Where to Start?

Buying a home, especially in a city such as Boston, can seem daunting and overwhelming. Well, take a deep breath and let’s start from the beginning. Establish priorities. Think about the lifestyle you’re looking for, the amount of space you need, the style of home that interests you and anything else that may be important to you. Then prioritize.

Schedule some home previews to see how far your dollar will take you in different Boston neighborhoods and to better understand the Boston real estate market.

Time to Get Mortgage Pre-Approved!

Unless you are a cash buyer, it is a good idea to get pre-approved for a mortgage from an accredited lender before you even begin looking at properties or making an offers. An accredited mortgage lender, will guide you through the process. Don’t have a mortgage lender? I know several that are highly experienced and offer excellent service. If you are a first-time buyer, I can connect you with mortgage brokers that can help you identify special loan programs in your area.

A respectable mortgage lender will:

  • give you an accurate idea of your price range.
  • take a collaborative approach with your and explain all your loan options.
  • check your credit report and give you feedback on how to improve your credit profile
  • provide advice about when to lock in your loan rate and discuss the pros and cons of various loan programs
  • offer recommendations on how to handle your money between the time you apply for a loan and settlement day
The mortgage broker may or may not require all documentation to back up your pre-approval at this point, but they will require it down the road. Here is a list of the most common items needed during the mortgage pre-approval process:


  • W2 or 1099 income statements for the last two years
  • Federal tax returns for the last two years
  • Bank statements for the last few months
  • Recent pay stubs or proof of other income
  • Proof of investment income if applicable

After navigating the real estate market and various neighborhoods, going to open houses, and visiting off-market homes, you finally found the right home. Even better, your offer was accepted!

How long does it take to officially purchase and close on your home in Boston?

Closing on a home: 30 to 60 days with an average of 45 days

What is the process?

Below is the typical home buying timeline for buyers who are getting a mortgage, giving you a general idea of process and steps taken from start to end.

The 10 step process:

  1. Offer to Purchase — As soon as practical after the home is identified. Make an offer!
  2. Offer Accepted/Mutual Acceptance — Within 24–48 hours of offer. $1000 earnest money deposit is provided to selling brokerage to be held in escrow. Acquire same day legal representation.
  3. Home Inspection — Within 7–10 days after Accepted Offer
  4. Due Diligence and Negotiate — Within 7–10 days after Accepted Offer
  5. Purchase and Sale Agreement (P&S) — Within 10–14 days after Accepted Offer P&S is reviewed by you and your attorney, signed, and a 5% earnest deposit (5% of offer minus the previous $1000) is provided which is written to the seller’s brokerage to be held in escrow.
  6. Complete Mortgage Application — Within a day or two of P&S (Including P&S, pay stubs, tax records, etc.)
  7. Mortgage Commitment Letter — Provided by the bank 21-45 days after signed P&S
  8. Buyer Secures Home Insurance Binder (n/a for condos) — At least one week prior to closing.
  9. Set Up Utilities — At least two days prior to closing
  10. Closing – Congratulations! You have made it to final steps in securing your new home. You will meet with your lawyer and seller and sign all closing documents, including HUD-1, you pay the remaining funds, your attorney will then record the transaction and deed with the appropriate municipality. You, the buyer, receive the keys and, unless indicated differently in the contract, officially takes possession of the property!

Here is a denser explanation of step by step:

1. Offer to Purchase, Day 1

When you’ve found a Boston property you want to call home, you’ll probably feel excited and a bit nervous. As your dedicated realtor I will discuss the best possible offer strategy with you. A strategy is important for any offer, but particularly critical when you’re up against multiple offers.

The official offer you make is called the “offer to purchase” which is a written document that declares how much you are willing to pay for the home, provided that certain conditions are met. It is important to carefully consider the price you indicate on your initial offer.

Your initial offer will also include a deadline by which the seller must respond. This deadline may vary from a few hours to 1-2 days, depending on how aggressive your offer is. The seller may respond by agreeing to your offer, making a counter-offer, or rejecting your offer outright.

