Massachusetts Mortgage Rates

Living in Massachusetts

Massachusetts boasts a long and storied past. Among its many draws are the sites of the Boston Tea Party and the Salem witch trials, not to mention the Kennedy compound. For those more interested in the natural world, the state offers the stunning Cape Cod shoreline and the quaint but stately streets of Nantucket. All of this combines to make Massachusetts a rich and engaging place to live.

But what does it cost to live there? The median sales price for a single-family home in Massachusetts is $385,000, up from $370,000 in 2018. This year, homes have typically been selling for 95.9% of their original list prices. That’s a slight decline from 2018, when sellers were likely to receive 97% of the initial asking price.

Still, the housing market seems to be tightening in favor of sellers this year. Inventory has been down since January, meaning that there are fewer homes available to buyers. Most homes sold in Massachusetts this year were on the market for two to three months. While this is good news for sellers, it leaves buyers with less leverage to negotiate on price and closing costs.

The rules and costs of buying a home in Massachusetts

When buying a home in Massachusetts, education is key. There are few laws about what exactly a seller or real estate agent must disclose, so you’ll need to be proactive about asking questions, researching the property and assessing all of the costs associated with your prospective home. The agents involved in a sale are legally bound to disclose their relationships and interest, but even then, you need to advocate for yourself. Make sure you understand all of the terms and costs before agreeing to a deal.

Home seller and buyer laws

If you’re buying a home in Massachusetts, the onus is on you to ask plenty of questions about the property and request any inspections or testing you want completed. Unlike other states, Massachusetts does not require sellers to provide a disclosure form, in which the seller must provide information about the property’s structure.

However, state and federal law does mandate that sellers disclose any potential health hazards related to lead paint if the house was built before 1978. The seller must also give the buyer a pamphlet on how to minimize health risks from lead paint exposure, and the buyer has the right to request a lead inspection before the deal closes.

Massachusetts sellers must also let you know whether the property relies on a septic or sewer system. If it does, the current homeowner has to order a system inspection and complete any repairs before selling.

In the unfortunate circumstance of a foreclosure, Massachusetts lenders can take either a judicial or nonjudicial route. Some states stipulate that only one or the other is legal, but both are allowed in Massachusetts. A judicial foreclosure is handled through the court system. If the bank or lender decides on a nonjudicial foreclosure, it may sell the house at auction without first obtaining a court order.

However, if you are a military service member away on active duty, the federal Servicemembers’ Civil Relief Act (SCRA) protects you from having your home foreclosed on while you are away.

Massachusetts has equitable distribution laws when it comes to property, so in the event of a divorce, you and your spouse will need to determine a fair division of your home and possessions. The court will not necessarily divide the couple’s assets 50/50, instead making the decision based on each spouse’s health, abilities and contributions toward accruing their shared assets.

Because Massachusetts is an attorney state, you will need a lawyer to represent you throughout the homebuying process. By law, an attorney should advise the homebuyer on key points, such as the deed signing, fee transfers and all necessary closing steps.

Taxes

Massachusetts has the sixth-highest tax rates in the country, according to Tax-Rates.org. Statewide, the median property tax bill is $3,511 annually, assuming the median property value of $338,500.

However, tax rates vary significantly throughout a state. Residents of Middlesex County, where the median household income is $92,878 and the median home value is $453,300, pay an average of $4,356 per year in property taxes. Meanwhile, those living in Berkshire County pay the lowest average rate in Massachusetts at $2,386. Residents in this area take home a median household income of $55,190, and the median property value is $203,300.

Although residential properties in Massachusetts are subject to local property taxes, some homeowners receive tax breaks based on their personal circumstances. If you are legally blind or a senior citizen, you may be eligible for an exemption. The exemption amount for both groups is up to $500, though the exact amount varies by area.

Low-income senior citizens may also be eligible for property tax deferrals. The full tax amounts, plus accrued interest, become due when they sell their homes or when they pass away. Additionally, seniors who are 65 and older and meet certain income limits may qualify for a “Circuit Breaker” tax credit of up to $1,100.

In addition to the exemptions available to the legally blind and to seniors, Massachusetts offers exemptions to the veterans and their surviving spouses and parents; National Guard members; surviving spouse and children; and homeowners suffering financial hardship.

In addition to property taxes, anyone who sells a home in Massachusetts must pay a real estate transfer tax of $2.28 per every $500 of the sale price. The only exception is Barnstable County, where the transfer tax is $1.53 per $500. Your mortgage lender should advise you on how much you’ll owe in transfer taxes when you decide to sell the house.

Conforming loan limits

Most counties in Massachusetts have a conforming loan limit of $484,350. But the limits reach $688,850 in several areas, and they top out at $726,525 in Dukes County and Nantucket County.

The government-sponsored enterprises Fannie Mae and Freddie Mac set the conforming loan limits each year. Loans that fall within the established limits are backed by Fannie Mae and Freddie Mac. Mortgages that exceed these amounts are considered jumbo loans and are offered exclusively through private lenders. Jumbo loans typically carry higher interest rates and require down payments of at least 20%.

Programs for homebuyers in Massachusetts

Homebuying is a costly endeavor, especially when you factor in appraisals, inspections, down payments and closing fees. Fortunately, Massachusetts offers a number of programs that lower those expenses through down payment and closing cost assistance.

