Purchasing a home for the first time calls for a celebration for many families, but a national study shows that celebration happens a lot less for African Americans, who are less likely to own a home than any other group.
A statewide program is working towards closing the inequality gap by helping more families purchase their first home, but funds are limited so people need to apply as soon as possible.
After renting for more than a decade, Angelique Boyd purchased her first home in South Suburban Chicago Heights.
“It was really in my spirit to get a home because that’s what I always wanted to do,” she said.
According to a study by Zillow and the National Urban League, Blacks make up 46.5 percent of homeowners, compared to whites who make up 73.9 percent. The study found that African Americans experience the highest loan application denial rates. When applying for a conventional loan, they are 2.4 times more likely than whites to get denied. Overall, Black people are less likely to apply for a mortgage than any other ethnic group.
The Illinois Housing Development Authority’s Welcome Home Illinois Program was launched April 1st and has already helped more than 6,200 buyers, said Dan Osborne, the agency’s marketing manager. Those homebuyers have reserved more than $720 million in mortgage financing to date, he said.
Boyd said she had been looking for a home for more than a year and wasn’t having any luck. When a friend referred her to another Realtor, she learned about Welcome Home Illinois. With the help of the program, it took only two months to find a home.
“My process was so fast,” Boyd said.
The program is simple. Eligible first-time homebuyers are given $7,500 to put towards a down payment. Other perks include a below-market interest rate at 3.625 percent for a 30-year fixed mortgage. Interested applicants have to either be first time homebuyers or have not owned a home within the last three years. They also must have a credit score at or above 640 to qualify.
Stephanie Harris is a lender at US Bank and said that the first thing she asks prospective homebuyers for is their ideal mortgage note.
“That helps me calculate affordability,” she said.
The next question is savings and Harris said that most haven’t saved. In that situation, she directs them to agencies in their area and shares information about Welcome Home Illinois.
Margaret Wooten has worked as a housing counselor for 27 years and she is also the director of the Chicago Urban League Development Corporation. One of her responsibilities is to provide housing counseling tools for participants of the organization’s First Time Homebuyers Program.
Wooten works closely with those interested in purchasing their first home and she said she tells everybody the same thing.
“My most important advice to potential homebuyers is to make sure your credit is in order before applying for a mortgage because if it’s not, you either won’t qualify for a mortgage or you will get a high rate so that it will be unaffordable,” Wooten said.
Harris said some first time homebuyers don’t really understand what’s included in a mortgage and that lack of knowledge is a common problem
The typical monthly mortgage payment consists of interest, principal, homeowners insurance and property taxes. She finds out what they are capable and willing to pay each month.
“They may be looking at an affluent community where taxes are high,” Harris said.
Wooten said the Urban League gets people to really think about how much they can afford and what percentage of their income goes towards bills and savings.
“We are determined to be the leader of the next generation of homeowners and to do that we need to educate people on credit,” she said. “We do lot of financial empowerment and one-on-ones.”
Boyd said she used to think that it took two people to get a home together, but as a single woman, with no kids, she was able to accomplish what she once thought was impossible.
She encourages people to see if they are eligible for the Welcome Home Illinois program because if it helped her, it can help others.
“There are a lot of single people and a lot of single moms out there who think something like this, they can’t do because they feel like they need two people to do it, and that’s not true,” Boyd said, who calls her story a success story.
“A lot of people don’t get to own their own homes and pull into their own driveways and they have two and three people helping them out with the bills and stuff,” she said. “I’m one person and I can do this, IHDA helped me do it.”
Anyone who has questions can call the toll free number at (877) 456-2656 or visit WelcomeHomeIllinois.gov
Welcome Home Illinois Requirements:
-Contribute one percent or $1,000 of the purchase price, whichever is greater
-Purchase a one- or two- unit property within Illinois
-Live in property as primary residence
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