Hispanic Millennials Seeking Education and Financial Stability Before Home Ownership
The Latino community has not eluded the country's recent economic turmoil.
The lingering effects of the recession caused an entire generation of graduates and post-graduates to reevaluate their options, take on low-wage jobs and retreat to their parents' home. Despite this, Latino millennials remain focused on their futures and determined to become future home owners.
Miriam De Dios, Senior Vice President for Affiliates Management Company and CEO of Coopera, a 7-year-old organization based in Des Moines, Iowa, spoke with Latin Post, sharing her insights about Hispanic millennials' intentions and preparedness when buying a home, and her personal experiences as a Hispanic millennial and home-buyer.
Born in Jalisco, Mexico and raised largely in Iowa and California, De Dios heads Coopera, a firm that helps to provide financial services to the Hispanic community through credit unions. De Dios' background in marketing, management, business and financial services, as well her position as a Hispanic millennial, had made her an expert in the field of Hispanic millennial home ownership.
According to De Dios, Hispanic millennials are more interested and determined to purchase a home than the rest of the millennial population. However, they are not necessarily prepared to do so; instead they see home ownership as a long-term goal, rather than a short-term one. Approximately 45 percent of Hispanics ages 18-34 live with their parents; they are 20 percent more likely than whites to live in a multigenerational home, and nearly 60 percent of bilingual, bicultural Hispanics ages 18-29 live at home.
For young Hispanics, education and business ownership are the main indicators of success, a statement that's more true of foreign-born Hispanic millennials (57 percent) than U.S.-born Hispanic millennials (45 percent). Getting a job and having financial stability are prioritized over home ownership, but the desire for home ownership isn't lost. Hispanics (68 percent), compared to non-Hispanic whites (64 percent), believe that part of the American dream is buying a home. Likewise, 64 percent of Hispanics define the American dream as gaining a college education, compared to non-Hispanic whites (50 percent).
"Going to college and starting my career were my top priorities. I didn't buy my first home until I felt I was in a good financial position to do so, and that was at the age of 25," said De Dios. "Another interesting factor, Hispanic millennials' preparedness to buy homes has to do with our views on money. Many Hispanic millennials, including myself, learned to be averse to debt from our parents, especially if our parents are first generation Hispanic immigrants. We grew up in households where if we did not have the cash to pay for things, we often didn't buy it."
De Dios shared that Hispanic millennials tend to carry $10,000 less in debt than their non-Hispanic counterparts. More than 31 percent have no debt at all -- one reason for this is because Hispanics are likelier to live with their parents for longer (45 percent) than non-Hispanics (39 percent). Buying a home could mean "going into debt for many Hispanic millennials, and so forgoing buying a home is also a debt reduction measure."
That said, some sources have said that Hispanic millennials are the driving force behind real estate growth. In fact, the National Association of Realtors stated that millennials claim the greatest share of recently purchased homes, with Hispanics representing 20 percent of those numbers. When seeking homes, the top ten markets for millennials are Austin, Texas; Salt Lake City, Utah; San Diego, California; Denver, Colorado; Washington, D.C.; Houston, Texas; Las Vegas, Nevada; San Francisco, California; and Dallas-Ft. Worth, Texas, areas that offer shopping, restaurants and offices. Additionally, non-traditional markets (such as Indianapolis, Indiana and Nashville, Tennessee) will see the fastest-growth of Hispanic millennials in the next five years (2013-2018).
Nationwide, however, many Hispanics -- particularly foreign-born -- are underbanked and unbanked, and being detached from the financial mainstream (savings, checking, good credit score, etc.) makes it difficult buy a home. According to the 2013 Fannie Mae National Housing Survey, "Hispanics: A Key Driver of Future Homeownership Demand," Hispanics continue find it difficult to obtain affordable mortgages because of the requirements needed to obtain a mortgage. Forty percent of the general population believes that it's harder to purchase a home today, compared to 63 percent of Hispanic homeowners.
De Dios shared that one way to ease the painful process is gaining financial education and learning more about home ownership before embarking on the tiring journey.
"I had started my career, I was earning a salary, I had some savings for a down payment (not nearly the 20 percent that's recommended) and I knew I had a good credit history that I built up after finally being able to pay off college debt with my new salary; all things I thought would be needed for the process," said De Dios. "Beyond that, I was unaware of how to shop for the best mortgage, I did not understand the benefit of paying for mortgage points, I didn't understand the pros and cons of having an escrow account, I didn't realize the implications of buying an older home that had also been foreclosed, and above all, and I underestimated the expenses that came after buying my home. At the time, I felt prepared, but there was a lot I did not know, which I wish I would have."
First time home-buyers should be aware of local credit unions, nonprofit financial institutions, as well as housing associations and other community organizations geared toward helping buyers understand "financing options, how to avoid predatory lenders, how to evaluate a home, how to make an offer, and who you need to work with including real estate agents, lenders, home inspectors, insurance agents, etc, amongst other helpful advice."
Often, courses will inform prospective buyers about special first-time home-buyer educational programs or special financing options. And institutions that offer general financial education, specific homeownership education and lower interest loans, including mortgages, tend to be community-oriented and look out for their members. Future home-buyers should also look into Individual Development Accounts (IDAs), which can be used to save toward the purchase of an asset, such as a home. Funds are matched with grant dollars to maximize saving for that specific asset, which are great for first time home-buyers.
Find out more about De Dios on Twitter, and check out Coopera on their Twitter page.
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