Beverly Walter, area lending manager at Bank of America
May 25, 2021
How to buy a home in Worcester's rising real estate market
By Beverly Walter
As Worcester moves forward with its revitalization, Bank of America in April convened a community roundtable on how to move more people into affordable homeownership. With the participation of local leaders including Timothy Murray, president and CEO of the Worcester Regional Chamber of Commerce, and Tim Garvin, CEO of United Way of Central Massachusetts, the discussion focused on overcoming barriers to entry in the local real estate market.
Everyone knows home prices are increasing, but what is less well known are the various lending and grant programs that may be available to buyers. Some would-be buyers self-select out of homeownership, assuming they can’t afford a monthly mortgage payment or the upfront costs. Others simply don’t know where to start.
To help future buyers better understand what’s possible, we’re debunking some of the most common misconceptions.
Myth: There is a right time to buy
First-time homebuyers may be holding off for the right time, but there is no such thing because homebuying is such a personal decision. While there is no secret formula to assessing emotional and financial readiness, answering a few questions can help you determine how close you are to becoming a homeowner and equip you with the resources you need to move forward with your homebuying goals. After all, the more informed you are about the homebuying process, the better prepared you are to find the best options.
Additionally, as you’re likely binge-watching more TV right now, switch your lineup and include some productive programming about homebuying. Bank of America’s First-Time Homebuyer Online Edu-Series provides an easy-to-understand roadmap to buying a home and allows you to go at your own pace as experts provide guidance and tips to prepare your finances, make an offer, apply for a mortgage and more.
Myth: I need to have a 20% down payment
Many mistakenly believe you need a 20% down payment when, in reality, the median amount was 6% for first-time buyers in 2019. Still, 71% of prospective homebuyers believe they will need assistance to save for a down payment. While these insights may be a bit dated, they’re still applicable and luckily, there are lots of solutions to help hopeful buyers overcome this hurdle. Many lenders offer innovative low down payment options. Additionally, online tools enable buyers to search for down payment and closing cost assistance programs offered by state and local housing agencies, nonprofit groups and employers to help make buying a home more affordable.
Myth: It’s smarter to rent versus buy
Another long-standing myth is renting is more affordable than buying. However, given rising rental prices in many parts of the country, a fixed-monthly mortgage payment typically provides more stable housing costs than renting – and can sometimes be lower than your monthly rent. Moreover, homeownership can provide an important path to the creation of long-term wealth. Historically, homes deliver real appreciation over time. You may be able sell your home years later, or you can pass on the value your home has earned to your loved ones.
The returns of homeownership are not only financial. While buying a house is not an automatic ticket to the good life, research has shown an overwhelming 93% of homeowners say purchasing a home made them happier than renting. This happiness could be attributed to the fact that owning a home comes with the perk of being able to make space exactly as one envisions.
Cooperation across the key industry is key to overcoming barriers
Homebuying can feel overwhelming, and while correcting common misunderstandings is an important element to helping Worcester continue to revitalize and grow, everybody within the industry has a role to play in creating pathways to affordable homeownership. Cooperation with local leaders, non-profits, financial institutions, government associations, and others to deliver solutions that can specifically address the needs of the community is paramount. We believe events like the one we hosted in April can be catalytic to cooperation, and we look forward to partnering with others as our community continues on its journey.
Beverly Walter is the area lending manager in Central Massachusetts at Bank of America.
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