By Amanda Rosenblatt
Amanda Rosenblatt is a writer for Federal Home Loan Centers in San Diego. You can follow them on Twitter @fedhomeloan or check out their site FedHomeLoan.org.
The Haitian population in America is steadily growing. As of 2009, the Census Bureau stated New York had the second largest population of Haitian Americans, with an average of 0.3 percent of Haitians living in each state of America.
With more Haitian families laying down roots in America, many are considering pursuing home ownership in the face of rent prices increasing with each passing year.
Take a look at the below q&a on how the HUD FHA home loan program can make your home-ownership dreams come true.
What are the benefits to using an FHA home loan instead of one I get directly from a bank?
Though these loans can seem very similar on the surface, there are some big differences between a conventional loan and the FHA. The FHA home loan, which is a federal home loan, will be more flexible to you if you’ve gone through financial hardships in the past.
With the FHA home loan, you can be approved for this loan within two years of a Chapter 7 bankruptcy, 13 months of a Chapter 13 bankruptcy with on time payments, and you can also be found eligible for the Back to Work, which will shorten these waiting periods.
For foreclosures and short sales, three years is the typical waiting time, unless the Back to Work program is approved for you. With a conventional home loan, you can see wait times after such financial adversities go up to seven years.
One of the biggest variances between the two loans is that the FHA loan can have an interest rate of about 1 percent lower than conventional. Though this does not sound like a lot, let’s put this into numbers with a hypothetical $200,000 home loan.
Let’s say your FHA home loan has a 3.75% interest rate versus 4.25% with a bank, and with both options, you’d have 30 years to pay off the loan. After a 3 percent down payment for conventional and a 3.5 percent down payment on the FHA, your principal payment with interest would be $954.36 with conventional and $909.45 with the FHA.
With the FHA, you will pay close to $50 a month less than conventional on principal interest alone, which is a difference of over $16,000. This is a lot of money and therefore, a huge difference between the two loan types.
What are the salary requirements to qualify for a FHA home loan?
There isn’t a typical salary where you qualify for the FHA home loan. The main factors that go into being pre-approved for an FHA home loan lay in your credit score (can go as low as 580 in the tristate area), your employment history, and your debt-to-income ratio.
In terms of salary with the Haitian-American population in the tristate area, the median salary of a New Yorker is $57,683 (NYC is a little lower at $51,865), while Connecticut is $69,519 and New Jersey is $71,637. Because of the sizable Haitian population in the tristate area, those of this identification who are part of the workforce are also part of this median.
If I was not born in America, will I still be able to get the FHA home loan?
Even if you do not have a green card, you will be found eligible for the FHA home loan. As long as you have a social security number, a work history of at least two years and a credit score, you can enter the pre-approval process for the FHA home loan.
Why should I purchase a home when it is easier to rent?
There are two benefits to owning a home versus renting. The benefits are both monetary and societal.
Money wise, let’s say you are paying $1,500 a month on an apartment. Though the apartment will include certain typical fees like water, waste and sewage, the cost of living will be constant for the rest of your life and it will increase. If you were to pay a similar, or even lower cost, monthly amount on a mortgage, you will be done paying for your home after a certain time period. That is money you can then reroute to other aspects of your life.
The other benefit to owning a home is that you will experience less stress. You will not worry about your landlord selling your apartment as a condo or evicting you for factors such as having visitors over a lot, owning certain pets, or not being able to afford rent increases. You also do not own your apartment and without the guarantee of a permanent situation, you know you will have to deal with the struggle, wait lists and other factors of finding another apartment.
Also, home ownership grows communities to be stronger and safer. With a home you own and have so much emotionally and financially invested in, you will be more concerned with helping to keep your home and your neighborhood safe.
You will have a home so that when you grow your family and expand Haitian culture. It will be a piece of property you can hand down from generation to generation. Even if you are not growing a family, you can take care of the home and grow equity on it, which will get you money back from your investment.
If you are a Haitian-American seeking home ownership in American, which includes New York, New Jersey or Connecticut, please contact Federal Home Loan Centers at FedHomeLoan.org.
If you have served in America’s military, you may also contact VAHomeLoanCenters.org. The author of this piece is Amanda Rosenblatt, who works for both Federal Home Loan Centers and VA Home Loan Centers in San Diego.