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Goodbye Mortgage Debt…?

House Value

Let’s say you live in a big city and you’ve been renting your room/ house/condo/shack for a while. Or you’ve been living with family for a while to save up and bust outta there because lord knows they’ve probably been getting on each and every one of your nerves. So now you’re thinking about purchasing a home for some stability, peace of mind, and peace in general. If you don’t have the money up front, you’re looking at taking out a mortgage, and therefore the bank owns your soul.

Mortgage=you slowly pay your debt until your home is completely paid off. It’s the equivalent of paying off your student loans, except this time you have more to show for it. Just kidding. But not really.

In the past it was much easier to get a mortgage loan because homeowners barely had to put any money down and your credit didn’t matter. banks were forcing themselves into risky situations. Well the government and the banks have figured out a better way to create less risk for everyone, and that is requiring homeowners to have good credit and put more money down initially.

The good news is that now for the first time since 2008, home equity has risen to $6.7 trillion. Homeowners are taking advantage of extremely low borrowing costs in order to refinance their loans by bringing cash money for their down payment.

This is great news because it means that home loan debt is finally starting to diminish. Americans are learning that they don’t actually want debt and now taking out a mortgage is viewed more as a sign of instability.

Says Richard DeKaser, deputy chief economist at Parthenon Group LLC in Boston, ” People are worried about falling home prices and they’re worried about the economy. If they can afford it, they’re paying down their mortgages instead of buying things because it makes them feel like they’ll sleep better at night.”

For six consecutive months up until March 2012, home prices fell steadily to the lowest point 35 percent below the housing boom’s highest prices, according to the S&P/Case-Shiller price index of 20 U.S. metropolitan areas. According Harvard University’s Joint Center for Housing Studies’ Eric Belsky, the 3.4% increase in home sales in May could be a sign that prices are finally starting show more reliability.

It seems that homeownership is becoming the survival of the fittest. If you’re thinking about owning your next home, consider reducing your  mortgage balance. Because many people have lost their jobs or gotten their salaries reduced, it makes people feel uneasy about the ownership process and they’d rather have less debt hanging over them. The good news is, at least for those in Massachusetts, the unemployment rate is steadily declining, making prospects even brighter for everyone.

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