Whether you are a first time home-buyer or a current homeowner who is considering relocating to Massachusetts, one of your prime concerns will be the affordability of housing. While homes can be purchased in Massachusetts at a whole range of prices from slightly less than $100,000 upward to $8,000,000, your Massachusetts mortgage rates will have an impact on both how much home you can afford and what your monthly mortgage payments will be.
Do You Need a Conforming Loan?
There are various types of mortgages that you may apply for. The type of loan you will need is typically based on the amount of money that you intend to borrow to purchase your home. The two typical mortgage products are known as “conforming” and “non-conforming.”
Conforming loan limits are set on an annual basis by Fannie Mae or Freddie Mac and the maximum loan amount is generally $417,000. There are higher conforming loan limits in some Massachusetts counties and Freddie Mac also offers a “super conforming” with different limits and requirements. Here are some of the interest rates you can expect to pay in and around the Boston area for conforming loans when you have put 20 percent down on your home and assuming you need a mortgage of $250,000:
- 30-year fixed rate mortgage
- Low Rate: 3.25 percent; APR: 3.316; Points: 1.1
- High Rate: 3.875 percent; APR: 3.920; Points: 0
- 15-year fixed rate mortgage
- Low Rate: 2.375 percent; APR: 2.656; Points: 1.1
- High Rate: 2.875 percent; APR: 2.932; Points: 0
- 1-year adjustable rate mortgage
- Low Rate: 2.250 percent; APR: 3.327 Points: 0
- High Rate: 2.375 percent; APR: 3.363; Points: .25
- 3/1 adjustable rate mortgage
- Low Rate: 2.625 percent; APR: 3.246; Points: 0
- High Rate: 3.375 percent; APR: 3.417; Points: 0
Please note these rates are a snapshot in time and may vary significantly from what you can find in the area.
What if I Need a Jumbo Loan?
Jumbo, or non-conforming loans, will sometimes require that you have a down payment of at least 20 percent. It is also important to understand other limitations including an excellent credit score, long-term job stability, and up to one year in reserves in the bank after you make your down payment and pay closing costs. Make sure you discuss any restrictions with your lender before starting the jumbo loan process regardless of the interest rates in Massachusetts. Here is what you can expect if you are seeking a home mortgage in the amount of $520,000.
- 30-year fixed rate mortgage
- Low Rate: 3.50 percent; APR: 3.512; Points: 0
- High Rate: 3.625 percent; APR: 3.644; Points: 0
- 15-year fixed rate mortgage
- Low Rate: 2.750 percent; APR: 2.750; Points: 0
- High Rate: 2.875 percent; APR: 2.909; Points: 0
- 5/1 adjustable rate mortgage
- Low Rate: 2.500 percent; APR: 3.031; Points: 0
- High Rate 3.375 percent; APR: 3.385; Points: 0
- 7/1 adjustable rate mortgage
- Low Rate: 2.875 percent; APR: 3.114; Points: 0
- High Rate: 3.625 percent; APR: 3.499; Points: 0
It is also important to be aware that not all lending institutions offer jumbo mortgage loans. Across the Commonwealth of Massachusetts however, you will find numerous mortgage brokers who are fully licensed and often deal with large companies that do offer jumbo loans.
What About Veteran’s Administration Guaranteed Loans?
Current and former members of the United States Armed Forces often are uncertain about how their Veteran’s Administration (VA) mortgage benefits impact their potential for a mortgage. VA loan guarantees cover mortgages up to $416,000 with some exceptions. This does not prevent you from borrowing more money, it is only the limit on the guarantee offered by the VA. The most typically quoted VA guaranteed loan is a 30-year fixed and you can expect some of the following rates:
- Low Rate: 3.250 percent; APR: 3.282 percent
- High Rate: 3.875 percent; APR: 3.95 percent
You should also be aware that in many cases, a VA loan may be for 100 percent of the purchase price of the home which means a lower out-of-pocket costs when you are buying a home.
Should Rates Be Going Down as 2016 Progresses?
Currently, mortgages are available at some of the lowest rates we have seen in many years. Many feared that when the Federal Reserve increased rates in December of 2015, for the first time in nearly a decade, that home mortgage rates would soar out of control. Fortunately, this has not occurred.
Instead, to the surprise of many, interest rates have stayed at historically low levels and in some cases have even decreased. In fact, in January of 2016, the lowest 30-year rate was 3.79 percent while 15-year rates were 3.07 percent, both higher than the rates available in late February 2016. As 2016 progresses one can expect some changes in rates although one would expect that these rates will start increasing slightly. However, at this time, there is no reason to believe that a 30-year mortgage should be dramatically higher at the end of 2016.
If you are considering purchasing a home, whether you are looking in the western part of Massachusetts or your interests lie more property on the cape, you can find a number of suitable homes for sale across the commonwealth. Making sure you understand the mortgage environment is important because a small change in interest rates in Massachusetts can make a significant difference in your monthly payments.
2 Point Highlight
While homes can be purchased in Massachusetts at a whole range of prices from slightly less than $100,000 upward to $8,000,000, your Massachusetts mortgage rates will have an impact on both how much home you can afford and what your monthly mortgage payments will be.
Many feared that when the Federal Reserve increased rates in December of 2015, for the first time in nearly a decade, that home mortgage rates would soar out of control; fortunately, this has not occurred.
