Down Payment Assistance for 1st Time Home Buyers in Massachusetts

For many first time home buyers coming up with a down payment is the most challenging aspect of the home buying process. Saving the down payment needed is the reason that many otherwise qualified applicants continue to spend money on rent that could be used to build equity of their own. Don’t let the down payment deter you from taking advantage of a historically low interest rate environment.

Massachusetts residents have the ability to utilize down payment and closing cost assistance by tapping into the resources made available through the HOME Investment Partnership Programs. HOME provides grants to states that communities use to fund various types of homeownership expansion programs. Many of these grants get partnered with local nonprofit groups that facilitate housing education to the public. HOME has become the largest Federal grant for MA designed to create affordable housing for low-income households.

Program Requirements: 

  • Must be a first-time home buyerState of MA Seal
  • Must purchase an eligible property such as 1-4 family homes, condos, or manufactured home
  • Must purchase in the city or town where you apply
  • The home must by your primary home also know as owner occupied
  • The applicant must complete an approved home buyer training course and obtain a certificate
  • Must use a lender that allows for down payment and closing cost assistance programs
  • Must meet income and asset limits

A first-time home buyer is defined as an individual who has not owned a home in the previous three years. If you owned a home with a former spouse, if you are a single parent, or if you owned a home without a foundation, you still qualify as a first-time home buyer.

Massachusetts residents can look here for more First Time Buyer Tools

Number in Household

Boston 120% of Median Income

Worcester 80% of Median Income

Springfield 80% of Median Income





























The amount of assistance the applicant is able to obtain varies from program to program but many programs will offer down payment and closing cost assistance ranging from 1.75% to 5% of the purchase price. Many of these programs do require that the applicant is able to make a small minimum investment so make certain that is something that you plan for.

The key to a successful home buying experience is understanding the steps from organizing your finances to getting the keys to your new home. The Mortgage Buddy tries to remove stress from the process by providing you a step by step timeline to buying your first home.

The first step to applying for the HOME assistance is to contact your local town housing administrator. This low interest lending environment won’t last forever so if you are seriously considering taking that step towards homeownership don’t let the obstacle of saving for a down payment get in the way of your dream.

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How to Buy Rental Property with Confidence

Many Mass. first time home buyers consider purchasing a multi-family property to help defray the cost of home ownership. By living in one unit and renting the remaining unit(s), the rental income received can be used to help pay the mortgage and lower your monthly housing expense. However, buying a multi-family property is not as simple as cashing the rent check every month. There are several additional issues to keep in mind if you decide to buy a multi-family property rather than a single family property or condo.

1. Qualifying for a Mortgage

For our purposes, we will define a multi-family property as a two, three or four unit property. These 2-4 unit properties will qualify for a regular residential mortgage. Down payments can range from 3%-20% depending on the type of loan program you can qualify for. The projected rental income from the unit(s) can be used as part of the borrower’s income to help qualify for the mortgage loan. The amount of the monthly rent used by your lender will be determined by the appraiser and be based on the fair rental market value of the unit(s). However, only up to 75% of this rental value can be used toward qualifying for the mortgage as lenders will discount this based on vacancy rates, repair expenses & other related concerns. The mortgage lender will also require that after closing, the buyer still have money left in savings for emergencies. These are called “reserves” and your lender will require between 1 and 6 months of reserves. Reserve requirements are higher for 3 & 4 unit properties than a 2 family home. Properties with five or more units are considered commercial properties, and as such require commercial mortgages (and much larger down payments and reserves).

2. Property Specific Due Diligence

You have found a potential property you like, and that your loan officer tells you that you can qualify to buy. Before running out & putting in an offer, do a little leg-work on the specific property.

Mulit Family for SaleHow is the Property Classified? It is very common for multi-family homes to have additional apartment units created without proper zoning, permitting or building inspector approvals. For example, many landlords convert the large attic of a two-family into a small studio or one-bedroom apartment. Or, a single family home that has added an “in-law” apartment and is now being rented and posing as a 2 family. Owners who have done so without permits or approvals can create huge headaches down the road. There will be issues with your lender’s ability to close on the transaction, insurance coverages and possibly future tenants. Be sure to confirm with the city or town to make sure the property is a “legal” 2, 3 or 4 family as the seller has represented.