I will always negotiate with the seller’s agent to reach a deal that both you and the seller can agree upon. This may happen quickly, or may require several rounds of negotiation.

I will draw up an official offer, send it to you for your signature, and then submit it to the seller’s agent. Most sellers respond within 4-8 hours, though some sellers may need more time.

You’ll need to submit a photocopy of your earnest money, also known as a “good faith deposit.” It is the money paid by buyers to sellers after mutual acceptance to prove that they’re serious about their offer. Earnest money amounts are commonly $1,000 paid via check. The earnest money will be deposited into an escrow account by the seller’s attorney or by their listing agent. Once the sale of the home has been completed, the earnest money you paid will be applied toward your closing costs. If you back out of the sale due to a failed contingency (eg: inspection report), you can recover your earnest money in full. If you back out of the sale for reasons not covered by contingencies, you will forfeit your earnest money.

2. Accepted offer; price confirmed (mutual acceptance),Days 2-3

If the sellers agree to your offer, you’ll be at the stage of the deal known as mutual acceptance. Mutual acceptance is the point at which the buyer and seller agree on the price and terms of a deal, as described in the buyer’s written and executed offer. Once both parties sign the offer, they’re officially at mutual acceptance.

There’s still plenty to do before the deal is done in the post-mutual. Home inspection, appraisals, paperwork, plus many more tasks which make up the part of the deal known as the post-mutual period can last for 30-45 days or more.

House inspection contingency:

A house inspection contingency, which is attached to the offer to purchase, gives the buyer the right to use the results of the inspection to negotiate with the seller to cover the cost of repairs, or to back out of the deal altogether. Under the terms of most inspection contingencies, the buyer has the right to back out of the purchase and reclaim his earnest money after reading the inspection report.

3. Home inspection and Due Diligence, Days 3-10

Due diligence refers to a buyer’s investigation of the various aspects of a property. The goal in any due diligence investigation is to make sure that the property you think you are getting is actually the property being conveyed. As you set out in your investigatory journey, I leave you with a couple of things to keep in mind: No home is perfect. Secondly, each transaction has its own unique set of obstacles and considerations, and third, utilization of third parties (home inspectors, lawyers, appraisers, etc) in the process is critical to accuracy and cost efficiency.

In the days immediately following mutual acceptance, the buyer should schedule a professional inspection of the home. In many states, the buyer gets a disclosure from the seller that lists any known problems with the property. However, in Massachusetts, the seller is not required by law to provide a disclosure.

There are several types of inspections that are usually performed on a home before it’s sold.

General home inspection: This inspection looks at the overall condition of a home and covers its main structures and systems, including the roof, plumbing, heating and cooling, electrical, kitchen appliances, and water heater as well as the condition of appliances that will be transferred to the buyer at the time of purchase. An inspection generally takes a few hours, and at the end of the process, the inspector will provide the buyer with a report of all the issues discovered during the inspection. A licensed contractor or certified home inspector will give you a full report on any issues that he or she finds, and whether the problems are minor or serious. In some contracts, you can ask the seller in writing to make the repairs, if they aren’t too numerous or severe. But sometimes a property has so many problems that you may decide to terminate the contract and get a full refund of your binder deposit.

Other inspections:

Wood-destroying organisms (WDO) inspection: This inspection, which many lenders will require, looks for wood rot in the structures of the property caused by termites, other insects, or water damage. This often includes the exterior siding, garage, and even the interior walls and baseboards.

Lead-based paint inspection: This inspection tests for the presence of lead-based paint in or outside of the home. It’s legally required for homes built before 1978; federal law requires that sellers disclose certain information about the presence of lead-based paint and allow potential buyers to test for it.

Radon gas inspection: This tests for radon, a radioactive gas that has been found in homes all over the United States. The EPA and the Surgeon General estimate that long-term exposure to high levels of radon gas causes thousands of lung cancer deaths in the United States every year.


