A10F03B49704A9555CB18D6BD506641C

Buyers Stretch Budgets To Be More Competitive

Dated: 04/27/2018

Views: 67

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

How To Decorate For Fall On A Budget

I had fully intended on sharing a great before and after with y’all today, but sometimes life happens.  It looks like I’ve got a case of the sickies to start off the week.  So I’ll

Read More

11 Mortifying Home Buyer Behaviors That Make Real Estate Agents Cringe By Cathie Ericson Aug 3

11 Home Buyer Behaviors That Make Real Estate Agents Cringe | realtor.com® 11 Mortifying Home Buyer Behaviors That Make Real Estate Agents Cringe By Cathie Ericson |

Read More

A Dictionary For Home Buyers

Mortgage Terms Explained, From ARMs to PointsBy Laura Winter | Jan 4, 2016 PeskyMonkey/iStock.comMortgage terms are like most industry terms: confusing as heck if you're not in the

Read More

Top 5 Reasons To Sell This Fall

5 Reasons You Should Sell This Fall!800SHARES63553271372Here are five reasons why listing your home for sale this fall makes sense.1. Demand Is StrongThe latest Buyer Traffic Report from

Read More