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Prepare to Prosper Part 2: Responsible Home Buying

Purchasing your first home could be another way to build your wealth. But lack of knowledge about the process may stop some from achieving their homeownership dreams. But if you’re ready to put down roots, these eight tips may be able to help you prepare, and prosper now and into the future.

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Purchasing your first home could be another way to build your wealth. But lack of knowledge about the process may stop some from achieving their homeownership dreams. But if you’re ready to put down roots, these eight tips may be able to help you prepare, and prosper now and into the future.

1. Consider your personal situation

Make sure you’re ready to take on the financial responsibilities of managing a mortgage, insurance, property taxes, utilities, and ongoing home maintenance before you buy.

2. Buy only what you can manage

A prequalification from a home mortgage consultant will help you understand your price range so you don’t fall for a house outside of your price range.

3. Don’t skip the inspection

Home inspections often identify problems related to the age and construction of the home including a sinking foundation, or simply a broken dishwasher.

4. Keep an eye on interest rates

When shopping for the best rates be sure to also compare the APR. The APR includes certain fees and represents the cost of the loan on an annual basis.

5. Prepare for down payment and closing costs

A down payment is required for most loan programs. However, a 20% down payment is not mandatory. In fact, qualified homebuyers may be able to put down as little as 3%. You should also prepare to cover closing costs, which could be another 3% to 5% of your loan amount.

6. Take advantage of programs

You may qualify for down payment assistance or even lower your mortgage costs by researching and applying for homeownership grants, loans, and tax credits.

7. Understand your borrowing choices

You have a lot of options when it comes to choosing your loan type so be sure to understand the difference between conventional and FHA (Federal Housing Administration) loans, and short and long term, fixed or adjustable rate loans.

8. Meet with a Home Mortgage Consultant

Get help demystifying the home buying process. A Wells Fargo Home Mortgage Consultant can help you find loans, terms and programs that may be right for you.

Through our Advancing HomeownershipSM effort, we hope to impact the declining homeownership rate among African Americans. We’ve committed to helping create more than 250,000 homeowners over the next 10 years by lending a projected $60 billion to African American homebuyers. Learn more at: wellsfargo.com/mortgage/jump/advancing-homeownership.

And if you have more questions about homeownership, come in to talk to a home mortgage consultant today.

Get more tips to prosper when the Prepare to Prosper financial series returns with a focus on entrepreneurship.

© 2018 Wells Fargo Bank N.A. all rights reserved. Member FDIC.

 

#NNPA BlackPress

If You’re Poor in America, Debtor’s Prison is Real

NNPA NEWSWIRE — The people who are jailed or threatened with jail often are the most vulnerable Americans living paycheck to paycheck, one emergency away from financial catastrophe, according to a 2018 report from the American Civil Liberties Union.

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Few tools are as coercive or as effective as the threat of incarceration, ACLU report authors said. (Photo: iStockphoto / NNPA)
Few tools are as coercive or as effective as the threat of incarceration, ACLU report authors said. (Photo: iStockphoto / NNPA)

By Stacy M. Brown, NNPA Newswire Correspondent
@StacyBrownMedia

Despite a centuries-old Supreme Court ruling that outlawed the practice, debtor’s prison remains very much alive in America, experts told NNPA Newswire. Being poor is challenging enough, but some states, like Missouri, have continued to punish those of lesser means.

A federal class-action suit claims thousands of those living in Missouri were jailed because they couldn’t pay off fines – essentially, a debtor’s prison and conundrum for the poor.

Pro Publica reported that four years after the suit was filed, the plaintiffs are still waiting, and wondering if the deck is stacked against them.

The report details the plight of Tonya DeBerry, who, in January 2014, was driving through an unincorporated area of St. Louis County, Missouri, when a police officer pulled her over for having expired license plates.

“After discovering that DeBerry, 51, had several outstanding traffic tickets from three jurisdictions, the officer handcuffed her and took her to jail,” according to Pro Publica.

“To be released, she was told, she would have to pay hundreds of dollars in fines she owed the county, according to her account in a federal lawsuit. However, even after her family came up with the money, DeBerry wasn’t released from custody.

Because DeBerry still owed fines and fees to the cities in Ferguson and Jennings, she remained jailed and her attorney likened it to “being held for ransom.”