If You’re Financing, Expect an Appraisal

A home appraisal is a determination of a property’s value. If you’re financing your purchase, your lender will select an appraiser from an appraisal management company. Although still recommended, an appraisal isn’t required on a cash purchase.

The appraiser will inspect the property just like a home inspector, but will be more concerned with features like property size, lot size and location, general condition, and upgrades. He or she then compares this “subject property” with other comparable properties or “comps” in the neighborhood (or nearby neighborhoods, if not enough comps exist in the same neighborhood).

If the appraiser doesn’t believe the property to be worth the sales price, the appraisal will “come in low.” In most cases, the seller will be forced to reduce the sales price of the home in order for the loan to be approved.

Get the Right Type of Insurance

If you want the best-quality, least-expensive insurance, it’s important to shop around. There are several types of insurance you may want to consider, based upon your use for the property.

Homeowner’s insurance: Purchase this insurance you’re going to live in the home. It covers fire and theft, liability, natural disasters, and private property losses.

Dwelling insurance: If you’re going to be renting the home out to tenants, buy this type of insurance. It contains liability coverage and protects the landlord’s property, but not the tenant’s belongings. Therefore, it’s recommended that tenants purchase separate rental insurance.

Empty or vacant property insurance: Buy this when you’re going to resell, or “flip,” the home within a short period of time. You may or may not be doing work on the home during the weeks or months after you buy it, but nobody is actually “living” in it. This type of insurance is more expensive than the others because there’s more risk of fire, theft or vandalism with an empty house.

Have the Property Surveyed

A survey is a geographic “map” of the property and its boundaries. It typically includes the home and land around it, as well as any right-of-way easement areas. It will also show permanent structures on a property, such as a fence or swimming pool. On occasion, a survey may show that a neighbor’s structure is actually encroaching on the property you’re purchasing. In such cases, it may be necessary for that problem to be corrected before a lender will grant you a mortgage for the property.

Get Owner’s Title Insurance

Owner’s title is a legal document that asserts that the property is free and clear of any defects in ownership, liens, or title claims, and that any and all liens have been paid in full prior to the closing date. For example, if a previous owner had a new roof installed, but never paid the contractor, the contractor could attach a lien on the property that would have to be paid in full before the property could be sold.

Owner’s title insurance protects you from hidden title problems that weren’t discovered during the initial title search, such as errors or omissions in deeds, mistakes in examining records, forgery, or undisclosed heirs. If you discover any liens after the closing, the company that prepared the title insurance would have to pay for them. If there’s a mortgage, lender’s title insurance protects the lender if there’s a problem with the title.

Check the HOA Covenants and Restrictions

Most condominium and town-homes and even some single-family neighborhoods have homeowners associations (HOAs) that propose and enforce rules for the subdivision in an effort to protect the appearance and values of the community.

When you purchase a new or used condo unit, you’re usually permitted to read through the covenants and restrictions within a couple of days of signing the contract. Take advantage of that opportunity. Should the covenants and restrictions not be to your liking, you can cancel the real estate contract without any penalty or loss of binder deposit. However, no such law applies to single-family homes.

The Bottom Line

All of these due diligence tasks may seem overwhelming, but fortunately, I knowledgeable experienced professionals to perform these tasks. As the buyer, you’ll be advised of the results every step along the way. When the day finally arrives to sign the closing documents, you’ll have peace of mind knowing that you have done your “due diligence” and that the home you are buying will be in excellent condition and free of liens, encumbrances, or title defects.

