We are in a different real estate market today than we were a few years ago. And with this changing market, potential buyers might want to consider changing their approach to purchasing a home.
And that change in approach might include breaking some rules… A recent article from realtor.com outlined some of the common mortgage “rules” that buyers may want to consider breaking in today’s market, including:
A 30-year fixed-rate mortgage is the only way to go.
Interest rates for fixed-rate loans are high right now. If you are looking to score a mortgage with a lower interest rate, you might want to consider an adjustable rate mortgage (ARM). If you go with an ARM, just make sure you have an exit strategy — for example, planning to refinance when rates for fixed-rate mortgages drop. And just in case that exit strategy doesn’t work out, it is also important to know what your maximum payment will be when your ARM rate adjusts, and that you can afford that payment.
A 20 percent down payment is a must.
Having 20 percent set aside for your home’s down payment would be nice, but by no means is it a requirement. While you will want to save as much as possible to put towards your down payment, there are plenty of loan options with low down payment options — like FHA loans, which only require a 3.5 percent down payment.
You shouldn’t ask the sellers to cover closing costs.
In a seller’s market, you want to make your offer as attractive as possible, which means you probably don’t want to ask for too many contingencies, like asking the seller to cover your closing costs. But with interest rates on the rise, many buyers are putting a pause on their home search. That means sellers will likely be more motivated, and possibly willing to entertain paying for your closing costs in order to get their home sold.
Bottom Line
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