January 10, 2024
GROWING COMMUNITY MEDIA
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AT HOME ON THE GREATER WEST SIDE A GCM GUIDE TO HOMEOWNERSHIP
ABOUT THIS SECTION
This monthly special section focuses on ways to grow Black and Brown homeownership on the Greater West Side. This Growing Community Media project is funded by a grant from the Chicago Community Trust. Share your thoughts with Erika Hobbs, our editor, at erika@ growingcommunitymedia.org
Advice from an Expert: Q&A with Austin resident and realtor Camella A Sutton
PROVIDED
Camella Sutton tours a high rise rental building in Millenium Park.
By DELANEY NELSON
Special Projects Reporter
ustin resident Camella Sutton knows first-hand how overwhelming the process of buying a home can be. When she and her husband bought their home in 2013, she didn’t know all the ins and outs of the maze that is homeownership and relied on a realtor to lead her through. Now, Sutton is the realtor helping people achieve homeownership — and she wants you to be empowered throughout the process, too. While Sutton works as a realtor throughout all of the city and some of its suburbs, she tries to focus on Austin, where she’s lived since she was a kid. Austin Weekly News spoke with Sutton about the local housing market and what to expect from the buying process.
This interview has been edited for clarity and length. Austin Weekly News: Why did you pursue a career in real estate? Camella Sutton: I wanted people to know, not so much about real estate, but how to advance, and really the one thing that never goes away is land — that’s the thing that people fight for every day. So, I really try to now focus in on educating people on the benefits of owning, of ownership as a whole.
See CAMELLA SUTTON on page B4
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January 10, 2024
AT HOME ON THE GREATER WEST SIDE
A prospective homebuyer’s list of terms
GROWING COMMUNITY MEDIA
Confused by all the terms? We got you with this glossary
By DELANEY NELSON Special Projects Reporter
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he process of getting ready to buy a home can be complicated — and wordy. Especially if it’s your first time. Here, we’ve made it a little easier for you by defining some of the words and phrases you’re likely to come across at the start of your home buying journey. Here are some of the terms you’ll need to know.
THE BIG PICTURE
Mortgage: an agreement between a homebuyer and lender that says if the borrower fails to pay off their loan plus interest, the lender can take possession of the property. Mortgage is also often used to refer to a home loan. Mortgage rate: the percentage of interest on a home loan. Mortgage rates can change with overall economic conditions, but also depend on your credit score and financial circumstances. Variable rate mortgage: This is a type of mortgage where the rate will go up and down as the economy changes. Fixed rate mortgage: This kind of mortgage has a rate will stay the same for the duration of the mortgage. Appreciation: an increase in the value of a home due to changing market conditions, home improvements and/or other factors. Depreciation: a decrease in the value of a home due to changing market conditions, wear and tear, and/or other factors.
Equity: the difference between what you owe on your mortgage and what your home is currently worth. Real Estate Agent: a professional who has completed training and passed a state examination to sell or rent real estate within a particular state. Real estate agents work under a real estate broker. A Realtor is a real estate agent or broker who is a member of the National Association of REALTORS.
PAYMENT AND FINANCING Before looking at potential houses or meeting with a realtor, it’s important to make sure you’re financially ready to buy a home. Mortgages almost always require a down payment, and saving for one is a major first step that can take years, depending on your financial situation. Assistance programs do exist that can help with your down payment, only require small down payments or don’t require one at all. Knowing more about down payments and what type of loan you may qualify for will help you plan how much to save. Down payment: the percentage or amount a buyer pays upfront when buying a home. The average down payment for first time buyers in 2023 was 8%, according to a study by the National Association of Realtors. AMI (Area Median Income): the median (average) household income within a certain geographic area. AMI is calculated and published annually by the U.S. Department of Housing and Urban Development (HUD) is a key factor for determining eligibility for many down payment assistance programs.
Assets: Broadly, assets are things of value. Some assets that may be used for mortgage qualification include bank accounts, property and retirement accounts. DPA (Down payment assistance) programs: loan or grant programs offered by nonprofit organizations, employers or state or local government entities that help people purchase a home. These programs are generally for low- to moderate-income families or first-time homebuyers (FTHBs). FHA loan: a government-backed loan available to low to moderate earners, including those with lower credit scores or other financial issues. FHA loans allow lower down payments than conventional loans. Maximum housing expense: the greatest amount an individual or household can afford to spend on housing-related expenses. These include mortgage payments, property taxes and property insurance. A frequently cited rule of thumb is housing expenses should not exceed 28% of your gross monthly income. VA loan: a home loan backed by the Department of Veteran Affairs for U.S. veterans. These loans have a low down payment or none at all — and nearly 90% of all VA-backed home loans are made without a down payment.