In addition to the state programs listed below, a number of cities in Massachusetts offer down payment and closing cost assistance, along with homebuyer education resources. Learn more at the U.S. Department of Housing and Urban Development (HUD) website.

Qualifying criteria for state programs vary, but here are some of the statewide options available:

MassHousing Down Payment Assistance

MassHousing provides down payment assistance of up to 3% of the purchase price or $12,000, whichever is lesser, in the form of a 15-year, fixed-rate loan. The interest rate is just 1%, provided you live in the home and do not refinance before the 15-year term is up.

Who qualifies:

  • Must be first-time homebuyers
  • Household income must not exceed 100% of the area median income (AMI)
  • Property must be a single-family home, condo or a Planned Unit Development (PUD)

Learn More

MassHousing Mortgage

The MassHousing program also provides options for 30-year, fixed-rate mortgages with low mortgage insurance requirements and down payments as low as 3%. These loans often include six-month job loss insurance to help you avoid defaulting on your loan if you were to become unemployed.

Who qualifies:

  • Eligibility is determined by location and income

Learn More

Operation Welcome Home

MassHousing offers up to $2,500 toward closing costs for U.S. military service members. The closing cost credit can be combined with a MassHousing down payment assistance loan.

Who qualifies:

  • Active-duty military members, National Guard members, Reservists, Gold Star families and honorably discharged veterans
  • Must be a first-time homebuyer, unless purchasing in a certain area
  • Must meet income and loan limits

Learn More

Home for the Brave

A military-specific program, Home for the Brave provides low-cost mortgages to service members and their families. It also includes up to $1,500 that can be put toward closing costs. Down payments are as low as 3%.

Who qualifies:

  • Veterans and active-duty members of the armed forces may apply
  • The program is also open to surviving spouses of military members
  • Must meet income and loan limits
  • Borrowers must have a debt-to-income ratio (DTI) of 45% or lower

Learn More

Buy Cities

Another MassHousing program, Buy Cities provides fixed-rate mortgages toward the purchase of property in certain cities in the state. Loans can cover up to 100% of the home price. Depending on the borrower, there may be no down payment requirement.

Who qualifies:

  • Borrowers must have a debt-to-income ratio (DTI) of 45% or lower
  • Must meet income restrictions
  • Must live in a certain area of the state (loans are offered in Attleboro, Brockton, Chicopee, Fall River, greater Gardner, Holyoke, New Bedford, Quincy, Southbridge, Springfield, Taunton, Ware, Westfield and Worcester)

Learn More

Massachusetts Housing Partnership ONE Mortgage

The ONE Mortgage program consists of two mortgages. The first covers up to 77% of the home price with a conventional home loan. The second applies to the remaining 20% and is publicly subsidized for the first 10 years.

During that time, the homeowner is responsible for interest-only payments on the second loan, though they will have to pay the full amount after that decade ends. Borrowers typically must put down 3% on the house, though only half of that must be their own contribution.

Who qualifies:

  • Only borrowers who have $75,000 or less in assets may apply for this program
  • Must also meet other income limits
  • Participants must complete a homeownership class
  • Home must be used as a primary residence

Learn More

Rate shopping tips

Naturally, you want to find the competitive rate when evaluating mortgage lenders. Use the following tips to help you compare rates to ensure you’re getting the best deal on your new home:

Contact at least 3 lenders on the same day

Interest rates can change day to day, so spreading out your quote requests may leave you with fractured information. To compare lenders as accurately as possible, reach out to at least three on the same day and see what each one offers.

It’s especially important to compare rates in Massachusetts, because offers vary more substantially here than in other states. Requesting quotes from three or more lenders will give you a sense of the rate range in your area and help you zero in on your best options.

Give each lender the same information

In addition to requesting quotes on the same day, you also need to provide lenders with identical information concerning your finances, credit score and the type of loan you’re requesting. Otherwise, you won’t be able to do a fair comparison of the offers and you may miss out on crucial savings.

Providing complete information also ensures you’re getting an accurate quote. The last thing you want is to provide partial answers and then find out that your actual rate is much higher than you initially expected.

Add up all the lender fees to confirm the costs

When you speak with each lender, ask about any fees associated with the loan. These may include origination charges, application fees, costs to pull your credit report and other service fees. Lenders’ fee schedules may vary, and some may offer reductions or assistance if you already have other accounts with them.

Make sure to take all of these factors into account when comparing costs. The lender who offers the lowest rate may also charge high fees that offset any savings you thought you’d be getting.

Know when to lock in the rate

You’ll want to lock in your interest rate once you decide on your lender and know when the loan will close. Rates only lock for a certain time period, so if you’re not sure when you’ll close, it’s best to hold off. The interest rate environment might also influence your decision. If rates will likely increase, you’ll want to lock sooner rather than later. But if you expect them to go down, you may want to wait and take advantage of the lower rates.

Rate increases in Massachusetts have slowed this year, so you may have a little more breathing room on how quickly you lock. Pay attention to the market, however, and consult your lender so you don’t miss out if rates begin to rise quickly again.

The information in this article is accurate as of the date of publishing.