Homeownership is a key component in wealth building for Americans of all races and ethnicities. Unfortunately, a significant disparity in the rate of homeownership continues to exist in the U.S. between African Americans and Whites, making it more difficult for African Americans to build wealth. It also makes it increasingly important for Africans Americans to protect the home they do own so that it can be passed down to the next generation.
The Difference between White and African American Homeowners
Despite the fact that housing discrimination based on race was prohibited by the federal government over 50 years ago, the gap between white and African American homeownership continues to grow. In fact, the current 30-percentage-point gap between black and white homeownership is larger than it was in 1968 when the Fair Housing Act was passed, according to Urban Institute research associate Jung Hyun Choi. Moreover, African American homeownership has been slower to recover from the Great Recession, effectively wiping out any gains they made prior to the economic crisis.
While the rate of homeownership does increase in relation to education levels among all races, white high school dropouts have a homeownership rate of 60.5 percent, compared with 56.4 percent for black college graduates. Because whites are more likely to own a home, they are better able to help their children buy their first home. This is one reason that African Americans buy their first home, on average, eight years later than white Americans. This allows white homeowners to build up equity earlier which, in turn, adds to the disparity in wealth between white and African Americans.
What You Can Do to Protect Your Home and Pass on Your Wealth
For African American homeowners, passing on the legacy of homeownership when they are gone is critical to decreasing the wealth gap for future generations. The good news is that you can accomplish this without the need for an expensive and lengthy court process by creating a Living Trust. A Living Trust is used to protect homes from being probated at the time of the homeowner’s death.
African Americans cannot risk losing their hard-earned assets to the costly, time-consuming probate process. Knowing that homeownership is often the single most important key to wealth building, keeping your home in the family is crucial. Create a Living Trust today!
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