“The crisis that is going on in Missouri is taking place all around the country. It is a rising issue amongst people who cannot afford to pay court fees and, or fines,” said Attorney Dameka L. Davis of the Davis Legal Center in Hollywood, Fla.

“I believe the more appropriate action is to implement programs and services that are free or offer a person to do community service in lieu of paying fines or fees,” Davis said.

“Our system is perpetuating a money-based system, which in turn systematically affects minorities and people of color,” she said.

Matt C. Pinsker, an adjunct professor of Homeland Security and Criminal Justice in the L. Douglas Wilder School of Government and Public Affairs at Virginia Commonwealth University, said the problem runs deeper than in Missouri.

“The American people would be horrified if they knew of just how many laws still exist which send poor people to prison over their inability to pay fines, court costs, and related expenses,” Pinsker said.

“It is a tragedy and absurdity that we will essentially have debtors’ prisons here in the United States of America,” he said.

In DeBerry’s case, Pro Publica reported that after the Michael Brown killing, “the city slowly stopped jailing people for not being able to pay fines as the news media showed the victims were primarily black and the Justice Department made clear that what Ferguson had been doing was wrong.”

Still, the lawsuit remains unresolved with the city seeking dismissal.

In 2018, the American Civil Liberties Union detailed more than 1,000 cases in 26 states in which judges, acting on the request of a collection company, issued warrants for people they claimed owed money for “ordinary debts, such as student loans, medical expenses, unpaid rent and utility bills.”

The ACLU said it’s a system that breeds coercion and abuse.

The report concluded that, “with little government oversight, debt collectors, backed by arrest warrants and wielding bounced check demand letters, can frighten people into paying money that may not even be owed.”

Few tools are as coercive or as effective as the threat of incarceration, ACLU report authors said.

As an example, one 75-year-old woman subsisting on $800 monthly Social Security checks, went without her medications in order to pay the fees she believed were required to avoid jail time for bouncing a check.

And as one lawyer in Texas, who has sought arrests of student loan borrowers who are in arrears, said, “It’s easier to settle when the debtor is under arrest,” the report’s authors found.

The people who are jailed or threatened with jail often are the most vulnerable Americans living paycheck to paycheck, one emergency away from financial catastrophe, the report said.

Many were struggling to recover after the loss of a job, mounting medical bills, the death of a family member, a divorce, or an illness.

“They included retirees or people with disabilities who are unable to work. Some were subsisting solely on Social Security, unemployment insurance, disability benefits, or veterans’ benefits – income that is legally protected from outstanding debt judgments,” the report’s authors wrote.

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Waters to Facebook: Today’s Hearing is Only the First Step in Our Oversight and Legislative Process

NNPA NEWSWIRE — “Facebook has proposed backing Libra tokens with government currencies and government guaranteed securities, and holding them in a so-called Libra Reserve, to be governed by Facebook and its partners. Ownership of government assets on such a massive scale without proper oversight threatens to concentrate government influence in the hands of a few elites. Ultimately, if Facebook’s plans come to fruition, the company and its partners will wield immense economic power that could destabilize currencies and governments.”

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Congresswoman Maxine Waters has emerged as one of the strongest legislators, community organizers, and champions for women, children, seniors, veterans, people of color, and the poor. She was elected in November 2018 to her fifteenth term in the U.S. House of Representatives where she proudly represents California’s diverse and dynamic 43rd Congressional District.

WASHINGTON – Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, delivered the following opening statement at a full Committee hearing entitled, “Examining Facebook’s Proposed Cryptocurrency and Its Impact on Consumers, Investors, and the American Financial System.”

As Prepared for Delivery

Today we are here for a hearing on Facebook’s proposed digital currency, Libra, and digital wallet, Calibra, and their impacts on consumers, investors and the financial system. Our first witness is David Marcus, Calibra’s CEO. Following his testimony, a panel of experts will share their views on Facebook’s plans.

I have serious concerns with Facebook’s plans to create a digital currency and digital wallet and its efforts to enlist partners that expand its reach, like Mastercard, Paypal, Visa, Uber, Lyft, and Spotify. Facebook is apparently trying to create a new global financial system that is intended to rival the U.S. dollar. This venture is slated to be based in Switzerland, which has a history as a monetary haven for criminals and shady corporations. Facebook’s plans raise serious privacy, trading, national security, and monetary policy concerns, not only for Facebook’s over 2 billion users, who will have immediate access to these products, but also for consumers, investors and the global economy.

