Boston real estate: Soft Second loan program offers lower costs to borrowers

Posted by Michael DiMella on Tue, Jul 28, 2009

[Here is a guest post from Jessica Later, one of the skilled buyer agents on my team here at Charlesgate Realty Group.  Please enjoy her post, and if you have any questions, please comment below or contact Jessica].


saving money

We all know Boston real estate prices are among the highest in the country, which makes it difficult for for many people to buy a home or condo in the Boston area.  But many people are unaware of some of the financing options (often backed by the government) that make it a bit easier to own your own piece of the Boston real estate market.  The government (and private sector for that matter) has a vested interest in keeping people of all economic backgrounds in the state, and some of the loan programs available help do just that by making it a little bit easier to buy a home and set down roots in Massachusetts communities.

I would like to share with moderate-income home buyers some information on one of those programs that can potentially save thousands in financing costs and use less cash for a down payment.  It is called the Soft Second Loan Program.  Recently, a buyer client of mine took advantage of this program and it will saving her almost $300/month!  This loan program has actually been around since 1991 has helped close to 13,000 families buy their first home.  This program is now available in every community in Massachusetts.

Highlights of the Soft Second Loan Program:

Homebuyer Support: The are pre and post-purchase educational courses that are in place to help guide first time home buyers in the right direction.  You more or less have your own support team throughout the entire process.  These classes will educate you on the process of buying a home, introduce you to home inspectors and real estate attorneys, and help you keep up on your payments.

Low Fixed Interest Rates:
The participating lenders that offer this program offer rates that are as low as one percent below market rate on a 30 year fixed rate.  My buyer locked in at 4.25% when the going rate is currently 5.5%!!

No Points: This program will not ask you to pay any "points" which are fees banks sometimes ask buyers to pay to keep their rates low.

No PMI: Usually, if you are putting less than 20% down you are required to get Private Mortgage Insurance which can cost roughly $125-250/month.  In this loan you only have to put 3% down and you still do not have to PMI.

Low Down Payment: Although most programs require minimum 10% down in this market, the Soft Second only asks 3% down from you...some of which can even be a gift or grant!

Great History: In all the years this program has been in effect, there has only been a .35% foreclosure rate.  This is actually less than the prime mortgage default rate!

What's the catch?  There are income requirements (you can't make more than the area median income for your community) and not all buyers will qualify, but the Soft Second loan program is definitely worth a look if you are looking into buying Boston real estate in the near future. 


Please contact me if you have any questions!

You can also find out more here.


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Tags: mortgage, buyers, financing