When it comes to purchasing a house, what are your greatest fears? That homeownership will be so expensive you won’t be able to eat, buy clothes or give your children gifts? That you’ll be humiliated if your mortgage application is rejected? That you’ll never be able to scrape together enough cash for a down payment?

These are the very real fears thousands of would-be buyers share. And I’ve been hearing them for years from renters and wannabe home buyers I’ve spoken to at home buyer fairs all over the country. They write me, call me and email me with their anxieties and frustrations. Some write back two, three, and four times.

The good news is, their fears and frustrations are not necessarily grounded in market reality. The bad news is, they’re keeping a lot of folks from achieving the American Dream.

Last May, Freddie Mac, one of the nation’s largest purchasers of mortgages on the secondary market, published the results of 12 focus group discussions. The 125 participants were financially stable Whites, Blacks and Hispanics, who were asked to talk about why they hadn’t bought a home.

In analyzing the data, Donald Bradley, a senior economist, and Peter Zorn, director of financial strategy in Freddie Mac’s housing economics department, asked the following question: Why do people who appear financially capable of becoming homeowners — and who have financial incentives for doing so — continue to rent?

One big answer seems to be that these renters have such a general lack of comfort with the home buying and financing process that it becomes an obstacle too big to overcome. “Many renters simply feel too ill-at-ease with either the risks or the complexities of ownership to undertake the necessary steps to find, finance, and take legal title to a home,” Bradley and Zorn write.

In fact, the focus group participants’ fears were so great that they overshadowed what the participants consider — and research concurs — to be the ample benefits of homeownership, including family self-sufficiency, expanded economic and social opportunities, and social stability. Renters recognize that owning a home means they’ll have a better chance at long-term financial stability, “increased privacy, a better environment for raising children, a place for self-expression and the fulfillment of the American Dream.”

Still, fears about losing jobs, the increasing costs of homeownership, rising crime in neighborhoods and the long-term nature of a 30-year mortgage often turn their dreams into a recurring nightmare.

Here’s what some renters are saying: “A house is a money pit — once you own, you’re never finished fixing [it].” “As soon as you buy a house, everything starts to deteriorate, so you have to spend money on repairs. I would rather just rent.” “You don’t know how [a neighborhood] is going to change. One day you’ll have people moving in, sniffing stuff and smoking stuff…You’d be stuck in that neighborhood.” “I would give my right eye tooth to own… I would sell my soul to the devil to own my own property . . . the only reason why I don’t is I have never been able to get together the down payment . . . those thousands of dollars.”

Today, very low down payments — as low as 3 percent of the purchase price — combined with increased debt-to-income ratios, make homeownership more affordable than ever. But clearly, the strides lenders have made in easing the financial barriers to homeownership don’t dissolve the emotional obstacles many renters have.

If you want to boost the national homeownership rate — currently around 66 percent of the population owns their own home — the real estate community must address these emotional issues head-on. Lenders and real estate brokers must take it upon themselves to reach out to prospective home buyers not only by dangling a 3 percent down payment (which to some folks only means a larger mortgage), but by offering solid information for coping with the fears and anxieties renters have about the home buying process.

Brochures, books, videos, and free seminars that provide a solid, non-commercial message and allow renters to identify and face their anxieties should be our goal. Those who provide it, plus a warm hand to hold onto, will reap the prize of purchase contracts and loan applications. Adding 2 million additional buyers to the system means thousands of new jobs, and millions of dollars in profit.

And while Freddie Mac and Fannie Mae should be congratulated for forcing technology into the real estate environment, faster isn’t always better. Getting approved for a loan in 4 seconds is remarkable. Passing along a savings of $1,000 per purchase is admirable. But lowering costs at the expense of assuaging fears and fostering a bond between lender and borrower may ultimately not be worth it. Not if nervous renters feel that no one is there to help them through the process.

CORRECTION: In a recent column on where to get good information on real estate, I gave an incorrect telephone number for Fannie Mae. The Fannie Mae Foundation can be reached at (800) 688-HOME (800-688-4663), while the Fannie Mae Public Information office is at (800) 7 FANNIE (800-732-6643).

March 17, 1997.