WASHINGTON, June 2 /PRNewswire/ — A hot real estate market has prompted record home equity borrowing and growth in adjustable rate mortgages and interest-only loans, but bankers say these products aren’t for everyone.
“Buying a home is an individual’s biggest financial investment,” said James Ballentine, director, Grassroots and Community Outreach for the American Bankers Association. “We want to make sure consumers are well educated about the mortgage process so they can choose a loan that’s right for them.”
Expanding upon that idea, the ABA is providing information on the mortgage process — including information on the role credit scores play in loan decisions, tips on choosing a mortgage, when to take out a home equity loan, and how to avoid predatory lending scams — in June, National Homeownership Month.
Over the years, bankers have developed mortgage products that evolve with the economy and consumer demands. For example, getting into a home in the 1970s was difficult due to double-digit interest rates, so banks created financing options to overcome the hurdles.
Today, interest rates remain low, but housing prices are rising faster than salaries, which has driven the development of products such as adjustable rate mortgages and low down-payment financing that help keep payments reasonable and expand homeownership opportunities to more consumers.
Despite these innovations, homeownership in minority communities still lags. According to the U.S. Census Bureau, homeownership rates for African American and Latino households are 25 percent lower than the rates for non- minority households. One of the reasons for this disparity, according to Freddie Mac research, is that misconceptions remain about buying a home. Additionally, about half of African Americans and Latinos believe to buy a home they must have almost perfect credit, have held the same job for at least 3 years, and have a 20 percent down payment.
To view ABA’s tip sheets developed for Homeownership Month visit http://www.aba.com/, click on Press Room and visit our Mortgage Lending Issue of Interest page.
Source Citation (MLA 8th Edition) “Some Mortgages Don’t Fit All Consumers.” PR Newswire, 2 June 2005. Infotrac Newsstand, http://link.galegroup.com/apps/doc/A132940492/STND?u=fairfax_main&sid=STND&xid=e42afa5d. Accessed 24 Mar. 2019.