African Americans are returning to the housing market slowly but surely, according to recent data. After hitting a near 50-year low of 41.3% in 2016, even lower than during the Great Depression, the 2017 State of Housing in Black America report found that black home ownership has now risen above 42%. With home ownership consistently pointed to as the best vehicle for long-term wealth creation, and accounting for 70% (U.S. Census Bureau) of black wealth, we are still facing a serious challenge.
Experts cite many benefits to home ownership, but here are a few highlights:
- Increased civic participation (including voting)
- Attainment of higher levels of education
- Improved health and enhanced life satisfaction
- Safer neighborhoods and better-quality housing environment
- Higher self-esteem and heightened sense of control
- Financial stability and generational wealth
Home ownership clearly plays a key role in our personal and financial well-being, which is why we need to center our efforts on teaching and enabling individuals to achieve, keep, benefit from, and build upon home ownership. With home ownership, social mobility, and economic mobility are so intertwined, there is an urgent need to disrupt the cycle of generational economic deprivation.
So let’s have “the talk,” and figure out how to make it happen. There are some easy steps to get the ball rolling, regardless of your timeline.
Take charge: Get your financial house in order
Buying a home often comes with a fear of the financial responsibility that goes with it. This is natural, and you’re not alone. You can overcome this fear by preparing—get your financial house in order and gain a better understanding of the home ownership process. Being an informed consumer is the first step to making home ownership possible. Need to improve or build up your credit history to be ready to apply for a mortgage? Or, perhaps you simply need to calculate what home price and monthly payment you can comfortably afford. Determine what fits best with your other financial obligations and, from there, you can make an informed decision when it comes to home ownership.
I was recently at a family reunion reminiscing about old times when my cousin told me that she wanted to buy a home. I asked her if she had checked her credit lately. She hadn’t, but she assumed it needed some work. As it happily turned out, her credit score was 742, much better than she had originally thought. She completely discounted her habit of paying bills on time, passing up shoes (her first love), meeting her tithing commitments, and putting away money for a rainy day. The point is, find out where you stand from a credit position—because at the end of the day, you never know.
Home ownership could be possible sooner than you think
It should be no surprise, but the Bank of America Homebuyer Insights Report confirmed that there is a great deal of enthusiasm about buying a home among today’s consumers. In fact, one in four prospective buyers plans to purchase in the next two years, and they are taking the right steps to prepare:
- 61% are paying off debts and bills
- 47% are improving their credit scores
- 45% are saving for a home
What was even more interesting was that nearly 70% of recent millennial homebuyers purchased the house they could afford now, and view their current home as a “stepping stone” to their forever home. It’s comforting to know that this group has confidence in their decision to become home owners, and they view it as an ascending path they’ll follow for the rest of their lives. A very solid 79% of millennial home owners said they see home ownership as having a positive impact on their financial future, and an overwhelming majority in this group said that they are proud of being home owners. With such a positive response, the millennial home owners surveyed send an encouraging message to their peers to get off the sidelines and buy a home so they too can begin enjoying the benefits.
It’s not the size of the home, but the size of the dream that matters
Despite all the enthusiasm and desire to buy a home, there are still many myths about what it takes to become a home owner, and these are sadly causing many people to wait longer than necessary to become home owners. Let’s bust some of these myths.
The biggest offender: the down payment myth. Forty-five percent of first-time buyers surveyed felt they needed to have a 20% (or more) down payment. Bank of America has shattered that myth by introducing the Affordable Loan Solution mortgage, which requires down payments as low as 3% with no mortgage insurance requirement. There’s also an online tool that allows consumers to search for down payment and cost savings programs in their area or desired neighborhood. More myths? Many believe that consumers need a perfect credit score and can’t have any student loan debt, both of which are untrue.
Power up with your financial support team
Whether you’re just thinking it would be nice to own a home one day, or you’ve already managed to put some money aside, get moving to improve your financial position—but don’t do it on your own. Visit your bank and talk with a financial professional. Even if you’re still in the dreaming stage, a lending professional can help you build a short- or long-term plan so you’ll be ready to achieve your goals when the time comes. Together you can come up with a savings roadmap to set aside enough funds for a down payment and understand what’s required long-term to comfortably afford your regular mortgage payments amid your other financial responsibilities.
By working with a professional, you’ll get the information you need to decide whether the time is right—and if you’re not ready right now, you’ll learn which priorities to address so you can be prepared in the future. With expert help and your own determination, you can take the steps to becoming a proud home owner, today or in the future. Now that we’ve had “the talk,” get ready, get set, and move forward.