Real Estate News

Could easier mortgage buying methods offset risks?

Published: 05 Jul 2017

The mixed developments in the housing sector, and mortgages in particular, may add up to a complicated picture for buyers. While some aspects of buying may be simpler, the risk associated with purchases are also a factor to consider. At the same time, the average buyer could wonder if there are enough advantages to purchasing that could help reduce the problems of market risk.

As the CoreLogic Housing Credit Risk Index said (according to National Mortgage Professional Magazine), the credit risk increased during the first three months of 2017, even though the average credit score was seven points higher than it had been just a year previously.

The company's chief economist said that the average credit score for borrowers who want to refinance has declined over the years, representing a significant drop and also highlighting the ways risk might manifest itself in mortgage holders even if they are just trying to refinance and not buy outright.

Trends in the buyer's favor
From a potential owner's perspective, there may be sufficient positive changes to help adapt to some growing risk. One aspect that could reduce the pressure of buying is the general lower cost of down payments, reducing the initial strain.

A Los Angeles Times article on this new pattern mentioned both the pros and cons of the 20 percent payment, which seems to be more of a widespread assumption than a requirement. While some may find themselves struggling to meet a 20 percent payment so early in the process, the source said, putting this much down may come with advantages, such as the chance for lower monthly installments and interest rates.

The availability of different types of mortgages can also lessen the harshness of a high down payment, depending on what the buyer's plans and type of investment are. Realtor.com argued that those not able to pay 20 percent for a 30-year fixed-rate mortgage, for example, might want a different type, such as the Adjustable Rate Mortgage, which could match their budget more closely.

A late June rate dip
Freddie Mac reported some lower mortgage rates for the final week in June, but only for the 30-year fixed rate mortgages, which were just .02 percentage points down from the previous week. The 15-year fixed rate mortgage and ARM rates were both at the same percentage, 3.17, which represented a stagnancy for the former and a slight increase for the latter option.