By Maria Figueroa, Enter- prise Retail Sales Manager, Bank of America, San Antonio
Over time, the definition of the American Dream has changed. Still, the desire to own a home remains a defin- ing attribute.
This rings especially true for Hispanic families, who are purchasing homes at faster rates than other minority demographics. In fact, an an-nual report by the National Association of Hispanic Real Estate Professionals found the national home ownership rate in Hispanic communities has increased from 45.6 to 47.1 percent in the past three years. In San Antonio- New Braunfels, the Hispanic home ownership rate is more than 59 percent.
Unfortunately, barriers to home ownership still exist for many first-time buyers, including those in Hispanic communities. While many would-be buyers can afford monthly mortgage payments, they often have difficulty saving for the upfront costs of home ownership, like a down payment and closing costs.
The San Antonio housing market presents its own set of challenges with a shortage of affordable housing and rising home prices. According to the Texas Quarterly Housing Re- port, the median home price in San Antonio rose more than 4% in Q2, a larger increase than every other major metro area in Texas.
So, the question remains: how do Hispanics make their home ownership dreams a reality?
Ask the right questions Once you’ve made the decision to purchase a home, the next step is to ask the right questions to fully understand the home buying process.
Prospective home buyers must understand how much they can comfortably afford. As a general rule of thumb, the mortgage payment should be no more than 30 percent of the pre-tax household in- come. If you’re unsure, try setting aside the equivalent of your potential mortgage payment each month and gauge whether you can comfortably live within the new budget.
One of the most pressing concerns for home buyers is the down payment. Although a 20 percent down payment is ideal – it helps avoid private mortgage insurance (PMI) costs, which can increase your monthly payments – there are loans available that require a substantially lower down payment, including some with a down payment as low as three percent and no mortgage insurance requirement. Grants to be used toward down payment and closing costs may also be available from lenders, as well as from cities and municipalities. For example, Neighborhood Housing Services of San Antonio’s Down Payment Assistance program provides a variety of home ownership opportunities for first-time homebuyers, with low inter- est rates, low monthly payments and a maximum fixed Down Payment Assistance of $10,000 for 20 years. Creating a plan Once you know what’s ahead, you can create and execute a plan to move beyond the role of home buyer and into the role of homeowner.
First, create a budget. The budget should include a detailed account of all revenue streams and all expenditures. Then, create a line item on the budget that outlines the anticipated cost of home ownership, including planned and unexpected maintenance costs.
Next, if necessary, go to work on improving your credit score with two goals in mind: first, keep the total debt you owe below the total amount of credit available to you; then, reduce your debt-to-income ratio by mak- ing greater payments toward high-interest loans and credit cards. Do not close your credit accounts, as your credit his- tory plays a significant factor in determining your score.
Finally, take advantage of the plethora of resources available in your community. Potential home buyers can seek assistance on down payments from a number of resources in San Antonio. In addition to the Neighbor- hood Housing Services of San Antonio Down Payment Assistance program, the City of San Antonio also offers a Home ownership Incentive Program, as well as a First Res ponders Home buyer Assistance Program tailored specifically to first res ponders and full-time City of San Antonio police and fire department employees. The Texas State Affordable Housing Corporation also offers loan programs to help first time home buyers.
Additionally, talk to your financial institution about pro- grams and grants for which you may qualify. For instance, Bank of America recently announced it was bringing a new Down Payment Grant program to San Antonio as part of its $5 billion commitment to help more than 20,000 families purchase a home. Through the program, San Antonio home buyers may be eligible for the grant amounting to three percent of the home purchase price (up to $10,000) to be used toward a down payment, with no re- payment necessary. Bank of America also offers a closing cost grant which, when combined with the Down Payment Grant, may allow qualified home buyers to receive as much as $17,500 toward the purchase of a home.
With the right support and guidance, home ownership can be a reality for every family in every community.
Maria Figueroa is an Enterprise Retail Sales Manager for Bank of America in San Antonio.