In addition, Facebook has proposed backing Libra tokens with government currencies and government guaranteed securities, and holding them in a so-called Libra Reserve, to be governed by Facebook and its partners. Ownership of government assets on such a massive scale without proper oversight threatens to concentrate government influence in the hands of a few elites. Ultimately, if Facebook’s plans come to fruition, the company and its partners will wield immense economic power that could destabilize currencies and governments.

Facebook’s proposed entry into financial services is all the more troubling because it has already harmed vast numbers of people on a scale similar to Wells Fargo, and demonstrated a pattern of failing to keep consumer data private on a scale similar to Equifax. Facebook remains under a 2011 consent order from the Federal Trade Commission (FTC) for deceiving consumers and failing to keep consumer data private. In the wake of the Cambridge Analytica scandal, in which Facebook provided 50 million users’ private data to a political consulting firm, the company will reportedly pay a record $5 billion fine to the FTC for data privacy failures. In addition, Facebook has allegedly: insecurely stored user passwords dating back to 2012; paid unsuspecting teenagers to download spyware; experienced a hack of nearly 50 million accounts; and experienced a software bug that granted third party access to 6.8 million users’ photos. It has also been sued by HUD and civil rights groups for violations of the Fair Housing Act in what amounts to modern day redlining. Facebook also allowed malicious Russian state actors to purchase and target ads in a campaign to influence the 2016 election.

I am also concerned about the lack of diversity in Facebook’s upper ranks, and fear that if these plans go forward, women and minorities and women- and minority-owned businesses may be excluded from participating fully.

In light of these and other concerns, my colleagues and I wrote to Facebook earlier this month to call on it to cease implementation of its plans until regulators and Congress can examine the issues associated with a large technology company developing a digital currency and take action. The Independent Community Bankers of America and others support this commonsense step.

Facebook’s plans also raise larger concerns about Big Tech’s expansion into financial services, as it appears to inappropriately mix commerce and banking activities. So, today we will discuss a draft bill, the Keep Big Tech Out of Finance Act, which would prevent large platform utilities like Facebook from becoming financial institutions and block them from creating their own currencies.

Today’s hearing is only the first step in our oversight and legislative process. I look forward to hearing from our witnesses.

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Bank of America Launches $5 Billion Home Loan Assistance Program

NNPA NEWSWIRE — The new Bank of America program includes down payment and closing cost assistance; innovative low down payment mortgages; grants that can be applied to non-recurring closing costs; a national network of lending professionals; easy-to-understand financial education tools; strategic partnerships with real estate professionals; and a national network of knowledgeable affordable housing nonprofit partners who provide in-depth homebuyer education and counseling.

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“We know that many people today can afford a monthly mortgage payment, but that securing the upfront costs of homeownership can be a significant challenge,” said Richard Winter, the vice president and Area Lending Manager for Bank of America’s Baltimore region. (Photo: iStockphoto / NNPA)

By Stacy M. Brown, NNPA Newswire Correspondent
@StacyBrownMedia

Bank of America officials have spent the past few months asking their customers and clients a simple question – what would you like to have the power to do?

“For many, the goal is to own a home and saving up for a down payment is the biggest barrier for anyone to buy a home,” said Richard Winter, the vice president and Area Lending Manager for Bank of America’s Baltimore region.

The banking giant has committed to removing that barrier with the announcement of a new $5 billion affordable homeownership initiative for low-to-moderate-income and multicultural homebuyers across the country.

“Our commitment to affordable and responsible homeownership is greater than ever, with half of our loans going to low- to moderate-income or multicultural families and communities,” D. Steve Boland, head of consumer lending at Bank of America, said in a statement.

“One of the ways we’re helping is through our suite of affordable homeownership solutions and professional resources, which aid them in overcoming barriers and put sustainable homeownership within reach,” Boland said.

Over the next five years the bank has committed $5 billion to its Bank of America Neighborhood Solutions program which they said will help more than 20,000 individuals and families thrive through the power of homeownership.

The Neighborhood Solutions program focuses on helping put people on the path to affordable homeownership and sustainable homeownership through a combination of specially-designed products, resources and expertise.

