Massachusetts Mortgage

Opportunities in the Massachusetts Housing Market

The Massachusetts housing market offers amazing variety, from beachfront property in Cape Cod to chic lofts in downtown Boston. History abounds in Massachusetts, from Plymouth where the Pilgrims disembarked to the meetinghouses of Boston where the foundations of the country were laid. Choice of terrain, from the hilly Berkshires to the rocky shores of the Atlantic, offers many attractive options for prospective buyers. A recent reprieve from the consistently rising housing prices of the past 20 years has made owning a home in Massachusetts even more appealing, especially combined with Massachusetts’ traditionally robust economy.

What Mortgage Options Does Massachusetts Offer?

Most Massachusetts lenders offer 10, 15, 20, or 30-year fixed-rate mortgages, in which the interest rate quoted at the signing of the mortgage is applied for the entire term of the loan. Adjustable Rate Mortgages (ARMs) are riskier, but have the potential to reduce total interest paid on the loan, as the interest rate is recalculated each year. This allows a borrower to take advantage of years with particularly low rates, but at the risk that rates could always increase instead. Interest Only mortgages (IOs) are relatively new, and offer the buyer the option of paying only the interest on the loan for a fixed period of time, usually ten years, after which the principal must also be repaid. This allows the buyer the benefit of a low rate, but can ultimately increase the total interest paid over the life of the loan.

Considerations When Choosing a Mortgage in Massachusetts

Prospective buyers in Massachusetts should take a moment to consider the particulars of the Massachusetts housing market when picking a mortgage. Housing prices have been steadily climbing since the mid-1980’s, leading some experts to note that houses are somewhat overvalued. Taking out a mortgage during the current market lull has benefits and drawbacks. The cooling of the market gives buyers a chance to find better deals in highly desired areas such as downtown Boston and the Cape. However, interest rates are not as low as they have been in the past, and this may affect the type of mortgage a buyer chooses to apply for. For example, because interest rates are a bit higher than have historically been, some buyers may wish to consider an ARM, which will help them benefit if interest rates decline to former levels in a few years time. However, a buyer who is not confident that the market will rebound may be happier with a fixed-rate mortgage that will protect against a further downturn in the market.

How To Avoid Mortgage Fraud

In recent years the number of complaints against fraudulent mortgage services in Massachusetts has risen, prompting increased awareness of the consumer’s need to be wary of predatory lenders. Home buying seminars that charge a substantial fee and guarantee results are generally not credible, so buyers should look carefully at the details of any seminar they plan to attend. Also, buyers worried about a spotty credit history would benefit more from working to improve their credit scores rather than entering into a contract with an unlicensed mortgage lender that promises a loan without a credit check. Unlicensed lenders are dangerous, and can confuse buyers into signing a contract that is not to their benefit. Instead, buyers may wish to work at paying down debts and keeping credit balances low in the months leading up to a mortgage application, so as to secure the best possible credit rating. The higher the credit rating, the better the interest rate on the mortgage.