(BPT) - For many people, a monthly mortgage payment may be manageable, but their biggest obstacle is the upfront expense — namely down payment and closing costs — of buying a home. In fact, according to the Bank of America Spring 2019 Homebuyer Insights Report, 69% of prospective homeowners say saving enough money for a down payment and closing costs is the biggest challenge they face.
Unfortunately, many assume the hurdle of upfront costs can’t be overcome, and they self-select themselves out of taking the next steps towards owning a home. However, there is good news: through smart planning and research, you may uncover new ways to turn your dream into a reality.
While everyone’s situation is unique, here are four helpful tips to get you ready to buy a home of your own.
It’s never too late to start saving: Take control of your finances by creating a budget to track your spending and discover areas where you can cut back and boost your savings. Even if it’s only $50 every month, every little bit gets you one step closer to your dream.
Understand what you can afford: It’s always important to get a sense of what your budget can handle — comfortably — every month, before you start looking. Put together a detailed budget so you can get a full picture of your finances and understand how much you can afford each month for a mortgage. A mortgage calculator lets you estimate housing costs given your income, debt, savings and other financial obligations. Don’t forget taxes and insurance.
Talk to an expert and get prequalified: Understanding your budget is just one piece of the financial puzzle when it comes to homebuying. To learn about the loan options that make sense for you, meet with a lending expert who can provide more information on current interest rates and how much you can borrow. Once you find a loan that fits your needs, get a prequalification letter, which estimates your borrowing power based on your financial information and shows sellers you are serious and gives you some negotiating leverage.
Take advantage of available help: To help afford your dream home (and all the associated costs), keep your eyes open for available grants and programs designed to help prospective homeowners like you. Through its Community Homeownership Commitment, Bank of America is providing up to $17,500 to eligible buyers in select markets to help with upfront costs. Specifically, to assist with down payments, Bank of America will give eligible homebuyers 3% of the home purchase price (up to $10,000) when they use a specific low down payment loan product. Homebuyers may also qualify to receive up to $7,500 for non-recurring closing costs or to buy down their interest rate.
To get on the right track to affordable and sustainable homeownership, keep these tips and programs in mind and talk to a Bank of America lending specialist to learn what programs and offerings you may qualify for. Visit bankofamerica.com/firsthome or text “mortgage” to 226526 to learn more.