A Guide to Buying Your Massachusetts Dream Home in 5 Easy Steps

Buying a new home in Massachusetts can be a rewarding experience. But whether you are a first-time homebuyer or a seasoned real estate investor, having a step-by-step guide can make buying your next Massachusetts dream home less stressful.

The home buying process has changed significantly since the outbreak of COVID-19. It is important to understand what processes have changed and identify things you can do to help streamline your transaction and get you to the closing table faster.

Lisa Berry and the team at Simply Sell Realty is one of Boston’s preferred real estate brokerage firms that has helped hundreds of buyers navigate the home buying process.

One of the best ways to ensure a smooth purchase is by having the right real estate team in place. But that’s not the only thing you can do to increase your chances of having your offer accepted.

Here is a brief overview of what steps you should expect when buying a home in Massachusetts and how a real estate agent can make the process much easier.

1. Making the Decision to Buy

Taking the first leap and making the decision to buy a new home is always a big decision. But even after you decide that buying a new home is the right move, it’s equally important to decide how much home you can afford within your budget. This will also help once you start the preapproval process.

Affordability

Over half of home buyers find the property they end up purchasing online. Starting off by doing some independent research into what areas you like and what features you will need in a new home is extremely important.

After doing some initial searching, meet with your real estate agent to figure out just how much home you can afford for your given budget. Your realtor can also help make recommendations about key neighborhoods of interest.

Furthermore, they can help filter out properties outside your price range or lacking any major features you are looking for in a new home.

Pre-Approval

Before you get too far along in the process, it’s always a good idea to get pre-approved for financing before you start touring new homes. In fact, the recent pandemic has made sellers even more cautious in allowing potential buyers access to tour new properties without a pre-approval letter.

A pre-approval letter indicates to a seller that you have already started the vetting process for being approved for a new home loan. It will help you stand out as a serious buyer compared to others without one.

Consider leveraging your real estate agents network of preferred lenders to help you get pre-approved quicker, enabling you to view properties sooner.

According to the Zillow Group, the number of days the average property stays on the market before having an accepted offer has decreased from 30 days to 25 days. Getting pre-approved will help you move faster in this dynamic market.

2. Making the Offer

When you finally find that perfect Massachusetts dream home to purchase, it’s time to pull the trigger. Your real estate agent will tactfully assist you with structuring your offer to give it the best chance of being accepted.

How to Get an Accepted Offer During COVID

Keep in mind that as inventory and mortgage rates continue to remain low, sellers are receiving more and more offers. It’s important to be flexible and understand what factors may tip the scales in your favor. Often offers with a lower down payment and less sales contingencies are more enticing to a seller.

Your agent may also advise adding an escalation clause which sets provisions to automatically increase the offered price (usually up to a predetermined limit) if the seller gets a better bona fide offer from another buyer.

Real estate agents are expert negotiators so leverage their experience and skills to help get you the most bang for your buck.

3. Finalize Your Mortgage Application

Once you have an accepted offer, coordinate with your real estate agent, and finalize your mortgage application with your mortgage lender. In general, you will need to submit the following documentation:

  • Two recent paystubs covering the most recent 30-days.
  • The most recent year W-2(s)
  • Two years personal tax returns with all schedules and worksheets
  • Two most recent bank statements, sourcing any undocumented large deposits.

If you are self-employed, the following documents may also be required:

  • Two years business tax returns including all schedules and worksheets.
  • A YTD profit and loss statement and balance sheet
  • Three months business bank statements
  • Copies of receipts, invoices, or equivalent documentation verifying business activity.

Your real estate agent will coordinate with your loan officer to help make sure your application is on track while being underwritten. They will also help coordinate any necessary inspections needed to help get your mortgage approved.

Factor in Closing Costs

Getting a new mortgage is never free. It’s important you factor in any applicable closing costs into your budget. On average, the average buyer spends anywhere from 2-5% of the home’s purchase price on fees.

In 2019, the average homebuyer spent almost $5,750 on closing costs for a standard single-family home.

4. Completing Contingencies and Inspections

While your lender is finalizing your new mortgage, you will want to complete any inspections and satisfy any contingencies outlined in your offer to purchase.

Most of the time it’s a good idea to elect for a general home inspection to make sure there are no major defects with the property and ensuring it is safe to live in. Other inspections your realtor might recommend are mold, pest, and radon inspections.

While completing these inspections, your lender may also want to complete an appraisal of the home to ensure its value is suitable to cover the mortgage balance you are applying for.

Make sure to get a copy of any appraisal report and have your agent pull comparable properties in the event the value comes in lower than expected. This may be enough to have the appraiser revise their opinion of value and save a faltering deal from falling through.

5. Closing the Deal

After your mortgage application goes through the underwriting process and receives the clear to close, your real estate agent will coordinate a final walkthrough of the property as well as a day to sign all the closing documents.

Make sure to show up to your designated closing date on time with valid government issued ID. Your real estate agent will be there to help answer any questions or assist with any unforeseen issues.

After inking the new deal, you are officially a new homeowner. While your purchase may be complete, you will still have a lot to do including moving into your new home, maintaining your new home, and making any changes to the property that align with your personal taste.

This is yet another opportunity to lean on your realtor who may be able to provide you with recommendations on contractors and industry professionals from their preferred network.

Estimated Costs

Whether you are looking to buy a mansion in Wellesley or a bungalow in Bellingham, buying a new home comes with costs. Here are some of the costs to consider when buying a new home.

  • $400-600 Home Inspection
  • $400-500 Appraisal Fee
  • $325-400 Mortgage application Fee
  • $1,500-2,000 Loan origination Fee
  • $300 Title Search Fees

Other expenses to budget for and that often vary depending on your credit profile, the purchase price of the property, how much you are putting down, loan product, and property type include things such as:

  • Prepaid Interest
  • Attorney’s Fees
  • Discounted Points
  • Mortgage Broker Fees
  • Mortgage Insurance Fees
  • Owners Title Insurance Policy
  • Upfront Homeowner’s Association Fees
  • Prepaid Real Estate Taxes and Homeowners Insurance