Bank of America launches low-zero mortgages in select cities. one in Michigan.
First-time homebuyers have a new lending option to help them enter the market.
Bank of America announced a new zero down payment and no closing cost mortgage solution for first-time homebuyers.
The new loan will be available in certain markets, with an emphasis on serving Black/African Americans and/or Hispanic neighborhoods.
The first cities eligible in the pilot are Charlotte, Dallas, Detroit, Los Angeles, and Miami.
The company’s facilitated community loan solution will use credit guidelines based on factors such as timely rent, utility bills, phone payments and car insurance. It requires no mortgage insurance or a minimum credit score.
Individual eligibility depends on income and home location. Prospective buyers must complete a Home Buyer Certification course offered by Bank of America and HUD-Accredited Housing Consulting Partners prior to applying.
“Home ownership strengthens our communities and can help individuals and families build wealth over time,” said AJ Barkley, president of neighborhood and community lending at Bank of America. “Our affordable community loan solution will help realize the dream of sustainable home ownership for more black and Hispanic families, and is part of our broader commitment to the communities we serve.”
The cost of buying a home is now 80% more expensive than it was just three quarters ago, according to the National Association of Realtors. Besides rising prices, mortgage rates have been increasing as a result of interest rate hikes by the Federal Reserve.
Mortgage rates are nearly double what they were a year ago, according to Freddie Mac. The 30-year interest rate was 5.66%, and the 15-year rate was 4.98% on September 1.
The competitive housing market has made affordability a major issue in the real estate sector. It also widened the racial disparity among homebuyers, with Hispanic applicants 7% more likely to be rejected for mortgages than their white counterparts, according to NAR.
There is a gap of nearly 30 percentage points in home ownership between white and black Americans. Black Americans’ home ownership rates are lower than they were in 2010, according to NAR.
Hispanic buyers have seen record growth in the housing market with Hispanic Americans owning homes at an all-time high and over 50% for the first time.
However, the gap between Hispanic homebuyers and their white counterparts is about 20%.
In 2011, Bank of America agreed to pay $335 million to settle allegations by the Department of Justice that its nationwide financial unit imposed higher rates and fees on about 200,000 eligible black and Hispanic borrowers “just because of their race or national origin,” according to a report from The Times. New York.
In 2019, the bank launched its Commitment to Community Home Ownership, which offers options for down payment and closing costs. The goal is to help 60,000 individuals and families purchase affordable homes by 2025.
So far, more than 36,000 people and families have used the software. Bank of America has provided more than $9.5 billion in low-paying loans and more than $350 million in non-repayable down payment and/or closing cost grants.
So far, two-thirds of the loans and grants offered through the Community Home Ownership Commitment have helped multicultural clients achieve home ownership, according to Bank of America.
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