We have witnessed the tremendous buying power of Hispanics as their homeownership rates skyrocket. And yet, many Spanish-speaking customers run into roadblocks when it comes to financing. According to the National Association of Hispanic Real Estate Professionals, Latinos experienced a 19.1% home purchase denial rate for conventional loans and were 81% more likely to be denied than their non-Latino counterparts.
In my experience as a Cuban American and managing director of Ameriuno, the bilingual division of Amerifirst Home Mortgage, I see several reasons for this disparity. For one, many Hispanics save money in nontraditional ways and that presents barriers under existing underwriting guidelines. In addition, many in the Hispanic community strive to improve their economic condition by living in multi-generational households and move jobs more frequently to improve their cash flow. These realities are not acknowledged in the current system and can actually count against a loan applicant.
This is complicated by the fact that a large faction of the Hispanic community is unfamiliar with the document-intensive process, all of which must be completed in English. Right from the start there is confusion and fear surrounding the largest financial decision most people will ever make, compounded by the fact that many harbor distrust toward financial institutions, having experienced corruption in their home countries.
Many applicants come to the U.S. from Central and South America, where buying a home likely means paying in cash. They are not familiar with the particulars of managing credit, keeping tax records or even establishing a savings account. A lot may not understand how to manage credit or how the things that they do can affect their credit. Little things like not paying a cell phone bill on time may seem inconsequential, but it can be the reason their loan is denied.
Financial education helps bridge the gap, so we developed a “Home Opportunity Center” in Kissimmee, Florida to support them.
Hispanics are very family-oriented and gain comfort from community. Like most people, they are drawn to those who are familiar to them and quite frankly, speak their language. The center has the feel of a welcoming community center, not a loan office. We encourage customers to bring their family members to participate in their decision.
If you are trying to reach Spanish speaking homebuyers, here are some things to consider: