Buying a home
Buying a home requires a little homework
Owning your first home is an important and exciting milestone. If you are feeling stressed due to the work necessary to manage this complex process, you’re not alone. However, your financial advisor can help.
To buy or not to buy?
Here are some things to consider when determining whether to rent or buy:
Getting started buying a home
First, determine how much you can afford to spend on a home.
This depends on a number of factors:
- Your gross monthly income
- Any debts that you need to pay off
- The down payment you can afford to make
- Your anticipated real estate taxes and insurance
- Housing expenses (maintenance fees, condo fees, repairs and improvements)
- The size of a mortgage for which you’ll qualify
Source: anyplace.com, June 24, 2021
Note: These are general, recommended percentages. You should adjust for your personal budget as necessary.
Deciding on a down payment
- To get the best rate and terms for your home loan, try to put down at least 20% of the purchase price.
- Note: If your down payment is less than 20%, you may need to pay a monthly private mortgage insurance (PMI) payment.
- Your down payment will affect your interest rate, terms and monthly payments.
- Ask your lender for the minimum down payment required for your loan and if you might be eligible for any down payment or cost-saving assistance programs.
Before you apply for a mortgage, get preapproved by Bank of America. Preapproval means a bank has verified your employment, income, credit and bank accounts, and provided a letter of commitment for a mortgage up to a certain amount. Preapproval can make you a more attractive and credible buyer
Applying for a mortgage
Types of mortgages
There are three main types of mortgages:
Home ownership offers a number of potential tax advantages:
- Gain realized on the sale of a house (up to $250,000 for a single taxpayer and $500,000 for a married couple) may not be taxable.
- You may be able to deduct mortgage interest on up to $750,000 in loans used to purchase or significantly improve your home.1
- The real estate taxes that you pay may be deductible as part of your state and local taxes that include personal income taxes and real estate taxes. Up to $10,000 of the combined amount can be deducted each year.
Turn to your Bank of America team for guidance around mortgage options and buying a home.
1These loans must be in place within 90 days of closing on your home orcompletion of the improvements and the loan must be secured by the property purchased.