If you find yourself daydreaming about your ideal space or shopping online for a home, you’re not alone. Bank of America’s Homebuyer Insights found that nine-in-ten buyers (89%) are motivated to buy a home and are looking at real estate listings (49%) and touring homes virtually (29%).
While a lot has changed over the last few months, 85% of prospective homebuyers said saving for a home remains a priority. Although everyone has their own homeownership timeline, it’s always a good time to take the first steps toward preparing to be a homeowner.
Some qualified buyers unknowingly self-select out of homeownership, assuming they can’t afford a monthly mortgage payment or the upfront costs. While becoming a homeowner can be as challenging as it is exciting, Bank of America’s Community Homeownership Commitment provides a variety of solutions to make homeownership affordable and sustainable, including innovative low down payment mortgages, significant down payment and closing cost grants and wide-ranging financial education tools.
Other potential buyers simply don’t know where to start. Along with providing solutions, we’re debunking some of the most common misconceptions to help future buyers better understand what’s possible:
Myth: There is a right time to buy
First-time homebuyers may be holding off for the “right time,” but there is no such thing because homebuying is such a personal decision. While there is no secret formula for assessing emotional and financial readiness, you can help determine how close you are to becoming a homeowner by answering a few questions to equip you with the resources you need to move forward with your homebuying goals. After all, when you’re informed about the homebuying process, you’re better prepared to find the best options.
Additionally, as you’re likely binge-watching more TV right now, switch your lineup and include some productive programming about homebuying. Bank of America’s First-Time Homebuyer Online Edu-Series provides an easy-to-understand roadmap to buying a home and allows you to go at your own pace as experts provide guidance and tips to prepare your finances, make an offer, apply for a mortgage and more.
Myth: I need to have a 20 percent down payment
You may have heard this one before but, still, many mistakenly believe you need a 20 percent down payment when, in reality, the median amount was 6 percent for first-time buyers in 2019. Still, 71% of prospective homebuyers believe they will need assistance to save for a down payment. Luckily, there are lots of innovative solutions to help prospective buyers overcome this hurdle, like Bank of America’s Community Homeownership Commitment, which can help people who are struggling to save for a home.
Myth: Find a place you want before applying for a loan
Another common misstep is window shopping for houses before understanding how much you can afford. While 44% of prospective homebuyers will apply for mortgage preapproval, more than half don’t think it’s necessary or don’t know what loan preapproval is. Prequalification can help you set realistic expectations when it comes to buying a house by providing an estimate of how much you could afford. Taking it a step further, you can request preapproval by providing more extensive information, which your lender will confirm. You’ll then receive conditional approval for the loan type and amount you qualify for and can begin your house hunt with confidence.
Some people avoid prequalification and preapproval out of fear they won’t measure up, but it’s important to know where you stand – and easier than ever to find out. Interactive digital tools allow prospective homebuyers to answer questions online or via their mobile banking app and get their prequalification or preapproval quickly.
While purchasing a home is a major decision, it’s never too early to start building wealth while you enjoy the benefits of a home of your own. As a homeowner, you learn savings discipline, enjoy tax benefits and are protected from rising rental rates. This, combined with home values that historically have appreciated over time, often leads to building long-term wealth. That can mean building equity for future uses, like college tuition or even retirement.
While homebuying may feel overwhelming, taking the first steps can help you understand your readiness and ensure that your planning is on track. If you’re close to buying, connect with a specialist who can also review assistance programs you may be eligible for. With a little bit of guidance, the house of your dreams is within your reach.
[Editor’s note: This article is sponsored by Bank of America.]
1 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 cash back. 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.
2 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.