Bostonians Are Turning to These Strategies to Make Their 2024 Home Purchase More Affordable

While inventory in the real estate market shows some signs of improvement, high home prices, and mortgage rates still make it difficult for Boston homebuyers to find affordability.

But if you budget ahead of time, learn about mortgage products, and work with the right agent, you can increase your chances of finding your Boston dream home.

To help aspiring homeowners, the team at Prevu Real Estate put together essential tips to help make your home purchase more affordable.

Structure your budget

Your budget shouldn’t just cover a down payment. Setting aside funds for closing costs, as well as money for renovations or repairs can provide a critical buffer. Getting a budget in order is a great way to ensure you always have capital on hand.

Take stock of your income, debts, and other assets to help find a price range that fits within your means. This way, you won’t waste time looking at homes outside your price range that would drain your funds completely.

From here, itemize your budget so you know how much you have on hand for a down payment, closing costs, and a general emergency fund.

Get pre-approved for a mortgage

While setting up a working budget is a good start, Boston homebuyers will want to speak to a lender about how they can help you make a home purchase more affordable.

If you are planning to finance a home purchase with a mortgage, it is important that you get pre-approved. A lender will review your W-2s, income, and debts to determine how much they’ll loan you to buy a house. You can take this further by requesting a lender complete a fully underwritten pre-approval so you can close more quickly when you find the one.

Being fully underwritten helps with affordability because it shows sellers you can quickly close a deal, which some sellers prioritize as a deal term. This may help you avoid a pricey bidding war.

Hire an experienced buyer’s agent

One of the best ways to make your home purchase in Boston more affordable is to work with an expert local agent.

A buyer’s agent will know what factors influence home prices across Back Bay, the North End, or one of Boston’s adjacent suburbs. They can use their access to the Multiple Listing Service (MLS) to help create a comparative market analysis of similar homes to ensure you’re paying a fair price. Plus, they’ll be able to introduce you to neighborhoods with homes that match your lifestyle and budget goals.

However, what makes an agent shine is their negotiation skills. Their knowledge of the market can help you craft an offer, make the best use of contingencies, or achieve a non-financial term that is important to the seller.

Work with an agent offering commission rebates

As you interview agents working in Boston, make sure to ask if they’ll provide a commission rebate at closing in addition to their services. The process of receiving a rebate includes your agent providing a percentage of their broker fee when you get the keys to your new home.

Prevu currently offers the highest commission rebate in Boston, totaling up to 1% of the home’s purchase price via the company’s Smart Buyer Rebate. This windfall can help buyers rebuild savings or fund a remodeling job on a resale property.

Speak to a lender about mortgage products

If you’re buying a condo unit in Seaport and only plan to stay in the space for several years before upgrading to a house in the suburbs, consider using an adjustable-rate mortgage.

These adjustable products offer you a lower interest rate for a fixed period of time—typically five or seven years—at the onset of the loan, and then the rate will fluctuate in the future by a specified amount relative to interest rates at that time. While there are risks to these products, it may be a way to achieve a lower monthly mortgage payment if you plan to sell before that fixed period of the loan expires.

If you’re set on purchasing a “forever” home, it may be more advantageous to pursue a 15- or 30-year fixed-rate loan. When signing, these loan types lock you in at a set interest rate, giving you peace of mind about a consistent monthly payment for the life of the loan.

Use mortgage points to lower your interest rate

The interest rate on a loan is one of the hardest factors to stomach when buying a Boston home. But if you purchase mortgage points upfront at closing, you can reduce the mortgage rate for the loan and save on the total interest you pay over the long term.

A single point usually amounts to approximately 1% of the loan amount and will reduce the interest rate by 0.25%. For a $500,000 loan, a single point would cost approximately $5,000 at closing to reduce your rate, but that lower rate could save you a multiple of that amount over the course of the loan—especially if you plan to own the home for 10 to 30 years.

You want to speak with your lender to compare the cost of the mortgage points with the total potential savings over a 30-year mortgage to understand how many years you will need to own the home before you break even on the cost of the points.

Interested in buying a home in the Boston area? Browse listings and see how much you can save with Prevu’s Smart Buyer Rebate.