Top 7 Reasons Stopping People From Buying a Home
By Susan M. Keenan ©2009
Although the reasons that stop people from buying a home vary, there are quite a few that are consistent across the line. In fact, some of these reasons will rear their ugly heads more consistently during a slow economy, while other reasons persist no matter what the financial climate is. While the list of reasons preventing potential homeowners from grabbing that brass ring and tossing their hat on a coat stand isn't all that long, the list itself is critical enough to stop people in their tracks before signing that line and crossing that threshold that most people call home.
The chunk of money that new homeowners need to put down when obtaining a home is referred to as the down payment. This amount varies, but is almost always present as part of the home buying experience. If the new homeowner wishes to avoid PMI or Private Mortgage Insurance, then he needs to place at least 20% of the selling price down as a down payment. While the down payment does serve to lower the monthly mortgage payment by lowering the full amount of the borrowed sum, it is often difficult for potential homeowners to amass that sum of money, thereby preventing them from purchasing a home.
As with the down payment scenario, accumulating the money for closing costs is often difficult for those individuals who have a tight budget. While the desire to save money in order to pay the closing costs outright might be present, the ability to do so might be hampered by a multiplicity of debts and a low-paying job. Those potential homeowners who are maxed out and cannot afford to save up what they need to pay for the closing costs while still being able to afford the monthly cost of the mortgage and accumulate a down payment might simply walk over and forego the chance to buy their own home, sweet home.
In many cases, potential homeowners are limited by the earnings from their particular employment circumstances. In fact, since their mortgage qualification depends upon their ability to repay the loan, the amount of money they earn is directly related to the size of the mortgage that they will be able to qualify to get. If their income is not sufficient enough to qualify them for the amount of money that they need to borrow, then they will be stopped dead in their tracks and forget their dream of looking for a new home at least for the present.
Fear of Unemployment or Job Security
When the economy is slow, it leads to more people worrying about the security of their job and the possibility of job layoffs, downsizing, and stagnant incomes. In fact, as they watch other individuals get their pink slips, they begin to wonder if maybe they should expect one themselves. This fear, no matter how small, will lead to the lack of a desire to commit oneself to a large monthly debt even if it does bring along with it the title of homeowner.
Fear of Foreclosure
As the number of foreclosures rise higher and more and more people succumb to the devastating effects of a slow economy, the fear of foreclosures prevents some potential homeowners from looking into homeownership. The effects of foreclosure can be devastating leaving people without a roof over their heads and bad credit on their credit reports. Not only will they be homeless, but they will be without the financial means to climb up out of the hole that they have fallen into.
Existing Home Values
Current market prices can also influence whether or not potential homeowners will take the plunge and buy a home. When it is a seller's market and home prices are high, prospective home buyers tend to shy away from some of the exorbitant ones in search of more affordable properties. Unfortunately, for some of these individuals, the search for home, sweet home is short lived as they realize that they cannot afford the current market prices for homes.
On the other side of the coin, current homeowners who are looking to upgrade their current property to a larger home or a different location might become discouraged by the drop in prices when the market turns into a buyer's market. Even though the home that they would be trading up to could potentially carry a lower price tag, their existing home might not sell at a high enough price to cover their existing mortgage.
Lack of Confidence
One of the unavoidable obstacles for some would-be homeowners is the lack of confidence they have in their own ability to secure a mortgage and pay for it on a consistent basis. It is this fear that they will prove unworthy that holds them back from even seeking pre-approval for a mortgage. In all fairness, however, banks have stricter regulations to follow when it comes to qualifying people for a mortgage.
In general, not having enough money saved up or the fear of not having enough money when the bills start to roll in is behind a great many of those decisions not to buy a home.
While the purchase of a home might begin as a good financial decision, circumstances can quickly erode this decision into a bad one. This is what many potential homeowners worry about when deciding whether or not to buy a home.
What are the reasons that stop some prospective home buyers from taking the plunge? Is it money? Is it the shakiness of the economy? Find out what lies behind the chain of events that push potential homeowners away from opening that door.