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Financing the American Dream--Can Qualified Buyers Achieve Homeownership Under Current Restrictions?

By
Real Estate Agent with Keller Williams NYC

 

Jscreations.FreeDigitalImages.comThere was a 1970‘s movie, Network, where actor Peter Finch’s character, after becoming so stressed about his lagging network ratings exclaimed, in front of millions of viewers:  "I'm as mad as hell, and I'm not going to take this anymore!"  He encourages his entire viewing audience to go to their windows and yell out the same sentiment about whatever was bugging them.

 

I wonder, are credit-worthy individuals desiring to get their part of the American Dream (i.e., being a homeowner) beginning to feel that way?  

 

Maybe so.  After reading an online article on CNNMoney.com, potential buyers with good credit are not only dissuaded from buying, but they can’t get the loan in the first place.

 

Talk about a infuriating conundrum!

 

According to the article, the Federal Reserve stated that 25 percent of people who apply for home loans are turned down and a chief economist for the National Association of Realtors said that if an individual has just one or two “blemishes” on their credit history, they’re denied a loan to purchase a home.

 

As realtors, we know the frustration of the current regulations that potential homeowners have to adhere to in order to qualify.  Lenders are requiring 15-20 percent down (in Manhattan that number is even larger) and the average credit score has to be at least 760, that’s up 40 points from a few years ago.  Based on my own brokerage’s experience, we’ve seen far more cash deals in the past year that ever before.

 

That leaves thousands of potential customers out of the picture and I don’t know about you, but I’m getting pretty tired of it myself.

 

The National Association of Realtors is broadcasting a new Public Awareness Campaign. If you’ve seen the commercials, they offer some impressive statistics regarding homeownership:

  • For every two homes sold, one job is created.
  • Each home purchased pumps up to $60K into the economy.
  • Home ownerships accounts for over $2 trillion of the U.S. GDP.

Watch their national campaign here.  They also have information about how associations can coordinate their own advertising and outreach programs here

 

Ron Phipps, NAR’s President has a video imploring people to respond to a call to action; letting Congress know that homeownership matters and to remind them that the mortgage interest deduction is a very critical element.  His statement that the tradition of home ownership, mortgage deductions and the rules governing it has been in place since 1913 and needs to remain in place.

 

I second that!  It’s not just a benefit for us as realtors, but it’s a crucial element of our economy’s recovery.  Everyone deserves the opportunity to have their piece of the pie and their own idea of the American Dream.  

 

Jonathan Miller stated in New York Times article, “Housing does not truly recover until lending does.”

 

Jerry Howard, CEO of NAR said, "For the first time in 100 years, the government is discouraging you. It's saying 'We intend to make it more difficult for you and your kids to buy homes.'"  

 

Enough already!  

 

What do you think of the new rules governing lending?  Voice your opinion and leave me a comment.

 

References:

 

Christie, Les. CNN Money. Prices are low! Mortgages are cheap! But you can’t get one. Apr 6, 2011. (Accessed 10 Apr 2011). 

 

Santora, Marc. The New York Times. New Worries for Buyers Seeking Mortgages.

March 10, 2011. (Accessed 10 Apr 2011).


 

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