Programs aimed at increasing homeownership among African Americans

February is Black history month. Past real estate industry practices, educational opportunities, lack of access to the G.I bill for housing and educational benefits among other things have made it more difficult for minority families to enter the housing market and create generational wealth.

Minnesota has the fourth largest racial and ethnic homeownership gap in the nation. The disparity continues to increase. In 2005, 32% of Black families owned their own home. Today, only 19% of Minneapolis homes and 16% of St. Paul homes are owned by Black families. With interest rates and home prices  increasing, it is becoming more difficult for many  families of color to purchase a home. Homeownership programs are created with the understanding that generational wealth is usually built through real estate.  The programs are designed with features to help lower income buyers achieve the American dream of homeownership. The typical homeowner has 36 times more wealth than a renter!

Build Wealth Minnesota is a 501(c)3 non-profit organization that has raised over $100 million dollars to help start closing this homeownership gap. It is their goal to reduce the gap by 15% over the next 7 years by providing 9,000 low barrier mortgages to borrowers with low incomes and help them become homeowners in that same time frame. They have several programs … today we will be highlighting just one.

Purchasing a Multiunit Building

To work towards bridging the homeownership gap, a new program has been developed – a multifaceted program to help buyers of color purchase a multi-unit (2-4 unit) property. The borrower(s) must live in the property as a primary residence, but they can rent out other unit(s) generating additional income and, over time, create wealth through paying down the principal and realizing annual property appreciation.

The Build Wealth Program will provide a forgivable loan of $25,000 towards the purchase of the property. This loan can also be layered with other assistance programs that the buyer may qualify for in order to obtain even more down payment and closing cost assistance. The $25,000 assistance loan is forgiven at a rate of 20% per year. So, if you lived in the property for 5 years, this assistance loan would be completely forgiven. This program does require successful completion of a home-buying class and a landlord training class.

To further facilitate long-term financial success, monies are available for making improvements to the property. If a property needs repairs/renovations, there are loans available at 0% interest for the entire cost of rehab. The renovations must make sense. An appraiser would need to believe that upon completion of the work, the property would be worth at least the balance owed on the mortgage plus the cost of repairs.

A third component of this program is designed to increase savings. Every family can create a savings plan, where every family member can set up a savings account. Every $1 dollar saved will be matched with an additional $.10. These savings are to be used towards acquisition of a home, education, starting a business or retirement.

There are also monies available for the purchase of single-family homes. However, there does not appear to be standard criteria for this program. When asked about the single family program, Your@Home Team was told the amount of assistance available to a buyer depends upon the borrowers’ income, where they are purchasing the home, the amount of assistance needed, the price of the home, the total amount of the buyers’ savings and the median income of the neighborhood. So, to access this program and find out if it would be beneficial to your situation, you will need to consult a loan officer who works with these programs. Opportunities beyond this program are also available and they are designed to help you achieve your goal of homeownership and help close the African American homeownership gap, too. If you are interested or have more questions, contact Your@Home Team and we can get you in touch with a lender who works with this program.

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