Buying a home in Boston is a huge commitment that requires a
lot of planning. If you’ve kept up with my blog, I’m sure you know this by now!
One of the biggest and most complex parts about preparing for your home
purchase is finding a lender and getting approved for a home loan. However,
before you start mortgage shopping, there are a number of questions you need to
ask yourself.
- What is my five to ten year plan?
- How long do I plan to live in this particular home?
- How important is it to me that I am debt-free?
- Can I afford to take some financial risks?
Once you can honestly and thoroughly answer these questions,
you can begin looking around for a mortgage that will complement your unique
situation. How you finance your home purchase is a huge decision that shouldn’t
be taken lightly. While I’m sure you’re eager to sign on the dotted line and
get settled into your new Boston home, I encourage you to take time to evaluate
all of your options before accepting an offer.
Once you find the perfect Boston home, you will need to
decide if you want to finance it with a 15-year or 30-year mortgage. A 15-year mortgage
will have a significantly lower interest rate, but your monthly payments will
be twice as high as that of a 30-year mortgage. Most homebuyers enjoy the flexibility
of taking out a 30-year mortgage with the option to make extra payments when
their budgets allow.
In a seller’s market, interest rates are typically high. If
this is the case when you’re a position to buy a home in Boston, you may want
to consider an adjustable rate mortgage (ARM). Your interest rate is fixed at
first, but begins fluctuating as market conditions change. Therefore, while you
may get stuck with a high interest rate when you buy your home, you can
potentially take advantage of lower rates down the road.
If you’re short on cash for a down payment on your Boston home, consider an “80-20” loan. A standard mortgage funds 80% of the purchase
price, and a second loan finances the 20% down payment. This method of
obtaining a home loan eliminates the need for private mortgage insurance since
you are making a down payment of at least 20%.
There are several other options you have as a homebuyer, and
there will be additional questions that come up throughout the mortgage
application process. As your Boston real estate agent, I can help you address
any concerns that surface along the way. It’s my job to steer you towards
success whether you’re a first time homebuyer or a seasoned pro. Please let me
know once you begin your home search in earnest. I’d be happy to help!
Lucas
Garofalo
Keller Williams Realty
(617) 861-3631
Lucas@LucasBostonHomes.com
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