After years of hard work, she tried to step forward to achieve a part of the American Dream, own a home, and start generating generational wealth for her family. But the 24-year-old’s loan application was denied due to a low credit score.
“I haven’t lived here long enough,” Garmargo said. “I didn’t learn when I had to. I didn’t start when I had to and now my credit score is not the best.”
Garmargo is not alone. Many other barriers prevent communities of color from buying a home and accumulating wealth, including no down payment or lack of knowledge.
“Fortunately, my parents were able to sell everything they had in Venezuela, so they brought the money here,” Garmargo said. “That is the money that we will try to use as a down payment on a house.”
But he said that many people in the Latino community, especially immigrants, do not have the same financial support and homeownership is almost never a reality for families like hers.
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“They don’t have the money,” Garmargo said. “They don’t have the legal status to be able to do it, so that pushes them back and makes them rent out their entire lives.”
When someone owns a home, even if they have a mortgage, their monthly payments and additional funds go toward something they own, increasing their wealth. However, when a family rents, their money goes to the owner, not to their own future.
And while many families try to avoid the never-ending rent cycle, data from the Home Mortgage Disclosure Act analyzed by the ABC Data Team showed severe disparities in home loans across the Triangle.
In the Raleigh-Cary metropolitan area, which includes Wake, Johnston and Franklin counties, 71% of approved home loans were for white applicants. That compares with 63% of Black and Latino applicants and 61% of Asians.
In the Durham-Chapel Hill metropolitan area, which includes Durham, Orange, Chatham, Person and Granville counties, 69% of approved home loans were for white applicants, compared to 65% for Asian applicants and 63% % for Black and Latino applicants.
“There is no question that communities of color have been created throughout the 20th and 21st centuries to fail in terms of housing,” said Professor Emeritus Robert Korstad of Duke University.
Korstad, who has been teaching public policy and African American history for about 30 years, said the problem dates back to the 1930s. Then the administration of President Franklin Roosevelt promoted home ownership, guaranteeing home loans as part of its plan. to reverse the course of the Great Depression.
However, those loans went almost exclusively to white families rather than to black communities. He said the effects of that red line are evident today.
“Ninety-eight percent of the loans made under that government program went to white households,” Korstad said. “That gives you an idea of how public policy created an advantage for white families.”
He added that most of the wealth in the United States today is in the value of one’s home, wealth that cannot be transferred to one’s descendants if they do not own property.
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Garmargo looks forward to the opportunity to build that legacy for his own family and for others in his community.
“We should be able to be better, grow and be able to have our own things that are ours and no one can take them away from us,” Garmargo said.
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