Tips for First-time Homebuyers Tips for First-time Homebuyers While buying your first home is a big decision, following these essential first-time homebuyer tips can make the process much easier. Explore these tips for first-time homebuyers Bank of America While buying your first home is a big decision, there are also lots of small decisions to make along the way to homeownership. To help you navigate the process, we've gathered suggestions for avoiding some of the most common mistakes. Know your budget Set a budget. Calculate a monthly home payment that takes into account how much home you can afford, then discuss this amount with your lender. Making sure you can meet your projected future home payment is probably the most important part of successful homeownership. Include PITI (principal, interest, taxes and insurance) in your budget. Mortgage calculators will show you how much you'll pay toward principal and interest every month. Remember that you'll also have to pay property taxes and homeowners insurance. Some financial institutions will require you to contribute these funds monthly along with your principal and interest payment. Be sure to talk to your lender to understand what will be included in your monthly payment. Know how much cash you'll need at closing. When you buy your home, you'll need cash for a down payment (see how much you should put down) and closing costs (estimate your closing costs). The down payment typically varies from 5% to 20% or more. Putting less than 20% down will typically require you to pay for private mortgage insurance (keep reading for more on that). Closing costs could be about 3-7% of the total loan amount and will include charges such as loan origination fees, title insurance and appraisal fees. Budget for private mortgage insurance. For conventional financing, PMI is typically necessary if you don't make at least a 20% down payment when you buy your home. Make sure you know how much this cost will be and factor it into your monthly home payment budget. Research your utilities. If you're moving into a larger home than you're used to, a home that is newer or older than you're used to or located in a climate that's hotter or colder than you're used to, ask your real estate professional to find out what the home's energy bills have typically been. This can help prevent being surprised by a higher utility bill than you're expecting. If you're moving into a new community, find out about water costs, too. Don't forget miscellaneous expenses. Be sure to budget for moving expenses and additional maintenance costs. Newer homes tend to need less maintenance than older ones, but all homes require upkeep. If you're considering a condo or a home with a homeowners association (HOA), remember to include HOA dues in your budget. Keep in mind that you should have an emergency fund on hand to prepare for any unexpected changes in your income (like reduction in your wages) or unexpected expenses (like medical bills). Manage your debt carefully after your home purchase. Sometimes your home will need new appliances, landscaping or maybe even a new roof. Planning for these expenses carefully can help you avoid one of the most common causes of missed mortgage payments: carrying too much debt. It's important not to overextend your credit card and other debts so you stay current on your payments. A smart start Research your mortgage options. As a first-time homebuyer, you're undoubtedly anxious and excited about moving into your new home, but take the time to step back, do the research and learn the differences between the various types of mortgages so you'll know which one is best for you. Know your credit score. As soon as you decide to start looking for a home, check your credit report and credit score with any of the 3 major credit reporting agencies: Experian, TransUnion and Equifax. If you find any mistakes that need to be corrected, addressing these issues early will put you in a better position when it's time to buy a house. (Bank of American credit card customers can get a free FICO® score in Online and Mobile Banking.) Find a responsible lender. When you choose a lender, pick someone you feel good about working with. They should listen to you and put your needs first, and they should be able to explain your home loan options in plain terms. It's a good idea to interview potential lenders to find the one that's best for you. Get prequalified for a mortgage before you start shopping. Knowing how much you can borrow will let you keep your search focused on the homes that are right for you. Getting prequalified (you can prequalify for a Bank of America mortgage online) will provide you with an estimate of how much you can borrow before you start looking at homes. You can also apply for a mortgage with Bank of America's Digital Mortgage Experience Calculate your monthly mortgage payment. You can use our Affordability Calculator to help calculate a monthly mortgage payment that fits into your budget. 2018-07-09 2018-07-09
*The funds available to the borrower may be restricted for the first 12 months after loan closing, due to HECM reverse mortgage requirements.  In addition, the borrower may need to set aside additional funds from the loan proceeds to pay for taxes and insurance. Information accurate as of 10/1/2017. Update underway to reflect latest changes to PLFs by HUD
A married couple may decide to get a reverse mortgage but leave one spouse off the HECM. If the borrowing spouse dies or moves out permanently, a non-borrowing spouse can continue to live in the home as long as he or she is listed in the HECM documents as such. The surviving spouse must maintain the home and pay taxes and insurance as long as he or she continues to live in the home, and will not receive any of the reverse mortgage proceeds.
