Massachusetts Home Buyer Guide

Consider The Costs Of Buying / Owning A Home

An April 10, 2008 post on Bankaholic discussed the various costs of buying and owning a home, and how one should carefully budget for such a major financial event.

The post contains simple, but sound, advice, such as the following.

"A good question to ask yourself before contacting your local banker to discuss a loan is, ‘how much is too much?’ While you might be tempted to try and get as much money as possible if you can find a good rate, you do not want to make the mistake of taking on a loan so big that your finances will be stretched to the point that you cannot make your payments."

Read The Entire Bankaholic Post

New Jumbo Loans

As part of the recently implemented economic stimulus package, home buyers will be able to borrow and homeowners will be able to refinance larger loans approved by the Federal Housing Administration (FHA), the Boston Herald reported March 30, 2008.

"Depending on the location of the property you want to buy or refinance, you can now get an FHA-insured mortgage for as much as $729,750 with a 3 percent down payment. You can also apply for loans designated for funding by Fannie Mae and Freddie Mac up to that amount - or 125 percent of your area’s median home price - but with larger down payments of at least 10 percent."

The previous amount was $417,000.

"Absent congressional action, the limits will drop back to $417,000 for Fannie and Freddie, and to $362,790 for FHA, beginning New Year’s Day. In the meantime, there should be plenty of jumbo mortgage money available for anyone who can afford it."

Among other conditions, you'll need a minimum of 10 percent for a down payment, and you need a minimum credit score of 700, if you're putting down less than 20 percent.

Read The Boston Herald Article

Historical Mortgage Interest Rate Data

Freddic Mac provides historical data on mortgage interest rates on its Web site dating back to 1971.

Be sure to check out interest rates in 1982.

First-time Home Buyer Seminar April 5, 2008

Buyers Brokers Only, LLC is sponsoring a first-time home buyer seminar on Saturday April 5, 2008 from 10 a.m. to 12 p.m. at the Best Western (401 Lowell Avenue, Haverhill, MA) in Haverhill.

Learn about every aspect of buying a home: mortgages, pre approval, finding a home (single-family, condos, multi-families, new construction), the multiple listing service (MLS), buying bank-owned properties and short sales, negotiating the best price, home inspections, purchase & sale agreement, the closing, tips and advice from the professionals and an opportunity to ask all your questions.

Space Limited: Please RSVP by filling out the form online or by contacting Alexa by April 3, 2008 at 978.457.4552 or astone@buyersbrokersonly.com. Space is limited to 50 people.

Knowledgeable Speakers:
Richard J. Rosa, Esq., Buyers Brokers Only, LLC: Rich is a real estate broker, lawyer and co-owner of Buyers Brokers Only, LLC. He has practiced law for 12 years, and he is a member of the Massachusetts Association of Buyer Agents.

David S. Kres, Esq., Buyers Brokers Only, LLC: Dave is a real estate broker and lawyer, as well as co-owner of Buyers Brokers Only, LLC. Dave earned the North Shore Association of REALTORS® (NSAR) Rookie of the Year award in 2006 and currently is the president-elect at NSAR.

Robert Barr, VIP Mortgage: Rob is the vice president of sales for VIP Mortgage, located in Danvers, MA. He has 20 years of experience in the mortgage industry and has helped more than 1,000 individuals/families finance their first home.

Jeffrey Stelman, Esq., Schribman & Stelman, LLP: Jeff is a partner in the law firm of Shribman & Stelman, LLP, located in Salem, MA. He has practiced law for 17 years and has conducted more than 1,500 real estate closings.

Josh Amsler, Jackson Home Inspection: Josh works for Jackson Home Inspection in Andover, MA. He has more than 10 years experience as a licensed home inspector and has completed more than 6,000 home inspections. He also is a member of the National Association of Home Inspectors.

