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As a first-time homebuyer, you might be confused or even bewildered by the mortgage process and its many moving parts. Here’s what you need to know about what a mortgage is and how it works for all parties – when purchasing a Boston condo for sale.

Whether you are buying a traditional Beacon Hill condo or a high rise Boston Seaport condo for sale, it is a big decision. Before you get ahead of yourself, first things first, understanding what a mortgage actually is and how it works.

What is a Boston Condo Mortgage?

In short, a mortgage is a loan from a lending institution to cover a home’s purchase. The bank or lending institution holds the note for the Boston condo as collateral for the loan. The mortgage is also called a “lien against property,” or sometimes referred to as a “claim on property.

A Real Estate Mortgage Has 3 Components:


The principle is the difference between the home’s final purchase price and the amount of your down payment. For example, if you provide $20,000 as a downpayment for the home you plan to buy for $200,000, your principal loan amount would be $180,000. 


The loan’s interest is what you pay the bank or lender in exchange for providing and servicing the loan. This amount is based on the loan’s interest rate, which will vary depending on the term (length of time) and type of loan. 


The downpayment is the amount you pay upfront, at the time of the purchase transaction, as your direct financial interest in the home.

As you make regular monthly mortgage payments, each payment includes the monthly interest on the outstanding loan balance and an amount that pays down the principal. 

Types of mortgages for Boston Condos for sale

Mortgages fall into two basic categories: Fixed-rate or adjustable-rate. 

  • A fixed-rate mortgage maintains the same payment of principal at an interest rate set for the loan term. Lenders offer these mortgages for either a 30-year term or 15-year term. On a 30-year fixed-rate mortgage, you will pay more over the loan’s lifetime because you will be paying interest for the life of the loan, but the monthly mortgage payment will remain the same as long as you have the loan. On a 15-year fixed-rate loan, your monthly payments will be higher, but more of each payment applies to the principal to pay off the home in 15 years. The total amount of interest you pay will be less.
  • An adjustable-rate mortgage (ARM) has an interest rate that is subject to change over the loan term. An ARM usually carries a lower interest rate for the first few years but then adjusts after a set period, typically five years, to a new rate tied to market interest rates. A first-time homebuyer may benefit from a lower mortgage payment for the first few years, but faces the risk that the rate will increase when the adjustment date comes around.


A considerable number of potential Boston real estate for sale buyers shy away from the Boston condo for sale market because they’re uncertain about the buying process – particularly when it comes to qualifying for a mortgage.

 The mortgage process can be scary, but it doesn’t have to be! 

A considerable number of potential Boston real estate for sale buyers shy away from the Boston condo for sale market because they’re uncertain about the buying process – particularly when it comes to qualifying for a mortgage.

In order to qualify in today’s market, you’ll need a down payment (the average down payment on all loans last year was 5%, with many buyers putting down 3% or less), a stable income, and a good credit history.

Once you’re ready to apply, here are 5 easy steps Freddie Mac suggests to follow:

Find out your current credit history and credit score

Even if you don’t have perfect credit, you may already qualify for a loan. The average FICO Score® for all closed loans in September was 737, according to Ellie Mae.

Start gathering all of your documentation

This includes income verification (such as W-2 forms or tax returns), credit history, and assets (such as bank statements to verify your savings).

Contact a professional

Your real estate agent will be able to recommend a loan officer who can help you develop a spending plan, as well as help you determine how much home you can afford.

Consult with your lender

He or she will review your income, expenses, and financial goals in order to determine the type and amount of mortgage you qualify for.

Talk to your lender about pre-approval

A pre-approval letter provides an estimate of what you might be able to borrow (provided your financial status doesn’t change) and demonstrates to home sellers that you’re serious about buying.

Downtown Boston Real Estate and the Bottom Line

Do your research, reach out to professionals, stick to your budget, and be sure you’re ready to take on the financial responsibilities of becoming a homeowner.

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