New York, NY (Vocus) September 11, 2010
Between low interest rates and lower housing costs, this may be a good time to be a first-time homebuyer. In fact, first-time homebuyers now account for 47 percent of all U.S. homes purchased, according to the National Association of Realtors, the highest rate since 1981.
The opportunity for first-time homebuyers, however, is tempered by another side of ownership: making sense of the mortgage paperwork required to buy a home. Just how well homebuyers navigate the paperwork goes a long way to help them understand the financial ramifications before getting the key to the front door.
Bank of America says successful homebuyers are those who know exactly what they’re getting into, especially when it comes to their responsibilities in the transaction.
To help homebuyers understand key loan terms, the bank now provides a single-page loan summary in addition to standard mortgage paperwork. The Clarity Commitment ® loan summary shows homebuyers in simple language what they will pay each month, tells them their interest rate and explains closing costs. If it is an adjustable rate mortgage (ARM), they will see when the rate will change, the percent the rate could go up and how that could affect the monthly payment. Such transparency seems to strike a chord with would-be homeowners: More than four in five homebuyers surveyed said they want a plain summary of mortgage terms.
Understanding mortgage options and loan choices is a continuous process for homebuyers. The paperwork is just one link in the decision-making chain. Here are suggestions for first-time homebuyers:
- Educate yourself. Free homebuyer education classes may be available. Visit http://www.bankofamerica.com/neighborhoodlending to find classes convenient for you.
- Review your credit. Lenders want solid credit scores. Review your credit score prior to moving forward with a home purchase.
- Don’t buy more home than you can afford. Do the math: Subtract the projected monthly payment, property taxes, and insurance and estimated upkeep costs from your monthly income. A good target: Spend about one-third of your income on housing.
- Look into down payment assistance. Many housing authorities may contribute toward your home purchase.
For more information on homeownership and the mortgage process, visit http://myhome.bankofamerica.com or call 1.800.344.9403 to find a Bank of America mortgage expert near you.
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