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.
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.
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.
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%.
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 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.
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.
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.
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%.
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.
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.