CREDIT Working to improve your credit score is another step you can take toward preparing to buy a house. Understanding how credit scores work can help you improve your own. And they do matter: A strong credit score proves to lenders that you are likely to pay back their loan — and is often necessary to qualify for a home loan with optimal terms. Credit score: a three-digit number that attempts to predict how likely a borrower is to default on a future loan. Companies like FICO and VantageScore calculate credit scores using information about a borrower’s bill paying, borrowing and loan repayment history. They generally range from 300 to 850 — the higher your credit score, the better. A strong credit score makes it possible to qualify for more favorable loans. Credit bureau: a company that collects and retains credit information and then provide that information — for a fee — in the form of a credit report to lenders or creditors. A credit bureau is also commonly referred to as a credit reporting agency. The three main credit bureaus are Equifax, Experian, and TransUnion.
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AT HOME ON THE GREATER WEST SIDE
GROWING COMMUNITY MEDIA
January 10, 2024
Overwhelmed by homebuying?
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Classes can help By DELANEY NELSON Special Projects Reporter
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avigating the homebuying process — and all of the lingo, steps and actors that come with it — may be confusing and overwhelming. Classes can help. Really. Any potential buyer’s first step should be to find a local housing counseling agency, said Danielle Matthews, director of homeownership services at Neighborhood Housing Services of Chicago. “Typically, people go straight to a realtor or a loan officer when they’re ready to buy,” Matthews said. “That’s kind of like starting in the middle as opposed to starting up front with a housing counseling agency that will help them get prepared, and then hand them off to a loan officer and then eventually a real estate agent when they have that strong buying profile.” The U.S. Department of Housing and Urban Development provides a list of approved housing counseling agencies, where certified housing counselors can help potential buyers maneuver each part of their journey, from pre-purchase and home buying programs to closing and post-purchase costs. Matthews leads NHS’s HUD-certified homebuyer education courses, which cover budgeting, credit, inspections and down payment assistance programs. The organization also provides financial literacy and foreclosure prevention programming and one-on-one guidance. Connecting with housing counseling and understanding the process of becoming a homeowner is crucial to success, she said. “Our goal at the organization is not only to create a homebuyer, it’s really more around creating a sustainable homeownCredit repair companies: private, for-profit businesses that claim to help borrowers with debt or credit difficulties. Many companies that say they can “fix” credit problems fast are predatory. Credit repair companies are not the same as credit counseling organizations, which help borrowers safely rebuild their credit.
er. That’s how we want to impact the buyer — making sure that we’re delivering a level of education to them that teaches them not just to purchase the home, but to keep the home,” Matthews said. “Getting that person in housing counseling is step one, so that we can dismiss the myths around buying and put in a plan of action to help start the process.” NHS is just one of many organizations that can provide counseling to potential home buyers on the West Side. Some, like those at NHS, are even offered online. Others that can help include:
Credit report: a record of a borrower’s credit history, including data from banks, credit card companies, collections agencies and more. This includes whether payments were made on time. The Fair and Accurate Credit Transactions (FACT) Act of 2003 requires all three major credit reporting agencies to provide credit reports to each consumer once a year upon request, free of charge. Consumers can request their report at annualcreditreport.com. Default: failure to repay a loan according to terms agreed upon between the borrower and the lender. Generally, one goes into default when they completely stop making loan payments for a period of time. Defaulting hurts your credit score, but there are paths to building your credit back up after a default. Delinquency: any late payment on a loan, credit card or other
• Oak Park Regional Housing Center/West Cook Homeownership Center • Spanish Coalition for Housing • Smart Money Housing • Northwest Side Housing Center • Latin United Community Housing Association (LUCHA) • Center for Changing Lives • The Resurrection Project
debt payment. Depending on how long the loan remains unpaid, your credit score could be affected. DTI (Debt-to-Income ratio): monthly debt payments divided by gross monthly income equals your DTI. Lenders use this number to determine how much a borrower can afford to spend on monthly home loan payments. Equal Credit Opportunity Act: enacted in 1974, it made it illegal for any creditor to discriminate against any applicant based on race, color, national origin, age, sex, marital status, receipt of income from public assistance programs, or the applicant’s good faith exercise of his or her rights under the Federal Consumer Credit Protection Act. Non-Traditional credit: If a potential buyer lacks an established credit history, they might assemble a non-traditional credit history which would involve proof of regular payments to entities other than a lender. These might include rent, utility or cell phone payments.
GETTING SERIOUS
After you’ve built up your credit and saved for a down payment, the next step might be prequalification or pre-approval for a loan. In addition to showing sellers you’re serious about buying, prequalification or preapproval will also give you a clearer idea of what you’re able to afford. Mortgage pre-qualification: an estimate from a bank or other lender of how much they would lend a borrower. This is based on information provided by the borrower. Mortgage pre-approval: an offer from a lender to loan a certain amount, good for a given time frame. This is based on information verified by the lender including a credit check and is more formal than pre-qualification. Follow us each month in print and at https://www.austinweeklynews.com/ at-home/, where you’ll find additional resources and useful information.
