Buying a house is what many consider the “American Dream.” But the process can be a challenge, especially when the English language gets in the way. That’s how many in Omaha’s Latino community feel about their journey towards buying a house in the metro.
The qualifications for purchasing a house can feel overwhelming; you need to have enough money, a visa or residency, speak English, have a high credit score, pay high taxes and more.
In 2020, home purchases in the United States during the pandemic by Latinos was at 49% in comparison to 47.5%, according to a report from The National Association of Hispanic Real Estate Professionals (NAHREP). The report states that 52.68% of Latinos own a home in Nebraska.
According to the report, this increase was due to the approximately 3% mortgage rates in the midst of the COVID-19 pandemic. The report states the rates provide a great opportunity to invest in property, on top of the financial aid programs offered by lenders — that is, the banks.
NAHREP estimates that by the year 2040, the proportion of Latinos who own their own homes will be around 70% with respect to non-Latinos.
In Omaha, despite the many Spanish-speaking real estate agents, there are still barriers and fears that prevent Latinos from buying a home and keeping a home or apartment rented.
Ana Pérez, a real estate agent at LifeStyle Realty, Realty One Group Sterling, 254 N. 114th St., mention that the most complex thing for certain community is to understand the process of closing the property title and the entire process that buying a house entail. She’s a guide to help all communities knows which path to take, making it a simpler process.
Abe García, another real estate agent for Realty ONE Group Sterling said the path for buying a home isn’t very clear.
“There is a lack of resources or sometimes (some agents) don’t want to take the time to explain the programs that are out there,” he said. “(Buyers) don’t know where to start and feel like they don’t have much of a choice.”
Both Garcia and Perez eradicate the myth that to have a home you have to have a high credit score. Sure, it helps, but it is something that does not determine if you can buy a house, they said.
The surreal 20% down payment
Over the last trimester, the price of houses increased by 14%, and the average price at the end of January was $247,679, according to Zillow.com
If someone wants to buy a house at that price, they would need to provide a down payment of around $49,535, which is the 20% that banks usually request to provide a regular loan.
To this you must add the expenses from taxes, insurance, and the process of closing the property title, which is a cost on top of the initial one, which could be of around $5,000 to $10,000, as mentioned in an interview by Latino title and closing agent Itzel Gonzalez at Charter Title & Escrow, whose office is at 407 N. 117th St.
However, to buy a home, the initial 20% payment is not always provided, explained Jeremy Murray, real estate agent with Realty ONE Group Sterling.
“There are programs like NIFA that you can apply to (…) you need to have a real estate agent that knows how to negotiate in your best interest and know about loan programs to make sure you get the right lender that suits you, who can adapt to your needs,” Murray said.
He pointed out that the programs help cover some expenses, such as the initial or the closing title.
Expert’s suggestions
Experts say the first step to becoming a homeowner is to know if you are prequalified. For this, the bank asks for requirements such as a W2 form and tax records, among other things. If the person does not have a social security number (SSN), it can be done through a taxpayer number (ITIN). However, with the latter, banks tend to be stricter regarding the requirements.
Prequalification is kind of an endorsement in which it is presumed that a buyer is serious about the purchase process.
That is why Juanita Incontro, an expert in the mortgage process, commented that, throughout her career, she has noticed that Latinos tend to buy everything in cash and avoid bank credits. “Cash is just that, cash, and it is not verifiable (by the bank),” she said.
She pointed out that you should not be afraid of buying a house because you have a low credit score. It is worth noting that the banks are guided by the Fair Isaac Corporation (FICO) record, which establishes a credit score of 300 to be bad and one of 850 to be excellent. A credit score is low when it is below 580. From there, depending on the bank, it can be between acceptable, good, very good or excellent (850).
Incontro verifies said data to give the buyer a chance to meet with a real estate agent.
Mistakes that are usually made along the way
When looking to buy a home, is a real estate agent needed? Experts say the answer lies with the buyer. What is certain is that the real estate expert is able to find a home that not even the buyer had in mind and it can also make the purchase process more bearable, thus avoiding mistakes.
“I had a case in which in the middle of closing the title, I explained to the buyer that he needs his wife’s signature, but she was in El Salvador. The buyer never mentioned that he was married until the paperwork was done. We had to redo everything. Now, when he wants to sell the property, no matter what, he will need the signature of his spouse,” said Itzel Gonzalez, who leads the Hispanic division oflocal real estate group Charter Title and Escrow.
“This could be considered a fraud since Nebraska is a marital state. Also, if you are married in one place, that is valid anywhere in the world,” she added.
During the process of buying the house, which can take around a month and a half, the buyer should not acquire other credits. “This is a common mistake. They go into buying a house and then ask for credit elsewhere during that verification and purchase process. That is not something you should do,” pointed out González.
When asked if it is better to rent or to buy, experts suggest that it is better to buy, because it is a long-term investment.
Programs for new buyers
The Nebraska Investment Finance Authority (NIFA) is a program of the State of Nebraska that helps those with low income to cover conventional down payment costs (20%) or closing paperwork on a home. A minimum of $1,000 is invested and the percentage for mortgage payments can be as low as 3%.
Before applying, you must have:
- A lender
- Attend classes for obtaining a homebuyer certificate. (Check website)
- Seek a real estate agent
- Apply for the NIFA
Documents that are required:
- Tax records
- If you have not paid taxes, specify why.
- Copy of a W2.
- Proof of sustenance or alimony payments.
- Homebuyer Certificate.
- Bank statement copies
- Copy of a DD214 for qualified veterans.
Neighborhoodlift. This is another financing program between Wells Fargo Bank and NeighborWorks® America that offers assistance to those who qualify and pass their homebuyer education classes. The program can contribute $15,000 for the down payment or the closing payment of title.
To apply, you will need:
- Complete an eight-hour education course from their list of providers.
- Mortgage pre-approval for this program.
- Buyers must have an overall income below $80,480.