An Expert Weighs In: What Does Home Buying Look Like Today?

This article is sponsored byBank of America as part of our series Property and Power: The Millennial Woman’s Guide To Homeownership — What Every Woman Needs On Her Agenda To Make Smart Decisions.Catch up on the full series herhttps://heragenda.com/property-and-power/e.

Have you noticed the low-interest rates and high demand in the real estate market these days? If not, you’ll want to pay attention as you dream of owning your own home. Although everyone has their own homeownership timeline, it’s always a good time to take steps towards your dream.

While a lot has changed over the last year, many people are still motivated to buy a home. As you think about homeownership, Kathy Cummings, Senior Vice President of Homeownership Solutions at Bank of America, shares some insights on what to expect, the home loan process, and how to shop for a home in today’s market:

If you’re considering purchasing your own home instead of continuing to rent, questions of readiness naturally arise. An effective way to start building out your personal timeline is to begin exploring user-friendly tools. Bank of America offers a First-Time Homebuyer Online Edu-Series, that breaks down the home buying process and shares first-hand stories of those who’ve done it.

Bank of America also offers some tips to get ready for homeownership. Kathy Cummings says, “To assess your readiness, the best thing to do is figure out what your financial priorities are. I always ask people to start there. For instance, the amount that you would want to spend on the home may depend on whether you want to start a family or are paying for college. Map out your financial plan, including your high-level goals, and then think through your plan to achieve those priorities.”

To reduce stress and understand your financial readiness, the next thing you’ll want to focus on is getting a mortgage prequalification or preapproval. Prequalification* can help you set realistic expectations when it comes to buying a house by providing an estimate of how much you could borrow. 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. 

Additionally, buyers are benefiting from digital innovations that can make saving for, searching and financing a home faster and more affordable. Innovations like Bank of America’s Digital Mortgage Experience puts applicants in the driver’s seat, allowing them to control and choose which combination of monthly payment, closing costs and loan terms work best. You can apply for prequalification, preapproval and complete a mortgage application anywhere and on your own time. Then, when you have questions that you want to speak to an expert about – either in person or by telephone – you have the option.

This can be one of the most intimidating parts of the process for new buyers, but the right lender and other professional advisors will help you navigate as pain-free as possible.

Cummings adds, “Another important piece is getting your credit in shape and making sure that as you take on the responsibility of homeownership, you’ve worked on making sure that you’re paying your bills on time and that you’ve got a credit score that is going to help you in the credit approval process. It’s usually the best first step to meet with a lending officer and have them look at your finances and figure out what you would need to do to become a homeowner.”

If you need to do more to prepare, your lending officer can introduce you to a local counseling agency that will help you get your credit in order, create a savings plan, or deal with other personal financial issues before proceeding.

Before you look for a realtor, identify what you’re looking for in a home, but also know you’ll need to be flexible. Along with knowing how much house you can afford, having a wish list you can share with your real estate agent will help ensure you’re looking at homes in your price range and that fit your criteria. If you know ahead of time what you need, you’ll save energy, time, and potential frustration.

Key points to keep in mind:

• What style home you want
• What area you want to live in
• Number of bedrooms, bathrooms
• Spaces like basement, office or pantry
• Accessibility needs
• Parking needs
• Proximity to schools, shopping, entertainment, etc.
• Square footage

Your list of priorities will likely change as you look at houses, and this is where your real estate agent can help. Your agent should ask questions that help you decide what’s really important to you versus what’s a “would be nice to have.”

Working with mortgage professionals you trust is one key to getting on the right path to affordable and sustainable homeownership.  It’s easy to locate a lending specialist from Bank of America. The right lender will look at your overall financial picture, guide you through the home financing process, review assistance programs you may be eligible for and help you get ready to become a homeowner. 

An experienced real estate agent is also critical to have on your team. Before agreeing to work with an agent, do some research. Look for positive references, or, better yet, ask your friends and family for referrals to great agents they’ve worked with. The right professional will ask questions, should understand what your budget is and take the time you need to help you find your dream home. You need to trust your agent and know that they have your best interest at heart.

As you work with your real estate agent and lender, you’ll want to take your time finding the right home. Rushing won’t produce the results you’re looking for, so breathe, explore, and take your time.

In most cases, it takes anywhere from four weeks to six months to find the right home. Finding the right details – a fireplace, the right accessibility for family members with mobility issues, that perfect walk-in closet – is important. You’re not necessarily looking for the last home you’ll ever own, but you do need it to work for your family’s needs and be a house that you love right now.

