How to navigate a hot real estate market
When it comes to neighborhoods, a lot of factors can help drive up demand. Good schools, great location, and the prospect of rising real estate values over time all combine to make a neighborhood ‘hot’. Additionally, low inventory in the current housing market is increasing demand across the board, and while interest rates appear to be holding steady, they could be on the way up, increasing the cost of borrowing.
Buying a home in a hot, in-demand neighborhood is a great investment, but at the same time, competition can be stiff. More than half of the top 20 markets recorded increases in views per property as well as listing price in February 2019,1 which means buyers should do their homework and be ready to move quickly. Along with getting pre-approved for a loan, the best way to succeed in a hot real estate market is to have flexibility, and the most tools available in your toolbelt when it comes to financing. That often means one thing—going jumbo.
Jumbo loans can accommodate buyers in high-cost areas where housing values tend to be higher. They can be used for primary residence, investment properties, vacation homes or second homes.
Jumbo mortgages provide buyers with flexibility in several ways. When it comes to setting your price range, these products offer the flexibility to accommodate higher purchase amounts, which can be especially valuable in high-cost markets like Washington DC and some parts of California, or higher-cost states like Massachusetts, Illinois and New Jersey.
Jumbo mortgages also offer buyers flexibility when it comes to income verification. Under new guidelines, some jumbo products allow for bank statements to be used to help verify income, as opposed to traditional financing documentation. Some jumbo loans can also accommodate individuals with non-traditional income types, or buyers who are qualified yet have limited liquid assets.
Since mortgage rates can often be lower than the return that can be generated from rising property values, a jumbo purchase in a hot neighborhood can also be a smart financial decision. By paying a low interest rate on a larger balance, homebuyers can let funds remain where they can generate a better return.
For more information on jumbo loans, contact your local Guaranteed Rate Affinity loan officer.
1Realtor.com, February 2019 Hottest Housing Markets
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Guaranteed Rate Affinity for current rates and for more information.