You may think that after almost five years of dealing with the mortgage crisis and its aftereffects that many Americans would have soured on the idea of homeownership. Au contraire! A new survey from Fannie Mae discovered that 85 percent of Americans would choose owning a home as opposed to renting. Those surveyed cited finances as the #1 obstacle to obtaining the “American Dream.”
The extensive survey brought to light a complex combination of factors ranging from emotions to perceptions about money, that all play a role in our decisions about homeownership. For example:
- The number of financial stressors, loan accessibility, affordability, and the perceived benefits of homeownership were what 40 percent of the respondents stated would most affect their choice to buy or rent
- Overall attitudes about housing would affect the decision for 39 percent.
- Demographic features such as marital status, age, income, and employment were listed by 21 percent as important considerations.
An article published on Housingwire’s site in early August by Kerri Ann Panchuk included the following observation from Steve Deggendorf. He was one of the survey’s creators and had this to say, “The whole world thinks about underwriting or what’s my income (when evaluating the home buying decision), but what is driving consumers seems to fall more in this attitudinal world. If we helped people understand these attitudes that are driving their decision-making process, it would help them make better housing decisions.”
HARP Refi Volume Increases
In other positive news, findings are in and show that for the second quarter of 2012, applications for the Home Affordable Refinance Program, known as HARP were on the rise. Changes made to the program in October such as doing away with the maximum LTV limit, allowed more borrowers to seek help. The Federal Housing Finance Agency reported that, “HARP loans were about one-third of Freddie Mac’s refinance fundings during the second quarter, the highest since HARP’s inception.” This is especially significant because of earlier predictions that the HARP program would likely comprise only around 25 percent of Freddie Mac’s loan applications.
HARP participants are discovering the benefits of the federally funded program. The latest findings indicate that underwater mortgage holders who refinanced under the program leaned towards long-term, fixed-rate mortgages. In fact, 25 percent of the program participants who refinanced during 2012’s second quarter were able to shorten their loan term. Another indicator that borrowers were opting for the fixed-rate loans was clear since 95 percent of those with ARM’s switched.
Many of the loans that were refinanced through HARP in the second quarter were originally taken out from 2007 to 2008. Of those refinanced, the median depreciation rate was 34 percent. The fact that mortgage rates are still extremely low could be another reason why HARP activity is up. Also, since risk-based fees were taken away in October, homeowners are now relieved of negative equity when they refinance into a shorter-term mortgage.