| One of the biggest disparities that exist between people of color and Euro-Americans is the wealth disparity. For example, while the average African American household has $6,000 in net worth, the average Euro-American household has a net worth of $88,000.This financial disparity means that Euro-Americans have many more financial options with which to deal with the challenges and opportunities of life. The Money Conference, sponsored by Asset Builders of America and its partners has sought for the past six years to educate African Americans, Latinos and other people of color how to accumulate wealth through savings and wise investments. One of the biggest investments that people make -- and goes a long ways toward explaining the wealth disparity -- are rates of homeownership. While 76 percent of Euro-Americans own their own home, the rates for African Americans and Latinos fall just below 50 percent. Jeff McAlister, who will be presenting Homeownership 101 at this year's Money Conference August 18, has been working at the Wisconsin Housing and Economic Development Authority (WHEDA) for the past three years trying to increase the rate of homeownership in Wisconsin's communities of color. "Basically, I will be providing interested people an overview of the steps to homeownership starting with a kind of the A to Z of homeownership," McAlister said during an interview with The Capital City Hues. "I will be giving them a little taste of what they will need to know and entice them into wanting to move forward into homeownership." And WHEDA stands ready to help low and moderate income individuals enter the homeownership market. "The whole purpose behind WHEDA is low to moderate homeownership," McAlister said. "It really depends on where your income is. We look at your credit report. We're going to look at what your income is. It may end up that you will need to save some money over a period of time. We'll look at how much house you can afford. We look at what you are making and what you can afford and go from there. And there are down payment assistance programs that can be coupled with WHEDA loans. There are avenues to help you find funds to get a home." "If you qualify for a WHEDA loan, you automatically qualify for our Home Plus loan," McAlister continued. "A Home Plus loan provides another $10,000 that can be used for a down payment. You don't have to use it all for down payment. It can be a draw over the first two years of owning the home. Let's say you need some gutters fixed, you can go back to the $10,000 or what's left of it and draw from that to pay for the repair." As it is in any market, the homeownership market has its share of people who are trying to maximize their dollars at your expense. And those just entering the market can fall prey to unscrupulous individuals who make things appear differently than what they really are. "One of the things that we stress in our workshops is the importance of the home inspector because they are going to point out things that would be costly to the homeowner down the line should they purchase the home," McAlister said. "There may be some things you want to have worked out in your agreement before you close on the house. So if the roof needs to be repaired, they can take something off of the cost of the house or have them repair the roof before you purchase it. All of those contingencies can be worked out before the purchase." And then, there are the predatory lenders, people who entice naive individuals into buying a home that they cannot afford, only to give the house up later on after they have failed to make the payments and their house is foreclosed upon. "Predatory lenders charge high interest loans," McAlister emphasized. "They have a lot of hidden costs in there like service fees and other charges. When you go to your closing, you think your closing amount is $2,000 and it becomes $4,000 with all of these hidden costs. In our workshop, we give people an example of what a good faith estimate looks like and what a truth in lending statement should look like. Predatory lenders will shop around and find you the best deal that in the long run will cause you trouble like a balloon payment that you don't know about." And then there are the interest-only loans where the individual doesn't pay down any of the mortgage principal -- or accumulate equity in the house -- until their payments dramatically increase at some point in the future. "For someone just starting out, we wouldn't advise taking out an interest-only loan," McAlister said. "Are you going to be able to adjust to that bigger payment?" Another type of loan is the adjusted rate mortgage. When interest rates are low, many new homebuyers are enticed into the market due to the lower monthly payments they may have to pay. And they borrow to the highest extent possible to get their dream home. But when interest rates start to climb and their mortgage payments are adjusted to reflect the higher interest rates, some families then cannot make their payments and their dream home is foreclosed upon. "We advise people to get fixed rate mortgages because you always know what your payments are going to be," McAlister said. "It may seem fine at the time because you can get a lower interest rate, but it will go up and then how are you going to adjust? How will you pay the extra money?" In order to navigate the homeownership market, McAlister and WHEDA suggest people use the services of professionals like lawyers and realtors to help you close that deal on your new home. While it might cost a little more money upfront, it could save you many headaches -- and dollars in the long run. McAlister enjoys giving presentations at the Money Conference because it is an excellent and simple forum for all members of the family -- adults and children -- to become financially savvy. "You need to tap into the youth at an early age and get them into the mindset of financial thinking and saving money and thinking wisely about what to do financially down the line," McAlister said. He stands ready to help families make their homeownership dreams come true at the 2007 Money Conference. The Money Conference is being held August 18 at the James C. Wright Middle School, 1717 Fish Hatchery Road, 8:30 a.m. - 3:30 p.m. Call Richard Entenmann of Asset Builders at (608) 663 6332, or e-mail him at info@assetbuilders.org for more information. |
| 2007 Money Conference Touting homeownership By Jonathan Gramling |
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| Jeff McAlister and WHEDA are trying to raise homeownership rate of people of color in Wisconsin |