Wednesday, September 7, 2022

My thoughts on Bank of America First Time Homebuyer 0% Down Program

Bank of America has launched a program geared to helping minorities get into Homeownership. The Community Affordable Loan Solution will be introduced in Black and Hispanic neighborhoods such as Miami, Los Angeles, Dallas, and Charlotte. Bank of America does plan to extend this program across the nation. However, I'm sure this depends on the selected cities not performing in a disastrous way. 
This program will allow First-time homebuyers to enter Homeownership with 0% downno closing cost, and no mortgage insurance. Buyers can own their home and still enjoy no mortgage (the same benefits that folks who put 20% down on a home enjoy) makes this an intriguing program. Mortgage insurance comes out to about (1.25-1.75%) of the loan's balance and is commonly paid as part of the homeowner's monthly mortgage.

An innovative way this program works for lower-income communities is that it will be determined by the following: timely rentutility billsphone, and auto insurance to qualify, instead of the traditional way, which allows high credit holders to receive the best rates. Bank of America and HUD require occupants to go through a Homebuyer Certification course before the applicant submits their loan.
Is Bank of America 0% down a good deal for future Homeowners?
This is a great question; like all great questions, there are many ways to look at it. Here's what we know, the cheapest way to get into a home requires 3% down (not accounting for CalHFA loans which give borrowers loans and grants for their down payments/closing cost). So on the average home in California, a modest home can be sold for around $450,000, equating to $13,500. The great news about putting money down as a down payment is that this immediately allows the buyer to have equity in the home, making it an asset. Once the buyer has the down payment, they also should account for a closing cost of around 2.5% of the total home price. In the example of a home for sale at $450,000, the closing cost would be $11,250. In the example above, the first-time homeowner would have to pay $24,750 plus other fees to acquire their first home. 

I believe if a buyer has a stable job and wants to own instead of renting, this can be a solid option. Rent increases at the end of most leases. At least the new homeowner will have autonomy and the opportunity to gain EQUITYPlease let me know your thoughts about Bank of America's new program. Thank you for stopping by.