The Top 4 Barriers to Homeownership

As Financial Literacy Month is recognized throughout the nation, credit.org and the National Foundation for Credit Counseling® (NFCC®) are working together to spotlight the results of the 2019 Consumer Financial Literacy Survey. This year’s survey, conducted online by Harris Poll in March 2019 among 2,086 U.S. adults ages 18 and older, reveals prominent barriers to home ownership for Americans who have attempted to buy a home.

The survey reveals that many Americans face increasing barriers to homeownership despite the good news about the economy. In fact, one out of every two U.S. adults who have taken steps to purchase a home of their own say they have faced barriers.

Challenges have always existed along the road to homeownership, but it is clear that some obstacles can lead people to abandon the pursuit of their goal. Purchasing a home in today’s market requires a greater level of knowledge and preparedness than ever before. Credit.org is a resource available to educate and prepare all individuals and families before they enter the homebuying process.

Top homeownership barriers reported in this year’s survey include:

Lack of Funding for Down Payment

A lack of funding for down payment or closing costs tops the list this year as the most common challenge. Savings has been a common challenge for some who have difficulty managing debt while balancing a household budget. Fortunately, most have non-retirement savings. More than half with non-retirement savings are keeping their funds in a standard savings account. Regardless of where someone may be in their journey to grow personal savings, nonprofit housing counselors can be assistive toward identifying ways to help make homeownership possible while growing personal savings.

Existing Debt

Three in five U.S. adults have had credit card debt in the past 12 months, and nearly two in five indicate their household carries such debt from month-to-month. Not surprisingly, more than half struggle to minimize their debt, primarily due to unexpected financial emergencies. Credit cards are known to be among the costliest forms of debt to manage and can be equally challenging to repay. Credit card interest rates for people with average credit scores are nearly 18% APR. Knowing credit cards are frequently used to cover emergency expenses in the absence of savings, makes it easy to understand how some may feel as though they are spinning their wheels trying to reduce the balances they owe.

Personalized credit counseling assistance can help people who want to take back control of their debt without turning to risky, get-out-of-debt-quick schemes.

Limited Budget Options

The survey revealed that about two in five U.S. adults, a proportion that has held roughly steady since 2007, say they have a budget and keep close track of how much they spend on such things as food, housing, and entertainment. On the one hand, it is encouraging to see that the number who regularly save has not diminished over time, but it is also disappointing that there continue to be more who do not follow these healthy financial habits. Nonprofit credit coaching is also a resource to help everyone succeed in reaching their savings goals, no matter their starting point.

Poor Credit History or Low Credit Score

A low credit score due to lack of credit history or an unsatisfactory record of debt repayment can be a major setback, especially when hoping to qualify for a mortgage. In either scenario, there are a range of options for restoring credit health while staying on track for home ownership. A credit report review or other credit coaching might be the best way to start when getting one’s credit ready for homeownership.

The survey clearly demonstrates the need for financial counseling and education for potential homeowners, but it also reveals the level of awareness of such resources. If they were to have financial problems related to debt, 23 percent of adults, or almost 56 million Americans[1], indicate they would reach out to a professional non-profit credit counseling agency for assistance. Taking that important step is as easy as reaching out to a counselor by calling 1-800-294-3896.

About the Survey

The 2019 Financial Literacy Survey was conducted online within the United States by The Harris Poll on behalf of the NFCC (National Foundation for Credit Counseling) between March 8th and March 13th, 2019 among 2,086 U.S. adults ages 18+. For complete research method, including weighting variables and subgroup sample sizes, please contact the NFCC at press@nfcc.org.

 

 

[1] Calculation based on U.S. Census Bureau’s 2016 Current Population Survey (CPS), which estimates there are 244.81 million adults ages 18+ residing in the United States: 244.81M x 0.24 = 58.75M.

Our Pre-Purchase Coaching and Home Buyer Education will help you become a successful homeowner.Our Pre-Purchase Coaching and Home Buyer Education will help you become a successful homeowner.