Author: Jeff Kingsley
Outside of Orlando, Dahianara Lopez and her spouse Paulo Echeverry own and operate a food truck. They claim that by working hard for many years, they could afford a down payment for a home.” We want something that we can say is mine,” says Lopez.
They put down a $25,000 deposit and signed a contract to purchase a new house for roughly $500,000 late last year.
However, the rise in mortgage rates since then—from 3% to about 7%—has been the largest in 40 years.
Due to pandemic delays, many new homes have taken a year or longer to build. So it’s now much more difficult for thousands of people to conveniently pay for houses they decided to buy, just like Echeverry and Lopez. In their situation, the higher rates would increase their monthly mortgage payment by roughly $1,100.
Homebuyers Experience a Financial Loss.
Some individuals have already experienced financial loss. In Tigard, Oregon, Karen Jensen is working as a school nurse. Together with her husband, she desired a larger home for their big family. But once the mortgage rates increased, they changed their minds and decided not to buy it. She also claims that the builder kept their deposit.
Firstly she felt disappointed but then OK with it. After all, they signed the agreement and paid the deposit. But afterward, she noticed that the business had put on sale the house for $90,000 more than she had originally intended to pay. During construction, local property values increased. She also claims it immediately entered into an agreement and is now shown as sold on the builder’s website.
Homebuilders’ Reaction
Builders don’t appear to be willing to discuss customers losing their deposits. Both the Florida Home Builders Association and the National Association of Home Builders denied requests for interviews.
It’s crucial to understand that buyers and builders are anxiously scrambling due to the dramatic rise in mortgage rates. That is a result of a large number of hesitant buyers.
Some builders are also making exceptions for those who can no longer qualify for a mortgage because of these rising interest rates. About 100 builders were questioned by Jody Kahn of the John Burns Real Estate Consulting Group to learn how they managed money deposits that buyers are obligated to make. She says most builders are willing to give a refund to customers who can no longer qualify for a loan. Not all builders, unfortunately.
Final Words
In Oregon, Karen Jensen has requested the builder a refund of her deposit, but she hasn’t heard anything yet. The company stated that it wouldn’t discuss any specific cases but added that there were expenses related to selling a building to a different buyer. Dahianara Lopez and her husband feared losing their $25,000 deposit when they were back in Orlando. However, a big public company called Dream Finders Homes claimed that the couple would keep their money. The couple also claims that the business is now prepared to invest roughly $10,000 to reduce its interest rate. Some home builders do this since lowering prices makes it easier for customers to buy homes.
