New data from Bank of America shows that family support often plays a pivotal role in helping first-generation homebuyers reach the major milestone of purchasing their first home. Families of first-generation homeowners often instilled in them the dream to buy a home and an understanding of the value of owning - whether they were able to provide financial support, or simply motivation.
"For many first-generation homeowners and their families, homeownership has a unique importance, given the collective efforts to overcome financial challenges that can often span generations," said AJ Barkley, Head of Neighborhood and Community Lending at Bank of America. "Achieving this goal can create a sense of pride and accomplishment that resonates both for the buyer and those closest to them, including their parents and future generations."
Published today, Bank of America's 2021 Homebuyer Insights Report: First-Generation Homeowner Spotlight is based on a survey of U.S. adults who currently own a home or plan to in the future. The study found:
-- Seven out of 10 first-generation homeowners (69%) say the importance of homeownership has increased over the past year.
-- 61% of first-generation homeowners say the importance of building equity has increased, compared to 39% of non-first-generation homeowners (meaning those whose parents or grandparents owned a home).
-- 73% of first-generation homeowners also have a newfound appreciation for the safety and security that homeownership provides, compared to 60% of non-first-generation homeowners.
-- Twice as many first-generation homeowners (43%) bought a home because they felt their parents expected it, compared to non-first-generation homeowners (20%).
-- For some, family involvement goes even further, with 37% of first-generation homeowners saying they received financial assistance from their parents to buy a home.
-- 74% of first-generation homeowners and 57% of non-first-generation homeowners expect to buy another home in the future.
Sheena C. is a first-generation homeowner and Philadelphia native who moved to Detroit several years ago. "I view homeownership not only as a way to build generational wealth for me and my young daughter, but to also have a stake in a neighborhood," said Sheena. "I immediately connected to the vibrant community in Detroit and decided to put down roots."
The path to homeownership begins with saving and building credit
Homeownership remains one of the most common methods for families and individuals to build wealth, as homes historically appreciate over time1. When the home increases in value, so does the amount of equity that is available to the homeowner. It is this equity that can be used to support the next generation.
However, the path to homeownership begins long before searching for a home. "The journey toward homeownership - whatever your timeline - actually begins with your first banking experience and continues as you learn to budget, save and establish a solid credit history," said Barkley. "Building financial confidence takes time and requires making early, consistent and informed decisions that set you up for success."
Prospective homebuyers say saving for a home is a financial priority, but they face hurdles, much like the generations before them. Only 24% of prospective buyers are proud of their credit score and 89% say they know there's more they could do to save money.
Overcoming barriers through planning and assistance
"While homeownership may feel like a distant dream, knowing the stepping stones and solidly planting one foot in front of the next can put you closer to your goal," says Barkley.
Bank of America is helping people get on the right path with a range of solutions starting with help managing spending and saving patterns and practicing responsible credit behavior. The bank offers innovative low down payment mortgages, as well as down payment and closing cost grants (no repayment required) designed to make homeownership accessible and affordable for those with a healthy financial picture.
While many prospective buyers can afford monthly mortgage payments, they report high rent costs (57%) and expensive home prices (54%) are making it harder to save for the upfront costs of homeownership. That's why Bank of America's Community Homeownership Commitment(R) was created - to address the challenges many would-be buyers face. Already, the Community Homeownership Commitment has provided over $270 million in grants to more than 29,000 homebuyers.
Sheena, the Detroit homeowner, is just one of many who took advantage of Bank of America's Down Payment Grant and America's Home Grant(R) to close on a home earlier this year. "After hours of research to understand the home buying process, things just aligned when I applied and qualified for down payment assistance from Bank of America," she said. "I knew that help with upfront costs would enable me to replace rent payments with regular mortgage payments, giving me a stronger sense of stability that a month-to-month lease could not offer."
About Bank of America's Community Homeownership Commitment
First launched in 2019 as a $5 billion initiative and tripled this year to a $15 billion commitment through 2025, the Bank of America Community Homeownership Commitment(R) helps low- and moderate-income homebuyers across the country begin to build their personal wealth and family legacy through the power of homeownership.
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 grants. Bank of America grants may also be joined with externally provided home buying assistance.
-- Down Payment Grant program helps buyers overcome the biggest barrier to homeownership - down payment. In more than 260 cities and counties across the country eligible buyers can receive 3% of the home's purchase price up to $10,000, whichever is less, to be used toward their down payment. No repayment is required.
-- America's Home Grant(R) program offers a lender credit of up to $7,500 that eligible buyers can use towards non-recurring closing costs, like title insurance and recording fees, or to permanently buy down the interest rate. The funds do not require repayment and can be combined with funds from the Down Payment grant program listed above.
About Bank of America's Homebuyer InsightsSparks Research conducted a national online survey on behalf of Bank of America between February 18 and March 1, 2021. Sparks surveyed a national sample of 2,000 adults ages 18+ who currently own a home or plan to in the future. In addition, an augment of 185 surveys was conducted to oversample First Generation homeowner populations (363 surveys in total). The margin of error for the national quota is +/- 2.2 percent at the 95 percent confidence level. Select questions allowed respondents to choose more than one answer, resulting in responses that may equate to more than 100 percent.
Bank of AmericaBank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 66 million consumer and small business clients with approximately 4,200 retail financial centers, approximately 17,000 ATMs, and award-winning digital banking with approximately 41 million active users, including approximately 32 million mobile users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and approximately 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.
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Reporters May Contact:Susan Atran, Bank of America, email@example.com
1 Joint Center for Housing Studies of Harvard University: Learning from the History of the Homeownership Rate
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SOURCE Bank of America Corporation