Is Homeownership Right for You?

By Rev. Dr. Charles Butler

For those who are now just coming to the realization that owning a home makes good sense, congratulations for reaching that conclusion. However, trying to buy a home now is Harlem can be an expensive investment. For the past 10-15 years or so the prices of homes in Harlem have been skyrocketing faster than a speeding bullet! 

The great rush to buy a home in Harlem is over and for most of the Harlem’s residents it is now too late to buy that multi-family brownstone that you always dreamed about. If you are fortunate enough, you can be selected from a New York City’s Department of Housing, Preservation and Development (HPD) lottery program to win a subsidized unit (usually coops or condominiums) at an affordable price. But those opportunities are a long shot at best as the lottery housing stock in Harlem has dwindled down to almost nothing.

The irony is that when Harlem was affordable, the few people who could afford to buy wanted nothing to do with Harlem and moved out. They thought it would be a bad investment to buy a home in a community that was run down, with shrinking property values, and there would be very little return on their investment. They wanted to live in a safer environment and thought that moving farther out of the inner city they would create a better home and raise the standard of living for their family. 

Most of the banks also had ‘red lined’ the Harlem community to the extent that those prospective buyers who had the foresight of realizing the true value of the property in Harlem could barely find a bank to approve their mortgage. Plus, only a few people really understood the advantages of homeownership especially the tax benefits and the creation of building up intergenerational wealth through accumulating equity in the home.

Now that Harlem has become a very attractive community, everyone wants to purchase a home in the area. The parks are clean, and crime has decreased. It is ironic because for many people, those who were born in Harlem, the ones who have lived in Harlem all their lives, those who have worked in Harlem, attended schools in Harlem, and have suffered through all the plight, poverty, and unpleasantness are now unable to purchase a home because of the high prices. 

Start by attending an approved housing counseling workshop

Harlem Congregations for Community Improvement, Inc. – HCCI’s Home Buying Education and Counseling Program has been approved by Housing Urban Development (HUD). All the counselors are HUD certified. Last year we assisted over seventy-five individuals and families were successful in completing the home buying process through applying the principles taught in the home buying workshop and became first-time homeowners! It is still a risky proposition, but education is power and HCCI is empowering our clients to make informed and educated decisions.

To understand the home buying process, it is important to first attend a home buyer Education Workshop Seminar Series. This workshop will inform you of what steps are essential to prepare you for purchasing a home. The basic steps in the process are as follows:

  • Attend the workshop
  • Prepare a monthly household budget to create a spending /saving plan
  • Pay off/reduce existing credit debt
  • Shop for a lender and get pre-approved
  • Determine how much you want to spend and the type of home you want to buy
  • Shop for a home and get inspections
  • Make an offer
  • Sign purchase contract after it has been reviewed by your lawyer
  • Apply for mortgage and grants if eligible
  • Prepare for closing
  • Get keys move in 

Single family home also includes cooperatives (coops) and condominiums (condos) as well as a single stand along home. There are also 2-3-4 multi-family homes. These are homes that have the primary residential unit for the owner but will also has rental units within the structure. This can be ideal because the rental income can supplement your monthly mortgage payments. The banks will also include a portion of the projected monthly rental income in calculating your approval amount. 

But you must be cautious about these types of properties because as the owner, you will be responsible for the entire amount of the mortgage payment whether your tenant pays their rent or not. This is one of the major reasons many homeowners will face foreclosure because they have not received the rental payments from the tenants and will be forced to take a tenant to housing court to collect rent in arrears. These legal actions can be very costly for the homeowner.

But if you were set on purchasing a home in Harlem do not despair. Despite the high prices there are still some affordable properties to be purchased in Harlem. The most affordable units being sold are the Housing Development Fund Corporation (HDFC) coops. These units are reasonably priced and provide an excellent opportunity to create equity to make a larger purchase. 

Although this is still a seller’s market, now is actually a good time to buy. The interest rates are extremely low and those homeowners wanting to sell are seeing many potential buyers submitting very competitive offers. Be careful not to get caught up in a bidding war. Do your research to determine how long the property has been on the market and if there are any violations on the building. 

Set a realistic goal and stick to it. 

It is important that if you truly want to buy a home you must understand that wishing and hoping will not make it happen. You must set a realistic goal and stick to it. This means you must start with making a monthly household budget. Your budget will tell you (1) how much money you can save every month; (2) how much you can afford to spend on a home; and (3) how soon you will be ready to buy. If you are serious about owning a home, you must make sacrifices in your lifestyle to save as much money as possible. If you genuinely want to buy a home, no one can stop you except yourself. 

Maintain a positive attitude throughout the process, you must have…

  • Desire to purchase a home and create a better lifestyle and standard of living for your family, and to desire not to continue paying rent to your landlord
  • Determination to purchase a home – do not be give up if it does not happen over night, it takes time, continue to build up savings and eliminate credit debts pay off bills as fast as possible to avoid high interest fees
  • Discipline to aggressively save your money, eliminate wasteful spending, make changes in your lifestyle, the goal now is to purchase that home
  • And above all do not get discouraged and do not quit pursuing your home buying dream. Maintain a positive attitude throughout the process and you can achieve your goal.

Also, many first-time homebuyers may be eligible for New York City’s Department of Housing Preservation and Development (HPD) Home First Down Payment Assistance Program forgive able loan program. This program will provide home buyers with 6% of the purchase price of the property up to $40,000 to be used for the down payment and/or closing cost assistance. There are six eligibility requirements that you must meet.

The Home Buyer Dream Program sponsored by the Federal Home Loan Bank of New York. This program will provide eligible first-time home buyers with a $9500 grant for down payment and/or closing cost assistance. You must use one of the participating lenders for the mortgage and meet the income and household guidelines. All these programs will be discussed during the workshop. 

There is also the State of New York Mortgage Agency (SONYMA) forgivable loan program. This program can you with either a down payment assistance loan (DPAL) or a closing costs assistance loan (CCAL). You can receive up to 3% of the price up to $15,000. You will have to pay a slightly higher interest rate of an additional .375%. 

Stay focused on your goal until you succeed in making your dream a reality. 

HCCI’s home buyer’s education consists of a monthly 4-part virtual workshop seminar series. The workshop meets on Thursday evening from 7:30 -9:00 p.m. Presentations will be provided by professionals in the home buyer process mortgage lending officers, real estate agents, real estate attorney, insurance agent, credit counselor, budget counselor, home inspector and a representative from the Attorney General’s office. If you are interested in attending the workshop or would like more information about the home buying process email Rev. Dr. Charles Butler at cbutler@hcci.org or call 212 281 -4887 ext. 231. 

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