The Scarcity of Low-Income and Multicultural Homebuyers
According to the National Mortgage News, the median income of the average US family is $60,700. Yet the median income of a family purchasing a home for the first time is $72,500.
The Pew Research Center reports that on average, African Americans earn just over half of what white Americans earn. Similarly, the net worth of the average white household is about 13 times that of the average black one.
Similarly, the Wall Street Journal reports that the median income of a Latino household is $50,486, also lagging behind the national average.
From all this information, you might infer that low- and even moderate-income households and multicultural households are underrepresented among homebuyers, and you’d be correct. The perception, right or wrong, that they don’t earn enough to commit to a home purchase and, in some cases, cultural barriers hold them back. Thus, not only may they miss out on the pride and satisfaction of homeownership, they can miss out on the opportunity to build equity and wealth that it represents.
Fortunately, though, the Bank of America has committed to providing home loans to low- or moderate-income homebuyers and multicultural homebuyers with fully half of such loans going to these borrowers. And now the bank is furthering its commitment to promoting sustainable homeownership with new programs to help low- and moderate-income families and multicultural families buy homes.
Low- and Moderate-Income Homebuyers, Multicultural Homebuyers, and the Bank of America
The Bank of America recently announced it’s committing $5 billion to facilitate low- and moderate-income homeownership and multicultural home ownership over the next five years. During the same period, it will put another $5 billion specifically into the Bank of America Neighborhood Solutions program, which is projected to help more than 20,000 people with homeownership.
The money comes with the creation of a number of new loan programs and options including grants.
Grants for Homebuyers
The Neighborhood Solutions program will now offer grants of as much as $10,000 to eligible homebuyers who obtain a Freddie Mac Home Possible mortgage. These grants will become available starting in the 2nd Quarter of 2019.
Through its America’s Home Grant program, Bank of America will also offer lender credit of up to $7,500 through its America’s Home Grant program. This is money homebuyers can put toward closing costs like recording fees and title insurance or to buy down the borrower’s interest rate.
The grants are already available in 39 markets, will become available nationwide soon, and one of the many attractive things about them is that they never have to be repaid.
Fixed-Rate Loans for Homebuyers
Bank of America can also provide the Affordable-Loan Solution Mortgage to eligible low- and moderate-income homebuyers. The loan doesn’t require mortgage insurance, has a down payment was low as 3%, and has a competitive rate. A full 90% of these loans go to benefit first-time homebuyers.
Additional Benefits for Homebuyers
Bank of America’s Neighborhood Solutions program also helps connect homebuyers with cost savings and down payment programs provided by employers, nonprofits, and local and state agencies.
In summary, low- and moderate-income families and multicultural families who aspire to be homeowners owe it to themselves to investigate all the options available. Programs like those offered by Bank of American may well place sustainable homeownership within their reach.