Get a detailed breakdown of expenses: Be sure to confirm what the landlord is responsible for paying & what the tenant is responsible for paying – water & sewer, gas, electric, oil? Have the units been separately metered? How much will the taxes & insurance be? Insuring a multi-family home is more expensive than insuring a single family home.

Buying A Property With Tenants in Place: If you are ok with buying a multi-family property with tenants in place, you will need to check the current lease. How long is the For Rent Signlease term or is it month to month? What is the rental amount? Are the current tenants paid up to date, or are you buying into bad tenants? How long have the tenants been there for? Do the units occupied by the tenants look like they are well maintained or do you need a Hazmat suit to enter the unit?

Buying A Property With A Vacant Unit: If you don’t want to keep the current tenants, you can ask the seller to have the tenants vacate before you buy. If there are leases in place, obviously the lease must be honored, but in the case of a month to month tenant, many sellers will be willing to deliver the unit(s) vacant. Often times the seller will want the buyer to have their mortgage commitment in place prior to giving the tenant notice, so you will need to be flexible as to the timing of the closing. When buying a property that tenants are vacating, be sure to do a thorough walk-through prior to closing to make sure the tenants did not damage the unit when moving out.

3. So You Want To Be A Landlord

You will need to make adequate provisions for rent losses due to vacancies. Even in the best case scenario, you will have vacancies. No apartment ever stays rented 100% of the time. Even in the case of normal tenant turnover, you will lose at least one month of rent. Worst case scenario is you end up with a bad tenant who stops paying rent. You will need savings in place to cover both of these scenarios.

Mr. Fix-it Landlord

You will also need to make adequate provisions for repair & maintenance expenses. These expenses are vastly underestimated by all first time home buyers, especially on multi-family properties. Problems in a tenant’s unit needs to be repaired quickly. Your tenant will not care that you do not have enough money saved to repair broken pipes when they do not have running water.

Be sure you go over in detail with your insurance agent the coverage that you have on the property. Lenders will require you to obtain rent loss insurance, but apart from that confirm what is or is not covered in your policy – slip and fall, lawsuits by tenants, etc.


Massachusetts has some of the most stringent Landlord-Tenant Laws which regulate nearly every facet of being a landlord including leases, deposits, lead paint removal, utilities, rent increases, and evictions. You will need to become familiar with these requirements. For a more detailed breakdown visit

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How to Do I Read My Home Appraisal Report

How to Understand your Appraisal

A home purchase is the largest, single investment most people will ever make. Whether it’s a primary residence, a vacation home or an investment property, the purchase of real property is a complex financial transaction that requires multiple parties. Most of the people involved are very familiar. The Realtor is the most common face of the transaction. The mortgage company provides the financial capital necessary to fund the transaction. The attorney ensures that all aspects of the transaction are completed and that a clear title passes from the seller to the buyer. So who makes sure the value of the property is in line with the amount being paid? There are too many people exposed in the real estate process to let such a transaction proceed without ensuring that the value of the property is commensurate with the amount being paid. This is where the appraisal comes in. An appraisal is an unbiased estimate of what a buyer might expect to pay – or a seller receive – for a parcel of real estate, where both buyer and seller are informed parties. To be an informed party, most people turn to a licensed, certified, professional appraiser to provide them with the most accurate estimate of the true value of their property.

The Appraisal Inspection

So what goes into a real estate appraisal? It all starts with the inspection. An appraiser’s duty is to inspect the property being appraised to ascertain the true status of that property. He or she must actually see features, such as the number of bedrooms, bathrooms, the location, and so on, to ensure that they really exist and are in the condition a reasonable buyer would expect them to be. The inspection often includes a sketch of the property, ensuring the proper square footage and the layout of the property. Most importantly, the appraiser looks for any obvious features – or defects – that would affect the value of the house – failed Title V, etc. Once the site has been inspected, an appraiser uses two or three approaches to determining the value of real property: a cost approach, a sales comparison and, in the case of a rental property, an income approach.

Home Appraisal Calculations


Cost Approach

The cost approach is the easiest to understand. The appraiser uses information on local building costs, labor rates and other factors to determine how much it would cost to construct a property similar to the one being appraised. This value often sets the upper limit on what a property would sell for. Why would you pay more for an existing property if you could spend less and build a brand new home instead? While there may be mitigating factors, such as location and amenities, these are usually not reflected in the cost approach.


