If you find yourself daydreaming about your ideal space or shopping online for a home, you're not alone.
Homebuyer Insights from Bank of America found that 89% of buyers are motivated to buy a home — 49% are looking at real estate listings and 29% touring homes virtually. Despite a challenging few months, the dream of homeownership persists for many across the country, especially in Denver. In fact, Homebuyer Insights found that Denverites are more likely than the average American to have looked at real estate listings recently.
While a lot has changed over the last few months, 85% of prospective homebuyers said saving for a home remains a priority. Although everyone has their own homeownership timeline, it's always a good time to take the first steps toward preparing to be a homeowner.
Some would-be buyers self-select out of homeownership, assuming they can't afford a monthly mortgage payment or the upfront costs. Others simply don't know where to start. To help future buyers better understand what's possible, I'm debunking some of the most common misconceptions:
Myth: There is a right time to buy
First-time home-buyers may be holding off for the “right time,” but there is no such thing because home-buying is such a personal decision. While there is no secret formula to assessing emotional and financial readiness, answering a few questions can help you determine how close you are to becoming a homeowner and equip you with the resources you need to move forward with your home-buying goals. After all, the more informed you are about the home-buying process, the better prepared you are to find the best options.
Additionally, as you're likely binge-watching more TV right now, switch your lineup and include some productive programming about home-buying. Bank of America's First-Time Homebuyer Online Edu-Series provides an easy-to-understand roadmap to buying a home and allows you to go at your own pace as experts provide guidance and tips to prepare your finances, make an offer, apply for a mortgage and more.
Myth: I need to have a 20% down payment
Many mistakenly believe you need a 20% down payment when, in reality, the median amount was 6% for first-time buyers in 2019. Still, 71% of prospective home-buyers believe they will need assistance to save for a down payment. Luckily, there are lots of solutions to help prospective buyers overcome this hurdle. Bank of America offers innovative low-down-payment mortgages, as well as down-payment and closing-cost grants, to help creditworthy borrowers in Denver struggling to save for a home.
Myth: Find a place you want before applying for a loan
A common misstep is window-shopping for houses before understanding how much you can afford. While 44% of prospective home-buyers will apply for mortgage pre-approval, more than half don't think it's necessary or don't know what loan pre-approval is. Prequalification can help you set realistic expectations when it comes to buying a house by providing an estimate of how much you could afford. Taking it a step further, you can request pre-approval by providing more extensive information, which your lender will confirm. You'll then receive conditional approval for the loan type and amount you qualify for and can begin your house hunt with confidence.
Some people avoid prequalification and pre-approval out of fear they won't measure up, but it's important to know where you stand — and easier than ever to find out. Interactive digital tools allow prospective home-buyers to answer questions online or via their mobile banking app and get their prequalification or pre-approval quickly.
While purchasing a home is a major decision, it's never too early to start building wealth while you enjoy the benefits of a home of your own. As a homeowner, you learn savings discipline, enjoy tax benefits and are protected from rising rental rates. This, combined with home values that historically appreciate over time, often leads to increased wealth for homeowners. That can mean building equity for future uses like college tuition or even retirement.
While home-buying may feel overwhelming, taking the first steps can help you understand your readiness for home-ownership and ensure that your planning is on track. If you're close to buying, a specialist can also review assistance programs you may be eligible for. With a little bit of guidance, the house of your dreams is within your reach.
— Allen Seelenbinder is the consumer and small business lending division executive for Colorado with Bank of America
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