Not all lenders are created equal. Each has their own metrics and level of tolerance when it comes to approving loans for their creditors. Different factors come into play such as credit history and score, job employment, income, and assets. Unfortunately for the Black and Hispanic people, they have one more thing to worry about.
And, as if the loan approval game isn't fraught with long odds enough, a recent Zillow study has shown that race or ethnicity contributes as to whether one's home loan application will be rubber-stamped or not.
The leading company when it comes to real estate and rental database found out that in 2013, conventional mortgage applications of 27.6 percent of Black people were turned down as compared to only 10.4 percent of their White applicant counterparts. Hispanic applicants have not had any more success as 21.9 percent of them were also rebuffed.
Compounding the woes of the minorities, analysis of the data also shows that home values in areas owned by mostly Hispanics have fallen by 46.3 percent on the average. Values in predominately Black neighbourhoods have also gone down by 32.1 percent -- 23.6 percent and 19.2 percent in White and Asian neighbourhoods, respectively.
Stan Humphries, Chief Economist of Zillow, cited that the inequality in U.S. housing playing field can be attributed to the fact that there is a significant income gap between the White and Black applicants amounting to practically $20,000 per annum -- this is not to take away other factors such as geography and other financial considerations. They will have a hard time qualifying for home loan applications with lower income.
According to Zillow, the rate of homeownership for white people stood at 71.1 percent (even higher than the U.S. homeownership rate, in general, of a little more than 63 percent). The homeownership rate for Black people, on the other hand, is well below at 41.9 percent. Hispanics are at 45.2 percent while Asians are at 57.8.
This numerical data shows that less than one in every two Black and Hispanic people has homes of their own. This could be the result of higher denial rates in home loan applications of the Blacks and the Hispanics as compare to the Whites and the Asians.
Meanwhile, those applicants coming from a minority group will have a higher chance of getting approval when it comes to loan applications that are endorsed by the Federal Housing Administration.