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January 10, 2024
CAMELLA SUTTON Continued from page B1
AWN: What are the benefits of homeownership? Sutton: One of the biggest things is that it creates generational wealth. Having ownership, whether it’s a home that you’re growing with equity in, or if it’s a multi-unit, you’re constantly collecting rent — it’s something you can pass down to your family. It’s the beginning of generational wealth. AWN: What are some things people interested in starting the process of buying a home should know? Sutton: The first thing I do is I tell people it’s not HGTV. That’s for sure. And then really just having them determine what they’re truly looking for, teaching them to live within their means. A lot of times we see these beautiful, decorated homes that we see on TV and automatically you’re like, “Oh, I want that.” [It’s important to] be realistic with your search and know that you can transform anything into a home. The second part is educating them on the finances. A lot of times they go online, they’ll get a pre-approval, and it’s like, oh, I’m qualified for $300,000 — that’s not what that means. You need to factor in the taxes, the insurance, the what-ifs. If you’re going into a house that isn’t as updated, what to expect from things like that. That’s also something I’ve educated myself on. My husband is a home inspector,
AT HOME ON THE GREATER WEST SIDE so I had him teach me everything about what to look for when I’m going into a home, so I know when I’m showing people things, [I can see] what needs to be repaired. Let me explain to you what this could look like for you in the future. I really like people to go in with everything they need to know. I like to prepare people and really educate them on the process, even after the closing of a home. AWN: What are some of the financial items people need to have in line before they even start the process? Sutton: For one, knowing what you can and can’t afford, knowing your own budget. Having money saved up for, you know, your first mortgage payment, but what if something should happen? I like to tell people to have anywhere from three to six months’ worth of reserves in their account, not that you’ll need them — but anything can happen. You can lose your job, [there can be] acts of nature, your roof caves in, and you just never know. So, I like people to be prepared financially. Also, having them look at their credit report and knowing what’s on there. And also looking into different [financial] programs — don’t settle for the first lender that you see online. There’s so many great programs that a lot of people don’t know about and are not widely advertised. One in particular that I love to tell people about is called [Neighborhood Assistance Corporation of America]. NACA allows you to obtain a home with bad credit, it doesn’t go off your credit score, it goes off your ability to pay your bills. It’s
PROVIDED
Sutton directing a photo for a new listing.
GROWING COMMUNITY MEDIA But now that I know, obviously I move differently. In my process, it was very overwhelming, to say the least. I learned a lot about different contractors, different developers. It was a lot of up and down, but in the end it worked out very well. I absolutely love where I live. I love my community. I would absolutely do it again. AWN: If you could give advice to yourself before you started the process, what would it be? Sutton: I would just tell myself to be a little more realistic within your search, and don’t limit yourself. So, I would tell myself to really just expand outside of my comfort zone.
Camella Sutton
Real estate broker
an awesome program that I like people to know about because it offers so much. So really just knowing what’s out there is big, and knowing what you can and can’t afford, being realistic with yourself. What are you willing to cut back on? What sacrifice are you willing to make to get to the point of homeownership? AWN: What are the first things you tell a potential client? Sutton: You’ve already taken the first step when you called me. The next thing that we would do from there is we will have just a great conversation, me getting to know you and know your likes or dislikes so that I can better assist you along the way. I’ll also find out a little bit more about your current situation financially so that way I can direct you to the lender that’s going to help you in your situation. Some people are veterans, so I want to make sure that we get you to a [Veterans Affairs] lender. If you are someone that can purchase the house, but maybe you don’t have all the down payment, I want to get you to a lender that has a great program that’s giving you money at closing. Every situation is going to vary. Some people already come with their lender, which in that case, again, I’m getting to know you so that way we can start your search. Each person will be different based on their needs. AWN: You’re a property owner yourself. What did that process look like for you? Sutton: Our process is another reason why I became a realtor. When I actually purchased a property that I live in, I did not have my license. My husband and I were flipping homes, but we had a realtor take care of this stuff for us. When I went to purchase my home, I felt I was being steered into certain areas. I felt that everything that I should have been informed about, educated on, I wasn’t given that opportunity.
AWN: What does the market look like in Austin right now? Sutton: The market in Austin is on fire. We are at an all-time high. The property values of our community are through the roof at this point. You’re seeing a lot of high property values, so a lot of equity in a lot of these homes. You’re seeing things that you probably would have never seen before — houses being brand new built over here at $600,000 and more, you’re seeing half-a-million-dollar properties being built. So, our community is taking a huge turn. We’re seeing a lot of growth and hopefully, that will lead to more businesses and more opportunities growing in the neighborhood as well. AWN: If you could give any advice to someone in your community who is interested in getting started with the process, or someone who is apprehensive about homeownership, what would you say? Sutton: Don’t be afraid, trust in yourself. Definitely do your research, and just go for it because the cost of living isn’t going down. If you’re waiting for that $100,000 house, it doesn’t exist anymore, so it’s no sense in waiting, because the prices are going up. AWN: Is there anything else you’d like the people in your community to know? Sutton: There’s so many great things coming to Austin. Definitely don’t be afraid to invest in your neighborhood. Become part of the neighborhood, join different clubs. There are so many great programs that are over here, from Build Chicago to the Good Neighbor Campaign. There’s so many great things that are happening here. Get out and be a part of the neighborhood. The neighborhood is going to be what you make of it. Follow us each month in print and at https://www.austinweeklynews.com/ at-home/, where you’ll find additional resources and useful information.