The bank is also offering a new Affordable Loan Solution mortgage – a competitive fixed-rate loan for low- and moderate-income borrowers.

Primarily targeting first-time buyers, the down payment on the Affordable Loan Solution mortgage would be as little as 3 percent, with no mortgage insurance required.

“Through our new Down Payment Grant program, Bank of America will give – no repayment necessary – eligible homebuyers 3 percent of the home purchase price (up to $10,000) to be used for a down payment,” Winter said.

The program arrives at a time when various studies and reports, including one from the National Association of Real Estate Brokers (NAREB), show that all the gains made by black homeowners since the Civil Rights era have been erased.

The homeownership rate for black households ended 2016 at 41.7 percent, near a 50-year low, according to the U.S. Census Bureau – a figure NAREB said hadn’t been this low since the time when housing discrimination was legal.

The current black homeownership rate is now 30.5 percentage points lower than non-Hispanic whites (72.2 percent) and 22 percentage points lower than the national homeownership rate of 63.7 percent.

It’s also 4.6 percentage points lower than the Hispanic homeownership rate.

“We have long been committed to providing a path to sustainable homeownership for all, but especially for low- to moderate-income (LMI) and multicultural clients,” Winter said.

“Homeownership is one of the most powerful ways to shrink the wealth gap,” he said, noting that the median net worth of a homeowner is 44 times that of a renter, according to a 2017 Federal Reserve report.

“Today, more than half our loans go to LMI and multicultural clients, but we know we can do more,” Winter said.

The new Bank of America program includes down payment and closing cost assistance; innovative low down payment mortgages; grants that can be applied to non-recurring closing costs; a national network of lending professionals; easy-to-understand financial education tools; strategic partnerships with real estate professionals; and a national network of knowledgeable affordable housing nonprofit partners who provide in-depth homebuyer education and counseling.

“We know that many people today can afford a monthly mortgage payment, but that securing the upfront costs of homeownership can be a significant challenge,” Winter said.

“We also know that low down payment loans on their own aren’t going to solve the biggest barrier to homeownership, so our new Down Payment Grant program, along with our existing closing cost grants we believe will make an even greater difference, particularly since eligible clients can combine programs to reduce upfront costs,” he said.

The most important thing for Baltimore residents to know about the program is that there are many options available, Winter said.

“Anyone who is thinking about buying a home should go to bankofamerica.com and make an appointment with one of our mortgage specialists at a nearby financial center and they can walk them through all the options that are available,” he said.

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Advice

Smart Financial Moves for Every Stage of Life

PASADENA JOURNAL — Regardless of what stage of life you’re in, you must make financial and investment decisions that will be with you for the remainder of your years. But the moves you make when you’re just starting out in your career may be quite different from when you’re retired. So, let’s look at some of these moves, stretched out across your lifetime.

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Photo by: Pexels.com

 

Regardless of what stage of life you’re in, you must make financial and investment decisions that will be with you for the remainder of your years. But the moves you make when you’re just starting out in your career may be quite different from when you’re retired. So, let’s look at some of these moves, stretched out across your lifetime.

Arnetta Tolley

Arnetta Tolley

  • In your 20s and 30s: During this period, you should strive to place yourself on a sound financial footing by taking steps such as reducing, and hopefully eliminating, your student loans and embarking on saving for retirement through investments such as a 401(k) and IRA. You also might buy a home, which offers some financial benefits, but be careful not to become “house poor” by devoting too much of your monthly income to mortgage payments. If you have young children, you might also want to start saving for college, possibly through a 529 plan, which offers tax benefits, high contribution limits and the ability to switch beneficiaries, as needed. And if you do have a family, you’ll certainly need to maintain adequate life insurance. Also, since you’re at the early stages of your working life, you should chart a long-term financial and investment strategy with the help of a financial professional. Your strategy should encompass your important goals, risk tolerance and time horizon. And you’ll want to revisit your strategy regularly to accommodate changes in your life and financial situation.
  • In your 40s and 50s: These are the years in which your career advances, leading to bigger salaries. The more you earn, the more you should be putting away in your 401(k) or other employer-sponsored retirement plan, along with your IRA. During the middle-to-end of this particular period, you might fi nish helping pay for your child’s higher education – which should free up even more money to put away for retirement. You also may want to consider long-term care insurance, which can help protect you against the devastating costs of an extended stay in a nursing home.
  • In your 60s, 70s … and beyond: Once you’re in this age range, chances are pretty good that you’ll either retire soon or are already retired. (Although, of course, you may well want to work part-time or do some consulting.) However, you certainly haven’t “retired” the need to make financial and investment decisions, because you’ll have plenty, including these: When should I take Social Security? Will my investment portfolio provide me with enough income to help keep me ahead of inflation? How much can I afford to withdraw each year from my retirement accounts without outliving my resources? Again, a financial professional can help you deal with these and other issues.