Sales Comparison

Instead, appraisers rely on the sales comparison approach to value these types of items. Appraisers get to know the neighborhoods in which they work. They understand the value of certain features to the residents of that area. They know the traffic patterns, the school zones, the busy throughways; and they use this information to determine which attributes of a property will make a difference in the value. Then, the appraiser researches recent sales in the vicinity and finds properties which are ”comparable” to the subject being appraised. The sales prices of these properties are used as a basis to begin the sales comparison approach. Using knowledge of the value of certain items such as square footage, extra bathrooms, hardwood floors, fireplaces or view lots (just to name a few), the appraiser adjusts the comparable properties to more accurately portray the subject property. For example, if the comparable property has a fireplace and the subject does not, the appraiser may deduct the value of a fireplace from the sales price of the comparable home. If the subject property has an extra half-bathroom and the comparable does not, the appraiser might add a certain amount to the comparable property. In the case of income producing properties – rental houses for example – the appraiser may use a third approach to valuing the property. In this case, the amount of income the property produces is used to arrive at the current value of those revenues over the foreseeable future.


Combining information from all approaches, the appraiser is then ready to stipulate an estimated market value for the subject property. It is important to note that while this amount is probably the best indication of what a property is worth, it may not be the final sales price. There are always mitigating factors such as seller motivation, urgency or ”bidding wars” that may adjust the final price up or down. But the appraised value is often used as a guideline for lenders who don’t want to loan a buyer more money than the property is actually worth. The bottom line is: an appraiser will help you get the most accurate property value, so you can make the most informed real estate decisions. Paul Kinuthia Certified Residential Appraiser ABC Appraisals, LLC Tel: (508) 736-6640 Fax: 1(800) 535-9636(Toll Free) Commercial & Residential Real Estate Appraisers & Consultants


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5 Ways to Boost Your Credit Score

There has been an increase in positive data coming out of the housing market in recent months, and it looks as if we have finally turned the corner towards a recovery. Sure, there may be some road blocks along the way such as a lack of confidence in the job market or still tightened lending guidelines, but all the news suggests that 2013 will be a huge year for the Mass real estate market. If you want to be ready to take advantage of low interest rates combined with low sale prices, now is the time to improve your credit. A strong credit score is the backbone of all mortgage underwriting. The following tips will help you boost your score in just a couple of months and better position yourself for a smooth transaction.

  1. Know Your Credit: You can’t fix your credit it if you don’t know what’s wrong with it. You are entitled to 1 free credit report from each bureau annually. Review your report for misreported late payments, incorrect credit limits, and duplicate loans. Make sure to request corrections in writing.
  2. Keep Your Balances Low: It’s important to keep your monthly balances low on your credit cards. Even if you pay your debt on time, but carry a high monthly Credit Repair balance, you are hurting your credit score and not reaching your maximum potential. If your credit limit is $5,000 and you owe $5,000, this will drag down your score. Keep the balance under $2,500.
  3. Move Your Debt Around: Take a look at your credit cards and the debts you are carrying. Move your debt to cards with a higher available limit. Getting several cards to 25% instead of having one at 80% or a bunch of 0%s, is a fast way to boost your score.
  4. Add Available Accounts: If you have had a strong payment history with non-traditional credit this could be a great way to boost your score. Utility companies, internet providers, cell phone providers, and the telephone company are all non-traditional credit sources that can report to the credit bureaus upon your request.
  5. Request a Credit Line Increase: Improving credit is all about improving your credit ratios or your available credit. Paying down debt is one way but also consider requesting more credit. A quick call to the credit card company to free up additional credit and give your scores a quick boost.
pie chart

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How To Refinance Your Underwater Home

A mortgage refinance is the process by which your current mortgage is paid off by a new loan. The federal government has expanded the underwriting guidelines of several mortgage programs to help upside down home owner’s take advantage of the recent historically low interest rate environment.

Step 1: Am I eligible?: FHA, Freddie Mac, & Fannie Mae all have refinance programs available which enable home owners to refinance their current mortgage without an appraisal.

Step 2: How do I know if I’m eligible?: If you have a FHA insured mortgage it will say so on your mortgage statement or in the copies the attorney gave you from your last closing. To see if you have a Fannie Mae or Freddie Mac loan you can input your information into the websites listed below.

Underwater Home

Step 3: Prepare your paperwork: All 3 loans require some basic documentation and signed disclosures that will need to be submitted to underwriting by your Mortgage Buddy. Make sure to follow the checklist exactly to save time during the process.

