By Jack Rubinger
For first-time home buyers, getting into the housing market has gotten tougher and tougher. Today’s economic crisis has only exacerbated this situation.
Recovering from the pandemic requires a greater cross-section collaboration and a diverse set of tools and solutions. A key one is credit building.
The challenge is financial inclusion and equity. Fortunately, there are several resources available for first-time home buyers.
One of these is Working Credit NFP, a national non-profit whose mission is to partner with individuals and communities to interrupt structural racism by providing credit building education, one-on-one counseling and access to the products needed to thrive financially.
They do this by helping participants acquire, achieve and sustain prime credit scores and to establish a safety net of at least $1,000 in available credit.
These improvements foster resilience by helping participants qualify for mortgages; save money on interest rates, insurance and security deposits; obtain rental housing and jobs; and how to weather emergencies without relying on payday lenders.
“Credit building is especially important for people of color who are almost twice as likely to be credit invisible or have low credit scores than their white counterparts,” said SE Portland resident Sarah Chenven, Co-CEO of Working Credit NFP.
The organization offers participants one-of-a-kind credit building education through group workshops followed by unlimited individualized counseling and coaching over the course of 12 months, almost always at no cost to the participant.
“Within six months of participating in our program, we see an average 10 percentage-point increase in both the number of participants moving from sub or near-prime to prime credit, and the number who gain the financial cushion of at least $1,000 in available credit. Results for our BIPOC participants are even greater,” Chenven said.
Credit building counseling and coaching supports all sorts of opportunities, such as a unique Oregon-wide initiative for first-time home buyers – Oregon’s Individual Development Account (IDA) initiative.
IDAs are matched savings accounts that support qualifying Oregonians with lower incomes while they save towards a defined goal like buying a home.
Individuals and businesses can contribute to this statewide initiative and 90 percent of the contribution is returned to them in Oregon State Tax Credits. The remaining 10 percent can be written off as a charitable donation.
One single mother who purchased a home in the Lents neighborhood did an IDA with Portland Housing Center and got a grant from Proud Ground, a community land trust that helps homeowners purchase affordable homes in Multnomah County.
The new homeowner had outgrown the small apartment where she and her two teenaged boys lived. The steps involved in getting the grant included taking part in workshops and learning saving tips.
“It was tough getting a seller to work with a buyer pursuing a grant,” she said. “There was a lot of red tape. We eventually found a perfect house which had been recently remodeled.
“We offered over the asking price, but there were lots of inspections involved and the sellers were getting frustrated with how long it took for the house to close,” she added.
“It’s a great way to get into the market. In five to eight years we’ll be able to generate enough equity for our next house. It’s nearly impossible for a single mom to get into the market without family support.”
The new home features a fully-furnished basement which the owner is now using as an Airbnb to generate money too.
The homeowner encouraged those who want to get into the market, saying,
“Keep your eyes out for grant programs, be patient with grant requirements, trust the timing and envision what you want.”
Another initiative is the Stop the Debt Trap Alliance. Throughout 2020, they kept pressure on city and state elected officials to implement consumer protections for financially vulnerable Oregonians.
The Alliance focuses on keeping people housed, protecting renters at risk of eviction and homeowners at risk of foreclosure, pausing debt collection fines and fees and helping students overburdened by student loan debt.
“Safe and affordable credit can act as a lifeline, helping households and small businesses smooth over income shocks, avert emergencies and pursue asset building opportunities,” Chenven said.
“Communities with higher credit scores per capita are generally more financially stable. Residents depend less on social services, and they boost the local economy by spending more, increasing the rates of homeownership, generating greater property tax income, small business growth and more employment opportunities,” she added.
For the Lents mom, there are still challenges that lie ahead for her and her family, including transportation to Hosford Middle School, but her neighbors are helping with repairs and other acts of generosity making the first-time homeowner’s experience very sweet.