August 2019


www.hamptonroadsmessenger.com Your Opinion Matters Real Estate FROM PAGE 1


Poverty and the Fallacy of Long- Term Economic Greatness


who crows about economic expansion without paying attention to those on the bottom.


Macroeconomic indicators


suggest the economy is healthy, but for how long? How long, can we expect our decades-long economic expansion, to continue? A minor blip, an extended trade war or, heaven forbid another kind of war could have devastating effects. This is why our 45th President keeps picking fights with the Federal Reserve Bank, urging them to cut already low interest rates to fuel economic expansion. Our nation can't thrive when nearly half of its citizens are on the outside looking in. And poverty can be a drag on economic expansion.


The people who are doing well in BY DR. JULIANNE MALVEAUX The first week of July produced


a somewhat positive Employment Situation report. While the unemployment rate ticked up just a bit, about 224,000 new jobs were created, nearly three times as many as were created in the tepid previous month. There was, of course, the Administration crowing about the strength of the economy, and with wage growth on the rise, an impassioned outsider might agree that the US economy is doing well.


But too many aren't doing as well


as they might, and too many, even with wage growth, aren't making enough money to lie on. Rev. William Barber's Poor People's Campaign says that more than 140 million people are living in poverty or near-poverty, nearly 100 million more than the Census suggests. Indeed, the very existence of a Poor People's Campaign, 51 years after Dr. Martin Luther King, Jr. launched his initial assault on poverty, speaks volumes about the status of our economy.


Poor people have been the


volleyball in a partisan net game, with some simply ignoring the realities of poverty, and others vilifying the poor for their poverty. These are the folks who will tell you that the economy has never been better, ignoring the fact that at least 40 percent (and perhaps as many as 60 percent) have not benefitted from economic expansion. The average family has yet to recover from the Great Recession. Many have financed their survival with credit cards, and between student loans and consumer credit, our nation's households are $13.7 trillion in debt. According to the Federal Reserve Bank, 40 percent of our nation's families can't manage a $400 emergency.


Half of all jobs in this country


pay $18.58 per hour or less. How stable is an economy that pays people so little? Fully a third of all jobs pay less than the $15 an hour, many legislators want to pay all workers. The minimum wage, at $7.25, has not increased in a decade, even as the economy expanded, productivity has risen, stock market indices are at an all-time high, and we have a President


our economy have a stake in it. They own their homes. They own stocks and bonds. They have retirement accounts and investment accounts. They've seen their asset base soar as the economy has expanded. But the Great Recession cause African American people collectively to lose a third of our wealth. Black homeownership rates grew for thirty years after the passage of the Fair Housing Act. Those gains were wiped out mostly during the Great Recession, and today Black homeownership is as low – 41.2 percent – as it was in 1968 when discrimination was legal. In contrast, the overall homeownership rate in 2016 was 63 percent overall and 72 percent for whites.


If this is a stakeholder economy,


African Americans have fewer stakes, but we don't occupy the economic periphery alone. Latinos and whites also experience poverty, but not at the disproportionate rate that African Americans do. Racism makes it possible for excessive poverty to exist! As long as some see poverty as a personal, not structural failure, it is easy (and acceptable) to demonize the poor, and even to criminalize them for their poverty. Thanks to folks like Rev. William Barber, some Americans are awakening to the fact that one person's poverty is another person's profit center, that the prison industrial complex needs to be dismantled, and that a restructured, less militarized (and dare I say green) economy might offer more opportunity for all!


The folks who earn $18.58 an


hour or less aren't benefitting from the expanding economy, but some of them support a wealthy huckster who lies with the same ease that he rises in the morning! He spins economic confusion in jingoistic and confusing terms so that an unemployed manufacturing worker in Ohio will passionately argue that he'd be working if it weren't for illegal immigrants!


Will we buy into the fallacy


and let increasing poverty imperil long-term economic expansion? Or will we develop a more inclusive and expansionary economic model? The Presidential campaign offers the opportunity for a dynamic exchange of ideas. What's next?


the five major components that make up your credit score.


Payment History – Reported


payments account for 35% of your total credit score. Late payments will affect your score negatively, so it’s important to consistently make payments on time.


