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For two years, WFAE has reported on the Charlotte area's affordable housing crisis through our Finding Home series. According to the U.S. Census Bureau, since 1990, home values have increased 36%, while median household income has gone up only 4%. The appearance of prosperity with new development masks the fact that people are being priced out of their neighborhoods.

Finding Home: Building Financial Stability A Challenge To Aspiring Homeowners

Finding Home

Many people have been left behind as the Charlotte region has thrived and housing costs have boomed. One response has been to increase Charlotte's affordable housing stock, but it's also important to help people achieve financial stability.

Claudie Johnson heads up the Charlotte office of an organization called Self-Help, which runs a credit union. Johnson joins WFAE's "Morning Edition" host Lisa Worf for this week's Finding Home.

Lisa Worf: What's missing in this conversation the city is having about economic mobility and affordable housing?

Claudie Johnson: You know, one of the missing pieces, and it's a challenge across the country, is how do we establish, I guess, a number that that is affordable because when you look at the rising prices of the homes, it's getting away from us. So, we definitely need to determine, you know, from a city standpoint, "Hey, this is affordable right now."

The focus has been on income, but the incomes are not able to keep up with the dollar rise or the value of the home. So, there has to be some meeting in the middle, if you will, in terms of, you know, an affordable home is in that $200,000-$250,000 price point.

Worf: So, with the rising housing costs, what's the primary challenge for financial stability now? Is it purely income or is it something else you really have to keep in mind?

Johnson: No, I think it is income. You know, I'm a sort of a financial planner by education, so for me, and talking with folks, it starts and stops with an individual spending plan. So, you as an individual, you need to make sure that you're keeping track of who's in your pocket, how much are you spending on housing, how much are you spending on transportation, food and things of that nature.

Worf: What programs are available to achieve homeownership through Self-Help?

Johnson: You know, from a homeownership, our credit scoring process, when you think about qualifications, is lower than a lot of the other credit unions. If you're not even at that credit score what we offer is a credit builder-type loan, you know, to allow you to get a loan, pay it back over a six-month or year time period, and as you're making those on-time payments, obviously, that's being reflective in your credit report and then now we're boost helping you boost up your credit score to enable you now to qualify for the home alone.

You know, we qualify individuals at a lower credit score — 580 specifically — whereas most banks are probably in the 620, 640, 650 range. So, you automatically are going to expand your pool of applicants. But even with that, because we understand life happens, some folks may not even be at that 580.

So, we have a program — a loan program again — that we call Credit Builder, where someone, it's almost like a secured credit card-type process or type of account but without the high fees that are associated with that because it's a loan product with us where you become a member, you put moneys into an account with, say, $200, $500, and then we'd lend you that same money, and then you repay it back over time, and then by making on-time payments — because on time payments represent 35% of your credit score, it's the highest percentage. So, by you making those on-time payments, that automatically is going to serve as a booster to your credit score to hopefully get you up to that minimum level that we require of 580.

Worf: And, so, I mean, you could start out taking loans out for rent and then building that history until ultimately you can get a home loan?

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Credit GREG COLLARD / WFAE
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WFAE
Claudie Johnson, seen here in the WFAE studio, is the city executive for the Charlotte office of Self-Help Credit Union.

Johnson: Correct. And then we also use alternative because, you know, people that rent, there again, they may not have credit, where they've paid cash for cars and things that of nature, but they've never missed a rent payment, so we can get that documentation that they've never missed a rent payment.

We can get documentation that they've always paid their Duke bill on time, if they have gas, they've always paid their Piedmont bill on time, where a lot of banks, you know, that's something that's new and become part of the conversation, but that's been part of our processing from an eligibility or qualifications standpoint.

Worf: What other obstacles do you see with homeownership?

Johnson: A down payment is huge. Obviously, again, we talked about credit, and that is a big impediment, but down payment assistance, you know, at a minimum if you're doing FHA, a minimum 3%, but in most cases we're back to 20% to avoid PMI. So, a lot of homeowners can't afford that 20%. So, we offer a down payment assistance.

We have resources that we can maybe utilize that are from the city or maybe from the state, things of that nature, that North Carolina has put in place that we can leverage to use as down payments, and it's typically in the form of a grant. Sometimes it's a forgivable loan.

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