Buying A House In Massachusetts (MA): A Guide

So you're thinking of buying a house in the Bay State? Well, good news, Massachusetts is a great state for finding your next abode! World-class universities, vibrant city life, excellent professional sports teams, exceptional cuisine and plenty of fun to be had by the water are just a few of the many reasons so many people love calling Massachusetts home.

Massachusetts also boasts a robust housing market, with home values rising year over year, a strong job market, and a plethora of potential home buyers year-round.

Finding your perfect new nest is a complicated process, so understanding how to buy a house in Massachusetts is critical to success. Whether you’re a first-time home buyer or have vast experience in the home purchase process, understanding all the ins and outs of Massachusetts home buying is a must.

How To Buy A House In Massachusetts

So, let’s get into how to buy a house in this desirable place to live. In many ways, buying a house in Massachusetts is like buying a home anywhere. In other ways, not so much. Buying a home anywhere starts with figuring out how you are going to pay for it. This really needs to be the first step, although many fall into the tempting trap of looking at houses in person or online first. This can result in heartbreak when you find your dream home but then realize it’s a nightmare for your budget.

To protect your heart (and wallet) start your Massachusetts home hunt by not hunting for a home, but rather a lender. Unless you are paying cash, in which case let the house hunting commence. Friends and family are a good place to start searching for a lender, as a trusted source is invaluable when it comes to referrals. The lender you choose will get you preapproved for a loan so you can have a good sense of what you can afford.

Next, it’s time to find a good real estate agent. Tap that friends and family network again or do your own research. Interview a few different agents to see who a good fit might be. Once you have found the agent that’s right for you, fill your schedule with open houses, private showings and time to peruse listings online.

When you find that Massachusetts home that’s right for you, it's time to submit your offer. Your real estate agent will help craft an offer that has a good chance of being accepted but isn’t more than you are willing to pay. Within that offer will be a number of contingencies that need to be met before the sale can close. The big two contingencies usually included are financing and inspection.

The financing contingency means that if you don't get final approval for your loan, you can’t buy the house. Makes sense, right? Your lender will be looking at a myriad of financial statements like pay stubs, savings, credit score and more to determine if you can get the final loan approval.

Another big part of this process is the appraisal. Your lender schedules an appraiser to determine how much the property is worth. If it is worth less than the contract price, your loan won’t be approved until the price comes down or other seller concessions are made.

The other big contingency, inspection, means you get a certain amount of time (usually a week) to look through the house from top to bottom with a home inspector. If everything looks good to go, or at least good enough that you want to move forward with the sale, things proceed toward closing. If there are issues that need to be addressed, you can ask the seller to fix them or pay for them. Or, if there are just too many issues to stomach, you can walk away from the deal by getting a mutual release signed by both parties.

Once all the contingencies in the contract are met, you will likely do a final walk through right before the closing to make sure nothing has changed during the sale process. Then, it’s off to the closing table to sign the final documents and get the keys to your new Massachusetts home!

Keep in mind that you might not move in right away. Sometimes occupancy of the home is given to the new owner right after the closing, but other times the previous owners need some time to move out. Sometimes they even need time to find their new home if that was a contingency written into the contract. Make sure you discuss these terms with your agent before making an offer so there are no disappointment surprises once you seal the deal.

The process outlined above describes real estate transactions all around the country. Now, let’s look at some parts of the buying a house in Massachusetts process that are specific to the Bay State. These are all good Massachusetts specific things to know before moving forward with your home search.

Dual Agency Is Allowed

Many states throughout the U.S. allow for dual agency during a real estate transaction and Massachusetts is one of them. Dual agency means that one real estate agent is representing both the buyer and seller during a transaction. This is not common, as most real estate transactions are done with the buyer and seller each having their own agent.

When each side has their own agent, they have a real estate professional they hired looking out for their best interests during a transaction. When one agent represents both sides, they must work with the interest of both parties in mind at all times. If done well, this can work just fine, with the agent helping find middle ground and a win-win situation for buyer and seller. However, when this isn't done well, one party can feel like they weren't treated equally during the deal. This is why dual agency is not allowed in some states.

Your First Offer Is Binding

The first offer you make on a house in Massachusetts is considered a binding contract if the seller accepts. That said, contract contingencies like the previously mentioned financing and inspection contingencies mean you don't have to go through with an offer if certain conditions aren’t met.

The importance of making a contingent offer can’t be overstated. Contingencies ensure you aren’t locked into a contract if you find something wrong with the home, can’t get loan approval or if something else goes wrong that you add as a contingency to your offer to purchase. When you find a house in Massachusetts that you want to make an offer on, make sure you talk to your real estate agent about what contingencies should be added.

Attorneys Must Be Present At Closing

Unlike in most other states, Massachusetts requires a lawyer to be present during the closing of a home sale. In other states, the attendees of a closing usually include the buyer, the seller, the real estate agents and a representative from the title company facilitating the sale. Usually, there aren’t lawyers present.

