Recently the news headlines have been buzzing about the new down payment assistance program that Bank of America is offering in selective states. The announcement came just weeks before the housing market started to shift and interest rates started to rise.
Bank of America’s initiative to gear this program towards minorities was actually genius.
At a minimum, it shows that they are somewhat concerned about the housing disparities among people of color and desire to be an asset to the community.
While the program itself is a great one; it is not one size fits all. There are always other factors that come into play and while they are accepting non-traditional forms of credit such as timely rent payments, auto and phone payments, somewhere along the lines, credit will come into play. In my experience, if it’s not on the front end then it will most likely be on the back end. Maybe somewhere between the Annual Percentage Rate or in the form of some other fees it will appear.
The biggest misconception with the program is that no money down isn’t necessarily no money down. Although the program is being advertised as up to 10,000 in down payment assistance that does not take into account earnest monies, due diligence monies or a deposit for new construction homes. The buyer would need funds of their own to pay for those items and a home inspection in addition to other recurring closing costs. That’s right! Bank of America is paying non-recurring closing costs. What does that mean you may be wondering? That means the buyer would be responsible for the property taxes, homeowner’s insurance and HOA fees if applicable. Normally if there is a homeowners association, this means there is a capital contribution fee that would be required at closing and they may not pay that as well.
This particular program will not charge Private Mortgage Insurance. Commonly referred to as PMI, is normally required when a down payment of less than 20 percent of the purchase price is utilized. PMI does impact the homeowners monthly payment and not having it can definitely be a plus.
Another great benefit is that the homeowner doesn’t have a certain amount of time to remain in the home before selling it; whereas with other down payment assistance programs the homeowner could be penalized if the home is sold within the first 5 years.
Whatever path you decide to pursue, be sure to partner with a skilled and knowledgeable Realtor that is familiar with a variety of products and can be a resource.
Happy Home Buying!
