Families shopping for homes in Delaware earlier in the year probably needed to make high offers to buy a property. Economists at CoreLogic and Capital Economics agreed that the low inventory of homes for sale has driven prices higher. Although mortgage interest rates remain extraordinarily low, higher home prices have caused people to select riskier adjustable-rate mortgages instead of predictable fixed rate 30-year mortgages.
From the first quarter to the second quarter of 2017, the demand for ARM loans increased of 40 percent. The year before, the spring-time bump in applications for ARMs only reached 15 percent. Real estate analysts interpret the greater demand for ARMs as a sign that high home prices are straining people’s ability to finance home ownership.
Pursuing a loan with an adjustable rate means that the borrower will gain a low interest rate in the beginning but face an unknown interest rate after a period of time, usually five years. The housing crash of a few years ago resulted partially from the prevalence of ARMs, but these days lenders are underwriting loans with greater care. Borrowers must prove income and an ability to pay, and lenders are making clear to people that loan payments will change in the future.
Every property transaction contains unique elements for a buyer to consider. Seeking out legal advice before closing a deal on residential real estate could alert a prospective buyer to problems and potential liabilities. An attorney might check to see if the seller provided the required property disclosures. A legal review of a financing agreement could give the client an impartial interpretation of the loan’s terms. Many other issues that could arise when buying property, such as title problems or zoning questions, might also be clarified by an attorney’s analysis.