How to Begin the Homebuying Process
A decade ago it seemed that everyone was buying a bigger house, thanks to the easy lending standards of the housing boom. But once the housing market crashed, lenders tightened their loan requirements, leaving many African Americans with no choice but to rent. In fact, in 2013, African Americans were on the receiving end of only 4.8 percent of mortgage loans, according to data collected from lenders. “Because the process has become more difficult, it takes more preparation to become a homeowner today than in the past,” says Marcia Griffin, founder and president of HomeFree-USA, a non-profit homeownership and financial empowerment organization based in Riverdale, Maryland. If you’re ready to pursue your dream of homeownership, Griffin suggests that you follow these steps to increase your odds of success. Check your credit. The average credit score for FHA loans – those insured by the Federal Housing Administration — is 690, according to Harvard’s Joint Center for Housing Studies’ The State of the Nation’s Housing 2014 report. Yet many mortgage applicants are being denied with credit scores of as high as 722, Griffin says. The first thing you should do is get a free credit report at If there are mistakes on it, contact the credit bureaus to get them corrected. If your score is below the high 600s, take steps to bring it up such as eliminating debt and paying bills on time. Get educated. The more you know about the homebuying process the better, says Griffin.  Go to to look for an organization like HomeFree-USA that is approved by the U.S. Department of Housing and Development. Such organizations work with consumers to determine whether they are likely to qualify for a mortgage and help them to become mortgage-ready if they are not. Housing counseling agencies provide free advice, financial education and guidance about the homebuying process so consumers know what to expect and how to identify the best mortgage products for them. Get funds in order. Just because you have the money you need to qualify for a mortgage doesn’t mean you have the money, Griffin points out.  Homebuyers must make a down payment, which can range from 3.5 percent to 20 percent of the price of the house depending upon the type of loan. For a $150,000 home, 3.5 percent down is $5,250.   Closing costs are another expense, costing homebuyers typically between 2 and 5 percent of the purchase price, according to real estate marketplace Zillow.  There are programs that provide down payment and closing cost assistance, Griffin says. A home counseling agency can tell you about programs that your lender or your realtor may not be aware of, she adds. Get a preapproval. Before going to a realtor, make sure you’ll be able to get a loan. To get a mortgage pre-approval, a lender will check your income and credit to make sure that you meet the qualifications to be approved for a mortgage. At that point, take your pre-approval lender to a realtor who can help you locate a house that you can afford. For many, a home is a big part of their financial foundation. “By following these steps, you can get into a home that will help you get to the next level in wealth building,” Griffin says.

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