In 2021, over 26.5 million Americans moved home.
And one of the top destinations they flocked to was Boston, MA. If you’re planning on joining them, be prepared to have a battle on your hands as competition is fierce in Boston.
Prices remain high and with lower than normal stock, each home could see over 10 offers. With the market hotting up further, you might be wondering what you can do to boost your chances.
That’s where our guide can help! Keep reading for everything you need to know about buying a home in Boston, so you can get ahead of the game.
Set Your Budget
Your first step before looking at Boston real estate should be setting your budget. A good guide to use is the rule of 28/36 which mortgage lenders use here. It means:
- 28% or less of your gross income goes on housing costs (insurance, taxes, interest, principal, etc.)
- 36% or less of your gross income goes on debt repayment (loans, student debt, credit cards, etc.)
So, if your yearly income is $80,000 you don’t want to pay more than $1,866 on housing costs. Your total debt payments also shouldn’t amount to more than $2,400. The goal is to get it as low as possible, of course, but this is a good starting point.
These aren’t the only costs to factor in, you have closing costs and long-term ownership costs too. In Boston, there are some of the highest hidden costs that could catch you out.
On average, you should expect to pay $14,000 each year on such. This is much higher than the US national average of $9,000. Here are some hidden costs you’ll want to consider when making your budget.
You should expect mortgage closing costs of between 2-5% of the price you paid. Sometimes it can climb higher.
For property maintenance expenses, expect an average bill of $4,500-$5,000 each year. This is for things like gutter clearing, window cleaning, and lawn care. Boston actually has some of the most expensive lawn care costs in the country.
As a good rule of thumb, you should set aside 1% of your home’s value each year. This is to cover any repairs or replacements like a new boiler or loose roof tiles.
The average property tax bill you should expect is just shy of $5,000. The 2021 property tax rates for Boston were $10.67 per assessed value of $1,000. This is well above the national average, only made worse by high property prices.
On average, comprehensive home insurance in Boston will cost you about $1,300. It may be a little less if your property is smaller, though expect it to climb rapidly for larger homes.
You should also consider other costs like replacing or adding new furniture. There are moving costs to think about and any fees associated with your previous home too.
How Much Will It Cost to Buy a Home in Boston?
Boston has long held a position as one of the top 3 most expensive US cities to live in. In the fall of 2021, after over 18 months of climbing prices, the average price sat around $675,000.
This was for a condo or single-family home. But bear in mind that 62% of Boston homes on the market went for above their asking price. There are more price rises predicted so prepare for this in your budget.
Get Your Mortgage Pre-Approved
With a good idea of your budget, you can approach lenders for pre-mortgage approval. You should do this before you start looking at Boston houses. Why? It sets you apart as a serious buyer to agents and sellers which is a valuable advantage in such a hot market.
Getting pre-approved is like the process of applying for the mortgage itself. You submit your application and the lender checks your credit data. You’ll have to provide documents on your assets, debts, income, and more.
When you’ve done this, the lender will send you a letter of pre-approval. This will state what you are pre-approved to borrow and so will dictate your budget.
You can then use this to start looking for houses within that price range. It’s a good idea to look at properties under this budget though in the current market. This will give you the best chance if you need to put in an offer that’s above the asking price.
What Do You Need to Purchase a Home in Boston?
If you want to get pre-approved and qualify for a mortgage, you’ll need to have all the information lenders could want at the ready. Here’s a list of what you’ll need.
A Good Credit Score
If you want to get approved for a mortgage you’ll need a credit score of at least 650. Depending on the lender and mortgage type, you could get one with a lower score of 580. Others may need to see scores over 700.
Many lenders will want to see that you’ve had a steady job for 1-2 years with the same employer. If not, they at least want to see you’ve had the same job title and worked in the same industry.
A Good Debt-to-Income Ratio
You’ll want to have a debt-to-income ratio of no more than 36% as we mentioned earlier. Lenders want to know that you’ll be able to make your mortgage repayments on time. They also want to know that you can still handle existing debts at the same time.
A Down Payment
In most cases, you’ll need to stump up a down payment but this depends on the mortgage type. With most conventional loans, you’re looking at 20% of the asking price. Anything lower and you’ll need mortgage insurance.
To cover closing costs and expenses, you’ll need even more cash on hand than the downpayment. Make sure you’ve set aside enough to cover all your fees and hidden costs.
If a relative has gifted you money to use for your downpayment the lender needs a letter stating this. The family member has to write to the bank, making clear it’s a gift, not a loan.
Proof of Sourced or Seasoned Down Payment
The bank needs statements that show the funds you’re using are sourced. This means there is clear evidence of where they came from. Or, they can be seasoned which means they’ve been in your account for 60-90 days at least.
