I never planned on buying a house in my twenties. Growing up, I watched how my parents struggled to move from renting to homeownership even at the peak of their careers in their fifties. If buying a house were such a difficult dream for them to achieve, I didn’t see how I could possibly do it as a much younger person with one income.
It didn’t help that just a couple of years after I graduated from college, the news was suddenly full of stories about people who should have lived within their means but didn’t, people who shouldn’t have bought houses but did anyway. Okay, I get the message. I’ll keep renting! I thought. I was prepared to put off homeownership for a long time—until I married, or, if I stayed single, until I was much older and better established.
Then I started doing research for my Endeavors article about the Center for Community Capital’s plan, outlined in a book called Regaining the Dream, to increase the rate of homeownership among middle- and low-income people. Homeowners don’t need to be rich, the Center researchers say. They just need a lender who wants to help them succeed and won’t approve them for way too much money, and they need a predictable (30-year, fixed) mortgage without punishing fees. People who have those two things seem to do well at paying back their loans.
As I read Regaining the Dream, I noticed that some of these borrowers sounded a lot like me. They didn’t make tons of money. Some of them were single. And yet, the data said they were keeping up with their mortgages just fine. The thought started to creep into my mind: Maybe I should get one of these mortgages, too.
Through the research I did for my article, I found a whole network I never knew existed of nonprofits that help people without a lot of money or great credit history get loans and learn the financial skills they need to succeed as homeowners. In my part of North Carolina, for example, there’s Self-Help, the community development lender the authors write about in Regaining the Dream.
In towns around the country where housing prices are high relative to income—Chapel Hill, for example—there are policies that support affordable housing by requiring developers to build a certain number of homes that are sold at lower than market rate. This makes it possible for people who work for some of a town’s important institutions—public schools, government, universities, hospitals—to afford to own homes in the same places where they’re employed.
Because I work in Chapel Hill, I visited the Community Home Trust, an Orange County nonprofit that’s responsible for selling a lot of Chapel Hill’s below-market-rate homes. The Home Trust teaches a home-buying class where I learned exactly what’s in a loan application, what makes up a credit score, and why I should get a survey done on a property before I bought it. (They were right—you definitely should get a survey! It saved me from having to deal with legal complications with a property later on.)
After looking at a few houses, I ended up buying a little cottage at market rate in neighboring Durham, which is where I grew up. But I’m a big fan now of affordable-housing programs and of the community development lenders who loan to people—disproportionately women and minorities—whom other lenders consider too risky. And I’m grateful for the researchers who showed that good lending practices, not high incomes, are the key to successful homeownership.
My loan officer, Nate, told me that not one of his clients has ever defaulted on a loan. When I wondered whether his luck could hold, he laughed. “They’d better not default, with how careful we are about approving people now!”
Thanks for your confidence, Nate. I’ll try my best not to break your streak!