5. Purchase and Sale Agreement (P&S) — Within 10–14 days after Accepted Offer and after the Home Inspection and Due Diligence

In Massachusetts, the standard form Greater Boston Real Estate Board Purchase and Sale Agreement (“P&S”) is almost always the governing contract between the Buyer and the Seller regarding the proposed property to purchase. Most Buyers submit an initial offer to a Seller, which spells out the terms of the contract. The P&S supersedes the offer, and can be thought of as the “long form” contract. Massachusetts requires the buyer’s attorney to draft a purchase and sale agreement, and then send it to the seller’s attorney for review and negotiation. The attorneys will send the document back and forth, making changes until both parties are satisfied. At this time, the buyer and seller will sign the purchase and sale agreement.

Deposit of 5 -10% Upon Execution of the P&S

It is customary for a buyer to give a deposit or binder as a show of good faith at the time the P&S is signed. While the amount is negotiable, it is typically 5% of the purchase price. This deposit, similar to the initial $1000 deposit, will be held in an escrow account and applied to the final home price at closing.

Title Examination and Title Insurance

Title: After you and the seller sign the purchase & sale agreement, your attorney will order a review of the ownership history of the home.

Secondly, most banks and mortgage lenders require that an examination of the seller’s title to the property be conducted to determine if the property is marketable and will provide adequate security for the loan it is making. Lenders generally require title insurance up to the amount of the loan and for an additional fee, title insurance can be obtained to protect the portion of the purchase price that the buyer paid.

Your lawyer and lenders will check the home’s title for liens, encroachments and easements.

  • liens: any legal claim of ownership listed on the title of the home.
  • encroachments: fences or other parts of neighboring lots that cross property lines. Encroachments should be listed in the title report or the seller disclosure documents.
  • easements: common land or utilities owned publicly and used by the local community. Easements are also a right to use another person’s land for a specific purpose.
The title lays out the framework for a conveyance (a real estate transfer) in Massachusetts. The agreement spells out that the Seller conveys the deed to the Buyer in return for consideration, then the deed is recorded and the Buyer becomes the owner of the property. However, in Massachusetts, once the deed is recorded at the proper Registry of Deeds, then any title issues “run with the land.” Thus, the new owner becomes responsible for any outstanding encumbrances or liens that were not properly discharged. In order to protect the Buyer, the purchase and sale agreement provides that the Seller must convey “good, clear and marketable” title. Acting as the buyer’s or lender’s counsel, or both, TitleHub attorneys will review the title exam and work with the Seller’s attorney to clear any title issues, so that the buyer will receive a certification of title and an owner’s title insurance policy.

Seller Responsibilities

The purchase and sale agreement lays out the responsibilities of the Seller. This includes maintaining insurance and upkeep on the property until closing, obtaining a smoke and carbon monoxide certificate at closing, paying the broker’s commission, obtaining a 6(d) certificate for a condominium, and requiring that the taxes be paid by Seller up until the closing date (through an adjustment to the HUD Settlement Statement). The agreement also provides that the Seller’s agent (either the realtor or the attorney) holds the buyer’s deposit in an escrow account.

Anything But “Standard”

There is a note of caution about the standard form Massachusetts purchase and sale agreement. We like to say that it is anything but “standard.” The standard form provides several hidden advantages to a Seller. Thus, buyers must have an experienced attorney revise the agreement and flag those built in deficiencies. For example, if a Buyer were to default prior to closing, the standard form document provides no cap on the damages; a skilled attorney will know to cap the damages at the deposit. The same is true if a buyer loses his rate lock if there is a delay of the closing; a skilled attorney would use language to protect the buyer in this situation.

An experienced attorney will produce a “Rider” to the purchase and sale agreement that will have language that protects a Buyer’s deposit and provides an aggressive layer of due diligence. Riders are extremely common for most purchase and sale agreements. The reason why attorneys add in a rider (or “addendum”) to the P&S agreement is because they are accustomed to certain language that has better covered their clients’ interests in the past than a stock P&S form may account for.

