Low Rates Still Not Enough to Encourage Home Ownership

In the last couple months, we’ve seen mortgage rates hit rock bottom. Who knows if they will ever be this low again let alone stay this low for much longer. Yet these amazingly low rates still have not helped increase sales figures for homes lately. Why is that?

According to reports, the number of mortgage loan applications has dropped significantly in recent months. Just in the last week alone, the number has dropped by nearly 1.5 percent. Apparently, American consumers are simply passing on buying a home right now because of the uncertainty of the economy and the job market. Even though mortgage rates currently stand at less than 4.5 percent, few people are looking at home ownership as something they need to do right now. Instead, many people are choosing to pay off some of their debt and put some money in the bank in case something drastic happens to their finances.

But there are other reasons as well. The number of people wanting a refinance has also dropped despite the low mortgage rates. Some homeowners are turned off by getting an appraisal on their home in order to get a refinance. Appraisals aren’t cheap and paying for an appraisal does not guarantee that you will qualify for a refinance loan. In fact, many people pay hundreds of dollars to get an official appraisal of their home and then they are turned down for a home refinance loan.

Other homeowners are citing reasons like their bank continues to decline their refinance application because of other debt. It seems that, at least in some cases, the banks are looking for excuses to not refinance homes for people which is frustrating many homeowners who feel like they qualify for the historically low rates. Some say the reason they have not refinanced is because they have gone through the obstacles of applying online and nothing has happened. After hours of jumping through the hoops to apply for the refinance, many people find that they have wasted their time or they find that the loan provider isn’t offering them nearly as much money that they need to refinance. One homeowner said she has a score of over 800 and the bank only offered her about 60 percent of her home’s value.

Have you tried to get a mortgage loan or refinance your home in the last few months to take advantage of the current interest rates? What are some of the things you are running into when you do this? Let us know in the comments below.