The Barriers to Homeownership in the Hispanic Community

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The Barriers to Homeownership in the Hispanic Community - Latina on Real Estate

The 2015 State of Hispanic Homeownership Report by NAHREP (the National Association of Hispanic Real Estate Professionals) highlights 5 barriers to homeownership. Here is a brief summary of those barriers followed by an excerpt from the report:

  1. Access to Affordable Mortgage Credit

“…A lack of access to affordable mortgage credit continues to be one of the largest homeownership barriers. In particular, Latino homebuyers continue to experience higher loan denial rates. From 2013 to 2014, overall denial rates from home purchase loans by Latino applicants were 18%, versus 11% for non-Hispanic white applicants.”

  1. Lack of Alternative Credit Scoring & Appropriate Underwriting

“A study by the Consumer Financial Protection Bureau (CFPB) found that about 15% of Hispanic consumers are ‘credit invisible.’ …Credit invisibles do not have a credit report generated by the three major credit reporting agencies. An Additional 12% of Hispanic consumers have “unscorable” records under the FICO model…. Those with unscorable records do not have enough information to generate a FICO credit score. Essentially, 27% of the Hispanic consumer population are not accurately rated by the predominant credit scoring mechanisms used in the U.S. today and thus are prohibited from access to credit.”

  1. Limited inventory

Available housing inventory continue to be a problem for interested owner occupants across the country. In October 2015, 25% of home sales in the U.S were to investors. While this is a decrease over prior years, it is still 8% higher than in 2000.”

  1. Language

“In a recent NAHREP member survey of top producers, 38 % of respondents indicated more than half of their clients require Spanish as a main language in the home purchase transaction. In an already complex transaction, this additional language element makes the need for culturally competent professionals all the more critical.”

  1. Lack of Culturally Competent Mortgage and Real Estate Professionals in Emerging Hispanic Markets

“While there is very little available data on the subject, it is estimated that 7% of real estate agents and 4% of mortgage professionals are Hispanic. These figures are substantially lower in the Midwest and Southern U.S. where Hispanic populations are growing the fastest. Competent professional guidance is needed most with first-time buyers and Hispanics are expected to account for more than 50% of first-time buyer activity nationwide. Even more challenging is that approximately 25% of all Hispanic buyers say they prefer a real estate agent who can assist them in Spanish.”

In conclusion,

If these issues are stopping you from buying your dream home, sit down with a local real estate professional to talk about your options. There are many new programs available that could help you make your dream of owning your home a reality!

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