Even as mortgage rates drop, housing trends indicate potential buyers’ hesitancy to make a purchase. What hurdles might they face?
1. The Complex Mortgage Process
According to a Digital Risk survey, the longer mortgage application process deters many potential first-time buyers. This includes a longer closing time and greater setbacks stemming from stricter regulations. A recent Trulia survey also shows that potential buyers find themselves not qualifying for loans or not being able to afford a large enough down payment for a conventional mortgage.
What can a buyer do? More preparation is needed, including setting a budget to save for a down payment, correcting errors on your credit report and shrinking your monthly spending down to 36 percent or less of your income.
2. Unstable Economy
Even if a potential buyer is qualified, the economy’s lack of stability results in many people looking years down the line to be approved. While their income and employment history may seem stable enough to qualify for a loan in the present, lenders consider the “what if?” scenarios of losing a job, being unable to make mortgage payments and having to file for foreclosure in the future.
3. Fluctuating Mortgage Rates and Prices
Among the factors that emerged from the housing crisis, volatile mortgage rates and fluctuating prices make certain potential buyers put purchasing on hold. Specifically, buyers get concerned about not securing a low enough rate and worry that the home’s value could plunge in the future, leaving them with an underwater mortgage.
In these instances, experts recommend refinancing if rates and prices drop significantly down the road.
4. Belief That Renting is More Affordable
Based on a Freddie Mac survey, many continue to believe that renting is more affordable than buying. In fact, about 75 percent of its subjects, from baby boomers to millennials, believed this to be true. For many regions, it’s more of a buyer’s market and purchasing property yields greater savings long term.
Are you at the start of the home-buying process and are looking in Central Connecticut? Consider the custom homes of By Carrier. Browse our communities or contact us to learn more.