Massachusetts Mortgage Rates
The state of Massachusetts is also called the Commonwealth of Massachusetts. This New England state has a population estimated to be about 6.6 million, most of which live in the Boston metro area. The state also ranks third in GDP per capita in the United States. When the state first began, it was dependent upon agriculture, fishing and European trade for income. Later it became dependent upon manufacturing during the Industrial Revolution. Today, Massachusetts leads in higher education, high technology, health care technology and financial services. This state has also housed some first families. Both the Kennedy families and Adams families have lived there.
Massachusetts Real Estate Prices
When compared to the national average home value, which hovers around $177,000, the values in Massachusetts are higher. The average home value is $378,000. In some areas of the state, real estate prices are lower than this average; on the eastern side of the state, most prices are much higher. The most expensive places to live in Massachusetts are found in some areas near Boston and along the coast. Choosing to live in rural areas will result in lower real estate prices and also lower property taxes. In a “heat” map, where brighter colors indicate higher prices and green indicates lower, the middle part of the state appeared to be the least expensive. The far western part of the state was slightly higher than the middle. The entire eastern side of the state had very high prices.
Most Popular Places To Live In Massachusetts
There are several areas that are considered preferable to live in Massachusetts. These areas are rated more popular because their home values are reasonable or good for the size of the population. They are also rated higher because they are growing fast. Fast growth is due to the economy moving forward, rather than backward. Most of these areas depend on solid sources of income that are not easily affected by economic crises. In the future, people are expected to seek these types of areas out to avoid any financial problems that may result from future economic down-slides.
Newton
This city is actually 13 small villages banded together. Each of the villages, commonly called neighborhoods, have their own downtown area and are a very tight-knit community. People are accustomed to new families moving in and welcome them. One of the best things about this city is safety ratings. In the past decade, it has consistently ranked in the top five safest cities in the United States by the FBI’s research. There are more than 10 elementary schools and four middle schools. Two high schools are located in the city, along with nine private schools. Several higher education schools are also in the city, including Andover Newton Theological School, Boston College, Boston Law College, Hebrew College, Mount Ida College and Lasell College. Newton is very close in proximity to Boston, making it easy to commute. This is a community with higher average home values, hovering around $645,000.
Brookline
This city is bordered by Boston and Newton. It has also received higher safety ratings than most cities that are located in suburban areas, however, it does not rate in the top five as Newton does. There are several higher education schools, including the famous New England Institute of Art. Most of the city is residential. Those who live in Brookline usually work in a different city. Some small business owners are able to work within the community. In recent years, Brookline was included in the top 40 best cities to live in the United States. Average home values in this community are around $575,000.
Waltham
This city was named the “birthplace” of the Industrial Revolution. Most people are familiar with the name because of its relation to the watch industry. The Waltham Watch Company was one of the most prestigious manufacturers of quality timepieces for many years. The factory closed in 1957, after nearly six decades of operation. Today it is a well-known place for research and higher education, with the famous Brandeis and Bentley Universities located there. The average home value is $359,900, slightly less than the state-wide average. The community was rated in the top 30 for the best cities to live in recent years.
Boston
Boston is the largest city, as well as the capital, of Massachusetts. It is also one of the most desired sophisticated cities to live in. Boston is also known as the capital of New England, as it is the main center of business. There are many different higher education colleges and universities, making it one of the leading cities for higher education. Boston is also one of the leading cities in medicinal research. The colleges, local sports teams, technology, biotechnology and tourism provide the largest portion of steady jobs in the city. At $425,000, average home values are higher than the national and state averages. The population in Boston is slightly more than 645,000, making it a comfortable size of city to live in.
Types Of Mortgages In Massachusetts
Buyers in Massachusetts will have several options when it comes to the type of mortgage they want to use. Each buyer’s circumstances are different from the next, so no single type of mortgage is right for everyone. Depending on the type of property bought, whether commercial or residential, the best type of mortgage to choose will vary. In the following paragraphs, the different types of loans will be discussed, including their defining features. Massachusetts also offers VA loans, which are for veterans only; full up-to-date information can be obtained from the VA. Depending on location and service, factors will vary for veterans. Massachusetts also features an interest-only loan. During the life of the loan, only the interest is paid and the principal is paid at the end of the loan. Since home values are so high, this loan is almost never used and is impractical.
