change for its entire life.
The predictable interest rate and stability of these loans make them popular with first-time homebuyers and long-term financial planners.
Fixed-rate mortgages are most commonly offered in 30-year terms. If you’re looking for lower mortgage interest rates, 15-year and 20-year fixed-rate loan terms also exist.
Adjustable-Rate Mortgage (ARM)
As an alternative to fixed-rate mortgages, an ARM’s rate changes every year. This annual ARM rate adjustment follows the performance of a lender-chosen market index.
Typically, ARMs also have a fixed-rate introductory period at the beginning of their life. The ARM rate during its introductory period is usually lower, making them popular for short-term savings.
Most ARMs’ introductory periods last 5 years. However, lenders may offer you introductory periods between 3 and 10 years.
Jumbo Mortgage
Many homes are priced over local lending limits. To allow borrowers access to these properties, lenders offer jumbo mortgages. They can exceed loan amount limits in exchange for higher rates.
Government-Backed Loan
Many government agencies offer loan products aimed to boost the homeownership rate in certain demographics. These loans usually feature more affordable rates and often have no down payment requirements.
The most prominent government loan programs are:
- FHA loans: Geared for low-income homebuyers, these loans have lower rates and allow you to pay 3% down. However, you need to pay private mortgage insurance (PMI) fees for its entire life.
- VA loans: To be eligible for this zero-down loan, you must be an active-duty military member or veteran. As a substitute for PMI, you have to pay for a cost called funding fees at the start of your VA loan.
- USDA loans: To be eligible for a USDA loan, you must buy property in approved rural areas. Qualified borrowers receive a zero-down loan with lower mortgage insurance fees.
Mortgage Refinancing
Refinancing entails taking out a new mortgage loan to pay off your existing one. This is usually done to accomplish one of these two goals:
- Alter your loan terms: Rate and term refinancing allows you to modify your existing loan term. You can shorten the loan to get better refinance rates, or change your loan type to avoid an ARM’s adjustment period.
- Convert home equity into cash: Cash-out refinancing is used to leverage your built-up home equity. They work by giving you a loan larger than your current mortgage balance. Once you pay the mortgage off, any leftover cash will be free to use.
Current Massachusetts Mortgage Rates
Generally speaking, Massachusetts mortgage rate trends are lower than the national average. Here, we provide the latest access to mortgage rates in Massachusetts, updated daily! The mortgage and refinance rates listed here are sourced from America’s major mortgage lenders.
Today’s Mortgage Rates in Massachusetts
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Your mortgage rates may vary depending on your financial circumstances. The data on this table may change without prior notice.
For a personalized look at your Massachusetts mortgage rates, we have a rate tool at the top of this page! Input your financial details and we’ll calculate a custom Massachusetts mortgage rate estimate for you.
First-Time Homebuyer Programs In Massachusetts
With rising prices, state homebuyer assistance programs are becoming more important. Through MassHousing, the State of Massachusetts offers these programs to help first-time homebuyers find a place to live.
MassHousing Mortgage
This state-sponsored first-timer mortgage offers eligible borrowers a 30-year fixed-rate loan to buy single-family homes.
To protect the borrower in case of job loss, this program also provides payment coverage of up to six months through MI Plus.
To qualify for a MassHousing mortgage, you must fulfill these criteria:
- Meet credit score requirements set by the lender
- Complete a homebuyer education course
- Meet MassHousing income limits
MassHousing Operation Welcome Home
This program offers affordable 30-year fixed-rate mortgages for military members and veterans who are buying a home for the first time. Participants of this program are also eligible for MassHousing Down Payment Assistance and $2,500 worth of closing cost and lender fees assistance.
In some areas like Boston, the first-time homebuyer requirement may be waived.
MassHousing Down Payment Assistance
This state-sponsored down payment assistance program offers $15,000 or 5% of the home value for eligible borrowers. The money comes in the form of a fixed-rate 15-year loan with a 2% interest rate.
Buying A Home In Massachusetts
The homebuying journey can be complex, especially for first-timers. To help make the process easier, we’ve compiled this guide to buying a home in six steps!
Step 1: Get A Pre-Approval
Before starting your hunt for the perfect Massachusetts home, you need to be financially prepared. The best way to check your homebuying readiness is by applying for a mortgage. During the application process, you’ll go through pre-approval where the lender examines your financial health.
If you pass, you’ll be given a pre-approval letter. This letter contains key details about your loan – its type, rate, maximum loan amount, among others.
In addition to being an estimate of your budget, it also serves as a sign of financial readiness to buy a house that you can show the seller.
Step 2: Recruit A Real Estate Agent
Local real estate agents can be one of your greatest allies in this process. They don’t just find and show you houses – they can help negotiate better deals.
With their experience in the area, they can help you learn key details such as local home values, nearby amenities, and commute times.
Step 3: Research Local Listings
With a real estate agent by your side, you should now choose a neighborhood. A good piece of homebuying advice is to look for the lowest-priced house in the neighborhood that still fits your needs. Any money remaining from the purchase can be used to make home improvements.
Step 4: Come Up With An Offer
Massachusetts is a seller’s market – meaning demand far outweighs supply. It’s likely that you’re not the only one with eyes on that house. To beat out the competition, you need to make your offer stand out.
One of the best ways to stand out is to make an offer above the property value. Consult with your realtor about how much above the listed home price you should offer, so you don’t overpay.
Step 5: Take Due Diligence Steps
Checking your purchase is an essential step to ensure you’re getting what you paid for. Home inspections can spot potential issues that may need repairs or maintenance. Appraisers help determine the actual value of the home – if the home is overvalued, you might have a chance to re-negotiate the deal.
Be sure to do these steps before the closing day so you still have time to go back to the seller if something is amiss.
Step 6: Complete The Purchase
In preparation for closing day, you should have the money for the closing cost and lender fees ready. Ask your realtor for real estate attorney recommendations and have one accompany you during the closing process.
Make sure everything is in order before you sign the paperwork. As soon as the closing process finishes, you can start preparing your move.
How To Get Better Mortgage Rates In Massachusetts
Since mortgage loans are a long-term commitment, getting the best mortgage rate can save you thousands down the line. Here are our three top tips to lower your mortgage rate.
Consider Shortening Your Loan
Shortening your loan allows you to save in multiple ways. Generally, lenders are more likely to charge lower rates on shorter loans due to the reduced risk. Since there are fewer payments on a shorter mortgage, you’ll also incur fewer interest expenses.
Pay For Discount Points
Your lender may offer discount points as part of your mortgage process. These points give you a mortgage interest rate reduction in exchange for an upfront cost.
On average, discount points are worth 1% of your loan each and provide a 0.25% rate reduction. If you can’t afford whole points, you can buy half-points instead. Because you can pay thousands to buy points, they’re best bought for long-term savings.
Compare Multiple Lender Offers
Different mortgage companies offer different rates, expenses, and fees. These details are outlined in standardized loan estimate documents, which makes it easier to compare offers from multiple lenders. Be sure to research at least 3 or 4 offers to find the one that offers the best rates and fees for you.
Closing Thoughts
Preparations are essential to compete in the Massachusetts housing market. Knowing the local mortgage rates and how to find the best deals can put you at an advantage over other homebuyers.
If you’re looking for the best mortgage to buy your dream Massachusetts home, Wesley LLC is here to help. Contact us today for a mortgage consultation!