A10F03B49704A9555CB18D6BD506641C

Buyers Stretch Budgets To Be More Competitive

Dated: 04/27/2018

Views: 59

Buyer demand is high but the number of homes for sale is low. This is prompting more shoppers to stretch their budgets, put less money down, or turn to adjustable-rate loans to prevail in a bidding war for a home. 

“The frustration with the lack of inventory is, so many of the houses are going in bidding wars, and so you know you really have to step up to the plate and you have to do your homework to be a competitive buyer,” Patrick Clark, a real estate professional with Long & Foster in Philadelphia, told CNBC. 

Higher mortgage rates and escalating home prices are prompting more home buyers to consider adjustable-rate mortgages, which offer lower initial rates for a set time before rising. Borrowers are being tempted on low down payment loan options, such as Fannie Mae- and Freddie Mac-backed 3 percent down payment loans. They’re also being lured to private lenders offering “nonprime loans” (the reimagined subprime loans). Read more: ‘Nonprime’ Loans Expand Mortgage Options

Buyers are feeling confident enough in their own finances to put more at stake to break into homeownership.

“When they’re more confident they are willing to stretch a little further, says Mike Graff, a mortgage consultant with Prosperity Home Mortgage. I think that some people realize, look, theyre 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, theyre 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.

Source: “Homebuyers Are Stretching Their Budgets and Mortgage Limits to Win Bidding Wars,” CNBC (April 24, 2018)

Blog author image

Angela Vasconcellos

Born and raised in the Mississippi Delta, I had the pleasure of learning the importance of southern hospitality and deep rooted relationships. After a move to Austin, Texas in 1985, my husband and I e....

Latest Blog Posts

Homeowners And Appraisers See Eye To Eye On Price In 3 Years

Homeowners & Appraisers See The Most Eye-To-Eye On Price In 3 Years In today’s housing market, where supply is very low and demand is very high, home values are increasing rapidly. Many

Read More

Is Your Pet Hurting Your Sale

7 Ways Your Pet Can Prevent a Sale | realtor.com® Cute Yet Cringeworthy Ways Your Pets Can Wreck a Home Sale By Jennifer Geddes | Jan 16,

Read More

5 Reasons Not To FSBO

Top 5 Reasons You Shouldn’t FSBO In today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their home on their own, known in the

Read More

Maybe This Is Why Your House Will Not Sell

7 Dumb Reasons People Can't Sell a Home | realtor.com® 7 Dumb Reasons People Can't Sell a Home By Audrey Ference | May 31, 2018 iStock;

Read More