Smart About Money: “Don’t let clickbait rob you of your dreams …”

Clickbait is one of the biggest nuisances on the internet but the concept existed long before computers.

People have been using words to affect other people’s behavior since Day 1. It’s always been up to the individual to be skeptical and doubting, especially when “controversial” ideas are being presented as established truth.

A story in The Boston Globe recently had a headline which made a colleague of mine so angry that she called it to my attention, hoping I would debunk it in this column.

The headline read: “If you don’t already own a home in Massachusetts, it may be too late.”

Canton Co-operative VP & Senior Loan Officer Anabela Vargas recognized it immediately as clickbait.

And bad clickbait at that. After all, Massachusetts is not a large state. But it has 351 cities and towns with huge differences in properties and property prices. The Globe seems to be implying that anyone who doesn’t already own a home in the whole state of Massachusetts may never be able to own one here.

“This headline is irresponsible,” Anabela Vargas said to me. “It’s not accurate. It gives the wrong impression and might keep someone from pursuing their dream of owning a home. It’s just about clicks for the Globe. But people are buying first homes in Massachusetts all the time, often for just a few hundred dollars more monthly than they were paying for rent. The dream is absolutely achievable and it’s wrong for the Globe to make it seem otherwise.”

Exactly! Massachusetts is an attractive state and many people want to live here. Especially in Metro Boston. And yes, that means housing generally costs more in Massachusetts than in some other states. But salaries in Massachusetts also tend to be higher. And properties here tend to hold their value longer and increase in value more quickly, which consistently makes owning a growing asset like well-located property in Massachusetts a reasonable investment.

The Globe article quoted some numbers to make their case but, as Homer Simpson once said, “People can come up with statistics to prove anything. Forfty percent of all people know that.” (“Forfty” being a number Homer apparently made up.)

Here are some actual numbers: A downpayment on a home can be 5% and sometimes less. On a $400,000 property, 5% would be $20,000 – which is an amount people can and do accumulate by saving. Rates are historically low right now and a mortgage lets you lock in that low rate for 30 years, which is a huge advantage.

A borrower putting 5% down on a $400,000 home might be looking at a mortgage payment of about $1800 (principal plus interest) a month. Factoring in real estate taxes and insurance, that’s still comparable to what many people are paying for rent – or less – to actually own a home.

And yes, a young person might have to wait to buy with a partner/spouse, or plan to take a roommate. First-time homebuyers have always done that. That first home might be a real fixer-upper. But that’s not unheard of either, by any means.

Houses get bought and sold in Massachusetts all the time. Prices will most likely continue to track up but for people who refuse to be discouraged or limited by obvious sensationalism, there will always be opportunities.

Do your research. Do your analysis. Sit with a lender who will help you come up with a plan. Refuse to let “economic indicators” that have nothing to do with you personally keep you from going after what you want.

Nick Maffeo is the President & CEO of Canton Co-operative Bank in Canton. “Smart About Money” is a regular column he writes for the Canton Citizen. Have a financial question you’d like to ask? Email to info@cantoncoopbank.com.

~ ~ ~ ~

As an example:
Presuming a Rate of 3.88% and an Annual Percentage Rate (APR) of 3.92% as of 10/16/19 on a 1-4 family owner-occupied home with 20% down. A 30-Year loan would be repaid in 360 equal monthly payments of $4.70 per $1000 borrowed, which do not include taxes or insurance premiums. So your actual monthly payment will be greater. Rate/APR shown assumes various factors including an excellent credit history. Your Rate/APR may be different than displayed here. Canton Co-operative Bank – NMLS #721437 Anabela Vargas – NMLS #582849 – Falo Português.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s