Homeownership is part of the American dream, and it plays an important role in establishing connections within communities. But homeownership has often been unobtainable for many prospective African-American homebuyers. According to the U.S. Census Bureau, the homeownership rate among African-American-only households was just 42.2 percent, the lowest rate for any race or ethnicity in America between 2014 and 2018.
When buying a home, financial literacy is essential to ensure a positive purchase experience. Knowing your options will prepare you to find a home at a budget you can sustain to help create value for your family in the years to come.
Here are tips to help you learn how you can achieve your dream of homeownership:
Pre-Plan before you Search for a Home
Before you even start searching for a property to call home, you need to know how much home you can afford. A prequalification from a banker or loan officer will help you understand your price range so you don’t fall for a house over your budget.
Using research tools such as Zillow or Trulia can also provide you with more information about demographics, schools, comparable home value in neighborhoods you are considering. All of this research before you search for a home will help in decision making as you proceed in the homebuying process.
Demystifying Loan Types and Options
When you’re planning to buy a home, it is crucial to understand the different mortgage loan options available to you. There are several types, with various term options, including ones that are government-backed, such as Veterans Affairs (VA) or Federal Housing Administration (FHA) loans; and conventional ones, such as adjustable-rate mortgage (ARM) and traditional 30-year fixed-rate mortgage loans.
Although you can gather this knowledge by listening to financial podcasts, reading home financing blogs or taking free online courses, you can also get direct help from a home mortgage consultant in your area at your local bank, including Wells Fargo.
Monitor Interest Rates
As you navigate the homebuying process, monitoring current interest rates is important. The interest rate you pay at the time of your purchase is influenced by a number of factors, including current economic conditions and your current credit score. The total cost of your homeownership over the life of your mortgage is affected significantly by the interest rate for your purchase. A higher credit score helps increase your chances of taking advantage of the best interest rates.
Research Options for Down Payment Assistance
Essential to the homebuying process is having a down payment. Doing so can prevent additional expenses, such as the necessity of purchasing private mortgage insurance. You may be able to get help with your down payment or even lower your mortgage costs by researching and applying for special homeownership grants, loans and tax credits.
Wells Fargo is helping African-American prospective homebuyers get closer to ownership with its Advancing Homeownership Effort. This initiative is helping increase home ownership by growing financing opportunities for qualified African-American homebuyers. The 10-year diversity effort will not only provide $60 billion in home loans, supporting at least 250,000 African-American homeowners by 2027, but part of its goal is also to increase financial counseling and education for prospective African-American homebuyers.
A successful homebuying experience starts with research before even searching for a property. Schedule time at your local bank with a homebuying consultant, including Wells Fargo, to explore and better understand financing options. Purchasing a home is a dream that should be available to all Americans, and it is possible when you take the right steps.