> Advice For Borrowers
Expanding Home Ownership Remains A Challenge
by Broderick Perkins
Americans believe home ownership provides the best long-term investment potential, but several obstacles are in the way of expanding that potential to underserved markets. Fannie Mae's 2003 National Housing Survey released yesterday found that while 84 percent of Americans say a major reason to own a home is as a good long-term investment, only 39 percent said that an IRA or a 401k is a safe investment with a lot of potential. In other investment categories, only 26 percent said that a savings or money market account was a safe investment with potential; 20 percent said the same about mutual funds and 12 percent pointed to stocks as a safe-long term investment with potential. Also, 87 percent of those surveyed said their homes increased in value since they first purchased them, and 76 percent reported the increase was more than they expected. Washington, D.C.-based research firm Penn, Schoen & Berland Associates conducted the housing survey of 715 adults, age 18 years or older, between Dec. 17, 2003 and Jan. 6, 2004. Unfortunately, the lack of adequate general home buying knowledge, income, credit information and confidence is preventing some Americans from enjoying what could be their most valuable asset. The survey found: There's a significant difference between the general public and ethnic minority communities in their levels of accurate information about the home-buying process. Sixty-five percent of English-language Hispanics, 60 percent of African Americans and only 27 percent of Spanish-language Hispanics know that a mortgage does not require a 30-year commitment, compared to 74 percent of all respondents. Sixty-four percent of English-language Hispanics, 57 percent of African Americans and only 22 percent of Spanish-language Hispanics know that it's not necessary to have a perfect credit rating to qualify for a mortgage, compared to 73 percent of all respondents. An affordability gap divides renters, lower-income Americans, and those who tried to buy but did not, from homeowners and the general public. Thirty-five percent of all renters have tried to become homeowners but failed. Affordability was the most common reason cited. Many believe their credit histories will make it difficult for them to secure a mortgage. Credit concerns, after affordability issues, are the second leading reason (39 percent) renters overall offer for having not bought a home. The same is true for 49 percent of English-language Hispanics, 46 percent of Spanish-language Hispanics, and 42 percent of African Americans who cited credit concerns as the primary reason they have not yet bought a home. Gaps in general home-buying information, affordability and credit information combine to reduce home-buying confidence in some Americans, the study found. English-language Hispanics (3.8 on a confidence scale of 1 to 5) were nearly as confident as the general public (3.9) that they could complete the different home-buying steps, but African Americans (3.6) and Spanish-language Hispanics (3.4) were less confident. African Americans were particularly less confident in their ability to complete the home-buying process without experiencing discrimination (3.4 compared to 4.0 for the general public), while Spanish-language Hispanics were least confident about obtaining a mortgage (3.2 compared to 3.9 for the general public) and finding a real estate professional (3.1 compared to 3.5). Overall, 49 percent of all Americans think it is harder to buy a home than it was in their parents' generation compared to 46 percent who think it is easier. Sixty-two percent of renters, 59 percent of those making under $35,000 a year, and 53 percent of English-language Hispanics believe it is more difficult, but 56 percent of Spanish-language Hispanics believe it is easier. Fifty percent of African Americans said it is easier today and 46 percent said it is harder. | 
