Bank of America, TD Bank, and Chase have all revealed plans to expand their range of adaptable choices.
Some mortgage lenders have increased the variety of home loan options they provide in order to make homeownership more accessible to persons living in neighbourhoods with a higher concentration of low-income and minority residents.
Research that was released earlier this year by the National Association of Realtors brought attention to a homeownership gap that exists between white customers and persons of colour. Grants, lender credits, and loans with no required down payment are some of the ways that financial institutions including Bank of America, TD Bank, and Chase are attempting to assist bridge the affordability gap.
- When compared to white Americans, the homeownership rates of black Americans, Asian Americans, and Hispanic Americans are lower, according to research from the industry.
- There has been an increase in the number of mortgage lenders that are making it easier for minority populations to become homeowners.
- Those who meet the requirements with one of the participating lenders may be eligible for assistance in the form of a grant programme, a credit from the participating lender, or both.
Research Conducted by the National Association of Realtors Indicates a Racial Divide in Homeownership
The National Association of Realtors (NAR) published research in March 2022 that highlighted how homeownership rates might vary greatly between white Americans and Americans of colour, notably Black Americans. The report focused on the disparity in homeownership rates between these two groups.
Specifically, the research provides the following breakdown of homeownership rates in 2020 according to the racial and ethnic group:
|Race/Ethnic Group||Homeownership Rate|
The research also outlines some of the many obstacles that individuals of colour face when trying to be authorised for mortgage loans in comparison to white customers.
Mortgage Lenders Working to Lower Monthly Payments and Increase Affordability of Homeownership
People living in low-income and minority neighbourhoods sometimes have a tough time accumulating enough money for a down payment and closing expenses, which is one of the barriers preventing them from becoming homeowners.
As a direct consequence of this, a number of home lenders have increased the scope of existing programmes or developed brand new ones in order to give help with these issues. Listed below are just a few examples:
Bank of America: In the month of August, the financial institution began testing out its Community Affordable Loan Solution programme in five different cities: Charlotte, Dallas, Detroit, Los Angeles, and Miami. Homebuyers who meet the requirements might perhaps get a mortgage loan with no down payment, no closing fees, no mortgage insurance, and no minimum credit score requirement if they live in a region that has a population that is more than 50% Black and Hispanic Americans.
TD Bank: In March, the bank made the announcement that it will be introducing a new mortgage product called TD Home Access Mortgage, which would provide additional flexibility for the Hispanic and Black populations. Homebuyers who meet the requirements and purchase a house in one of the participating markets are also eligible to receive a credit of $5,000 from the lender. This money may be used toward the buyer’s down payment or the buyer’s closing fees, and the buyer is not required to return the credit.
Chase: In February of 2021, Chase made the announcement that it would be expanding its Enhanced Homebuyer Grant programme. Under the terms of the expansion, Chase will provide a grant of $5,000 to qualified homebuyers in more than 6,700 locations that had a predominantly Black population. The grant, which does not need to be repaid, can be used for a down payment or closing costs, and homebuyers can also qualify for an additional $500 if they finish a certified education course and get a Dreamaker home loan through Chase. Both of these requirements must be met in order to receive the grant.
These are just some of the initiatives that home lenders have taken to address the racial disparity in homeownership, but there have been many more. Homebuyers who are considering making a purchase should do their homework and investigate a number of lenders, both locally and nationally, to learn more about the variety of affordable mortgage choices.
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