Homeownership is a major part of the American Dream. But, the path to achieving this dream can be quite difficult. While progress has been made to improve fair housing access, households of color still face unique challenges on the road to owning a home. Working with the right real estate experts can make all the difference for diverse buyers.
It's clear that achieving homeownership is more challenging for certain groups because there’s still a measurable gap between the overall average U.S. homeownership rate and that of non-white groups. Today, Black households continue to have the lowest homeownership rate nationally (see graph below):
Homeownership is an important part of building household wealth that can be passed down to future generations. According to a report by the National Association of Realtors (NAR), almost half of Black homebuyers in 2023 were first-time buyers. That means many didn’t have home equity they could use toward their home purchase.
That financial hurdle alone makes buying a home more challenging, especially at a time when affordability is a major concern for first-time buyers. Jessica Lautz, Deputy Chief Economist at NAR says:
“It’s an incredibly difficult market for all home buyers right now, especially first-time home buyers and especially first-time home buyers of color.”
Because of these challenges, there are several down payment assistance programs specifically aimed at helping minority buyers fulfill their homeownership dreams:
Even if you don’t qualify for these programs, there are many other federal, state, and local options available to look into. And a real estate professional can help you find the ones that best meet your needs.
For minority homebuyers, the challenges that remain can be a point of pain and frustration. That’s why it’s so important for members of diverse groups to have the right team of experts on their sides throughout the homebuying process. These professionals aren’t only experienced advisors who understand the market and give the best advice, they’re also compassionate educators who will advocate for your best interests every step of the way.
Let’s connect to make sure you have the information and support you need as you walk the path to homeownership.
On the road to becoming a homeowner? If so, you may have heard the term pre-approval get tossed around. Let’s break down what it is and why it’s important if you’re looking to buy a home in 2024.
As part of the homebuying process, your lender will look at your finances to figure out what they’re willing to loan you. According to Investopedia, this includes things like your W-2, tax returns, credit score, bank statements, and more.
From there, they’ll give you a pre-approval letter to help you understand how much money you can borrow. Freddie Mac explains it like this:
“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. . . . Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”
Now, that last piece is especially important. While home affordability is getting better, it’s still tight. So, getting a good idea of what you can borrow can help you really wrap your head around the financial side of things. It doesn’t mean you should borrow the full amount. It just tells you what you can borrow from that lender.
This sets you up to make an informed decision about your numbers. That way you’re able to tailor your home search to what you’re actually comfortable with budget-wise and can act fast when you find a home you love.
If you want to buy a home this year, there’s another reason you’re going to want to be sure you’re working with a trusted lender to make this a priority.
While more homes are being listed for sale, the overall number of available homes is still below the norm. At the same time, the recent downward trend in mortgage rates compared to last year is bringing more buyers back into the market. That imbalance of more demand than supply creates a bit of a tug-of-war for you.
It means you’ll likely find you have more competition from other buyers as more and more people who were sitting on the sidelines when mortgage rates were higher decide to jump back in. But pre-approval can help with that too.
Pre-approval shows sellers you mean business because you’ve already undergone a credit and financial check. As Greg McBride, Chief Financial Analyst at Bankrate, says:
“Preapproval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements. A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”
Sellers love that because that makes it more likely the sale will move forward without unexpected delays or issues. And if you may be competing with another buyer to land your dream home, why wouldn’t you do this to help stack the deck in your favor?
If you’re looking to buy a home in 2024, know that getting pre-approved is going to be a key piece of the puzzle. With lower mortgage rates bringing more buyers back into the market, this can help you make a strong offer that stands out from the crowd.
