The following are the first steps you need to take to buy a Boston condominium in 2023.
The first step, you need to know is have much debt you already have. An important metric to determine if you can afford a Boston condo is your debt-to-income (DTI) ratio. The Consumer Financial Protection Bureau (CFPB) reports that a maximum DTI ratio of 43% is required to receive a qualified mortgage, which is seen as safe to lenders.
Getting your existing debt under control is imperative before you can begin your mortgage application. This includes:
Credit cards: Pay down your credit card balances so you’re using no more than 30% of your available credit.
Installment loans: You might consider paying off or significantly paying down any installment loans (e.g., auto loans) to ease your monthly obligations.
Student loans: Paying off any credit card debt might give you more leeway in your budget to service both your student loans and a mortgage.
The more debt you pay off before applying for a mortgage, the less stress you’ll likely have when it comes to being approved for a Boston property for sale.
The better your credit score, the lower the interest rate you’ll have on your mortgage. Checking your credit well in advance of beginning your home search will give you time to correct any errors and improve your score ahead of time.
How much you’ll put down on your home depends on the type of mortgage you receive. However, the typical mortgage down payment ranges from 3.5% to 20%.
Essentially, the higher your down payment, the lower the risk you are to a lender. Lenders assume that buyers investing more cash up front are less likely to walk away from the money they have in their home.
When you put down less than 20%, lenders often mitigate that risk by charging private mortgage insurance (PMI), which is an insurance policy that protects the lender if you default on your loan. This PMI will be added to your monthly mortgage payment.
When you save a bit more for a down payment, you may qualify for a mortgage that doesn’t have PMI requirements. Avoiding PMI can potentially save you hundreds of dollars a month.
When you’ve cleaned up your credit and paid down your debt, you’ll want to get preapproved for a mortgage. Preapproval is important in order to view properties.
First, you’ll find out exactly how much you’ll be able to borrow and therefore, how much home you can afford. Knowing your purchase power will help guide your home search
Next, preapproval positions you as a serious buyer. Many real estate professionals won’t take on buyer clients if they haven’t already been preapproved.
Once you’re preapproved, it’s time to research your favorite Boston neighborhoods.
Consider these factors when searching for a Boston condo for sale:
Based on your pre-approval which Boston neighborhoods can you afford? What features are you looking for? Can you afford them? If not, what are you will to give up?
How far do you want to live from work?
Do you need parking? Parking comes as a premium can you live without your car?
Do you have a pet? Many Boston condo associations don’t allow pets or have restrictions on the type and weight of your pet.
Many of the historic neighborhoods have no elevators, are you comfortable walking three or four flights of stairs. In addition may have no laundry facilities in the unit or the building,
Boston condo tip: You might consider visiting your target neighborhoods several times and at various times of day to get a picture of what life might look like if you bought a home in the area.
View Ford Realty Inc., Google Reviews