Real Estate Marketing & Beyond
What with buyer demand reaching epic levels amid the ongoing housing inventory crisis, some shoppers are stretching their budgets to the max. They’re putting less money down, or opting for adjustable-rate loans in order to succeed in a bidding war for the property they choose.
Patrick Clark, a real estate professional with Long & Foster in Philadelphia, told CNBC that buyers were growing frustrated. “You know you really have to step up to the plate and you have to do your homework to be a competitive buyer,” he said.
Adjustable-rate mortgages are growing in popularity due to higher mortgage rates and escalating prices, experts say. Adjustable-rate mortgages come with lower initial rates for a set period, before rising later. Borrowers are also looking at low down payment loans more seriously, such as Freddie Mac’s recently expanded three-percent down option. Some are also considering so-called nonprime loans, which are an evolution of the old subprime mortgages.
One expert said these trends are a sign that buyers are growing in confidence about their finances, and that they’re willing to bet more in order to become homeowners for the first time.
“When they’re more confident they are willing to stretch a little further,” said Mike Graff, a mortgage consultant with Prosperity Home Mortgage. “I think that some people realize, look, they’re not going to be in this house for 30 years, so moving to an ARM, when the rate is fixed for a period of time, they’re definitely more comfortable with something like that to lower their payment or to kind of stretch their budget a bit, so we have seen an uptick in that.”
Banks are showing more willingness to take on greater risk in jumbo loans, too.
