Are you dreaming about owning your own home? If so, you’re not alone. And, whatever your timeline, it’s never too early to start planning. Bank of America’s 2020 Homebuyer Insights found that 89 percent of prospective buyers remain motivated to buy their first homes, and four in five consider saving for it a priority. More than half are either on pace or actively accelerating their home purchase plans. That’s not surprising, given today’s favorable interest rates.
Despite this optimism, some challenges remain. “Some would-be buyers self-select out of homeownership, assuming they can’t afford a monthly mortgage payment or the upfront costs,” said AJ Barkley, Neighborhood Lending Executive at Bank of America. She added, “Other potential buyers simply don’t know where to start. No matter what stage of home buying process you are in, there are various solutions to make homeownership affordable and sustainable, such as innovative low down payment mortgages, significant down payment and closing cost grants and thought-provoking financial education tools.”
So what are the steps to take if you’re ready to start pursuing homeownership? Here are suggestions to get you started.
Learn How Home Financing Works
Bank of America’s First-Time Homebuyer Online Edu-Series can take away the mystery of the home buying journey and provide you with actionable guidance. The free series, available in English and Spanish, reviews topics from preparing your finances to making an offer on a home to applying for a mortgage. In the series, you’ll hear from a first-time homebuyer as he shares his experience with using down payment and closing costs programs to help him realize the dream of homeownership.
Answer the Question: Are You Ready To Buy?
First-time homebuyers may be holding off for the “right time,” but there is no such thing because home buying is such a personal decision. While there is no secret formula to assessing emotional and financial readiness, these resources can help you determine how close you are to becoming a homeowner and equip you to move forward. After all, the more informed you are about the home buying process, the better prepared you are to find the best options.
Assess Your Finances
Not sure where to start? The Homebuyer Insights found 80 percent of first-time homebuyers needed help understanding what they could afford. Begin by asking yourself, “How much should I borrow?” instead of, “How much could I borrow?” This helps you focus on the amount that comfortably fits your budget. Then, a general rule of thumb is to multiply your monthly income before taxes by 28 percent or use an online affordability calculator to do the math. The resulting dollar amount is typically how much a manageable monthly payment might be, including taxes, insurance, and private mortgage insurance.
Research Affordability Resources and Programs
If you’re concerned that you may struggle with the upfront costs, be sure to do your homework to find programs and resources which provide financial support and guidance for affordable and sustainable homeownership. For example, Bank of America’s Community Homeownership Commitment offers specific solutions for modest-income and first-time homebuyers, including affordable mortgages, grant programs, resources and expertise.
Thanks to low interest rates and lending programs tailor-made for low- and moderate-income and first-time buyers, homeownership may be well within your grasp. Take time now to check out your options and determine whether Bank of America’s mortgage programs could help you realize your dream of becoming a homeowner.
This post is sponsored by Bank of America.
* Qualified borrowers must meet eligibility requirements including, but not limited to, being owner-occupants, meeting certain qualifying income limitations and purchasing a home within a certain geographical area. Minimum combined loan-to-value must be greater than or equal to 80%. The America’s Home Grant Program is a lender credit. Program funds can only be used for nonrecurring closing costs including title insurance, recording fees, and in certain situations, discount points may be used to lower the interest rate. The grant cannot be applied toward down payment, prepaid items or recurring costs, such as property taxes and insurance. Borrowers cannot receive program funds as cashback. Maximum income and loan amount limits apply. The home loan must fund with Bank of America. Bank of America may change or discontinue the America’s Home Grant Program or any portion of it without notice. Not available with all loan products, please ask for details.
** Qualified borrowers must meet eligibility requirements such as being owner-occupants and purchasing a home within a certain geographical area. Maximum income and loan amount limits apply. Minimum combined loan-to-value must be greater than or equal to 80%. Program funds can be applied toward down payment only. Borrowers cannot receive program funds as cash back in excess of earnest money deposits. Down Payment Grant program may be considered taxable income, a 1099-MISC will be issued, consult with your tax advisor. May be combined with other offers. The home loan must fund with Bank of America. Down Payment Grant may only be applied once to an eligible mortgage/property, regardless of number of applicants. Bank of America may change or discontinue the Bank of America Down Payment Grant Program or any portion of it without notice. Not available with all loan products, please ask for details.