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Responsible lending applies to you and your bank
It's anyone's guess as to when the market will rebound, but most experts think it is a matter of when, not if.
So how do you prepare yourself in advance of an eventual rebound?
Your decision involves more than saving for a down payment and improving your credit score. Yes, those are important factors but there are other considerations, too. At Bank of America, we view the critical decision to buy a home from the standpoint of responsibility.
Bank of America is a responsible lender. It means we want to provide the right home loan to fit the needs of our customers. This should be a loan borrowers can afford over the long term that fits their budget and their goals. For most people that is a fixed rate loan where you know how much you'll pay each month with no surprises. Matching the right financial product to the customer is the hallmark of a responsible lender.
However, responsible homeownership goes beyond affordable loan terms and interest rates. Borrowers also need to be responsible. There are questions you should ask yourself before starting down the path to homeownership. The questions are not always easy and neither are the answers. But such questions are a reality in today's marketplace:
Q: How do I know if I am ready to buy a home?
A: Know where homeownership fits in your larger financial plan. Prioritize homeownership among financial goals you may have. Ask yourself:
- Would buying a home stretch my financial limits too far?
- If so, where can I make changes in my budget to keep it more balanced?
- Will I still be able to save enough for other opportunities or unexpected emergencies?
Q: How much should I borrow?
A: Ask yourself "how much should I borrow?" instead of "how much could I borrow?" This is an important distinction. Rather than focus on your lender's limits, focus on the home loan that provides you with the best opportunity for success. Keep in mind how much you can afford to spend on a home without putting the rest of your financial plans on hold.
Q. If I can't buy a home right now, what should I do to prepare myself?
A: One of the most important things is to save a sufficient down payment. It's never too soon to begin saving, even if buying a house is down the road. Consider setting up a separate savings account for your down payment fund and make a habit of depositing money regularly into this special account.
Q: How do I know which type of mortgage is right for me?
A: The variety of mortgages offered provides many options but can add confusion to the start of the mortgage shopping process. Some loans offer fixed, consistent payments, while others allow your payment to vary based on the movement of interest rates. It is important that you understand how your payment can change and how quickly it will pay down the balance of your loan. It is equally important that you make sure that you can afford the loan-even at its highest possible payment.
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04/27/09 Introducing Bank of America Home Loans ...
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