Tips to save time: The following is a list of items to pay close attention to, to make sure your refinance moves through processing and underwriting as quickly as possible.

  • Do not apply for any credit cards or loans of any type until your refinance is completed
  • Do not make any non-direct deposits into your bank account or transfer any money between accounts without first reviewing it with your Mortgage Buddy.
  • Inform your Mortgage Buddy of any change or anticipated change of employment status that would occur during the refinance process.
  • Provide complete statements: Whenever providing bank statements or asset statements such as a 401k or IRA statement they must have the following. A.- Full name B.- Address C.-Full account number (no Xs or partial account numbers will be accepted) D.-Bank or Institution Name E.- All pages, if it says page 1 of 4 the underwriters will need all 4 pages. “screen shots” or “print outs” are not acceptable unless they are signed & stamped by the bank

Ask Questions: The Mortgage Buddy is here to help you feel comfortable with every step of the process. If you have any questions about the process or something you read online or in the newspaper about refinancing please ask me. Every situation is unique.

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10 Spring Home Buying Tips

(1) Get Your Free Credit Report. You are allowed to get 1 credit report from each of the 3 major credit bureaus once every 12 months. Utilize this free opportunity to make certain that your credit is being accurately reported.

(2) Decide What You Can Afford? Make an honest evaluation as to what a comfortable monthly payment is for you and your family by doing a detailed budget. It’s better to determine a comfortable monthly payment first before you look at homes for sale so you are not tempted to “over buy”. Be sure to include costs such as real estate taxes, home owner’s insurance, or condo fees. Also, do not forget to include additional costs of home ownership such as remodeling and maintenance.

(3) How Much & Where Is My Down Payment? How much you are able to put down will affect the financing you can qualify for. Do you have your down payment money already in your bank account, or is the money coming from your 401k or a gift from a family member? It needs to be readily accessible & properly sourced. Have your down payment in place prior to looking at homes.
Also, Establish a reserve account: It’s important to have a reserve savings account for your new home. You don’t want to completely drain all of your savings on the down payment. Home ownership can come with unforeseen costs from things like storm damage to failed heating systems to increasing taxes and insurance. Having an emergency fund will make difficult situations more manageable for you and your family.

(4) Get pre-approved. Before you make appointments to look at houses, talk to your Mass. Mortgage Buddy. Getting pre-approved will allow you to shop with confidence. Also, most seasoned real estate agents will not show houses to buyers before you have a pre-approval letter, and for good reason. No sense in wasting time looking at homes that you can’t afford or qualify to buy.

Spring Home Buying Checklist

(5) Select A Mass. Buyer’s Agent. It’s very important to find an experienced agent that is familiar with the neighborhood you are searching in. Take the time to interview your agent and make sure that person is responsive and you are comfortable with them. Remember, the listing agent represents the seller, not the buyer. Protect your interests with your own agent.

(6) Evaluate the neighborhood. After all, real estate is all about location, location, location. Do your research about potential neighborhoods. What is the crime rate? How is the school system? Are there any registered sex offenders? These are all unfortunate realities that you must remember to review when looking to buy a new home. Once you have found a potential home, visit at different times of the day to get a true sense of the neighborhood and neighbors.

(7) Be Ready To Move Fast. Most real estate agents in Mass will tell you that the housing inventory is very low right now. Quality houses that come on the market go under agreement quickly, often within 2 or 3 days. If you see a new house that has just come on the market which you really like, move fast to avoid getting into a potential bidding war with other buyers.

(8) Don’t Cut Corners On Inspections. Just about everyone knows that getting a home inspection is good common sense. You should also make sure you attend the inspection yourself, and don’t forget other inspections you may forget about like radon and well water inspections.

(9) Use a Mass. attorney: Use an attorney who specializes in real estate law. The cost of the attorney will vary depending on the services rendered, but the extra cost is well worth it to protect yourself on the biggest investment of your life. The Mortgage Buddy approved real estate attorney is Susan J. Mahony  MA Real Estate

(10) Remain Patient & Calm. Buying a home is an inherently stressful experience. Locating and deciding on the perfect new home can result in many sleepless nights. If you do not find the home you are looking for right away, stay patient, the right one will come along. Once it does, lean on your team of carefully selected professionals to help you get to the closing.

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