Making an offer on the home you love is the next step. This will be navigated with your real estate agent, who will help lay out all the details for you.

Keep in mind, getting prequalified or preapproved for a mortgage will put you a step ahead, as many sellers won’t consider your offer without it. 

Once your offer has been accepted by the seller, the escrow process begins. An escrow is the financial agreement through which a third party holds and regulates the payment of funds between two parties. In the case of buying a house, the three parties are the buyer, the seller, and the escrow holder, which may be a bank, title company, or private individual agreed upon by both seller and buyer. 

During “escrow,” you’ll do a variety of things:

• Make a deposit to purchase the home
• Have a home inspection completed
• Provide lenders with financial documents
• The lender will have an appraisal made to determine the value of the property
• Take a final walkthrough
• Make a down payment and pay fees (closing costs) associated with closing your home loan

With interest rates hovering near record lows, Cummings notes that “every market is different. There are certain places where it may make more sense to rent rather than to purchase right now. It’s always worth doing that rent versus buy analysis. And keep in mind the [financial] depression right now. Some markets are declining, and some are actually increasing. So it’s very specialized, based upon where you live.”

As you’re conducting your research, check out programs in your area and tools like Bank of America’s Down Payment Center that enables customers to find down payment and closing cost assistance programs offered by the bank, as well as programs from non-profits and housing agencies. You can also head to Bank of America’s Real Estate Center, which now identifies properties that may be eligible for the bank’s own down payment and closing cost grants. 

Cummings offers the advice she gave her daughter when she was purchasing a home in New York City, “[The fear in home buying is] a healthy fear. Just make sure you study and learn. There are several things that you need to understand; not only about the mortgage process and how that works, but also about how to shop for a home, and what to look out for. Make sure if you are moving into a pre-existing home that you get that housing inspection, so you don’t end up with a big price tag after you move in. [You also need to] understand your local market, what the real estate market looks like, and what to expect. Get a good, trusted real estate agent who will be able to help you with that.”

Most importantly, the decision to pursue homeownership is a personal one, so make sure to develop your own timeline as you make one of the most significant and exciting decisions of your life. 

Wherever you are in the process, now is a great time to look through the wonderful resources that Bank of America offers prospective home buyers. You’ll find practically anything you could need to know right here.

• Community Homeownership Commitment, innovative low down payment mortgages, significant down payment and closing cost grants and wide-ranging financial education tools to make homeownership affordable and sustainable.
• Better Money Habits, a financial education platform that empowers people to take control of their finances with advice, tools and guidance on budgeting, saving, managing debt and more.

[Editor’s note: This article is sponsored by Bank of America.]

1. *Pre-qualification is neither pre-approval nor a commitment to lend; you must submit additional information for review and approval.

2. **Final loan approval is subject to satisfactory appraisal and title review and no change in borrower credit and financial condition. Preapproval is subject to terms and conditions and timely submission of required documentation; ask your Lending Specialist for details. Preapproval does not commit to the continued availability of the loan program. The interest rate shown in a preapproval is based on current market rates and is not locked. You may choose to lock an interest rate after we receive the complete and executed purchase contract. Borrower must submit purchase contract within 90 days of preapproval. If the rate at time of lock is higher, or a rate lock expires prior to funding, or for adjustable-rate loan programs when the index value rises, we must determine your ability to repay the loan at the higher rate, which may lower the loan amount or invalidate the pre-approval. Not available on all loan products. Not available on refinance loans.

*Pre-qualification is neither pre-approval nor a commitment to lend; you must submit additional information for review and approval.

**Final loan approval is subject to satisfactory appraisal and title review and no change in borrower credit and financial condition. Preapproval is subject to terms and conditions and timely submission of required documentation; ask your Lending Specialist for details. Preapproval does not commit to the continued availability of the loan program. The interest rate shown in a preapproval is based on current market rates and is not locked. You may choose to lock an interest rate after we receive the complete and executed purchase contract. Borrower must submit purchase contract within 90 days of preapproval. If the rate at time of lock is higher, or a rate lock expires prior to funding, or for adjustable-rate loan programs when the index value rises, we must determine your ability to repay the loan at the higher rate, which may lower the loan amount or invalidate the pre-approval. Not available on all loan products. Not available on refinance loans.

Bank of America, N.A., Member FDIC Equal Housing Lender ©2021 Bank of America Corporation. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.