Among Hispanic women in that same age group, the comparison was about 6 percent to about 4.5 percent, respectively.
Positive economic trends have helped, too. Hispanics looking to fund business ventures using their home equity have recently been aided by rapid appreciation in the home market and low mortgage rates. Those factors, combined with a dearth of traditional business loans, have led more entrepreneurs to their mortgage bankers.
"Especially in the area of startups, there's very little availability of capital to fund startups, because from a business perspective or lender perspective, it's a very high-risk venture," says Mari Riddle, executive director of TELACU Community Capital, a nonprofit financial development institution in Los Angeles. "When you look at resources of capital for startups, you will always have friends and family or credit cards or other sources, which would include home equity."
Ultimately, business people will make choices between tapping home-equity credit and taking out a business loan based on the fundamentals of entrepreneurship: availability of capital and risk.
Which option is more favorable at any given time depends on factors ranging from the borrower's home-equity level and credit rating to current mortgage rates, Ms. Riddle says.
One advantage of home-equity credit is the simplicity of the risk structure. Only the house itself backs up a mortgage in case of default, whereas business loans are guaranteed by a complex hierarchy of assets, starting with the company's cash flow and then followed by assets such as equipment, accounts receivable, and inventory.
Cooperativa Comunitaria Latina de Crédito, a 4-year-old Hispanic credit union with five branches across North Carolina, is just one agency promoting homeownership as the most direct path toward affluence. "Our strategy is that the way to get out of poverty is homeownership and equity that you build in your home," Chairman and co-founder John Herrera says.
| INCREASING HOMEOWNERSHIP Hispanic Home-Owner Households (in 000's) |
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| (Source: HispanTelligence® projections based on Statistical Abstract of the United States: 2002, and Housing Vacancy Survey Annual Statistics 2002) |
The organization's 25,000 members are just now stepping toward homeownership after regulators approved the credit union's request earlier this year to offer 30-year mortgages with an interest rate of 5.25 percent.
While Mr. Herrera says home-equity loans are not on the credit union's menu of services yet, it's the first step.
"El hogar – the family home – is not just a physical space," Mr. Herrera says. "It provides the financial security and personal security that our children need to succeed in school and to succeed in society."
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