The Fear of Buying a House

[Gabriela Gaspar]

“Rate on 30-year fixed mortgage falls to 3.98 pct.” This is, according to this article, one of the lowest rates over the last weeks. However, as the article further states, such lower rates have not encouraged an increase in home sales. Furthermore, “rates have been below 5 percent for all but two weeks this year. Yet this year could be the worst for home sales in 14 years.” What, then, is the problem that hinders potential home buyers to buy at such low mortgage rates?

 

The article mentions that, despite the lower rates, mortgage applications have decreased 1.2 percent compared to when theses rates were higher. While reading it, I could immediately recall our class discussions about incentives for buying a house. This article shows that low mortgage rates are not the only thing potential home owners are looking for, especially in these days of recession and a shaky economy. I also recalled what professor Sullivan said about good and bad seasons to enter a mortgage plan and to buy a house. And this is definitely not the best time to do so.

 

The article makes another good point when it states that “high unemployment and scant wage gains have made it harder for many people to qualify for loans. Many Americans don't want to sink money into a home that could lose value over the next three to four years.” The truth is, Americans are scared to buy houses because they can't see the short term – and even the long term – benefits of doing so right now. We have seen such a great number of families losing their homes because they failed to keep up with their mortgage, that even lower mortgage rates are not enough today for people to consider buying a house. People are scared to invest, and they have all the right to be. This concept makes total sense when we think of these times as the “bad season” for for the house market, as we learned in class.

 

Hopefully, as we also learned, the trend is for things to look better with the years and for the people to regain confidence in entering such a great commitment as a mortgage plan. After all, increases in house sales are a great indicator of a recovering economy. And that is all we want to see.

 

Source: http://www.wfaa.com/news/national/134390963.html