Massachusetts has laws in place to protect Boston homebuyers and sellers, but it’s best to do your due diligence when buying a home and have it professionally inspected. Here is what you should know if you are considering buying a home in Beantown.
Home seller and buyer laws
Massachusetts is a caveat emptor state, which means “buyer beware.” In practical terms, this translates to few required state disclosure forms. The burden is on you as a buyer to ask questions and have your home inspected. If the home was built before 1978, sellers must complete a lead poisoning prevention program notification form, and if the home has a septic system, the seller must have it inspected before selling the home. Massachusetts also requires an attorney to be present at closing.
Massachusetts allows nonjudicial foreclosures, which means your lender is not required to go to court to foreclose on your home. The state allows judicial foreclosures, too, but those are less common. Your lender must give you notice and allow you at least 90 days to bring your mortgage up to date before moving forward.
In the event of a divorce, Massachusetts is an equitable distribution state. This means property is divided equitably between the two parties. This doesn’t mean it will be a 50/50 split, however. The court takes several factors into consideration, including each partner’s earning potential, which spouse is caring for any children and how each spouse contributed financially to the marriage.
Despite Boston’s rather famous resistance to taxes (see: Boston Tea Party), real estate taxes are a reality for city residents. The state of Massachusetts imposes a transfer tax, called an excise tax, any time property is transferred. This tax is paid by the seller and is $2.28 for each $500 of the purchase price in most parts of Massachusetts, including Boston.
The City of Boston’s 2019 residential property tax rate is $10.54 per $1,000 of value. There are several property tax exemptions that could lower your property tax bill, though. These include:
- Surviving spouse, minor child of deceased parent or elderly person exemption. Minor children, surviving spouses and those age 70 or older may receive $334 or more in tax relief.
- Blind exemption. If you are legally blind, you may receive $500 or more in tax relief.
- Disabled veterans, parents of deceased veterans and surviving spouses of veterans. If you meet the requirements, you may receive $400 or more in tax relief.
- Elderly exemption. If you are age 65 or older and have lived in your home for 10 years or more, you may receive $750 or more in tax relief.
- Hardship exemption. This is granted on a case-by-case basis.
- National Guard exemption. If you are serving active duty in a foreign country, you may qualify for an exemption.
- Residential exemption. You may receive an exemption for your primary residence, which can save up to $2,719.
You can find more details on these exemptions here.
Suffolk County, where Boston is located, has a median tax rate of 0.78%, which translates to $3,009 for a home valued at $384,500, according to Tax-Rates.org. This is below the median statewide tax of $3,511 and well below the highest county in the state, Middlesex, which collects an average of $4,356.
Conforming loan limits
Fannie Mae and Freddie Mac are two government-sponsored enterprises that help stabilize the U.S. real estate market. There are limits on the size of the loans they will back. Each year, the Federal Housing Finance Agency (FHFA) sets the conforming loan limits. The overall conforming loan limit is $484,350, but there are higher limits in pricey areas, such as Boston. Suffolk County, which includes the Greater Boston area, has a conforming loan limit of $688,850.