Massachusetts requires lawyers to be present at the closing to handle many of the steps a title company would do at the closing in other states. This includes finalizing the purchase agreement, running the title search for the property, preparing all the necessary ancillary documents and overseeing the signing.

Fewer Disclosures Are Required

In most states, sellers are required to fill out an extensive form called a sellers disclosure statement that all prospective buyers review, sign and include with their offer. This document outlines the presence and condition of many items in the home. Things like the stove/oven, refrigerator, washer, dryer and more are all marked as present in the home and in working condition. Or, not present, or present and not working, when applicable.

Seller’s Disclosure statements often include the age of the roof, any plumbing issues and whether there is evidence of water in the basement, among many other things. This information is invaluable for buyers who want to know what they are getting into before making an offer on a home.

Buying a house in Massachusetts is a little different when it comes to sellers disclosures. There is a form regarding the presence (or not) of lead paint in the home as well as a form describing the condition of the septic system, if applicable. The more extensive sellers disclosures are not required, so buyers beware, as they say.

What You Need To Buy A Home In Massachusetts

Now that you understand how to buy a house in Massachusetts, let’s dive into what you will need to get it done. The biggest part of buying a home is the financing, so here are some factors related to securing the loan necessary to purchase your new house. If all of these factors are looking good in relation to your financial situation, you should be ready to buy your Massachusetts home.

Low Debt-To-Income Ratio

Having a low debt-to-income ratio (DTI) when purchasing a home in Massachusetts, or anywhere else, is going to help you when it comes to your loan approval. Lenders want to know you can afford your mortgage, so if you have too much debt in relation to your income, they might be worried you won’t be able to make your monthly house payments. Your specific DTI represents the total percentage of your income that is spent on debt payments each month.

Borrowers with a DTI ratio up to 50% can be approved under some circumstances. If your DTI exceeds this, you may have a problem getting a loan to buy a home in Massachusetts. If your DTI is too high, you might be able to lower it before applying for a loan. Some good tactics to consider are paying down your existing debt, not taking on more debt or finding ways to increase your income.

Good Credit

A good credit score affects many aspects of your financial life. Getting a loan for a car, opening a credit card and applying for a personal loan are just a few examples. Not only does your score matter for qualification, but it will also affect your interest rate and other terms of your loan. The better the score, the better the terms and the lower the interest rate. Here is a rundown of credit scores and where they fall in terms of quality.

• Exceptional: 800 – 850
• Very good: 740 – 799
• Good: 670 – 739
• Fair: 580 – 669
• Poor: 300 – 579

Different lenders and loan types require different minimum credit scores to qualify. Check with your lender about what score you need to qualify for the specific type of home loan you are applying for.

Home Appraisal

As mentioned briefly earlier, the home appraisal is an important part of your loan approval. You can’t avoid it either, as appraisals are required by lenders in Massachusetts before getting a home loan. Your lender will take you through all the ins and outs of this, but having a general overview of the home appraisal process before you get started is a good idea.

Once you have an offer accepted by a home seller, a sales price is agreed upon as part of that offer. Since the lender is loaning you the money to buy the house, they need something to make sure they don’t lose all that money if you don’t pay your mortgage, also known as collateral.

With a mortgage, the collateral for the loan is the home. Therefore, the lender needs to know the home is worth the amount they are loaning you to buy it. To determine this, they order an appraisal. A licensed appraiser reviews the home and takes into account many factors, including recent similar sales in the area, to determine the value of the home.

If the appraiser determines the home is worth less than the agreed upon sales price, negotiation between the seller and buyer on the price occurs. If they resolve the gap between the appraised value and the original offer value, all is well and the transaction moves forward. If not, the buyer might not get final loan approval, which means they may not be able to purchase the home.

Down Payment

Lenders loan you the money to buy your home, but usually not the entire purchase price. Some of the money will come from you in a lump sum at the closing. This is called a down payment. Most buyers will need to have a down payment in order to get a mortgage loan in Massachusetts, so it’s important to discuss this with your lender.

The amount you put down has a lot to do with the type of loan you are getting. A Federal Housing Administration (FHA) loan could have a down payment amount as low as 3.5%. Department of Veterans Affairs (VA) loans often require no down payment at all but are limited to active and retired armed service members and their families.

Think about what type of loan you are likely to use (a lender can help with this) and how much you are looking to spend on your Massachusetts home. Then you will have a good idea of how much you need to save for a down payment before getting preapproved for a loan and looking at houses.

First-Time Home Buyer Assistance In Massachusetts

Not sure you can afford to save for a down payment? Well, not all hope is lost, especially if you are a first-time home buyer, a first-generation home buyer or someone facing possible homelessness. A number of buyer assistance programs are available to you in Massachusetts if you qualify.

Let’s get into the details of a few of them, including who is eligible, the type of assistance and how much you can get from each.

The Bottom Line

When it comes to buying a home, Massachusetts is a great location to consider. Understanding the process for buying a house ahead of time will help you tackle this process in a financially responsible and strategic way.

Ready to get started? Work with a Rocket Homes℠ Verified Partner Agent and start looking for your Massachusetts dream home today!