3 Changes That Would Increase Homeownership

3 Changes That Would Increase Homeownership

1. Easing the mortgage qualification process. Banks have many restrictions that determine who they can and cannot finance transactions for, and that process should be opened up a bit to accommodate a wider swath of people.

Argument against: Banks won’t want to lend such high amounts to less qualified buyers because of higher risk of default.

Argument for: Someone paying 2000 a month in rent should be able to qualify for a mortgage that would cost less a month than what they are paying in rent, regardless of their debt-to-income ratio or income. If they pay their rent on time every month I think that dispels the notions of “less qualified” and “higher risk of default”

2. Impose penalties for non-primary residences. Companies snatching up homes to be permanent landlords is not against the law, but I wouldn’t be opposed to them paying a higher tax rate to help give back to the community and install a “check” against them simply buying up everything.

Argument against: Nobody who pays taxes likes higher taxes, so this will be unpopular amongst homeowners.

Argument for: Installing a check against venture capitals and the like buying up all the residential real estate at a time where we are in a housing crisis seems like a no-brainer to me. Give it a time-out clause if you need to, but to do nothing while these companies buy up all the homes will just exacerbate this problem.

3. Lower Interest Rates

It doesn’t make sense for interest rates to have doubled over the course of a housing crisis – lower the rates and make homeownership more affordable. Banks make a lot of money on mortgages, they can stand to make a little less and still be profitable. These higher interest rates are stifling homeownership by changing affordability to accommodate the higher costs.

Argument against: Well you should have SEEN the interest rates in the 80s! Double digits! Historically, 6 is fine!

Argument for: We aren’t in the 80s anymore, you can’t get those jobs, things don’t cost what they did in the 80s. Things cost a lot closer to what they did in 2020 when the rates were 3-4, let’s get back to reality with the interest rates here.

My Conclusion

Ultimately, homeownership being expanded would be good for all Americans. Homeowners enjoy a net worth 40 times greater than their non-homeowning peers, and locking in a mortgage payment can be a game-changer 7 years down the road when your mortgage payment is the same but rent in the area has all gone up.

Let’s get people educated on the benefits of homeownership, and what the obstacles are – and then tackle those obstacles.