Boston condo for sale financing is in principle similar to financing a single-family home. The same type of loans that are available to single-family homebuyers are available to those looking to purchase a Boston Seaport condo for sale. However, condo mortgages often involve more paperwork and due diligence, as well as higher interest rates.
If they deem the Boston Seaport condo complex a risky investment, lenders will not finance the purchase of condo units. When the vacancy of the units is higher, it means that each unit has to pay a bigger share of the association dues. Therefore, the risk of owners defaulting is greater. Lenders will look at the history and finances of the condo association to assess the overall picture. If the condo association is experiencing difficulties in terms of financing, this may cause the condos to lose their value.
All of the above is important to know before assessing the basics of condo mortgages. The loan requirements differ, and whether you’re eligible will depend on the loan you are applying for.
Each type has different requirements:
- Down payment of 3% – 5%
- Your credit score is over 600
- Debt-to-income (DTI) ratio no more than 35%
- The condo unit is your primary residence
- Down payment of minimum 3.5%
- Your credit score over 580
- Debt-to-income ratio no more than 50%
- The Condo unit is your primary residence
- Each project is reviewed and approved by the HUD
- Eligible for military members, veterans, and surviving spouses
- No down payment or minimum credit score required
- The condo unit must be your primary residence
- The property must be in a rural area
- No down payment
- No minimum credit score
- Debt-to-income ratio no more than 40%
- The condo unit is your primary residence
By exploring different options, you’ll be able to avoid obstacles and financial surprises. This is precisely why researching condo properties, asking your lender the right questions, and doing your due diligence is essential in finding the right loan type.
Good news for Boston condo buyers: despite the recent and much-anticipated federal interest rate hike, actual mortgage interest rates have barely budged.
That’s good news for buyers, who can expect to ride this low-interest rate train for a while to come, til rates up sometime in 2022.
Just because rates are low doesn’t mean Boston condos buyers shouldn’t scrutinize everything about their loan! As a real estate buyer agent, I always advise my clients to avoid these common pitfalls.
1. Get your acronyms in order.
There are a few tools that homebuyers can use to comparison shop for mortgages, and they may look like alphabet soup at first. A Good Faith Estimate (GFE) includes basic information such as the lender name and address, sales price, loan amount, interest rate, and type of loan. Then there’s the TIL (Truth in Lending) disclosure, which provides more details, and most importantly, APR. This little number is far more useful than the mortgage rate itself because it includes points and fees. When you compare loans from lender to lender, be sure you’re comparing the APR and not just the interest rate!
2. Ask for a recommendation.
As a downtown Boston real estate agent overseeing a hundred plus sales each year, I get to know a lot of mortgage companies and mortgage brokers. I have excellent recommendations waiting for you, just ask!
3. Get pre-approved
. Most home sellers will not even look at your offer unless you are sending an up-to-date pre-approval letter along with it. A pre-approval is easy, and approval is a lot harder.
4. Be ready to apply and get approved quickly
Once you have an accepted offer, you’ll want to make sure you can meet the closing date on time. Do do that, your lender has to get you through the approval process quickly. Know ahead of time what papers you’ll need to apply for that loan. Most lenders require, at the minimum, bank statements, tax returns, W-2 statements, and recent pay stubs to prove your income and assets, however, your lender will know the specific paperwork they’ll need based on your financial situation.
5. Lockdown that rate!
While variable interest loans may have their advantages for some buyers, with interest rates as low as they are right now, it makes sense to ask your lender if they can lock it in for the lifetime of the loan. You will only have a short period of time to do this, and the nature of mortgage rates is to fluctuate from day today. Bankrate.com’s advice is to not overthink it. “Pick a rate that you can be happy with, and when it hits, lock the rate. The key is to be happy with the rate you were able to get and not look back.”
Use your real estate agent. After closing on hundreds of homes, I know the tricks as well as the hazards of applying for and obtaining a mortgage. Your loan officer and your real estate agent are both parts of your team in making these decisions and ultimately, buying your Boston Seaport District condo at a price you can afford in the long term!
These are just a few examples of the ways in which you can learn from the mistakes of the past in order to ensure a bright future for yourself — one that includes homeownership.
Boston Real Estate and the Bottom Line
We hope this article has helped you realize that just because you may be down, doesn’t mean you’re completely out.
These common home loan misconceptions don’t have to be the reasons you don’t try to purchase a home!
Despite the odds, with the right approach and loan type you, too, can qualify for a home loan.