Bank of America is introducing new mortgage products that require no down payment and have no closing costs to help people in minority groups buy their first homes. This move is being made to help close the home ownership gap that exists between Black and Hispanic-Latino communities.
The program, which goes by the name Community Affordable Loan Solution, will be made available in certain markets, such as the ones found in Charlotte, North Carolina; Dallas, Texas; Detroit, Michigan; Los Angeles, California; and Miami, Florida. These markets include neighborhoods that are predominantly Black or Hispanic or Latino.
What facilities does the loan provide?
Bank of America recently announced that it would provide first-time homeowners in Black and Hispanic/Latino areas with mortgages that need no down payment and do not incur any closing costs. The program will initially only be available in certain cities, but eventually, it will be rolled out to additional markets across the country.
The Community Affordable Loan Solution is the new mortgage that’s available. Its purpose is to facilitate the acquisition of an inexpensive mortgage for first-time homebuyers who qualify as individuals or families. The bank claims that the program utilizes credit parameters that are based on things such as regular payments made for rent, utilities, and phone service. It does not mandate a minimum credit score or mortgage insurance coverage.
A statement made by AJ Barkley, who is the head of neighborhood and community financing at Bank of America, is quoted as saying that “Homeownership enhances our communities and can help people and families grow wealth over time.” Their Community Affordable Loan Solution will assist in making the goal of long-term homeownership more affordable for more Black and Hispanic families, and it is a component of their more comprehensive commitment to the communities that they serve.
How the loan works
Homebuyers with low to moderate incomes are eligible for an extra 15 billion dollars worth of mortgage loans, as stated in another announcement made by the Bank. This gift will remain in effect until May 2027. This is accomplished via a partnership with the Neighborhood Assistance Corporation of America (NACA). For more than 25 years, Bank of America and NACA have collaborated.
The loans are subject to stringent screening, and their approval is contingent on meeting certain credit criteria, such as making all of your payments on time, including those for your rent, utilities, phone, and vehicle insurance. The amount of income as well as the location of the residence determine eligibility. There is no need for a minimum credit score or mortgage insurance.
To be considered for the program offered by Bank of America, candidates need to be looking to purchase a house in one of the five locations and must also finish a homebuyer education course that is accredited by the United States Department of Housing and Urban Development. Once they get the loan, applicants won’t be required to have mortgage insurance anymore.
Why is this scheme so appreciated?
There is a significant income gap between different racial and ethnic groups, which, along with the legacy of past prejudice, has resulted in homeownership rates that vary widely. According to the National Association of Realtors, only about four in ten black households and about five in ten Hispanic households own their own homes, while about seven in ten white households do. The new initiative is aimed at first-time homeowners, particularly in certain areas like Charlotte, Dallas, Detroit, Los Angeles, and Miami. When applying for a house loan using Bank of America’s program, the borrower’s credit score will not be taken into consideration, as stated by Bank of America. Instead, creditworthiness will be determined by factors such as prompt payment of rent as well as other bills, such as those for the phone, auto insurance, and utilities.