Deciding whether to buy a home is like asking someone to dance, said Rob Weagley, chairman of the consumer and family economics department at MU. It can be particularly intimidating for people with low or moderate incomes, who, assuming they won’t qualify, are sometimes reluctant to ask financial professionals about mortgages.
But with the availability of low-interest mortgages and special homeownership programs, families of modest means can stop paying rent and put their money into owning a house.
“Talk to a real estate agent or banker and let them tell you,” Weagley said. “What’s the worst that can happen? They say ‘no.’ You’re no worse off than before. If you don’t ask someone to dance, you’re not going to have anyone to dance with.”
One potential partner is the federally funded Public Housing Home Ownership program. The Columbia Housing Authority, which administers the program, has so far helped six families who make 30 percent or less of Columbia’s median income to purchase their own homes. The housing authority currently has another half-dozen grants available for those who qualify.
Recipients of the grants, which are funded by the U.S. Department of Housing and Urban Development, receive $10,000 to use as a down payment on a mortgage. Participants in the program must still secure a home loan and make monthly mortgage payments without additional assistance.
The housing authority also administers the Section 8 Home Ownership Program, which pays a portion of a family’s monthly mortgage bill, based on a sliding scale, as long as the family qualifies. After the mortgage is paid, the family owns the home.
The need for affordable housing in Columbia has increased steadily, said Courtney Herbst, the acting executive director for the Columbia Housing Authority. In the past few years, more and more people have been seeking help with their rental payments, said Herbst, who is filling in for Doris Chiles, the housing authority’s executive director, while she is on medical leave.
More than 300 people are on a waiting list for the Section 8 Rental Assistance Program, which covers all or a portion of the rent in a private apartment. Another 100 people are waiting for an opening at one of the rental properties owned by the housing authority: Paquin Tower, Oak Towers, Bear Creek and the downtown family public housing sites.
Low wages and the high cost of housing contribute to the growing list of those who need help.
“Would you be able to afford a $500 to $600 apartment that’s three bedrooms?” Herbst said. “It’s just not possible.”
The large number of college students in Columbia increases rental costs, Herbst said, because they have the economic means to pay $600 or $700 for three- or four-bedroom apartments or duplexes.
Even if a family has the money for a mortgage, bad credit is an obstacle to homeownership. Just under half of Columbia’s non-college-student population is in renter-occupied dwellings, according to the 2000 Census. Renting is an obvious choice for people who can’t come up with a down payment, although Weagley pointed out that people with bad credit sometimes have to provide three months of rent up front.
Renting offers flexibility and convenience, but the advantages of owning a home are great, Weagley said. Paying a mortgage generates equity, and is almost like making payments to oneself. Owning a home also increases commitment to the neighborhood and provides a good example to children, Weagley said.
A good starter home would be a duplex or condo, Weagley said. With a duplex, the extra income from renting the second unit can alleviate the mortgage burden.
Because real estate agents work on commission, making higher-priced homes more lucrative to sell, Weagley suggests that people with low incomes find an agent who specializes in less-expensive housing.
Controlling spending is essential to saving money for a home and then keeping it. All of the positive psychological benefits of owning a home disappear when owners lose their homes to foreclosure, Weagley said.