Daily Press (Sunday)

Six homebuying mistakes to avoid in Hampton Roads

- | Guest columnists Tyrone Noel is the president of Bank of America Hampton Roads. Jay Grant is executive director of Local Initiative­s Support Corporatio­n (LISC) Hampton Roads.

By Tyrone Noel and Jay Grant

Buying a house in Hampton Roads? Be prepared for a face-paced market and try to avoid these common pitfalls on your homebuying journey.


Before you start shopping, review your budget to determine how much you can afford each month. Generally, mortgage payments shouldn’t be more than 28% of your monthly gross income. Use an online home affordabil­ity calculator to help understand what fits your finances.

Not prioritizi­ng your wish-list can also lead to overspendi­ng. A recent Bank of America Homebuyer Insights Report found that prospectiv­e buyers are most likely to give up buying a brand-new home (35%), being near family (33%) and access to public transporta­tion (32%) to increase their chances of purchasing a home.

Prequalifi­cation vs. preapprova­l

Preapprova­l for a mortgage means the lender has examined your income, credit and other expenses to determine the mortgage amount you qualify for. Once preapprove­d, you’ll receive a preapprova­l letter, which is an offer (not a commitment) to

lend you a specific amount, good for 90 days. This is a more serious step in the homebuying process and can make you a more appealing buyer.

Prequalifi­cation, on the other hand, is a step many homebuyers take before preapprova­l, and can help you set realistic expectatio­ns — providing an estimate of how much a lender may lend you. Being prequalifi­ed doesn’t guarantee you’ll get a loan, but it can help.

Waiting out the market

Prospectiv­e homebuyers’ patience may be waning when it comes to home prices and interest rates coming down. There are opportunit­ies in this market if buyers approach real estate as a long-term investment.

The best time to buy is when you feel ready financiall­y. Rather than trying to time the market, evaluate factors that would encourage you to buy — whether it’s a certain amount in savings or when homes in your budget become available in a specific neighborho­od. If rates drop in the future, you can always refinance. On the other hand, waiting too long for interest rates to fall can cause increased home values to overshadow savings you might see with the lower rate.

Not seeking homebuyer assistance programs

Many people overlook first-time homebuyer loan programs and grants that can make buying a home more affordable.

With one of the most generous grants in the industry, Bank of America offers up to $17,500 in combined down payment and closing costs as part of its Community Homeowners­hip Commitment. Eligible buyers can receive up to $10,000 or 3% of the home’s purchase price, whichever is less, to be used toward their down payment — no repayment is required.

BofA’s Down Payment Center can also help you find state and local down payment and closing cost assistance programs that you may be eligible for in your area.

Overlookin­g closing costs

Closing costs are an often-underappre­ciated expense that can include loan originatio­n fees, appraisal and survey fees, homeowners’ insurance and/or private mortgage insurance.

Payment is due when you sign final mortgage loan documents.

You can get a sense of how much your closing costs will be from the loan estimate your lender provides after submitting your mortgage applicatio­n.

Forgetting seasons of life

Remember that your first home may or may not be the home you retire in. Considerin­g your current and future needs can allow you to age-in-place as opposed to financing another home at a point in life when income may become fixed or limited. On the other hand, a younger homebuyer could go in knowing a home will serve its purpose for a small number of years and not be so concerned with features and amenities that may become important later in life.

It’s never too early to start discussing your current financial picture and goals with a lending officer to see if you are on track to achieve the dream of homeowners­hip.

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