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What is a P&I payment?
P&I is the principal and interest you pay your lender each month. The principal is the amount of money being borrowed. The interest is the cost of borrowing the principal. Principal and interest account for the majority of your monthly payment, which may also include escrow payments for property taxes, homeowners insurance, mortgage insurance and other costs.
What is an escrow account?
An escrow account may be required by your lender to cover future payments for items such as homeowners insurance and property taxes. An escrow account is not a fee; it accumulates funds needed to properly service your loan.
What are points?
Points (sometimes referred to as discount points or mortgage points) are paid to the lender, usually at mortgage closing, in order to lower the interest rate. One point equals one percent of the loan amount. For example, 2 points on a $100,000 mortgage equals $2,000. Learn more about mortgage points
How do I estimate my property taxes?
Your property taxes are a fixed percentage of your home’s value based on the tax assessor’s appraised value of your home. Property taxes are paid to township or county in which the home is located. You will pay this tax annually, semiannually or as part of your monthly mortgage payments (the tax portion of the payment will go into your escrow account). The local tax assessor’s office can provide you with a specific property tax rate.
Why do I need a home inspection?
The home inspection is an added expense that some first-time homebuyers don’t expect and might feel safe declining, but professional inspectors often notice things most of us don’t. This step is especially important if you’re buying an existing home as opposed to a newly constructed home, which might come with a builder’s warranty. If the home needs big repairs you can’t see, an inspection helps you negotiate with the current homeowner to have the issues fixed before closing or adjust the price accordingly so you have extra funds to address the repairs once you own the home.
Why does my lender require homeowners insurance?
Homeowners insurance is a contract that protects both you and your lender in case of loss or damage to your property. The contract is known as an insurance policy, and the periodic payment is known as an insurance premium. The monthly homeowners insurance premium is often included as part of the monthly mortgage payment, with the insurance portion of the payment going into your escrow account.
Set interest rate for the life of the loan
Your monthly payments of principal and interest remain the same for the life of the loan
Interest rate may change periodically during the loan term
Your monthly payment may increase or decrease based on interest rate changes
Low down payment options with flexible credit and income guidelines
$200 bonus when you get a VA or FHA mortgage from Bank of America. Offer has been extended. Apply by February 15, 2019. Learn more