Home Mortgage Rates in Massachusetts
Mortgage rates in Massachusetts tend to be lower than the average national mortgage rates. However, the median home price in the state generally exceeds the cost of a home nationwide. Higher demand and higher wages in the state act to push home prices higher than in many other states.
Popular Cities to Live in Massachusetts
The ten largest cities in the state are Boston, Worcester, Springfield, Lowell, Cambridge, Brockton, New Bedford, Fall River, Quincy and Lynn. However, cities like Boston and Lowell have seen decreases in population since 2000.
Among the fastest growing cities are Worcester, -- which has grown by 5 percent since 2000 -- Brockton (4 percent), Quincy (3 percent), Fall River (2 percent) and Quincy (2 percent). Some smaller towns have grown very fast including North Amherst, which has grown by 16 percent, Bellingham by 13 percent and Yarmouth Port by 11 percent.
Worcester’s growth appears linked to its proximity to the Greater Boston area offering lower home prices at a reasonable commute distance from Boston and the metro area. Brockton has been experiencing the same growth found all over southeastern Massachusetts. In particular, Brockton has seen a rapid growth in its African American population. Increasing tourism, seasonal residence and development is spurring population growth in the southeastern part of the state. Cities like Cambridge, Worcester and Peabody have been included on lists of the “most livable” cities in America.
Much of the population change in the state is driven by immigration and migration. Newcomers from the Caribbean including Puerto Rico and Jamaica are particularly noteworthy. Another trend is the movement of people toward less crowded areas.
Massachusetts Mortgage Types
Mortgages in Massachusetts are either fixed rate or variable rate. Here is a list of some of the loan programs available in the state.
- 30 year fixed rate mortgage – The interest rate for this loan is fixed over a 30 year payment period.
- FHA 30 year fixed rate mortgage – A fixed rate mortgage insured by the Federal Housing Administration. Available to those who meet certain qualifications.
- VA 30 year fixed rate mortgage – A fixed rate mortgage offered by the Veterans Administration. Available to qualified veterans of the United States Armed Forces.
- 30/3/1 adjustable rate mortgage – An adjustable rate mortgage provides a fixed rate at the start but then switches to an adjustable rate that changes every year based on certain indexes. A 3/1 ARM gives a fixed interest rate for the first three years, and an adjustable rate that changes every year thereafter.
- 30/5/1 adjustable rate mortgage – A 30 year mortgage with a fixed interest rate for the first five years and an adjustable rate that changes very year until the end of the payment period.
- 30/7/1 adjustable rate mortgage – A 30 year mortgage with a fixed interest rate for the first seven years and an adjustable rate that changes very year until the end of the payment period.
- 20 year fixed rate mortgage – The interest rate for this loan is fixed over a 20 year payment period.
- Jumbo mortgages – These mortgages are for homes that exceed the limits set by Fannie Mae and Freddie Mac. Because these mortgages present higher risks to the lender, they often charge higher interest rates than found with other loan types. Jumbo mortgages can come in both fixed rate and adjustable rate types, and with different payment period terms.
- Interest only mortgages – With these mortgages, the borrower pays only the interest rates until the end of the term when the balance of the loan becomes due. The idea is to allow the borrower to invest payments due on the principal in other areas. If such investments do not perform well, the borrower could end up paying more than with other types of mortgage loans.
Mortgage rates also depend on the number of points or fees paid to the lender. A no points mortgage usually have a higher interest rate than one with points. When you have no non-recurring closing costs, the interest rates will also be slightly higher than with a no-points mortgage.
Points are prepaid interest on the mortgage with one point equaling 1 percent of the loan amount. Thus, for a $400,000 mortgage, one point equals $4,000 while three points is $12,000. Non-recurring Closing Costs (NRCCs) are various fees that can include administration fees, appraisal fees, processing fees, etc.
Massachusetts is a recourse state by default, which means that the lender has the right to recourse even after a foreclosure sale. If the amount of the foreclosure does not satisfy the mortgage amount, the lender can still pursue payment of the balance of the debt from the borrower. For example, if the mortgage is for $300,000 and the foreclosure is only for $200,000, then the borrower may still owe the lender the remaining $100,000 of the mortgage. However, one can include a non recourse clause in the loan contract, which frees the borrower from personal liability after the foreclosure.
Foreclosure Laws in Massachusetts
In this state, lenders use the non-judicial or trustee sale foreclosure process. No court order is sought, but instead a neutral third party known as a Trustee handles the foreclosure action.
The process begins when the lender files a complaint to the trustee. If the sale is for more than the loan amount, then the borrower is entitled to the surplus amount. If the foreclosure sale fails to meet the mortgage amount, then the borrower may still owe the deficient amount unless they have a no recourse clause in their loan terms.
In Massachusetts, there is no right of redemption after the foreclosure sale. So the original homeowner does not have the right to buy back the home from the person who purchased the property in the foreclosure. However, the state does give the owner the right to redeem the property prior to the publication of the first notice of sale. A notice of sale informing the public of the upcoming foreclosure auction is required by state law.