Massachusetts Mortgage Guide
The mortgage process can seem daunting for a first time home buyer. What type of loan is right for you? What do you need to qualify? Where do you even begin? The Boston Proper Group works closely with some of the finest mortgage brokers in the area in order to provide our clients with the smoothest purchasing experience possible.
We have invited Jason Deeb, Senior Loan Officer of MSA Mortgage, to write a Massachusetts mortgage guide for your educational use. Jason is our most trusted source for mortgage procurement and advice. We recommend reaching out to Jason with any and all questions you may have. You will not find a more resourceful and diligent mortgage broker in the area. Scroll to the bottom of this guide for Jason Deeb's contact information.
PRE-QUALIFICATION
Easily the most important step in the purchase process, the pre-qualification step provides education regarding financing and lays the foundation for a smooth loan process. It is great to have an idea of where and how you would like to live, but it is more important to do your due diligence and ensure that you are qualified to finance your ideal property and the associated payments (mortgage, real estate tax, condo fees, etc.). Very often buyers will conflate eligibility with affordability, however, there are many other subjective factors for you to consider with your loan officer.
As lenders, we are primarily concerned with three variables (income, assets, and credit profile) when determining qualification and the best loan programs available to you. There are many different loan programs, each with a unique set of guidelines, but most buyers in the Greater Boston area will mostly find themselves considering a Conventional Loan, Mass Housing Loan, or an FHA Loan. Which program is best will ultimately your choice, but some key characteristics of each are as follows:
- Conventional Loans – This is the most popular loan program with almost a 90% share of the loan market. This program allows for a 5% down payment minimum and generally has the lowest payment and closing costs for well qualified borrowers when compared with most other loan programs.
- Mass Housing Loans – This is the perfect loan program for first time buyers as it allows for a 3% down payment option with no mortgage insurance (PMI) at very competitive interest rates. This loan program has some of the strictest eligibility requirements, however.
- FHA Loans – This is a great program for borrowers who can only allot for a 3.5% down payment on a single family or multi-family purchase and/or those who have a less than ideal credit profile. However, condominium buyers will be frustrated to learn this may not be a viable option for their purchase as the association must be on an approved condo listed with HUD, the government agency that oversees the FHA. Very few condominiums in the Greater Boston are currently on this list so many borrowers will have to look to other programs.
Once your program has been selected, your credit file reviewed, and your initial documentation reviewed, your lender will issue a pre-qualification letter and purchase estimates so you can submit offers with your real estate agent!
SUBMITTING YOUR APPLICATION
Congratulations, you have a property under agreement. Now what? Your first call should be to your loan officer to let this person know you are under agreement. Submit your loan application by the date outlined in your Offer To Purchase or Purchase and Sale Agreement and discuss the next steps in the process. At this point, the process has formally started and the loan officer will do the following with you:
- Review Your Loan Program Options – Your file will be updated, credit checked again, and another review of the programs available to you will be discussed.
- Lock in Your Interest Rate – After you have finalized the program and structure, a rate lock strategy will be discussed. Do you want to wait for a more opportune time, pay discount points to get a lower interest rate, or would you prefer/need a lender credit to offset some or all of your closing costs?
- Submit Your Application to Underwriting for Initial Approval – The underwriter, the person responsible for making the decision to lend, will review your file against program guidelines to check for eligibility and then furnish a list of items needed to issue a loan commitment.
- Collect the Program Specific Documents – The loan officer or processor will contact you to review the items requested by underwriting and work through any questions.
- Order a Property Appraisal - Because the lender is using the property as collateral for the loan, an appraisal will be ordered to determine that the value equal to, or greater than, the price you are paying.
- Order a Title Exam - Your attorney, who will most likely also act as the closing attorney, will be contacted so he/she can begin research on the chain of ownership of the property, commonly referred to as title.
The goal is to have all of this information reviewed and the process completed by your mortgage loan commitment date as outlined in the Purchase and Sale Agreement.
MORTGAGE LOAN COMMITMENT
Once the mortgage commitment is issued, the closing attorney will take the lead to confirm the closing time and location. They will prepare any final numbers for the closing.
Mortgage Guide Provided By:
Jason Deeb
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