Half the challenge of homebuying is finding a house you love, in a great neighborhood, at a price that fits your budget. But, once you’ve found your dream home, what comes next? Here are some important things to think about when you’re ready to close on a home.
Preparing an Offer in Massachusetts
When buying a home in Massachusetts, your realtor will want two things at the time you make an offer: a pre-qualification letter from a financial institution that shows that you are able to obtain a mortgage, and a “good faith” deposit, which shows that you’re serious about buying the home. This deposit money doesn’t go directly to the seller but instead gets set aside in a special escrow account which will later be used as part of your down payment, assuming the offer is accepted and everything goes through as planned on the purchase.
Making an offer on a home is a big step, but luckily it’s normal to add contingencies to your offer which will give you time to be sure you are getting what you think you are buying. Common contingencies are that the house passes inspection and appraisal, to ensure it’s in good condition and that the offer price fairly matches the value of the home. If for any reason the house doesn’t meet its contingency requirements, you can back out of your offer with no legal consequences and a refund of your deposit.
Currently, as a result of low inventory and high demand many properties in the metro Boston area come under agreement quickly, with multiple offers that exceed the asking price. Sellers, in some instances, are not accepting an offer that requires a home inspection or to have a mortgage clause written into the Purchase and Sales Agreement. But, a buyer’s decision to waive these contingencies can be risky. As legally written into a standard Purchase and Sales Agreement, the “good faith” deposit is not normally refunded should the lender not approve you for a mortgage or if you should discover defects to the property.
Applying for a Mortgage
When you officially apply for your mortgage, the first step will be to obtain a loan estimate from your lender. This document outlines important information about your estimated interest rate, monthly payments and other closing items – so that you have a clear outline of all costs and fees associated with your homebuying transaction. Lenders are required to provide you with this loan estimate within three days of your application.
Mortgage rates can fluctuate based on your personal financial situation and the overall economy. Luckily, lenders can usually offer a “mortgage rate lock” which means you’re guaranteed a specific interest rate for a certain period of time (normally 45-60 days).
Once all documents are received (i.e. paystubs, bank statements, W-2s), the loan will be reviewed for approval. If everything goes well, you will be issued a commitment letter outlining the agreed upon terms between you and your lender and stating that your mortgage has been approved. Finally, when the loan is cleared to close, the lender’s attorney will be notified and a date will be scheduled for closing on your new home.
Make HUECU a Member of Your Homebuying Team
HUECU is a not-for-profit cooperative which exists solely for the best interest of its members and is available to help guide you through the homebuying process with personalized service. No matter your homebuying experience or needs, HUECU is ready with a friendly team of experts to assist. The Credit Union offers a range of mortgage products and has competitive rates as well as discounted rates for first-time homebuyers — including 3% down for first-time homebuyers.
HUECU further supports homebuyers with a closing cost credit, to help lower closing costs, and a relationship credit — both of which make the offering very appealing in today’s marketplace. With easy digital access, every step of the homebuying process will be organized and simple to understand. The Credit Union also services all its mortgages, so you’ll be taken care of under one roof, by the HUECU team you trust.
