Much like the pioneering men who broke with tradition to write and sign the Declaration of Independence, being a single black woman and owning a home can be seen as subversive.
The classic trope is of two parents, two kids, a dog, minivan and – in suburbia’s past -- white. It is not by accident, but by design that blacks have lower rates of homeownership. Instances of redlining, predatory loans and domestic terrorism, protected by law and in the instance of redlining perpetuated by the federal government, are well known and documented when it comes to the challenging history of black homeownership in America. Due in large part to these past injustices, and the recession, which hit black homeowners particularly hard, black homeownership rates still suffer in comparison to other groups. Today, about 72 percent of white households own their home, while that number is about 43 percent for African-Americans.
Buying a home is often seen as a mythic undertaking: First you must scale the mountain of paperwork, swim through the torrent of worry and doubt, and finally arrive, battered and bruised, only to find your goal just out of reach.
For those who have purchased a house, this may sound familiar. For those who haven't, what I just wrote may keep you up this evening, wondering whether to continue the quest. To those I say, push forward.
My adventure into this space in Washington, DC, where prices are high and the perfect house hard to find, was fraught with indecision and I am not alone. Some of my considerations (and yours) are below:
1. Washington is a transient city. So, will I even be here in five years? Well, maybe not. However, the market in D.C. (even during the recession) was very strong with most houses selling within 90 days. Additionally, people are often looking to rent, so, even if I do move, I'm a landlord whose mortgage is covered and pays a property management company to do the dirty work.
2. I should wait until I find my life partner so we can buy TOGETHER. As Mandy Hale said, in The Single Woman: Life, Love and a Dash of Sass: "Hope for love, pray for love, wish for love, dream for love...but don't put your life on hold waiting for love." You can't predict when you will find your special person; it may be tomorrow, it may be five years from now, years when you could have paid money toward your principal instead of rent. In fact single women account for 17% of homeowners, while single men account for only 7%.
3. I need 20% down, right? Well that depends. There is no doubt the more you put down the better. Heck, if you are in a position to purchase a house in cash, please do! I didn't have 20% or even 10% down. Yet I was able to take advantage of loan products that allowed for less, still offered a competitive interest rate (below 4%) and didn't tack on additional fees such as Private Mortgage Insurance (PMI). If you look hard enough and know the right questions to ask, there are options.
4. What if you lose your job? You want a home purchase to be a blessing, not a curse. You should focus on paying off all of your consumer debt (and ideally your student loans) before purchasing a house. You should aim to save an emergency fund of at least 3 to 6 months of expenses (this would include your mortgage payments, homeowners insurance, food and extras). Once you have done this, you have built up your financial security. If you lose a job or experience some other unexpected expense you will be OK, for a while.
5. Do black women do this? Looking at my friends, "Yes!" We are buying homes, paying far less than we did in rent and slowly building equity. The median rental price for a one-bedroom D.C. apartment is $2,000 according to a study by Zumper, a national rental search site. Compare this to the average mortgage payment for a $230,000 one bedroom condo in Washington, DC with 4% down. Depending on APR, it is between $960 and $980, according to Zillow. After accounting for property taxes, condo dues and escrow for home improvements, you are saving money monthly.
6. A home is too much space. There are multiple home options and types, including studios, one and two- bedroom condos, single family homes, townhouses, co-operatives and even house boats.
7. What if I encounter a spider! This makes me laugh, but it is a real concern. When you are homeowner and something breaks, or a spider appears, you don't have a landlord to call. I found it empowering. For instance, my toilet handle broke. I went on YouTube, visited Home Depot and 15 minutes and $15 dollars later it was fixed. For larger projects, I call handymen and women for help.
8. “But, I'm alone.” No you are not, and in fact I would suggest that you link up with friends to learn about their experience buying a home. This was invaluable during my home-buying experience, as I found myself asking other homeowners about how they found the right realtor, right inspector and right bank. My mentors also helped me in the final stages of closing, as I felt every emotion from elation to buyers’ remorse to uncertainty and everything in between.
For the average American, the home is the bedrock of wealth building and a forced savings tool. You are contributing to your principal (the part you own) every time you make a mortgage payment.
Following the recession, sub-prime loan crisis and ensuing foreclosures, many Americans are still weary and there are plenty of pitfalls to avoid. Banks will often pre-qualify you to purchase a home that is far outside of your ability or willingness to pay monthly. Make sure you know what you are willing to spend and try to stay at or below 25% of your take home pay. Buy a home that you like. Don't worry about friends or family; they are not paying your mortgage. And finally, know that owning a home is not necessarily a lifetime commitment. You can sell, you can move and, most importantly, you can build your wealth.
Many celebrate Independence Day, as the day the Declaration of Independence set America on a track to be independent from Great Britain. This Independence Day I plan to celebrate the liberation of the United States and the freedom and peace of mind I have as a home owner.
Kylie Patterson is the Senior Program Manager for the Racial Wealth Divide Initiative at CFED and a participant in the Allies Reaching for Community Health Equity Public Voices Fellowship with The OpEd Project.