Also, if you haven’t done so, now is the time to draw up your estate plans, so you can leave the type of legacy you desire – one that provides for the next generation (or two) and the charitable organizations you support. You’ll need to work with a legal professional to create estate planning documents and arrangements appropriate for your needs.

You will spend a lifetime making financial and investment decisions – so put in the time and effort, and get the help you need, to make the best decisions you can.

[Arnetta Tolley, Financial Advisor, Edward Jones 626-744-2740 or arnetta.tolley@edwardjones.com.]

This article originally appeared in the Pasadena Journal

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State Housing Finance Agencies Boost Hopes for Finding Affordable Homes, Apartments

NNPA NEWSWIRE — According to Stockton Williams, executive director of the National Council of State Housing Agencies (NCSHA), in 2017 alone, state HFAs provided $28 billion to finance affordable homeownership for more than 152,000 households, 26 percent of which were minority-headed households.

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Most of NCFHA’s work is done in association with partners, including local governments, nonprofit organizations and private developers.

Christopher G. Cox, www.realesavvy.com, NNPA Newswire Contributor

Every state in the U.S., as well as in Puerto Rico and the U.S. Virgin Islands, has a Housing Finance Agency (HFA) that provides low- and moderate-income individuals and families with the opportunity to find a home or apartment that meets their budget and quality-of-life needs.

According to Stockton Williams, executive director of the National Council of State Housing Agencies (NCSHA), in 2017 alone, state HFAs provided $28 billion to finance affordable homeownership for more than 152,000 households, 26 percent of which were minority-headed households.

The NCSHA was created by the state agencies more than 40 years ago, Williams said, to help share best practices. “HFAs are constantly learning from each other,” Williams adds, “not only sharing best practices, but solving emerging challenges on a collaborative basis. NCSHA facilitates these exchanges and augments them with additional analysis and support.”

Some of the state HFA practices that NCSHA helps to promote are careful underwriting of borrowers, close oversight of lenders, proactive loan servicing and counseling assistance to borrowers who need it, Williams noted.

“A 2018 study,” according to Williams, “found that state HFA loans were much less likely to experience defaults or foreclosures than loans from other sources to similar borrowers.

“According to the study,” he continued, “not only are HFAs more likely to require full documentation and careful underwriting, they also serve as a third-party monitor on lenders originating loans through a state program, creating an additional incentive for careful screening by the lender.”

Like other state housing finance agencies, the North Carolina HFA (NCFHA), which began operating in 1973, serves the broad mandate of providing affordable housing opportunities for state residents whose needs are not being met by the market, explains Connie Helmlinger, manager of public relations and marketing for the NCHFA.

The work of her agency, Helmlinger notes, is divided into two main areas: providing assistance with home ownership and with rental housing.

“We have helped more than 115,000 individuals and families purchase homes,” she said. “We do that by offering mortgages with competitive rates and down payment assistance for buyers.”

The NCHFA offers a variety of assistance programs that seek to help low- and moderate-income homebuyers in such categories as first-time buyers, military veterans, senior citizens and people with disabilities. Detailed information about such programs as NC Home Advantage Mortgage, NC Home Advantage Tax Credit and NC IST Home Advantage, and how potential buyers can qualify for them, can be found at www.ncfha.com

Most of NCFHA’s work is done in association with partners, including local governments, nonprofit organizations and private developers. “One of our self-help programs,” Helmlinger says, “is working with Habitat for Humanity. They take the money we provide and roll that into their own money to provide better mortgages for people who buy their homes.”

Helmlinger notes that the NCHFA does not work directly with buyers — except for being involved in final approvals and underwriting — but works directly with lenders after buyers have contacted a loan officer about applying for one of their assistance programs.

“The money is coming from us,” says Helmlinger, “but it’s the lender that is managing the whole process.”

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