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Consumer debt preventing many from entering housing market

The American dream usually consists of a perfect home with a white picket fence. Unfortunately, that dream is a reality for the lowest number of homeowners since 1987. A recent study conducted by RealtyTrac seems to point to various types of consumer debt as a potential cause for the low numbers. Prospective home buyers in Washington may be held back for this same reason.

The report is based on research done in 500 counties across the country. It concludes that student debt and vehicle loan debt, along with other types of consumer debts, have negatively impacted the ability of new buyers to enter the housing market. One financial professional has suggested that lowering the required down payment from 20 percent to 3 percent may enable buyers to save the money they need sooner. However, even if the amount required for a down payment were reduced, buyers with non-mortgage debt would only benefit in 48 percent of the total 500 counties due to the increased monthly payments that result from smaller down payments.

For those who find themselves with consumer debt who hope to enter the housing market, there are a plethora of programs that can assist with down payments and closing costs. Unfortunately, these programs are not being utilized by many potential buyers. This is possibly because buyers believe that mortgages are out of their reach.

Conversely, many hopeful home buyers may simply be overwhelmed with consumer debt. Washington families who find that they are unable to cope with their debt load do not have to trade their dreams of home ownership for financial peace. Many of those who seek bankruptcy protection from their insupportable debt can still achieve the American dream in a shorter amount of time than they may have imagined and without the specter of debt holding them down.

Source:, "Non-mortgage debt holding back home ownership", Rapti Gupta, Nov. 7, 2014

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