Families should help members of the next generation to buy their first home as soon as they are able to do so.
They can do so through encouragement, through advice, through helping them make their way through the process, and through monetary help.
It can take time and requires perseverance, but it will be worthwhile in the end, says AJ Barkley, head of Neighborhood and Community Lending at Bank of America.
Homeownership also means that your monthly payment on a house is an investment in building your own wealth over time as opposed to paying rent which does not do so. It also provides a sense of stability that cannot be obtained through a monthly lease. In addition, reaching such a goal can create a sense of accomplishment and pride for the buyers and those closest to them, including their parents and future generations, Barkley says.
Family support can be pivotal
A survey of U.S. adults found family support can be pivotal in helping first-generation would-be home buyers to achieve homeownership. The survey of 2,000 adults over 18 who own their homes or plan to do so in the future was conducted by Sparks Research for Bank of America .
Among the poll’s findings:
• Almost half of first-generation homeowners said they bought a house because their parents expected them to do so.
• A third of first-generation homeowners said they obtained financial help from their parents in order to buy a home.
Buying your first home is a process. The journey to becoming a homeowner starts a long time before you search for a house to buy, Barkley explains. Clearly family can help by providing help and advice as would-be homeowners undertake that journey.
The path starts with the first time you begin banking. It continues as you learn how to budget, how to save, and how to establish a good credit profile. Doing so takes time and means that you need to make consistent, informed, and early decisions that will help set you up for success. A major requirement is to save up enough money over time, possibly years, to put down as a deposit on your new home. Once you have saved that money you will be able to go out and look for a house that is within your price range.
You will then need to obtain a mortgage. Here is where a good credit score is essential to obtain a mortgage at a good interest rate. Although owning a home might seem like a dream far off into the future, if you know the steps toward success you can get closer to your goal by putting one foot in front of the other along the steps, Barkley explains.
Barriers along the way
The Bank of America survey found, however, that too many would-be homeowners are failing to place their feet firmly on those steps.
The survey found that:
• Only a quarter of prospective buyers are proud of their credit score and nine out of 10 say they could do more to save money.
• Some would-be home buyers say that on one hand they can afford to pay a monthly mortgage on a house. On the other hand, high rental costs prevent them from saving enough money for the downpayment.
• Expensive house prices also are a barrier right now to being able to afford to buy a house.
Here, again, family support and advice might be able to help would-be home buyers to overcome those barriers.
Help from the bank
To help first-generation homebuyers, Bank of America says it offers help in guiding them with advice and programs on saving and spending patterns, including advice on how to use credit responsibly. The bank also offers low down payments on mortgages as well as grants on deposits and closing costs that are tailored to make owning a home affordable as well as accessible for those whose financial picture is healthy. The grants do not need to be paid back. The bank says its $15 billion community homeownership commitment assists homebuyers who are in the low and moderate income brackets to build up their wealth and the legacy of their family by using the power of homeownership to do so.
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