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Categories: Rev. Dr. Charles Butler,
By Rev. Dr. Charles Butler
Prospective first-time home buyers are in the middle of the ‘open house’ season. You will be able to find several beautiful homes on the market in Harlem and other neighborhoods.
Surprisingly, most of these properties’ market prices are quite high, higher than expected. However, these high values will not stop the buying frenzy. We are still experiencing a seller’s market, and the competition for available homes has exceeded our expectations. Buyers are offering more than they can afford! Do not get caught up in this buying frenzy.
Entering this housing market is no small feat-it requires serious financial readiness. You need to have a substantial amount of money saved for the down payment and closing costs, typically ranging from $ 30,000 to $ 35,000. Most lenders will expect to see a robust credit history, with at least 3-4 active accounts and no late payments over the past 24 months.
If you do not have the minimum number of trade lines, some lenders will accept non-traditional lines of credit. This will include proof of monthly on-time payments on accounts such as rent receipts, cell phone bills, and utility bills. The lenders will generally require a minimum of twelve months’ payment history and still prefer one major credit account.
Harlem Congregations For Community Improvement, Inc. (HCCI) offers a program called Lending Circles. This program is designed to increase your savings and improve your credit score. It works like a susu, except it is reported to all three credit bureaus as an installment loan. There are three savings amounts: $50, $100, and $200. If you are interested in learning more about this program, go to www.lendingcircles.org and enter my zip code, 10039. We now have 30 first-time homeowners who benefited from this program.
The Lending Circles program will resolve two major obstacles for many first-time buyers: not having enough money saved and having limited credit history. Once you have overcome these two barriers, you will be ‘mortgage ready’. You can now select your lender and start the pre-approval process. The pre-approval process will determine the maximum amount loan limit a lender is willing to offer you. But your monthly household budget will give you a clear picture of the amount you can comfortably afford to spend. Remember, the bank will base their calculations on your gross monthly income, but you live on net income.
Start the process by attending HCCI’s home buyer workshop seminar series. You will learn the steps involved in the process, industry terminology, and several available grant programs to assist you in the purchase. There will also be presentations on assembling your home buying team and factors to consider when shopping for a home.
If you are interested in attending the HCCI workshop or have questions regarding the home buying process, contact Rev. Dr. Charles Butler at (212) 281 4887 ext. 231 or email cbutler@hcci.org.