Donation: $15 per person. All proceeds going to Rebuilding Together Greater Haverhill, Inc., which helps revitalize homes and neighborhoods for low-income homeowners and communities in need, especially the elderly, the disabled and families, helping them to live in warmth, safety and independence. Please make checks payable to Rebuilding Together Greater Haverhill Inc., and please mail checks to Buyers Brokers Only, LLC, 7 Kenoza Avenue Haverhill MA 01830. Space limited to first 50 people, so please RSVP.

Appraisal v. Inspection

An appraisal and an inspection are not the same thing.

Many first-time home buyers wonder about the difference between a property appraisal and an inspection, and how each is used during the home buying process.

An appraisal is a formal assessment of the value of a home or property. When you are seeking financing, the lender usually requires an appraisal to ascertain the value of the property in order to make sure the loan amount does not exceed the value of the property being sold.

An inspection is an assessment of the systems and structural integrity of the property. It's normally ordered and paid for by the buyer at the time of inspection to find any hidden problems with the property. An inspection is often written into an offer to purchase as a condition of the sale in Massachusetts.

In New Hampshire, an inspection is written into the purchase and sale agreement as a condition of sale.

Tips To Repair Your Credit Score

An article by Inman News, a real estate industry publisher, on Boston.com discusses tips to increase your credit score.

The article talks about some basic and easy-to-do things, but it's worth reading if you're in the market for a home loan and want to boost your credit score over the next few months.

I wrote a post last week about the formula for calculating a credit score changing.

Read The Boston.com Article

Check Your Credit Report For Errors

We all know that maintaining good credit is critical, especially in this lending environment, but even if you do your part a creditor might not be doing its job correctly.

A short article in the December Money magazine discusses consumer rights under the Fair Credit Reporting Act and provides tips to make sure errors in your credit report are corrected.

"A recent study by the U.S. Public Interest Research Group found that 25 percent of credit reports have mistakes serious enough to cause a denial of credit. With today’s tighter loan standards, it’s critical to make sure your report is up to snuff."

Read The Money Magazine Article

What's Better, Renting or Buying?

Whether buying or renting is better depends on your personal circumstances.

Several factors need to be considered, including the rent you pay, the price of the home you plan to purchase, the mortgage interest rate, how long you plan to remain in the home and other factors.

Here's a handy free calculator from Ginnie Mae that will help you decide whether renting or buying makes more sense financially for you. It's a great tool.

The default amount for property taxes is 1 percent. That is probably a little low for our part of the country. I suggest changing that variable to 1.25 percent or 1.5 percent for Massachusetts and from 1.5 percent to 2 percent for New Hampshire to get a more accurate calculation.

The Only Place To Get A Free Credit Report

Only one Web site is authorized to take requests from consumers for the free annual credit report you are entitled to under law.

That Web site is AnnualCreditReport.com. Other Web sites that claim to offer “free" credit reports, credit scores and credit monitoring are not part of the legally mandated free annual credit report program. In most, if not all, cases, the “free” product comes with strings attached.

You're are not entitled to a free copy of your credit score. Companies are allowed to charge a reasonable fee, generally around $6 to $10, for your credit score. When you buy your score, sometimes you get information on how you can improve it.

I've written a lot about the importance of your credit score, especially in the current lending environment. If you plan on purchasing a home within the next 12 to 18 months, it probably is a good idea to get your score now. Individuals with scores of 720 or higher generally get the best mortgage interest rates and terms. Knowing your score now will give you time to correct errors and take steps to improve it.

Your Credit Score More Important Than Ever

It's not news to anyone that maintaining a respectable credit score is vital to obtaining a home loan and a competitive mortgage interest rate.

What's respectable in the current lending environment may be news to many consumers.

According to an August 26, 2007 article in the Boston Herald, underwriting standards adopted by various lenders have increased the minimum credit score necessary to stay out of the subprime lending pool.

A minimum credit score of 620 had been the typical cutoff point between a traditional loan and a subprime loan; however, some lenders now are requiring minimum scores of 680, a significant increase. For limited documentation loans, some lenders are requiring a credit score of at least 720.

Mortgage brokers I speak with regularly have been telling me for months that underwriting standards literally have been changing on a daily basis, and many loan programs are no longer available.

Read The Boston Herald Article