When you look through the rider, it may appear that some sections are redundant with sections in the standard P&S form preceding the rider. This is okay. These provisions may include buyer’s obligations, seller’s warranties, or instructions on when notice has officially been given to the buyer or seller. Upon a closer look, these provisions are not restatements but rather expansions on what’s in the original P&S agreement, ensuring that you are covered in the manner your attorney sees fit. Where there may appear to be duplicate information, your attorney should account for this by adding a section in the rider noting that where there appears to be a conflict or a diversion in language between the rider and the original purchase and sale agreement, the rider wins out.

For example, if the Buyer is purchasing a condominium, the Rider should have the Seller make representations that the association is not contemplating any special assessments, there are no pending lawsuits against the association, and the budget is in good order. Other issues include seller repairs, septic system/Title V compliance, radon gas, UFFI insulation, lead paint, and buyers’ access to the property while it is under agreement.

6. Submit Complete Mortgage Application — Within a day or two of P&S (Including P&S, pay stubs, tax records, etc.)

For consumers who apply for most mortgages on or after October 3, 2015, the stress of shopping for a mortgage will be reduced, as our new mortgage disclosure rule takes effect. The new rule and disclosures ease the process of taking out a mortgage, helping you save money, and ensuring you know before you owe.

Here’s what will change:

  • Four overlapping disclosure forms will be streamlined into two forms, the Loan Estimate and the Closing Disclosure.
  • You’ll have more time to review your closing documents. Currently, lenders must give you your HUD-1 Settlement Statement disclosure 24 hours in advance, if you request it; after October 3, you’ll receive your Closing Disclosure three business days before you sign the forms and accept the terms of your mortgage, no request needed.
Here’s how these changes will improve the mortgage process:

  • The new forms will make it easier to understand complicated mortgage terms.
  • The Loan Estimate makes it easier to shop around and compare loan offers from multiple lenders. Consider applying for loans from at least three lenders before choosing a mortgage so you can find the best deal for you.
  • The three days required between getting your Closing Disclosure and signing on the dotted line allow you to make sure there aren’t major changes from the deal you were offered on your Loan Estimate. It also gives you time to ask your lender all the questions you might have about the terms of your mortgage and consult with a lawyer or housing counselor.

More resources to help make mortgages understandable

We’ve released “Your Home Loan Toolkit.” The toolkit has worksheets and conversation starters to help you at key points in the mortgage process. You’ll receive the toolkit when you apply for a home purchase mortgage. However, you can also download it now.

In addition, while these forms make the process of taking out a mortgage easier, we have also created digital resources to help you use and understand your Loan Estimate and Closing Disclosure. These tools give you definitions of terms like “balloon payments” and “points.” They also show you where to look, page-by-page, to check that terms and numbers on both documents match up.

For a better understanding of what it takes to get a mortgage, we’ve updated our “Owning a Home” site with an overview of the mortgage process. This step-by-step guide to getting a mortgage takes you from creating a budget to filing away your important closing documents after you accept the terms and sign on the dotted line. “Owning a Home” also has tools and resources to help you learn more about your loan options, make decisions, and prepare for closing.

Housing counselors approved by the U.S. Department of Housing and Urban Development (HUD) are another great resource. They can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost to you. To find a housing counselor near you, use our search tool.

7. Mortgage Commitment Letter –10 to 21 days after signed P&S

Once your mortgage is lined up (you’ll need to have a mortgage commitment from your lender within 20-25 days of signing the purchase & sale agreement) and the inspection is completed, you and the seller will be ready to sign the purchase and sales agreement, which will act as a binding contract for your home purchase. Your attorney and the seller’s attorney will send the contract back and forth, making changes until all parties are satisfied. When you sign the purchase & sale agreement, you’ll also need to make another deposit with the seller’s agent or attorney, worth 5% of the home’s purchase price.

8. Buyer Secures Insurance Binder (n/a for condos) — At least one week prior to closing

The mortgage company you are getting a loan from requires that you obtain homeowner’s insurance on the home you are purchasing. They will require you to pay for the first year’s premium up front prior to closing and bring a “binder” showing that you have insurance. The binder is basically a certificate that your insurance agent will issue that shows you have insurance & what your coverage is & most importantly will list the mortgage company as a “loss payee” – that is, if there were a fire or other incident & the home was lost, the mortgage company would be covered. If you call your insurance agent & tell them you need a binder for a closing, they will know exactly what you mean.

