Buyers Consider ARMs as Interest Rates Rise
Eager home buyers are employing different tactics to offset heftier mortgage payments. Some pay fees to reduce their mortgage rates, while some put more money down. Others are opting for adjustable-rate mortgages (ARMs).
ARMs are variable-rate loans featuring a lower introductory rate, which may last 3 to 7 years. After that, rates could either go up or down depending on the market. Some buyers may want to start with an ARM and switch to a fixed-rate mortgage after the introductory period.
Now more than ever, the advice of a knowledgeable agent is critical. A real estate professional can help you choose the best mortgage based on factors such as loan amount, local market conditions and how long you plan to stay in the home.
Such cooperative planning and expertise can save buyers substantial time as well as money on interest, fees and down payments.
Making an Offer on a House That’s Contingent
Think of home-sale status as a traffic light. Only green-lit homes are considered officially on the market. Reds are pending or sold, and yellows are contingent.
One type of contingency is when the buyer stipulates the seller address specific issues before closing. If the seller doesn’t meet those requirements, the buyer can walk. In other words, the deal is on as long as the seller keeps their commitments.
Another type of contingency occurs when the buyer requests the seller delay closing until their current property sells.
Typical reasons for contingencies may include financing snags, low appraisals and problems with inspections or titles. Contingent sales are also common in instances of super-low inventory when the seller may face challenges in finding a new place to live.
If you’ve found the perfect house, but it’s marked contingent, you can still make an offer. If the existing contract falls through, you’ll be next in line. For more information on the complexities of buying or selling a home, consult a qualified real estate professional.
Which Amenities Are Buyers Seeking?
Buyers know what they want: homes that are move-in ready and designed for active lifestyles. According to Realtor.com®, buyers say they’re looking for these specific amenities.
- Today’s fitness-conscious buyers enjoy outdoor activities like boating, jogging or golfing. They gravitate toward neighborhoods that can accommodate their active lifestyles.
- Water features like pools and hot tubs rank high on the wish list.
- Most buyers want to move right in without hassling with repairs or renovations.
- Even when they’re indoors, buyers want to feel connected to nature. Cathedral ceilings, oversize windows and outdoor living spaces satisfy their desire for natural views.
- Buyers seek beautiful views, especially when they overlook bodies of water.
Tapping Home Equity
The hot housing market has resulted in a large percentage of U.S. homeowners who now have built up substantial equity in their homes. By tapping into that equity, homeowners may want to fund major home improvements, invest in a rental property or purchase a second home.
“Equity rich” describes homeowners with at least 50% equity in their property. The total number of mortgaged homes that fit into this coveted category has grown to nearly 45% in the first quarter of 2022. That’s a 13% increase in equity over the first quarter of 2021.
According to ATTOM Data Solutions, “Homeowners continue to benefit from rising home prices. Record levels of home equity provide financial security for millions of families and minimize the chance of another housing market crash like the one we saw in 2008.”
One way to tap into your equity is to take out a home equity line of credit (HELOC). Home improvements enhance your daily life and your home’s resale value.
You should also consider making a down payment on a rental property or vacation home. Both investments can offer the potential for a long-term source of rental income.
Here are the top 10 states where homeowners with a mortgage gained the most equity in 2021 over 2020: Hawaii, California, Washington, Arizona, Utah, Nevada, Florida, Colorado, Montana, and Idaho.
Don’t Skimp on Home Inspections
In a highly competitive market, some buyers may take drastic measures like paying well above the listing price or fast-tracking the closing process. But the one thing you may not want to do is waive inspections.
Here are five ways waiving inspections can negatively affect your home purchase, according to RISMedia.com.
- You may be robbed of negotiating leverage you could have gained from discovering undisclosed problems.
- You won’t know what kinds of costly repairs you could need to make. The home may not even be up to code.
- Your homeowners insurance may not cover the repair costs of pre-existing problems.
- You may uncover health and safety hazards that put you and your family at risk, such as issues with the structure, foundation, electricity, or plumbing.
- You may be sacrificing the peace of mind that comes from getting professional inspections.
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