To succeed in business, we are often told that what is important is who you know, not what you know. Though I take that with a pinch of salt, I do wonder if it makes sense, especially for a first-time homebuyer coming from a minority community. People of color were some of the hardest hit during the great recession, and the subsequent housing collapse.
Should the fear of discrimination keep millennials from buying homes?
Enough has been written on the subject, including, as PBS reported, thousands of buyers from the community falling victim to predatory lending practices by some institutions prior to the recession. There is enough blame to go around for that particularly bad period in our history.
But should millennials of color, ready and willing to buy houses, be discouraged from doing so because of what happened in the past?
Shouldn’t they be making use of this opportunity to build wealth through real estate? After all, if a home purchase is well thought out, it can lead to a much better financial outcome.
According to the U.S. Census Bureau, 43 percent of blacks owned a home, compared to 71.6 percent of non-Hispanic white citizens. It has also been found that homeowners have substantially higher net worth as a result of the forced savings that occur in the process of paying down your mortgage. So it’s clear that the more homes people of color own, the higher their net worth.
How I prepared to buy a home
When I bought my first home, I didn’t realize that I had stumbled upon a recipe for financial success. Since then, buying a home increased my net worth and left me with a very positive attitude towards the idea of owning a home. But when I began looking into buying my first home, I knew that I wanted to find the best home for the least amount of money, and in the best location that I could afford.
First, I spent a lot of time reading about mortgages and home-buying, thinking about the responsibility, where I wanted to buy, and whether or not I planned to live in my town for at least the next five years after my purchase. I did.
I made sure that I was well aware of all aspects of buying a home – commissions, mortgage rates, inspections, status, market price – the list goes on. As I worked with my agent, it was important for me to be listened to, respected, and treated as a person. It quickly became clear that the realtor whom I was working with would be that person.
I WAS LUCKY ENOUGH TO FIND THE RIGHT PERSON TO TAKE ME THROUGH ALL THE STEPS, BUT NOT EVERYBODY IS SO FORTUNATE.
Taking advantage of available resources
It’s best if you find someone aligned with your concerns, who will connect you with the right resources. In the hands of the wrong agent, you will find yourself in an overpriced home, with a loan that has too many clauses built in against you. So check around to zero in on that person who has integrity and who respects you.
Whether or not you find such a person, the best way to protect your interest is to be your own resource. I remember spending a lot of time reading about mortgages, homeowner’s insurance, fixed vs. variable rates, and the long-term importance of having real estate as part of your overall financial strategy.
Basic advice for the prospective homeowner
There are many online programs that help people understand how the home-buying process actually works. Being an educated consumer will help you recognize when you’re being steered in the wrong direction.
And be honest about what you can afford. You may have the nicest realtor who advocates for you, but they are ultimately in the business to make money. You have to become your own best advocate during your home-purchasing process.
Spend time researching loan rates for people in your area with the same credit rating. If you’re offered a loan for which you’ll be paying a higher percentage over the life of the loan, ask why the bank offered that rate.
ALWAYS BE READY TO WALK AWAY OR SAY “NO” TO ANY OFFER THAT YOU FEEL, IN YOUR GUT, IS NOT A GOOD ONE.
Don’t rush the home-buying process. Be patient. There will be always other homes up for sale. Remove emotion from the process so that you can make a financial decision based on a sound evaluation.
What I have said here might fit every homebuyer, irrespective of their color, but as a woman of color, I have to stress this message as often as I can, as I do not want to see another generation of color falling victim to the promise of easy homeownership.