Guide to Latino Home Loans

Disclosure: Stilt is a lending company. Nonetheless, we are committed to recommending the best loan products to our readers when their needs are outside Stilt’s loan offerings.

Purchasing a property may not look like an easy task, but it’s actually much simpler than you would think. Being a Latino and trying to by a house may be more difficult, but there are many misconceptions about purchasing property as a Hispanic.

Even those who can’t buy a house with cash can possibly qualify for Latino home loans. Before you apply for your home loans you should first read this to understand how mortgages work. It will help you to make better decisions when you purchase your home.

Buying a Home as a Hispanic

You face some obstacles every day and many of them as a result of your heritage. You face pay inequality and some ladies even face gender-based discrimination. Though all these issues toughen your home buying efforts there are some misconceptions about buying real estate as a Latino.

Misconceptions about Hispanics in the Real Estate Industry

Some misconceptions about Hispanics in the real estate market are made without concerning any statistics. Those ideas are entirely false. Here are a few of the more prominent ones.

Misconceptions about Hispanics and real estate:

• ­Hispanics want to live in predominantly Hispanic neighborhoods – Many Hispanics don’t mind to look for homes in neighborhoods that aren’t predominantly Latino.
• Hispanics don’t want to own property – This is a common myth in the real estate industry. Large parts of the Latino community actually do want to own property.
• Hispanics are all low to moderate-income earners – Some real estate agents or property sellers are concerned about the Hispanic community’s ability to finance a purchase. Many Latinos are super successful and can easily buy homes cash. Those who can’t may still have the opportunity to buy a home with Latino home loans.
• All Hispanics only want Spanish speaking real estate professionals – Many Hispanics speak more than just Spanish. They are well proficient in English to complete a home purchase in the U.S. Though some Hispanics may prefer a professional who can speak Spanish and English too, many are perfectly fine with working with an English speaking real estate professional.
• Hispanics don’t have bank accounts – For some reason, people believe the Latino community is unbanked. This is false. Many Hispanics already have a bank account by the time they get to a lender. They do possess the means to facilitate a mortgage and/or home purchase.

These misconceptions could perhaps be an obstacle to Hispanic homebuyers. These won’t be a problem anymore when you apply for your Latino home loans, however.

4 Big Home Buying Concerns for Latinos

The aforementioned misconceptions may be somewhat imaginary, but the following concerns are in fact true obstacles to Hispanic homebuyers. These challenges may halt your home buying plans altogether if you don’t sort them out. They are as follows.

Credit Scores

A credit score is a vital part of your Latino home loan hunting efforts. People with bad credit scores struggle to get mortgages. Unfortunately, 17% of the Hispanic community was denied conventional loans due to bad credit scores. Follow tips to improve your credit score to increase the likelihood that you’ll get a mortgage for the home you want to buy.

Stronger credit scores also get cheaper loans. The interest rates offered to people with strong scores are lower than those offered to people with weak credit scores. A lower credit score helps to cheapen the monthly installments required by mortgages. You could also settle debt with a lower interest rate much faster than the same amount of debt with a higher interest rate.

Mortgage requirements were tightened right after the housing crisis. Prepare well and secure a good credit score to get cheaper mortgage options.

Intergenerational Mortgage Payments

Some Hispanic families don’t have a single breadwinner who can service a mortgage alone. Intergenerational mortgage payment options help a family to buy a home collectively by adding more people to the list who service the required payments.

Though this may sound like a good option it could make things harder if you don’t use it correctly. All members who help make payments towards the mortgage have to prove their income. It places all members and the whole family at risk of eviction if one member loses their job.

It’s the same issue with cosigned loans. A guarantor can help someone to get access to credit by providing their creditworthiness as security for the loan taken out by the beneficiary. It’s a noble cause, but it could be tough if you can’t trust the person who you are cosigning for. You need to repay the loan if the actual borrower defaults.

Language Barriers

A mere 4% of mortgage professionals and 7% of real estate agents are Hispanic. Many Latinos who only speak Spanish struggle to get the help they need to get their best and cheapest mortgages. This could also further complicate matters when Hispanic buyers want to negotiate home prices.

You need to find ways to bridge the language barrier to facilitate a smoother home buying process. Most services in the U.S. are offered in English. You might not get access to the deals you need if you don’t speak English (or at least use someone who can translate to Spanish for you).

Even real estate professionals can benefit if they offer their services in Spanish as well. Find ways to cater to the Hispanic community and you will immediately get access to a larger market. Now you can sell your listings to the Latino community as well with immigrant-friendly lending services.

Income and Down Payments

Many people in the Latino community made their way to the U.S. in search of better opportunities. They are from poor backgrounds and only found better jobs here. Their income is not yet as high or as established as it could be. They then struggle to get the mortgages they need to buy homes. This low-income state initially has a bad effect on their credit scores as well which places even more pressure on their financial wellbeing.

A low income also makes it much harder to save up for a proper down payment. Most mortgages require a down payment. A down payment is good. Some mortgages require a down payment of up to 20%. People who can’t make down payments lose the opportunity those mortgages hold. Some lenders may require undocumented immigrants to make even higher down payments. These high down payment requirements could be a massive barrier to Latino home loans. But there may be a way to still make a down payment on the house you want to buy.

The Importance of a Down Payment

It’s very important to make a down payment (if possible). A down payment is an upfront deposit towards the purchase of the home. It helps to decrease the likelihood that the value of the home will fall below the value of the outstanding balance of the mortgage.

A mortgage worth more than the house itself causes a negative net worth. This means you are repaying a debt that is actually worth more than the value of your home. Even worse, you can’t sell the home to settle the debt. The total income made from selling the home is less than the outstanding balance of the loan itself.

A down payment also lowers the interest rate on a mortgage. Homes with higher down payments have less debt on their mortgage. Anything paid as a down payment lessens the amount of debt incurred in the mortgage. This means the likelihood that someone will settle a mortgage increases as the amount paid as a down payment increases. Therefore, many lenders offer better interest rates to customers who make larger down payments when compared to customers with the same credit scores. A larger down payment helps you get access to better and cheaper mortgages.

How to Get a Personal Loan for a Down Payment on a House

What can you do when you don’t have enough money for a down payment? You are already in search of a mortgage, but you realize you need to provide a down payment to qualify for the mortgage. Can Latinos get access to some form of credit that could possibly finance a down payment for DACA home loans or Latino home loans? Yes, you can.

You could get a personal loan for a down payment. Personal loans are for whatever you need. Some lenders even help Latinos without a Social Security Number. If you find the right lender, you won’t even need a credit score to qualify for a personal loan. For instance, online lenders have alternative ways to determine your creditworthiness. You could still qualify for a loan and use it to make a down payment on your home. This can help you to qualify for a mortgage.

Conclusion

Hispanics and Latinos have a tough time operating in the real estate market in the U.S. since they face so many barriers. Some of the financial and others more social. These challenges could remove many prospective Latino home buyers from the market, but there may be a way in which this could be negated.

You can possibly still qualify for Latino home loans. Even if you struggle to make a sufficient down payment. You could get a personal loan for a down payment and still qualify for the mortgage you need. Go apply today and buy the home you need.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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