Tools for Affordable, Accessible and Sustainable Home Ownership

By Dale Mitchell of Pinnacle Financial Partners

Affordable housing rightfully takes up a lot of oxygen in Nashville’s growth conversation. Projects like the East Bank and the changes coming to Dickerson Pike hold an enormous amount of promise for people hoping to find and afford homes close to the jobs, major attractions and investments made in downtown.

While we focus on producing new affordable units as part of these and other development opportunities, we need to also stay focused on two other important aspects of Nashville’s overall affordability:

• Accessibility; that is, ensuring homes are within reach of working families with help from the right tools and resources
• Keeping people in their homes as neighborhoods change and grow around them by taking advantage of the equity they’ve built.

Accessible Housing
As our city continues to grow, varied housing options will always be needed so Nashvillians, regardless of circumstance, have safe, quality places to live. Development costs, however, do not get cheaper just because a property will be occupied by a teacher, a first responder or an essential service provider, all of whom play critical roles in increasing Nashville’s livability. An important key in meeting the burgeoning housing need is to ensure accessible resources to place a home within reach of working families. 

Many local nonprofit developers do yeoman’s work to connect people with homeownership opportunities. A few examples are organizations like The Housing Fund, Habitat for Humanity and Affordable Housing Resources. Developers like these are building single-family homes in urban areas that are made accessible through innovative programs that include loans made directly to home buyers with terms that traditional banks often can’t match. They teach personal finance classes and the basic requirements of home ownership. They are essential players in this work, with significant support from municipalities, for-profit builders, realtors, and major employers, all eager to help increase overall impact.

Banks are strong partners to these organizations, understanding they also play an important role in the supply of accessible housing.  They have much more capital and larger infrastructure for making and servicing home loans. Many banks, Pinnacle included, use this advantage to create specialized products, like mortgages with relaxed underwriting guidelines and flexible terms, to do just this.

Another burgeoning tool available at a few banks and nonprofits is down payment assistance, which is helping many new home buyers overcome one of the biggest obstacles to ownership. Saving enough money to put down on a home is a huge task for many people. Staring down the need to pay tens of thousands of dollars before your first mortgage payment is enough for some to let go of their dream.

Down payment assistance provides funds through a second mortgage that often may not require repayment until the first mortgage is repaid or until the home is sold or ownership is otherwise transferred. The funds can sometimes come in the form of a grant or a forgivable second mortgage that doesn’t require repayment if specific qualifying conditions are met. In either case, the funds can be used for down payment or to help cover closing costs.

Keeping People in Their Homes
Areas like Dickerson Pike are facing the possibility of rapid gentrification due to rising property values and nearby revitalization from public and private investments. Rather than let this continue unabated, we can take advantage of the tools available to help people stay in their homes, take advantage of rising values and change with the neighborhood instead of being priced out.

Minority communities may have specialized home equity loans and lines of credit that are unavailable in other areas. Many banks and financial nonprofits often design them with more affordable rates and other features that make them attractive and budget friendly. Homeowners in these communities can improve and upgrade their homes and take care of big-ticket maintenance items that will help them make a changing neighborhood work for them instead of against. Low-to-moderate income homeowners have many of the same tools available, sometimes with even more attractive terms.

Take Action Together
Even in Nashville, home ownership and improvement aren’t out of reach for everyone. Innovative tools are out there, and they’re getting more plentiful and powerful all the time. As financial professionals, realtors, employers and civic leaders, we must educate ourselves on the available resources and help connect the people we work with, our family and friends to them.

Start a conversation with your banking partner to learn for yourself so you can be that connection to a permanent, sustainable home for our Nashville neighbors.

 

Dale Mitchell is a community development coordinator at Pinnacle Financial Partners, helping lead the firm’s community investments and lending efforts in Middle Tennessee, Chattanooga, Knoxville, Kentucky and Alabama.  Dale has 30 years of banking experience and is based in Nashville.