Boston First Time Buyers Assistance Programs – Boston downtown real estate

Like many people forced to work from home after the onset of the Covid-19 pandemic, Lauren Niesz, 26, found the conditions were not necessarily ideal.

Niesz, who rented a townhouse in southern New Jersey, found herself often working from a closet so that her live-in boyfriend’s work calls did not interfere.

Moreover, the couple’s now 2-year-old dog required frequent walks around the neighborhood.

After seeing an online sketch of a brand-new home, Niesz contacted her realtor and put in an offer in September. Last month, they closed on their newly constructed home in Howell, New Jersey, complete with a backyard for their dog.

Much of the couple’s progress in accumulating a down payment happened during the pandemic, according to Niesz, a technical product manager at Comcast.

“We were able to save so much money because we weren’t going anywhere or doing anything,” Niesz said.

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A survey from real estate company Redfin found that stimulus checks and the ability to save more money during the pandemic were among the top ways recent first-time homebuyers were able to save for their down payments.

While the rule of thumb is typically to put down 20%, the National Association of Realtors finds most homebuyers put down just 7%, according to Nadia Evangelou, senior economist and director of forecasting at the real estate industry trade association.

That’s as millennials — the generation born between 1981 and 1996 — enter homebuying age while facing market conditions that make it even more difficult to buy their first home.

Home inventory for people who typically qualify as first-time homeowners — with incomes between $75,000 and $100,000 — is at record lows. In 2021, there was one listing for every 65 households in the starter-home category, according to Evangelou. In 2019, there was one listing for every 24 households.

“We see a drastic drop in the options they have,” Evangelou said. “They have fewer homes that are available for them that they can afford to buy.”WATCH NOWVIDEO01:22Mortgage rates hit 4.02%

Still, there are some conditions that could tempt first-time homebuyers into the market now.

Mortgages will likely get more expensive, as the Federal Reserve considers raising interest rates to curb inflation.

Moreover, with rents up significantly from last year, buying a home would eliminate the uncertainty of worrying how much you will have to pay next year, Redfin chief economist Daryl Fairweather said.

“At least when you buy, you get to lock in your monthly mortgage payments,” Fairweather said.

But sealing the deal on a transaction can be more difficult, as first-time homebuyers are more likely to compete with multiple bids on homes, including those from existing homeowners and those willing to pay cash.Just because you ‘qualify’ for that nice big mortgage doesn’t mean you necessarily should take it.Thomas ScanlonFINANCIAL ADVISOR AT RAYMOND JAMES FINANCIAL SERVICES

That’s exactly what Thomas Scanlon, a financial advisor at Raymond James Financial Services in Manchester, Connecticut, said he recently saw with one 30-year-old first-time homebuyer, who was not a client. The prospective buyer was competing for a home that received 16 offers. The winning bid was $30,000 over the asking price and the buyer paid all cash.

Despite the frustrations that come along with trying to buy a first home in today’s market, many times it’s still the best way to grow personal wealth, Scanlon said.

“Long term, you clearly don’t want to wake up after a decade with a cigar box of rent receipts,” Scanlon said.

Experts say it’s more important than ever that first-time homebuyers go into a transaction thoroughly prepared, or what Scanlon calls “eyes wide open.”

Start by doing research as to what homes are listed for and what they actually sell for, and how quickly those transactions are happening, Fairweather said.

A Chicago home is offered for sale on Jan. 20, 2022.

A Chicago home is offered for sale on Jan. 20, 2022.Scott Olson | Getty Images

Taking steps to raise your credit score, pay off debts and perhaps earn more money through a side hustle will also put you in a position of increased financial strength, Scanlon said.

Be sure to line up everything you need — including preapproval for a mortgage — before you’re ready to make a bid.

“If you do tour a home and you do like it, you will need to make an offer right away in order to be competitive,” Fairweather said.

However, it’s important to not get so caught up in having a winning offer that you don’t think through all the financial implications.

If you overbid and are not paying all cash, that’s more money you’re borrowing from the bank, Scanlon said.

Resetting your expectations

If you put less than 20% down, you’ll have to pay for private mortgage insurance, or PMI. That could cost around $50 to $100 per month, depending on the size of the home, and will add up over the years, Scanlon said.

However, once you’ve built up about 20% equity in the home, you can have the PMI removed. But the burden will be on you to prove that and go through the necessary steps.

You may also want to reset your expectations for how much you want to spend, particularly after you factor in your mortgage payment with other bills, such as car or student loan payments.

“Just because you ‘qualify’ for that nice big mortgage doesn’t mean you necessarily should take it,” Scanlon said.

Above all, don’t rush into a home purchase now that you may regret later.

“The most important thing is that you buy a home that you can see yourself staying in for the long term, because that means that you’ll have the best chance of building equity,” Fairweather said.

Buying a Boston downtown real estate for sale can seem like an impossible goal, especially if you’re a first-time home Boston condo buyer, with a moderate income or have struggled to save for a down payment.

The good news is there are several mortgage programs, local and national, designed to help first-time home buyers and others achieve their homeownership goals in the Bay State.

The MCC Tax Credit

About the program

  • It’s a dollar-for-dollar tax credit that will reduce annual federal income taxes owed for Boston condo owners with a mortgage.
  • Credit is given for up to 20% of the mortgage interest paid in that year. 
  • Only available to first-time home buyers 
  • The MCC also boosts home buyers’ purchasing power by reducing their debt-to-income ratio (something that lenders like to see as low as possible).

How it works

  • Obtain a loan through an MCC Approved Loan Officer
  • Take the tax credit every year that you keep the home loan, as long as the home remains your primary residence.

Guild Mortgage 3-2-1 Home Loan Program

About the program

  • Offered through Guild Mortgage, a private lender. 
  • Only available for first-time home buyers who meet income eligibility requirements, but there are no location restrictions.
  • As of this writing, Guild advertises that home buyers can qualify with a credit score of 620 or more.
  • The 3-2-1 program offers a mortgage at an un-advertised rate (meaning home buyers must inquire with a loan officer to find out the current rate) with a 3% down payment.
  • Other incentives include a $1,500 grant toward closing and a $2,000 Home Depot gift card.

How it works

  • Home buyers must take out a loan with Guild Mortgage. 
  • PMI may be required.
  • Because interest rates could be at market rate or higher, low-income home buyers may be better off obtaining financing through an FHA loan.
  • Paying less up front may mean paying more in the long run.
  • Read more at TheTruthAboutMortgage .

Unison HomeBuyer

About the program

  • It’s a “co-investment” with a San Francisco startup called Unison, so there are no eligibility requirements or location restrictions.
  • Unison will partner with home buyers to contribute up to half the downpayment on the Boston condo for sale
  • Warning – home buyers pay Unison back when they sell the home, plus something around 40% of the home value gained since the time of purchase (some scenarios may entail a much higher or lower percentage).
  • Home buyers also pay Unison a 2.5% origination fee, along with normal closing costs associated with buying the home.
  • Buyers can avoid paying PMI, and because partnering with Unison is not considered debt, buyers can also improve their debt-to-income ratio.

How it works

  • Home buyers must take out a mortgage through one of Unison’s partner lenders.
  • If the home gains significantly in value, the amount owed to Unison could be much greater than the amount saved by not paying PMI.
  • Since Boston downtown real estate values are going up, not down, over time (long-term trend), investing with Unison might not be the best option for home buyers in this area.

Affordable Boston condos for sale

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