Fixed Rate Mortgage
This is the type of mortgage that most home buyers choose in Massachusetts. Most families or singles who purchase a home want to have some form of steady payment that will not change, especially those whose incomes are limited. This is the perfect loan for such conditions. Some of the features include:
- This loan is usually offered in a 15-30 year span, but may stretch more than months in some cases.
- The interest rate is fixed, meaning it will never change. The interest rate stated in the mortgage contract is the same rate that will remain throughout the life of the loan.
- Monthly payments are always the same amount and are guaranteed to be consistent.
- Due to the long-life amortization, monthly payment amounts are lower than most other types of loans.
Adjustable Rate Mortgage
Adjustable rate mortgages are chosen by some, but they are still treated with caution. Most buyers who choose this type of mortgage have a flexible budget. Since it is so unpredictable, first-time home buyers and most buyers of residential property opt for a fixed rate mortgage. There are several aspects that make up an adjustable rate mortgage:
- There is an initial interest rate, which is established at the beginning of the loan’s life. This is also sometimes called the introductory rate. It is usually lower than the rate offered on a fixed rate mortgage.
- The adjustment period is the entire period where the initial rate is activated. At the end of the adjustment period, the rate is recalculated and the monthly payment will change.
- The index rate is the rate used to recalculate and figure new interest – and consequentially the monthly payment amount also.
- Index rates are usually calculated using one, three or five-year Treasury securities. The national and regional averages are also used to calculate index rates.
- Margin is the term used to refer to the percentage points lenders add on to the index rate. This determines the loan’s interest rate.
- Most loans have interest rate caps, which are limits on how much interest can change each month, giving some form of estimated payment stability to the loan.
- Some loans come with an initial discount, which is a promotional offer for the first year or first year and a half. This is comprised of reducing the interest rate to less than the prevailing rate, which is index plus margin.
- There are some ARMs that come with a conversion clause, allowing the buyer to convert the loan to a fixed rate mortgage at specified times.
- ARMs usually always come with a prepayment penalty. Since the lender wants to make a profit and the life of the loan is shorter than a fixed rate, there are considerable monetary penalties for paying it off early.
Balloon Mortgage
A balloon mortgage is usually never chosen by buyers who are purchasing a residential property, unless they have large amounts of funds at their disposal and desire to build credit. The final and largest payment is often too much for some people to pay. This type of loan is preferred in most cases by those who are buying a commercial property. Although it is designed for this type of purchase, it still remains less popular than most other types of loans. The features of this loan include:
- This loan does not fully amortize during its life, which results in a large balloon payment at the end of the loan.
- Monthly payments are similar to a fixed rate mortgage, due to amortization being calculated on a monthly basis using a 30-year fixed rate.
- The loan may have a floating interest rate or fixed rate.
- Most loans are set up in five or seven-year terms.
- Balloon payment amount is known at the time of signing; the Truth In Lending Act specifies that it must be clearly stated in the mortgage agreement.
- Some of these loans feature a two-step program in which buyers who cannot pay the large balloon payment can pay it off in several payments. In some cases, the remaining balloon amount is instead converted into a fixed rate payment schedule.
- This type of loan is considered to pose a refinancing risk.
Massachusetts Foreclosure Laws
Massachusetts is a recourse state, so the lenders have more security in a transaction than buyers do. This makes it imperative to choose an economical and practical loan that will fit personal needs. The foreclosure process is non-judicial, using a Trustee instead. The trustee handles the foreclosure process without judgment after the lender files a complaint. There is no right of redemption and the property is sold as a Trustee’s sale. Any deficient amount the buyer owes after the sale must be repaid to the lender, assuming the amount received in the Trustee’s sale is less than the amount the buyer owed on the loan. The buyer only has the right to redeem the property before the first public notice of sale is filed.