Gilmer Alas, 31 years old, was a soldier in his native El Salvador before emigrating to the U.S. 11 years ago with no money or marketable skills. He taught himself to weld and now makes about $12 an hour at a forklift factory. His 30-year-old wife, Guadalupe, came to the U.S. from Mexico as a child in 1979. She trained as a secretary, but never worked as one.
The Alases and their two young sons don’t fit the usual profile of would-be home buyers. But, in fact, they are among the U.S. housing industry’s choicest customers.
Though Latin American transplants often have low-paying jobs, spotty credit and rudimentary English, the U.S. housing industry has begun to court them assiduously. Lenders are required by law to make money available to a broader range of borrowers. And both builders and real estate agents now see immigrants as a lucrative growth market.
Realtors are adding Spanish-speaking agents and are more willing to handle lower-priced homes. Century 21 Real Estate, a franchiser owned by HFS Inc., this year began advertising on the Spanish-language television network Univision. Home builders are also advertising in Spanish, while Norwest Corp. and other big lenders now sometimes accept receipts for rent and utility payments in lieu of credit records.
Often reared in countries with shaky economies, many Latin American immigrants are leery of financial institutions.
The industry needs “to earn their trust,” says Antonio Matarranz, a Dallas real estate agent who sells mostly to immigrants. To find clients, he hosts a Spanish language call-in radio show.
A recent study by the Fannie Mae Foundation estimates that of the 2.2 million foreign-headed households that will become U.S. homeowners by 2010, 48 percent will be Latin American or Caribbean.
The Alases dream of being among them. They’ve enrolled in a class designed to help low-income buyers break into the housing market. It’s sponsored by about 50 lenders and Housing Opportunities of Houston, a non-profit group.
One lender, Compass Bancshares Inc., says the program’s Spanish classes have brought it almost $10 million in lending business since 1994.
The air conditioning in the community college classroom is intermittent, but the Alases listen attentively as their instructor explains the upfront costs of home purchases.
“Just because you paid the down payment doesn’t mean you’re done paying,” she says in Spanish, ticking off various closing costs.
She warns them about fraud, telling of an immigrant who hired a home inspector recommended by his real estate agent and wound up with a house needing thousands of dollars in plumbing repairs.
Alas is tired and red-eyed when the night class disbands. But it helps allay the couple’s jitters about the big financial commitment.
“It’s a complicated process. We don’t want to do it in English,” says Mrs. Alas.
The Alases are tired of apartment life and the rent that doesn’t buy them anything. Their American-born sons, 9-year-old Gilmer Jr., and 8-year-old Edgar, are bilingual “and will grow up like Americans,” Mrs. Alas says.
Alas’s co-workers, many of them immigrants and new homeowners, referred him to Nina Gonzales Fraga, a former Century 21 agent who now sells about 200 homes a year, mostly to immigrants, through her own agency. Fraga, who was born in Mexico, marvels at the frugality of some clients. One family of low-income Salvadorans paid for their new home with $69,000 in cash they had socked away in their apartment.
Fraga advises clients to limit their monthly outlays to about what they’re paying for rent. With rent on their three-bedroom apartment $500 a month, plus $100 more in utilities, the Alases figure they can afford a home selling for between $60,000 and $70,000.
In Houston, that would buy them a house bigger than their apartment, and considerably more comfortable than the one Mrs. Alas grew up in. Her father had a decent income, but lenders looked askance at his lack of a credit record and his large family: Mrs. Alas is one of eight children. Unable to get a large mortgage, the family bought a two-bedroom home.
The Alases, too, have a sketchy credit record. They acquired their only credit card to finance a Mexican vacation a few years back, but cut it up when they realized they were charging too much.
A $1,100 stereo purchased six years ago but returned to the store creates an unexpected snag. When they apply for a mortgage, they learn that the stereo credit agreement still holds them liable for its cost. They wind up paying half.
“It hurt so much,” Alas says.
Mrs. Alas expects their pending mortgage application to be approved, because they pay rent and utility bills on time. But they won’t qualify for the lowest rate, 7.5 percent on a 30-year fixed mortgage. Instead, they are likely to get a Federal Housing Authority-backed mortgage at 7.88 percent that will let them make a down payment of only 2.25 percent of the price.
It still will be a stretch. Alas works 12-hour weekdays at the factory, and an additional eight hours on Saturdays, earning about $40,000 annually. Mrs. Alas cuts coupons and pinches pennies.
On a recent weekend, Fraga shows them three houses. They are tempted by a three-bedroom with a Jacuzzi for $70,000. But it lacks a backyard–and Alas wants a big dog.
Finally, they find it: a three-bedroom gray house with a big living room and a back fence, for $60,000. Their mortgage payments will be about $433 a month plus insurance and property taxes.
The Alases expect to move after they repaint and replace the carpeting.
“No Jacuzzi,” Alas says with a laugh, “but I’ll try to put one in there myself, man. It’s easy.” And soon after they move in, he adds, they’ll start dog shopping.
