What You Need to Know About a Mortgage Before Buying a Boston Luxury HomeFebruary 22, 2014
First time home buyers often have questions about loans and other issues related to Boston luxury real estate dealings. More seasoned buyers understand what it means to apply for a mortgage and common real estate concepts involved in making an offer.
Lending for a Broad Range of Boston Luxury Real Estate
Mortgages are obtained by buyers in ALL price ranges from $200K to $30M+. Although buyers in higher price ranges make their offers “cash” without a financing contingency, it does not mean that they are putting down the entire amount in cash. They are just confident enough that they can finance part of the Boston luxury home purchase price.
Given the current low interest rate, people can get a mortgage and free up some of their cash to invest elsewhere that would give them a higher yield and return while they’re only paying low interest for their mortgage. In most cases, people put down between 20 to 40% and obtain a mortgage for the balance. In higher price ranges, the down payment is more sizable.
In this hot seller’s market, even first time home buyers base their offers not contingent on financing because they know that they are competing with seasoned home buyers. First time buyers have to understand what is involved in getting a mortgage before getting into the real estate market.
Speak with your bank or mortgage broker to find out how much loan you pre-qualify for and get a pre-qualification letter. Bankers will walk you though different types of financing and rates based on the duration and fixed type, 3-5 yrs, 10 yrs with ARM (adjustable rate mortgage), 30-yr etc. Don’t forget to factor in closing costs, escrow amount, title search and home insurance. Once you have done your homework and are confident that you can make an offer based on the bank’s final approval, you are ready to enter into the competitive Boston luxury real estate market.