Full Details of New Bank of America Assistance Program

What does Bank of America’s new zero down payment zero closing cost mean?

If you’re in Charlotte, Dallas, Detroit, Los Angeles, or Miami it could be thousands of dollars!

The Bank of America (BofA) pilot program to boost minority home ownership is spreading through social media waves as many aspiring wealth builders see an opportunity to finally purchase a home to call their own, yet many are unclear as to how the program works and what is needed to qualify.

The name of the program is Community Affordable Loan Solution.

Here’s the breakdown:

1. Mortgage insurance is required yet will be at a reduced cost compared to most loans. Generally, for buyers putting down less than 20%, this is an additional fee added to their monthly mortgage payment.

2. Eligibility will be based on factors such as timely rent payments and utility bills. A credit score will not determine eligibility.

3. Buyers must complete the homebuyer certification course provided by BofA before they apply and qualify. Income and loan amount limits apply and vary by location.

4. Single Family Units require a 3% down payment, and Duplexes require a 5% down payment.

5. Loan amounts up to $647,200 with 3% down or $970,800 with 5% down in high cost areas*

* In my experience, programs of this nature generally come with higher interest rates to fund the assistance. It’s neither good nor bad just something you should know. The only way to know if your rate is competitive is to speak with more than one lender.

Bank of America joins many corporate lending institutions in an effort to bridge the wealth gap and racial inequities driven by homeownership, or the lack thereof.

This loan program does not come without caution as Bank of America and other institutions such as Wells Fargo and Chase Bank have a sketchy history with people of color, minority buyers, and those with disabilities, so pay attention! Be sure to understand the parameters of your loan and partner with someone you trust to ensure that there are no surprises on the back end.

While programs like this are starting to show up more frequently to encourage home ownership, local lenders are available to provide a proactive approach to understanding your financial needs with rooted care and understanding of protecting your bottom line and the community, many times they’re just as competitive if not more.

Full Details of New Bank of America Assistance Program

1. Bank of America never introduced it as a loan FOR minorities. It’s assistance to increase homeownership in areas that are predominantly Black/AA/Hispanic/Latino. That doesn’t mean you have to be a minority to apply.

2. Currently, they’re testing it out in Charlotte, Dallas, Detroit, LA and Miami. If the program renders success, they will expand into other areas. Sorry Houston, we haven’t made the list, BUT, we’re not missing much. Keep reading.

3. The MEDIA translated and headlined this announcement in a way to attract the attention of the black and brown community…click bait. What BOA is offering is not very different from other programs that the state of Texas already has in place. They’re just now jumping on the bandwagon and participating to get more business, process more loans and do damage control to change the narrative of what current statistics prove about racial inequality in the world of mortgage lending.

4. These programs are targeting areas where the median income is low and where there are more renters than homeowners. It will help revive those areas, bring value or keep them from being abandoned. They are using data from the U.S. Census to pinpoint these areas. They just so happen to be predominantly minority.

5. If you’re not aware of what a down payment is, it’s a portion of the purchase price that you’re paying in cash at closing, the balance is what you get a loan for. Down Payment Assistance helps cover all or a portion of your down payment. One of their programs doesn’t require a down payment at all, which means you finance 100% of the purchase price. There are some theories out there that financing 100% of the loan leaves you upside down when the values go down. Meaning you end up paying more for a home than it’s worth. Values go up and down on just about anything that you invest in. There are always risks associated with any investment. The only way to avoid fluctuations is to not invest at all.

6. Another theory is that the programs are designed to set buyers up for failure. They make it easy for you to get into a home knowing that you can’t afford it, just so that they can take it back. I don’t agree with that. The bank doesn’t make money holding on to land and properties or taking them back, they lose money. They want people to buy and maintain homes so that they get their money back that they loaned you, with interest on top. They make money when they sell it, not when they take it back.

7. CLOSING COSTS GRANT: When you close on a home, you have closing costs, plus down payment. That equals your cash to close. BOA has programs to assist with both. The closing cost assistance is up to $7500. It’s a grant that does not require repayment at any time. UP TO $7500 means you only get what you need. If your closing costs come up to $5K, you don’t get the remaining $2500. Your closing costs consists of recurring and non-recurring fees. The grant only applies to non-recurring costs. It’s important to know that you will be responsible for the recurring fees. This grant also has income and loan limits (this is normal for assistance). The grant is only available in specific zip codes. This grant is only eligible for a home that you will live in, not an investment property.

8. DOWN PAYMENT GRANT: up to $10K, no repayment required. Again, UP TO means they will only give you what you need for your specific home. If your down payment is $7K, you only get $7K. It can be combined with the closing costs grant, which leaves minimal out of pocket costs for you at closing. A homebuyer course is required. This grant will be counted as income so you will receive a 1099 for it and have to claim it as income when you file your taxes the following year. This grant also has income and loan limits (this is normal for assistance). This grant is only eligible for a home that you will live in, not an investment property.

9. DOWN PAYMENT ASSISTANCE: BOA is offering down payment assistance as low as 3% of the purchase price. Mortgage insurance will be at a discounted rate using this program. This program also has income and loan limits (this is normal for assistance). This program is only eligible for a home that you will live in, not an investment property.

10. The GRANTS don’t require repayment. If you do any of the following during the life of the loan, you will be required to repay the ASSISTANCE: sell, refinance, or transfer your loan to another borrower.

No money is free money. Grants are considered a lender credit. Lender credits come with higher interest rates. Assistance does as well. So you have to decide if you’d rather save up your own funds and pay more upfront to keep a lower interest rate and lower monthly payment OR use the assistance/grants and pay a higher monthly payment with a higher interest rate. Keep in mind that your interest rate affects your loan amount. I always recommend to use the assistance only if you absolutely need it. Always have your lender show you a side by side comparison of what your loan will look like with and without assistance. In some cases, I have seen where the interest rates are VERY close, so it makes more sense to use the assistance even if you have the funds.

With these BOA programs, The interest rate that you receive will be based on your credit HISTORY and debt to income ratio. If your score is low or you have no credit, they will use other means such as your ON-TIME rental history, utility bills, phone bill and auto insurance to qualify you. They haven’t made the interest rates public so it is specific to you and your credit profile. You’d have to apply to know what you qualify for and what your interest rate will be.

Full Details of New Bank of America Assistance Program

– $10 – $15k in down payment assistance
– No PMI (private mortgage insurance)
– No minimum credit score
– Applicants will be evaluated based on payment history
– Property must be located in Wayne County
– Must have verifiable income
– Complete a Home Buyer’s Course BEFORE you can apply for the program
– As of now, there is no limit on purchase price.

No matter how you spin it or what program you use, you will need SOME money to purchase a home. Assistance is not paying your earnest deposit or home inspection. If your lender requires you to pay your appraisal upfront, that’s out of your pocket too.

If you are working with another agent, this should give you some good points to discuss with your agent and lender. Make them work and research for you. Also, do your own research and have them clarify anything that you don’t understand.

Hope this article on Full Details of New Bank of America Assistance Program is really helpful?

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