Credit Utilization – How much


of your credit is in use makes up 30% of your score. If you reach the credit limit on your credit cards, it lowers your credit score. Do your best to start paying down credit card balances to free up your credit.


Length of Credit History – How


long you have been using credit and making payments as well as the amount of time each of your credit accounts have been open is 15% of your total credit score. If you’re trying to clean up your credit, closing accounts may not necessarily be the answer. It may be best to pay off accounts and keep them open to maintain long standing accounts.


New Credit – Be cautious when


opening new credit accounts, which accounts for 10% of your score. Opening too many new accounts in a relatively short period of time could hurt your score.


Credit Mix – The remaining 10%


of your score relies on the variety of credit accounts you have. Having a mix of revolving credit accounts, such as credit cards, and installment loans, including auto loans and student loans, with positive payment histories show that you can manage different types of credit and will increase your score.


Remember, the higher your credit


score as a potential buyer, the lower the risk to a potential lender.


2. How Much Can and Should


You Spend? When reviewing mortgage


applications, lenders pay close attention to your debt-to-income ratio (DTI). DTI shows how much of your monthly gross income – your income before taxes or other deductions are taken out – goes to monthly debt payments. Many lenders prefer that your total monthly debt payments, which include housing payments, auto loan payments, student loan payments, and minimum credit card payments, not exceed 40% of your gross monthly income. Some lenders prefer a DTI of 36% or less. Others may accept a higher ratio.


When looking at your finances to


determine how much you can afford for a monthly mortgage payment, keep in mind that the payment will include not only the loan principal and interest but also taxes, homeowner’s insurance, and possibly mortgage insurance (lenders require you to pay mortgage insurance when your down payment is less than 20% to protect the lender in the event you default on the loan). While you will need more information to get an exact figure of the house price you can afford, such as the interest rate on your loan and how much of a down payment you will have to put toward the purchase, look at your DTI as discussed above to get a better idea of the monthly payment that will fit your budget.


Many websites have calculation


tools that can help you determine how much you can afford and the amount your monthly payment will be under different scenarios. The U.S. Department of Housing and Urban


Development’s (HUD) maximum financing calculator is a good place to start and can be found at FHA Maximum Financing Calculator.


3. Save, Save, Save Having savings makes it easier


to purchase a home. Saving can be hard given the challenges many first-time home buyers face with high housing costs and student loan debt, but most lenders require a down payment, and you will likely be responsible for closing costs. You will also want to have money available once you complete the purchase for maintenance or repairs in your new home. So let’s look at the possibilities.


To increase your savings, see if


there is a way to tighten your budget and lower your current housing costs. Automating your savings may help keep you on task with obtaining your savings goals too. Check with your bank about linking a savings account to your checking account and creating a regular automatic deposit to the savings account. In addition, automatic savings apps, which help you save by rounding up certain purchases to the nearest dollar and setting the money aside, can add a little extra to your savings.


The Consumer Financial


Protection Bureau and Federal Trade Commission have useful resources for those interested in learning more about ways to save. Visit Start Small, Save Up and Make a Budget.


You may also be able to take


advantage of down payment and closing cost assistance programs offered by government agencies and non-profit organizations. Be sure to take the time to research what is available and what your qualifications are to apply for these special programs. Start with HUD’s website for more information about assistance programs in your state: HUD - Local Information.


HUD also provides lists of


approved housing counselors in each state that can help with the home buying process:


HUD Approved Housing


Counseling Agencies For suggestions on how to save


money with worksheets to help you plan to save visit: Money Smart - Your Savings


4. Start Organizing Documents When you apply for a mortgage,


most lenders will want one or two months of paystubs, two years of tax filings, three to six months of bank account statements, information about any retirement savings, and other documentation specific to your financial situation, such as explanations of any recent large deposits or withdrawals from your bank account. It can be overwhelming to pull together so much information in a short timeframe, so start early. By getting these documents in order at the beginning of your house hunting journey, you give yourself time to ensure you have all of the documents the lender requires.


When you’re ready to buy a


house, understanding the costs and benefits, researching your credit and housing options, and building your savings are the best first steps toward owning your first home. In next month’s article, we’ll take a look at the next step in the home buying process: applying for a mortgage.


The Hampton Roads Messenger 5


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