Bank of America is launching a program that will provide financial assistance to would-be homeowners who need cash for a down payment and closing costs.
The Down Payment Grant program will provide as much as $17, 500 to buyers who can make monthly mortgage payments but would have problems coming up with a down payment and closing costs. The bank’s $5 billion commitment is expected to help 20, 000 people buy a house nationwide. The program is not exclusive to first-time buyers.
The down payment assistant is expected to especially benefit Inland Empire house hunters because of the region’s relative affordability. But even for a low-priced starter home, buyers still have to come up with as much as $15, 000 for a government-backed loan, closing costs and other expenditures.
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“The benefits of this program will be significant in the Inland Empire, ” said John Loyacono, the area lending manager for Bank of America’s operations on the west side of Los Angeles. According to the bank’s research, 69% of all prospective buyers say down payments and closing costs are the biggest barriers to homeownership.
James Deason, a senior vice president and BofA’s lending manager for Riverside County, said there is no cap on income for applicants if the home you want to buy is in an area labeled “low-to-moderate, ” in terms of the income of the neighborhood’s residents.
If the homes are considered to be in a “medium” or “upper” income area, there is a cap on the applicant’s earnings based on 80% of the income in that area. For the greater Riverside and Moreno Valley area, for example, that cap would be $52, 640 a year, Deason said.
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The program offers up to $10, 000 to help with the down payment, a grant that applicants do not have to repay. It also offers as much as $7, 500 as part of the bank’s closing cost grant program.
Additionally, the bank could waive lender origination fees, usually about $1, 000, for loans backed by federal agencies such as Freddie Mac, the Federal Housing Administration and the Veterans Administration. That advantage will expire on Oct, 31.
The grant program has support from nonprofits in the Inland Empire, including the Neighborhood Housing Services of the Inland Empire, which provides counseling to would-be homeowners on matters that include loan assistance and home maintenance.
Bank Of America Offers $17,500 Grants For Would Be Homebuyers
Dawn Lee, executive director and CEO of the San Bernardino-based nonprofit, said they provide eight hours of group counseling on homeownership for BofA grant applicants, which is a mandatory part of the process. She said her organization works with several major lenders, including Wells Fargo, which introduced a similar program earlier this year.Interest rates are rising from already elevated levels again, and one would expect them to start pinching. Let's be honest; a 30-year mortgage rate of 7.6% surely causes some discomfort. Also noteworthy is the eerie silence prevailing in the American regional banking sector. This raises the question: Have the bad actors been weeded out with the demise of Silicon Valley Bank and First Republic, and is the worst behind us?
That might just be the case. Below is the chart that resembles the issues faced by the regional banks that have ceased to exist. The black line represents the assets of money market funds, while the blue line represents bank deposits.
In March, the core issue was that because banks refused to offer higher interest rates on their customers' savings, these customers flocked to money market funds that did. For some banks, these outflows of savings meant they had to sell a portion of their underwater bond portfolios to fill the gap, realizing unrealized losses. Government bonds are not that safe when you are forced to sell them before maturity. Unfortunately, Silicon Valley Bank didn't quite grasp this; it was game over for them.
In Deposits Exit Us Banking System In One Year As Money Market Funds Witness Historic Inflows
But if you look at the right end of the chart, you'll see that bank deposits have stabilized despite steady inflows into money market funds. The money flowing into money market funds is now coming from somewhere else. And this should not come as a surprise. Why invest in stocks offering the lowest risk premium in decades if you can get a 5%+ return with a US money market fund?
The chart above provides further insight. It breaks down deposits at large and small, let's say, regional banks. Pay close attention to the blue line, which shows that bank deposits at small banks are on the rise. This reduces the risk that unrealized losses on bonds, which are still substantial, will ultimately lead to a full-blown bank run.
However, this doesn't automatically make American regional banks a 'strong buy.' First and foremost, they are compelled to raise savings interest rates to counter outflows, which directly impacts profitability. Additionally, regional banks are the primary lenders for commercial real estate. Despite US employees being urged to return to the office, not everyone is willing to do so. Add to that the massive spike in interest rates – pushing the value of commercial real estate further down – and you shouldn't expect too much 'profitability' from this sector. Fortunately, there's always a central bank 'hopium.' Right?
Bwe Next Chicago Presents “learn How To Access $17,500 In Grants To Buy A Home” (seminar) Tickets
The Market Routine - Charts & Research for Every Investor is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
Dawn Lee, executive director and CEO of the San Bernardino-based nonprofit, said they provide eight hours of group counseling on homeownership for BofA grant applicants, which is a mandatory part of the process. She said her organization works with several major lenders, including Wells Fargo, which introduced a similar program earlier this year.Interest rates are rising from already elevated levels again, and one would expect them to start pinching. Let's be honest; a 30-year mortgage rate of 7.6% surely causes some discomfort. Also noteworthy is the eerie silence prevailing in the American regional banking sector. This raises the question: Have the bad actors been weeded out with the demise of Silicon Valley Bank and First Republic, and is the worst behind us?
That might just be the case. Below is the chart that resembles the issues faced by the regional banks that have ceased to exist. The black line represents the assets of money market funds, while the blue line represents bank deposits.
In March, the core issue was that because banks refused to offer higher interest rates on their customers' savings, these customers flocked to money market funds that did. For some banks, these outflows of savings meant they had to sell a portion of their underwater bond portfolios to fill the gap, realizing unrealized losses. Government bonds are not that safe when you are forced to sell them before maturity. Unfortunately, Silicon Valley Bank didn't quite grasp this; it was game over for them.
In Deposits Exit Us Banking System In One Year As Money Market Funds Witness Historic Inflows
But if you look at the right end of the chart, you'll see that bank deposits have stabilized despite steady inflows into money market funds. The money flowing into money market funds is now coming from somewhere else. And this should not come as a surprise. Why invest in stocks offering the lowest risk premium in decades if you can get a 5%+ return with a US money market fund?
The chart above provides further insight. It breaks down deposits at large and small, let's say, regional banks. Pay close attention to the blue line, which shows that bank deposits at small banks are on the rise. This reduces the risk that unrealized losses on bonds, which are still substantial, will ultimately lead to a full-blown bank run.
However, this doesn't automatically make American regional banks a 'strong buy.' First and foremost, they are compelled to raise savings interest rates to counter outflows, which directly impacts profitability. Additionally, regional banks are the primary lenders for commercial real estate. Despite US employees being urged to return to the office, not everyone is willing to do so. Add to that the massive spike in interest rates – pushing the value of commercial real estate further down – and you shouldn't expect too much 'profitability' from this sector. Fortunately, there's always a central bank 'hopium.' Right?
Bwe Next Chicago Presents “learn How To Access $17,500 In Grants To Buy A Home” (seminar) Tickets
The Market Routine - Charts & Research for Every Investor is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
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