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--Why
more people aren't buying homes: Too many would-be buyers can't afford the required down payment, are out of work, lack enough income or are burdened by large debt loads. Home prices have sunk 31 percent since the housing boom four years ago, leaving many Americans fearful that prices have yet to bottom. They don't want to throw good money at a depreciating asset. Half of would-be buyers also say they don't think they'll ever save enough for the 20 percent down payment now expected by most sellers, according to a survey by the National Foundation for Credit Counseling. For those looking to buy, banks are also insisting on higher credit scores. Roughly 60 percent of U.S. households don't have the required scores above 700 to get a prime mortgage, according to an Associated Press analysis of Fair Isaac Corp., or FICO, and other credit-score data. The average U.S. credit score is 661. --The consequences of refinancing: When people refinance at lower rates, they pay less interest on their loans. So they end up with more money to spend, save or invest. For those who can qualify, the savings can be significant. If, for example, a homeowner with a $200,000 mortgage at 6 percent can refinance down to 4.5 percent, the savings would be $3,000 a year. Still, the benefits for the larger economy are limited. Most homeowners who refinance these days tend to sock away their savings or pay down debt rather than spend it.
[Associated
Press;
Copyright 2011 The Associated
Press. All rights reserved. This material may not be published,
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