Gloria Diaz | Financial Coach | The Financial Clinic
HOME OWNERSHIP IS POSSIBLE!
Homeownership is an important way to build wealth and pass it on to future generations. However, owning a home can seem like an unreachable dream for many customers, especially with the current reality of wage stagnation. According to The Pew Research Center’s, report on wages and purchasing power of the average American:
“Despite the strong labor market, wage growth has lagged economists’ expectations. In fact, despite some ups and downs over the past several decades, today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers” Desilver, 2018.
Statistics like these can make many customers feel like homeownership may just be a pipe dream. Despite dismal statistics, there are a few resources out there that can make this dream a reality.
The Department of Housing and Urban or HUD offers grants and programs that allow for more flexibility than traditional paths to homeownership. Programs like HomeFirst Down Payment Assistance are available in all 50 states. They allow clients to purchase their first home with less than 20% of the down payment (in some cases even less than 10%) and can also offer flexibility with credit requirements. Depending on the consumer and the program being offered, help towards downpayment or closing costs are also offered.
On top of the state programs, HUD also offers specialized programs that include:
- Good Neighbor Next Door (GNND): Single-family homes at 50% off the list price of the home for people in Law Enforcement, Teachers, Firefighters, and EMTs.
- The Public Housing Homeownership Program: Provides public housing residents the opportunity to own the home they live in
- Indian Home Loan Guarantee Program: Allows American Indian, and Alaskan Native families, Alaska villages, or tribes, or tribally designated housing entities to get into a home with a low down payment and flexible underwriting.
To participate in these programs, customers have to complete a home buying course. It is a requirement, however, they are offered for free or at a low cost. They walk the client through every aspect of the home buying process, providing a strong foundation and understanding of the financial requirement needed so they can handle the large monetary commitment.
Although such programs offer flexibility, the basics of financial health still apply. Some questions to consider when speaking to a customer who is interested in owning a home are: is your customer fiscally ready to be a homeowner? How is their credit and credit history? Are there any issues that need to be addressed on any of their reports? How much can they afford to buy? That break down should include all debts and spending costs. How much of a down payment do they need to save for? What strategies can I suggest to help them meet their savings goal?
Here are a few Change Machine’s tip sheets that can help with this process:
These are great tools for coaches to get the conversation about homeownership going, and begin to build a road map for customer goals.
The dream of owning is possible, with determination, planning and creative thinking, we can help make our customer’s dreams come true.