The mortgage company has requirements as to how much coverage you must have & how the loss payee clause should read. You will at least want it insured for the purchase price & most mortgage companies will require replacement cost coverage.

If you are purchasing a condominium unit, your lender may require you to purchase your own homeowner’s insurance, called an HO-6 policy, which covers the interior of the unit and everything inside it. In other cases, the Condominium’s master policy will be sufficient for the lender. We will still need a binder for closing and we will contact the Condominium’s insurers to obtain it. Most condominium master policies will pay only to rebuild the unit to its existing walls, but will not pay to repair or replace any items inside the unit (i.e. cabinets, appliances, fixtures, carpets and personal items). If you need to obtain interior coverage, we often recommend that you examine purchasing coverage from the same insurance company that writes the Condominium’s master policy. This way both the “exterior” and “interior” contents are covered by the same company and they cannot attempt to disclaim coverage for an item by claiming that it falls under your other company’s policy.

9. Set Up Utilities — At least two days prior to closing

10. Closing — Closing is not the simple transaction it once was with a handshake and a title exchange. Closing takes typically 45 – 70 days after accepted offer (this can vary greatly, as needed). Starting August, 2015 the CFPB, Consumer Financial Protection Board, will implement a new closing process. Two new forms will be used: the Closing Disclosure and the Loan Estimate.

Closing:

The day has finally come and it’s time to close on the purchase of your property!

The days of filling out the HUD-1 settlement form and getting a Good Faith Estimate (GFE) from the lender are winding down. August 1, 2015 those two forms are going away. The Truth in Lending Act (TILA) disclosure form is going away, too. Replacing them are two new forms: the Closing Disclosure and the Loan Estimate. You can familiarize yourself with these new forms on the website of the Consumer Financial Protection Bureau (CFPB), which has taken over administration of the Real Estate Settlement Procedures Act (RESPA) from HUD. Just go to CFPB.gov and type in the name of the forms in the search box.

All the documents are signed, the sale has been recorded with the county government, and the seller has access to the money from the sale. You’ll also need to deposit your down payment and any closing costs, usually by a wire transfer or a cashier’s check. To be safe, you should have all of your down payment and closing cost funds ready to deposit at least one day before your closing date.


Buyer’s Closing Checklist

The detailed steps that make up closing are:

  1. As mentioned prior, a title search is run just prior to closing to determine if there are any liens or assessments on the title. Provided the title is deemed ‘clear,’ the closing proceeds as planned. Note: buyers can ask for this title search in advance of closing (sometimes for an additional fee), and it may reveal material information regarding the property that may be good to know well before closing.
  2. A buyer’s attorney begins preparing the paperwork for changing the title / deed and will prepare title insurance, and a final closing date is scheduled on or around the date indicated in the contract.
  3. A final cash figure for what a buyer needs to bring to the closing in the form of a cashier’s check is calculated. This is based not only on a mortgage’s closing costs but factors like property taxes and utilities paid in to date by the seller.
  4. A final walkthrough will often be performed the day of or before closing to verify the property is in the same condition it was when the process began.
  5. At the closing, or settlement, table, you, the buyer, (and seller) sign all closing documents, including the HUD-1 (see a sample HUD-1 here), and the final loan documents.
  6. You, the buyer, pays the remaining funds in your downpayment to your attorney or a representative of the title company (who is present at closing) via cashier’s check.
  7. The representative from the title company or your attorney will then record the transaction and deed with the appropriate municipality.
  8. You, the buyer, receive the keys and, unless indicated differently in the contract, officially takes possession of the property!

Congratulations! You closed the deal! You’ll get the keys from the seller on your closing date, and the home will be officially yours!

– Josh Stiles