Is the American Dream Still Attainable? Great Mortgage Rates Make It Possible

by | Mar 14, 2022 | Interest Rates | 0 comments

When it comes to the American Dream, homeownership is a huge component as it provides a number of economic benefits for homeowners, but this dream is sometimes harder to attain when interest rates rise. The American dream requires the ability to build equity, reduce housing costs, and accumulate wealth by accessing credit. Based on the research produced by the US Census Bureau, since the 1960s, homeownership has remained over 60 percent.

Even though loads of Americans aspire to own homes, they are often faced with problems like having trouble with their down payment, incredible levels of student debt, and finding it difficult to access credit. Along with these financial hurdles, the boom conditions have been affecting the real estate market. 

However, great mortgage rates make it possible. The buying conditions are ideal as the Federal Reserve consistently maintains interest rates at the lowest levels in history. Moreover, Newsweek claims that the mortgage rates have been the lowest since 1971 ever since they were being tracked by the Federal Home Loan Mortgage. 

Homeownership and the American Dream

Homeownership is linked to optimism. It encourages the notion of equal opportunity so that any individual, regardless of his background, can achieve financial stability and superior wealth through entrepreneurial ventures and hard work. A large part of the American Dream is homeownership. 

Since the 2008 housing collapse and the ongoing pandemic, homeownership in the United States of America has become difficult. However, low mortgage rates are making the dreams of Americans come true again.

Decent, stable housing in a healthy community and neighborhood is a fundamental need of the population. According to economists, housing is a “composite” good, which means that it meets a number of different goals. The most important goals of homeownership include:

  • Shelter

At its very core, housing is a basic need that every human requires. Without it, there is no concept of security. The physical structures of a house are important to keep us protected from outside elements while ensuring security and providing privacy. Housing helps us eat, sleep, and keep our belongings safe and in place.

  • Stability

Homeownership brings about stability. You no longer have to worry about where to live next month. Of course, it requires mortgage rates to be low, but this knowledge allows a stable foundation so that one can make plans for the future and carry out any other economic needs that influence his life.

  • Location

Where one lives determines his access to schooling for his kids and jobs to keep a roof over his family’s head. Moreover, the proximity to services and stores is based on the location of his home.

  • Wealth

Housing, especially in the form of homeownership, is a way to build wealth for a large chunk of the population.

How Great Mortgage Rates are Benefiting Homeowners

Homeownership brings a number of financial benefits. Paying a mortgage regularly is a “forced savings mechanism,” which means that homeowners continue to pay down debt and accumulate equity each time they make a payment. Of course, for the first few years of a mortgage, the monthly payments apply to the interest that homeowners owe instead of the principal. 

Moreover, homeownership provides predictability and stability of housing expenditures. Usually, homeowners who have a 30-year fixed-rate mortgage have to pay the biggest portion of housing costs each month spread over a long period of time. 

Since the housing expenditures are predictable, homeowners can enjoy greater stability. In fact, research also shows that as compared to those who rent houses, homeowners are more engaged in political and civic affairs and may also be better parents since they do not have to disrupt their child’s learning curve and schooling every few months.

Low mortgage rates are also helping existing homeowners as they save money by refinancing. The money saved is going to be redirected somewhere in the economy, which is extremely helpful in case a recession ever occurs. Individuals who took out mortgage loans in 2018 when the rate of interest was approximately 4.94 percent might be able to benefit from the low mortgage rates today and save money every month.

Of course, the lowest interest rates are usually given by lenders who feel that the borrower has a strong credit profile. Hence, before refinancing, we always recommend that you review the cost of refinancing while keeping in mind potential savings to ensure that everything makes financial sense in the long run.

Integrity Mortgage (NMLS #1692497) can help you get the great mortgage terms you need to achieve your American dream.  Contact us to learn more.

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