Before you enter the Boston area home buying market, there are three important pieces of the puzzle you should understand. What do you know about closing costs? How about your credit score? What you know will help you make the best decisions once you find the home you’re ready to buy.
Boston Area Home Buying: What to Know
Find out how much your closing costs will be. Often prospective buyers are shocked when they find out how much closing costs can be. Knowing in advance an estimate of your closing costs will help you plan better for how much of a down payment and other costs you will be expected to pay.
Most closing costs average between 2%-5% of the mortgage loan amount and cover items such as mortgage fees, appraisal charges, attorney’s fees and home inspections.
If the total amount exceeds what you have available or what you’re comfortable in paying, there are alternatives. One, as we’ll touch on in Boston area home buying Tip #2, is to negotiate with the home seller on payment of the closing costs. Another popular alternative is a low down payment loan program that requires as little as 3% down on approved home purchases. In addition, Fannie Mae recently rolled out a mending program designed to assist first-time home buyers. Qualifying purchasers are able to receive up to 3% of the home’s purchase price in closing cost assistance.
Know which party is responsible for paying closing costs. There is also a fair degree of confusion as to who is usually responsible for paying certain closing costs at the settlement. As mentioned above, often home sellers will agree to pay some or all closing costs as an incentive to prospective purchasers.
Know the value of your credit score. A popular television commercial depicts the feeling of empowerment a consumer has when they know and understand their credit score. A high credit score gives you a better chance at a lower interest rate when it comes time to take out a mortgage. In addition, your credit score may also affect other credit decisions regarding your home purchase such as the amount of utility deposit you may be required to pay, and even your home owners insurance premium.
There is currently some discussions in the home buying industry that some lenders are considering pulling away from FICO scores. However, it’s safe to assume that until it is known what will replace the FICO score, most lenders will base their credit decisions on the payment history of the debts you owe.
Following these important Boston area home buying tips will make your home search more enjoyable and more fruitful — since you’ll be more confident and informed about what is expected of you in the home buying process.