May 2017

After years of historic lows, interest rates have started rising this year — but that doesn't mean you should hold off on buying or selling a home.

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You can use a home equity line of credit to make energy-efficient updates that can increase the long-term value of your home.

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Figure out how much of a monthly mortgage payment you can comfortably afford in the second installment of our four-part series on home buying.

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Is now a good time to buy or sell?

With the federal interest rate on the rise this year, you may be wondering: Is now the right time to buy or sell a home?

The good news is that, no matter the time or season, we offer many programs and resources that can help you decide if purchasing or selling a home is right for you — including:

Regardless of whether rates rise or fall, people always have home financing needs that are unique to their circumstances and lifestyle. Whatever your situation may be, Bank of America has a range of mortgage options to choose from, including the Affordable Loan Solution® mortgage — a fixed-rate loan for borrowers with modest incomes that offers a down payment as low as 3% for qualified buyers.footnote2 I'm here to help you find the option that's right for you, so if you have any questions, please contact me.

1Down payment and/or closing cost assistance programs may not be available in your area. Down payment and/or closing cost assistance amount may be due upon sale, refinance, transfer, or repayment of the loan, or if the senior mortgage is assumed during the term of the loan. Some programs require repayment with interest, and borrowers should become fully informed prior to closing. Not all applicants will qualify. Minimum credit scores may apply. Sales price restrictions and income requirements may apply. Homebuyer education may be required. Owner-occupied properties only. Maximum loan amounts may apply.

2Available for fixed-rate purchase loans with terms of 25 or 30 years and on primary residences only. Certain property types are ineligible. Borrower(s) must not have an individual or joint ownership interest in any other residential property at time of closing. Maximum purchase loan-to-value is 97% and maximum combined purchase loan-to-value is 103%. For loan-to-values >95%, any secondary financing must be from an approved Community Second Program; ask for details. Homebuyer education may be required. Restrictions apply regarding co-borrowers. Maximum income and loan amount limits apply.

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Go green with a home equity line of credit

Whether you've made a commitment to living an eco-friendly lifestyle or you're simply interested in reducing your utility costs, making energy-efficient upgrades to your home can bring great financial benefits — even adding to the long-term value of your home.footnote1

Relatively simple projects such as installing insulated windows or updating heating and air conditioning systems can save you a lot of money over time.footnote2 If you're thinking about making changes, consider integrating these smaller types of projects into larger updates like a kitchen or bathroom remodel.

To help pay for any upgrades you have in mind, a home equity line of credit (HELOC), which allows you to tap into the available equity in your home, could be a good choice. In fact, home improvements and remodeling have traditionally been among the most common reasons homeowners take out a line of credit.

Benefits of a home equity line of credit

There are a number of benefits to using a HELOC to pay for planned upgrades:

  • Flexibility. Once you open a line of credit, you may draw out funds as needed up to a predetermined credit limit.
  • Convenience. Most financial institutions give you checks that can be used to pay directly from your HELOC for services used (for example, a contractor) and purchases made (for materials, appliances, etc). Or, you can use secure online banking to transfer funds from a HELOC to your checking account to pay for home improvements.
  • Low interest rates. Typically, the interest rates on a HELOC are much lower than on credit cards.
  • Possible tax advantages. Check with your financial advisor to learn more about what kinds of tax advantages you may qualify for with a HELOC.

To get an idea of how much you may be able to borrow, you'll need to know the estimated value of your home and how much you still owe on your mortgage. Visit the Bank of America Real Estate Center, type in your home's street address and instantly see an estimated range of what your home is worth. Generally, you're allowed to borrow a portion of your home's equity (defined as your appraised home value less what is owed).

Wondering whether a HELOC could be right for you? Let's talk.

1Sources:
Home Valuation Study, October 2015: The Market Valuation of Energy Efficient and?Green Certified Northwest Homes.??With support from the Northwest Energy Efficiency Alliance.
U.S. Green Building Council: The Value of Green Labels in the California Housing Market.

2Sources:
"Energy Savings at Home," ENERGYSTAR.gov.
"Home Systems+Energy," SmarterHouse.org.

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Better Money Habits®: Know what you can afford

If you're in the market for a new home, it's a good idea to know how much you can comfortably afford before you start shopping around. That way you can avoid falling in love with a house that's out of your price range, which can tempt you to overstretch your budget.

Remember, your mortgage payment includes additional expenses that you also have to budget for, such as interest, insurance, taxes and other costs. An online calculator can help you determine an affordable mortgage payment based on your monthly income.

For more help figuring out your home buying budget, check out our short video "How much home can you comfortably afford?"

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