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Owning a home is one of the key ways to build wealth. But for aspiring Black homeowners, it can be a difficult milestone to reach. New report from LendingTree.
Mortgage rejection rates among black homebuyers are twice as high as among borrowers in the nation’s 50 largest metropolitan areas, according to a study by an online loan marketplace.
When it comes to mortgage applications, an average of 18% of black borrowers are denied, compared to a 9% denial rate for the population as a whole.
LendingTree’s analysis is based on data from the Residential Mortgage Disclosure Act of 2020.
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“The problem is there,” said Jacob Channel, senior economist at LendingTree.
“But there is a solution. Black homebuyers should never lose their faith that they can never be homeowners,” he said.
The city with the largest gap between black borrower mortgage refusal rates and the population as a whole is St. Louis, where blacks account for 20.73% of the total population and 7.33% of the total population, according to a LendingTree study, with an overall difference of 13.40 percentage points. did.
Boston and Jacksonville, Fla. tied for second place, with a 13.34 percentage point gap between black mortgage denial rates and the population as a whole. In Boston, the percentage of black homebuyers was 20.85% compared to 7.51%. In Jacksonville, it was 25.01% versus 11.67%.
The three West Coast metropolitan areas yielded the most favorable results for black homebuyers. Seattle, San Francisco, and Sacramento, California.
San Francisco was in first place with a spread of just 2.35 points. He is 11.79% black compared to 9.44% of the total population.
Sacramento was next with a spread of 4.64 points. Overall it was 13.12% vs 8.48%. Seattle had him in third place, with him 4.83 points behind, 12.74% to 7.91%.
Progress has been made to give aspiring black homebuyers a more equal footing compared to the general population, but it’s been slow and gradual, Channel said.
a Recent National Survey 45% of black respondents said they own the house they live in now, compared to 55% who said they rent it.
This is lower than the 65% of all respondents who say they own their own home, the lowest compared to minorities such as Caucasians, Latinos, Asians and Native Americans, according to NPR. Research, presented by the Robert Wood Johnson Foundation. And the Harvard TH Chan School of Public Health discovered.
“There’s a lot of unconscious bias, and people don’t always understand that it exists or how to spot it in the first place and how to prevent it,” says Channell.
For blacks who hit a wall, it’s important to remember that it’s the millions of black homeowners in the U.S. who have been able to take out loans and secure home ownership, he said. Said.
“First of all, don’t let this discourage you completely,” the channel said.
If you believe you have been discriminated against, you may report it to your state attorney general or the U.S. Department of Housing and Urban Development.
As with all homebuyers, having a strong financial profile can help increase your chances of getting a loan approved. includes very few
There are programs to help borrowers with poor credit, such as loans from the Federal Housing Administration and programs at the state and federal levels.
According to the Channel, it’s important to remember that one rejection doesn’t represent all lenders.
“Don’t give up hope just because you have a rejected application or two,” he said.
“There are always options,” the channel added. “There may be other lenders out there who can work with you.”