Amid a growing affordable housing crisis, the largest bank in the Tampa-St. Petersburg area is offering one potential solution for prospective homeowners.
Bank of America (NYSE: BAC) has expanded a two-year-old program that provides grants for down payments and some closing costs.
The bank tripled its Community Home Ownership Commitment to $15 billion to help 60,000 individuals and families nationwide buy homes by 2025, after completing its 2020 Homebuyer Insights report.
“We found that nationally 70 percent of our clients indicated they needed down payment assistance to keep up with the rising prices in the market and just in general to afford a home,” said Scott Stange, Bank of America’s local consumer lending market leader. “One out of five nationally need financial guidance to prepare for home ownership.”
Bank of America is one of several financial institutions — along with nonprofits and government agencies — that offer some help to first-time and low-income home buyers.
Bank of America’s program includes two proprietary homebuyer grant programs to help prospective buyers with the upfront costs of homeownership:
• Down payment grants. Eligible buyers can receive 3 percent of the home’s purchase price, up to $10,000, whichever is less, to be used toward their down payment. No repayment is required.
• America’s Home Grant program, with a credit of up to $7,500 that can be used toward non-recurring closing costs such as title insurance or recording fees, or to permanently buy down the interest rate. The funds don’t require repayments and can be combined with the down payment grants.
When the grant programs are used together, homebuyers receive on average of about $14,000 to help with their home purchases, according to a news release from the bank.
The grant programs can be used in combination with low down payment loans, which are fixed-rate mortgages with down payments as low a 3 percent and require lower-cost or no-cost mortgage insurance.
“Home ownership is often the largest financial transaction that most clients will do in their life. It provides the opportunity to earn equity in their home, take pride in home ownership, gives them stability and a chance to build personal wealth and equity,” Stange said. “It is important to the bank to improve the financial lives of our customers. We’re always looking to better others and deliver on the dream of home ownership. Many folks don’t understand how to navigate those waters. As a service company and a local partner, we want to be able to guide them, whether it’s with Bank of America or any other lender. It’s the right thing to do for our community.”
Bank of America also partners with credit solution advisors, including Suncoast Housing Connections (formerly Tampa Bay Community Development Corp.) in Clearwater and Solita’s House in Tampa. Both of those organizations help prospective homeowners understand what’s involved in owning a home.
Suncoast, a HUD-approved counseling agency, has multiple partnerships, including with St. Petersburg-based Raymond James Bank, which has a variety of down payment assistance programs designed for first-time buyers in Florida. BankUnited, Cadence Bank, Synovus and Regions are among the other lenders listed on Suncoast’s website.
Helping homebuyers find affordable housing is more important now than ever, said Fran Pheeny, Suncoast CEO.
“Covid highlighted a lot of the issues and the importance of preparing people for home ownership, as did the last financial crisis,” Pheeny said. “Studies done of homebuyers in the last financial crisis showed that people who got pre-purchase housing counseling were dramatically less likely to end up in foreclosure than people who didn’t.”
First-time homeowners also need an independent review of their financial situation and guidance to stay out of predatory loan products, Pheeny said.
“There’s also the issue that people who get pre-purchase housing counseling or even just go to a homebuyer education class understand all the costs associated with home ownership and the importance of having reserves for repairs, as well as making sure you get a home inspection,” Pheeny said. “It’s really important that people get that help up front before they see a lender.”
On its down payment center website, Bank of America lists additional housing agencies and nonprofit organizations that can help with the upfront costs of buying a home.
The bank also can pre-approve prospective home buyers, which is helpful when inventory is tight, as it is now.
“We will run out of all Pinellas County single family homes to sell in 24 days if no more homes come on the market between now and then,” Liane Jamason, broker/owner of DWELL Real Estate’s St. Petersburg office, wrote in a blog post on March 22.
“With the low inventory we can offer clients an opportunity to pre-approve and prepare for these grants, so they are more timely in their offers and can take advantage when they do go look for a home,” Stange said. “It gives them a leg up really in the overall purchase process, and it gives them the confidence to go out there. These programs provide that peace of mind.”