More than Half of Aspiring Homeowners Face Major Obstacles
By Business Today
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Becoming a homeowner is a dream for many Americans, but the path to homeownership is far from easy. According to a recent report by Bankrate, more than half of aspiring homeowners face two significant roadblocks in their journey.
High Cost of Living and Insufficient Income
The Bankrate report reveals that 51% of aspiring homeowners believe that the high cost of living is preventing them from buying a home. Additionally, 54% feel that their current income is insufficient to afford a home in today’s market.
The survey, conducted with 2,267 U.S. adults, including 864 aspiring homeowners, highlights the challenges faced by those who have either owned a home in the past but do not currently own one or have never owned a home but hope to in the future.
The Daunting Task of Saving for a Down Payment
When asked about their ability to save for a down payment, 20% of aspiring homeowners expressed doubt that they would ever have enough funds. Furthermore, 30% believe it will take them at least five years, while 10% anticipate needing a decade or more to save enough.
Mark Hamrick, senior economic analyst and Washington bureau chief of Bankrate, acknowledges the significant waiting times many aspiring homeowners face. He remarks that waiting “never” or for five to ten years can feel like an eternity.
Mortgage Rates Adding to the Burden
High mortgage rates further compound the challenges for aspiring homeowners. As interest rates rose in 2022, the average monthly mortgage payment increased to $2,045 in December, a 46% jump from the previous year. Consequently, more individuals were denied mortgage applications due to insufficient income.
Unfortunately, recent trends have not been favorable either. Last week, the 30-year fixed mortgage rate reached 7.06%, disappointing those who expected a decline at the beginning of the year. While experts predict a potential decrease in rates in the coming months, historical events like the Covid-19 pandemic have led to unexpected fluctuations in interest rates.
Considerations Beyond the Down Payment
Aspiring buyers must look beyond the down payment when planning for homeownership. Owning a home entails new financial responsibilities, such as repairs, maintenance, upgrades, and renovations. Failure to account for these costs can strain finances, making it challenging to save for other goals and potentially leading to increased debt.
In addition to the high cost of living and low income, aspiring homeowners also face hurdles such as credit card debt (18%) and student loan debt (10%), as reported by Bankrate.
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