Choose a Buyer’s Agent in Boston
Once your pre-approval is in place, make sure you choose a local Boston agent to work on your behalf. While you don’t have to, per se, it’s advised especially as the seller usually pays for the buyer’s agent anyway.
Your agent can guide you through the process and the local Boston market. They’ll take you to neighborhoods and show you homes that fit the list of requirements you have. After that, they can submit an offer, negotiate, and help close the sale for you.
Start Looking for Homes in Boston
Now comes the fun part and you can dive right into looking at houses! Don’t get carried away though, prepare a written list of your needs and then your wants.
A need is a feature that is essential for your family. It should be something that isn’t easy or possible to change, so you need a home that has it already. A want is something that would be nice to have, but you can function without it or add it later on.
You can break this down further to make it easier with these categories to consider:
- Amenities and features you need
- Amenities and features you want
- Amenities and features you don’t want
- Absolute deal breakers
Remember to keep your expectations realistic to your budget. There is a fair chance you’ll need to compromise, so make sure you’re prepared to do this. Whether it’s Boston or elsewhere, it’s rare that you’d find a home that ticked all your boxes right off the bat.
Go into this house hunt with an open mind and try to let logic guide the way. There is little room for emotion, as it’s no good falling in love with a house you won’t ever qualify for a mortgage on. Nor is it worth rushing in only to end up with deal-breaking issues you overlooked in your enthusiasm.
Make an Offer
Let’s hope that you find a Boston home that ticks all your need boxes and even gives you a few wants too. Now you need to make your move and submit an offer to the seller.
This is where your agent comes in and will help you set an amount using similar properties sold already. They’ll tell you what they think you need to offer to be a strong contender to boost your chances of acceptance. After you make that offer here is what could happen:
- On rare occasions, the seller could accept your offer outright and go under contract
- Most likely they will make a counteroffer asking for more money or other concessions. You can either accept or make another counteroffer yourself
- Refuse the offer. If they have other offers or don’t think you’re serious they might say no and you have to search for another house.
It’s not all despair if you get turned down, it happens more often than you think. You need to pick yourself up, dust yourself off and get back on the house-hunting horse. It’s important you keep your wants and needs in mind and don’t give up hope.
Seal the Deal By Closing
Once you get an offer accepted, both parties sign off on it and the house goes under contract. This last phase will take around 60 days in Boston then you’re ready to close on your home.
During this time, you’ll go through escrow and many things need to occur such as:
- Applying for and finalizing the mortgage
- Buying your home insurance
- Having a home inspection
- Getting the home appraised
- Searching the title to make sure it’s clean
- Complete any other concessions negotiated in the sale
- Do any extra inspections and the final walkthrough
Once that’s all dealt with then there is a mountain of documentation to sign. This transfers ownership, records the new deed, and makes sure the seller gets their money. The next step after that is getting the keys, packing up, and moving in!
Choose a Mover You Can Trust
We recommend that you look for a mover local to Boston for the best service and rates. These movers will likely live local to Boston too and will care about the reputation they have there. It’ll also make it easier to coordinate your move.
If you’re moving long-distance, make sure you choose a mover who can accommodate that. Not every mover can haul long distances as they need a license for each state they operate in. Here are some things you can do to get the right movers for your needs.
Research Movers Online
This is one of the most important steps for finding a mover. Make sure you do thorough online checks of any movers you’re considering hiring. You need to make sure you can trust them with your precious belongings.
Make sure they’re an established firm with at least 2-5 years in the business already. Their website should be clear and easy to read, with testimonials readily available. The movers should be honest, open, and have nothing to hide.
Make Sure They’re Insured and Licensed
Check they have the right licenses from the United State Department of Transportation. Never hire a mover who doesn’t have these in place. If a worker gets hurt on your property, you could be liable for the medical bill.
To avoid this, ask the mover to provide proof of insurance and their license. If they’re not hiding anything, this won’t be an issue. If the information isn’t up-to-date or they refuse, move on to a different company.
Look at Online Reviews
Read what previous customers said about a mover with online reviews. Google provides reviews as do websites like Yelp. You can also check out the Better Business Bureau to see if they have any complaints.
A few bad reviews out of thousands aren’t anything to worry about. Give them a read and see how the company responded to resolve the issue. Red flags should come up if there are more bad reviews than good though, or they’re rude to customers.
Buying a Home in Boston Made Easier
As one of the top three cities to live in the US, a home in Boston comes with a price tag. You need to be prepared to pay above the national average for a home here.
In fact, you need to prepare to pay over the asking price. But once your patience pays off and you manage to snag your Boston dream home, you won’t be disappointed.
Prepare for your move by getting a quote today. At Boston Best Rate Movers, we’ll take the stress out of moving so you can get started on your Boston adventure.