This is the full price you will pay for the home. Some of that price will come from your down payment and the balance will come from the mortgage. To make sure you are paying the right price for the home you want, consult real estate websites and talk with your real estate agent to compare the price you are considering to similar properties in the neighborhood where it is located.
*Keep Your Home California works directly with California’s Employment Development Department to determine a homeowner’s employment status. If it is determined that a homeowner’s unemployment benefits were terminated because they became fully re-employed at any time during the eighteen (18) month Unemployment Mortgage Assistance benefit period, and the homeowner failed to notify Keep Your Home California as required, Unemployment Mortgage Assistance benefit payments will be terminated immediately.
Oftentimes, rates you see in advertisements online aren’t necessarily for the loans you qualify for. So you’ll need to investigate. Interest rates vary by location and can change daily. And they vary depending on your specific financial picture, such as income, credit score, and debts.  A good place to get an idea of what rates are available to you right now is to search for interest rates on Zillow. You can get free quotes anonymously, based on your specific financial picture, so you don’t have to worry about being hassled. You’ll also be able to see mortgage rates from multiple lenders so you can easily compare rates.
Down payment minimums vary and depend on various factors, such as the type of loan and the lender. Each lender establishes its own criteria for down payments, but on average, you’ll need at least a 3.5% down payment. Aim for a higher down payment if you have the means. A 20% down payment not only knocks down your mortgage balance, it also alleviates private mortgage insurance or PMI. Lenders attach this extra insurance to properties without 20% equity, and paying PMI increases the monthly mortgage payment. Get rid of PMI payments and you can enjoy lower, more affordable mortgage payments.
Typically, you'll need a minimum of a 620 FICO score to qualify for a conventional mortgage, and it can be difficult to qualify with a score that's near the minimum if your other qualifications aren't stellar. Another option is the FHA mortgage, which is designed for borrowers with qualifications that don't meet the standards of conventional lenders. The downside is that FHA loans can be significantly more expensive, but they can be great resources for people who otherwise wouldn't be able to qualify for a mortgage.

If there’s going to be a gap between the sale of your home and the purchase of your new property, some people apply for what’s known as a ‘bridging loan’ to bridge this gap. This type of loan means you can move into your new property before you’ve sold your home. However, these should only be considered a last resort as they usually very high interest rates and fees. Seek professional advice if you’re unsure, and if you’re considering this type of loan you must be comfortable with the risks involved as you’ll essentially own two properties for a period of time.
Hybrid Adjustable Rate Mortgages (ARMs): Mortgages that have fixed payments for a few years, and then turn into adjustable loans. Some are called 2/28 or 3/27 hybrid ARMs: the first number refers to the years the loan has a fixed rate and the second number refers to the years the loan has an adjustable rate. Others are 5/1 or 3/1 hybrid ARMs: the first number refers to the years the loan has a fixed rate, and the second number refers to how often the rate changes. In a 3/1 hybrid ARM, for example, the interest rate is fixed for three years, then adjusts every year thereafter.

Countrywide / Bank of America has announced a program to help 400,000 homeowners pay their mortgage and keep them in their homes. It will offer modifications, principal reductions, free counseling, and other aid. Some borrowers may receive financial assistance in relocating to a new more affordable home. Many beneficiaries of assistance from this program received questionable or sub-prime loans from Countrywide. Find how to get help from Countrywide with housing issues, and learn how BOA took over the lender.
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