Patrick Iturra, Asset Manager at Estate Investments Group
The housing market has been facing many challenges these days, with rising mortgage rates, high closing costs, and higher credit score requirements than before!
All such challenges have made it difficult for an average American(predominantly black) to buy a house in the US.
However, Bank of America is here to make it easier for the average black/Latino American consumer. The bank has recently launched a new mortgage plan that aims to make it easier for first-home buyers to have more affordable homes.
The affordable home loan will be available in some appointed black and Hispanic such as Charlotte, Dallas, Detroit, Los Angeles, and Miami. There is no requirement for any mortgage insurance or minimum credit score. Instead, the bank has credit guidelines based on expenses such as rent, utility, phone, and automobile insurance payments. Also, the borrower must complete the homebuyer certification program before applying for the loan.
The bank aims to make a community affordable loan solution to fulfill the solution of homeownership for black and Hispanic families.
This loan is governed by Congress’s Equal Credit Opportunity Act in 1974 to prohibit discrimination in the lending process.
If we consider the data, we can see that the housing rate of black Americans has decreased by 30 percent compared to white Americans. However, since the covid-19, homeownership among black Americans has reduced, and the gap has increased.
If we check the data provided by the National Association of Realtors, the US homeownership rate is 65%, whereas black American ownership decreases by 43%. The rate is 72% for white Americans, and for Asian Americans, the rate is above 50%.
This is the data where we can understand the home ownership among the two communities. To know this further, let us look at the significant roadblocks to homeownership.
Three Obstructions for Homeownership
We can say that there are three significant obstructions for homeowners in the United States: Inflation, interest rate hikes, and lack of credit. Combining these obstructions has decreased the home affordability score to the 33-year-old low.
Black Americans already earn less than the US median income; the homeownership gap increases further.
One of the biggest challenges is the lack of credit, where they cannot get a loan to buy a property. As per a recent study by LendingTree, black Americans had higher mortgage rejections than other communities. Overall, the denial rate of black borrowers was higher than that of the entire population.
The biggest reason is the absence of a credit score; many metrics lenders use to check whether a borrower can repay the loan. But, most black borrowers do not have this, which is why they find it challenging to have loans. As a result, many black Americans have called for different alternatives to credit scoring in the mortgage lending process.
To tackle this problem, the Bank of America is here to eliminate the credit score problem and improve approval rates for Black/Latino American people.
Not only Mortgage, but you also need to pick the right property!
If you are a Black/Latino American who just got approved for a mortgage, congratulations! You have crossed the hurdle of approval now; you must ensure that you select the right property.
There are different things that you have to select location, appraisal potential, calculate affordability, etc. As a first-time home buyer, it is easy to make mistakes!
You can contact me, and I will refer you to my Network of Brokers and Agents through Estate Investments Group.
“Our investors hire us for one main reason: they want us to prevent the leakage of their significant operating expenses in real estate, contracting, licensing, and facilities management, while they focus on their core business, investing.”
We do not sell houses. We grow your assets. Patrick Iturra, Asset Manager at Estate Investments Group.
