Northeast Ohio
Real Estate
May 20. 2022
Happy Friday!
Thank you for checking out my update! I hope you enjoy the upcoming gorgeous weekend!

Happy Friday!
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Adjustable Mortgage Making a Comeback?

As mortgage rates spike, more and more potential homebuyers are considering adjustable-rate mortgage loans to finance their home purchases.
Adjustable-rate mortgages, or ARM for short, operate differently from fixed-rate mortgages, which keep a constant interest rate for the entirety of the loan. They can be a bit complicated at times, so here’s what you need to know about how they work, plus the pros and cons of taking one on.

How do adjustable-rate mortgages work?

An adjustable-rate mortgage is a type of loan that carries an interest rate that is constant at first but changes over time. For the first few years, you’ll typically pay a low fixed interest rate. Then, once that time period is over, your interest rate will change at certain time intervals depending on market conditions.

The time periods for your low fixed rate and any associated rate fluctuations would already be agreed upon when you accept the mortgage. A 10/6 ARM means that you’ll pay a fixed interest rate for 10 years, then the rate will adjust every six months. A 7/1 ARM, on the other hand, means you’ll get a fixed interest rate for the first seven years, then the rate will adjust every year. Depending on market conditions, your rate can wind up being lower or higher.

For 98% of my clients, I always recommend a fixed rate as opposed to an ARM. If you'd like to talk about the situations where both options make sense, please let me know and I'd love to discuss.
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Market Update
For the third consecutive month, existing-home sales fell, but buyers are still eager. Higher mortgage rates and prices and low inventory continue to chip away at affordability.

Nationwide, existing-home sales—completed transactions of single-family homes, townhomes, condos, and co-ops—decreased 2.4% in April compared to March, Sales are down 5.9% year over year.

“The market is quite unusual as sales are coming down, but listed homes are still selling swiftly, and home prices are much higher than a year ago,” says Lawrence Yun, NAR’s chief economist.
Still, higher home prices and sharply higher mortgage rates are beginning to reduce buyer activity in many markets, he adds. “It looks like more declines are imminent in the upcoming months, and we’ll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two months,” Yun says.

Here’s a closer look at the key indicators
  • Home prices: The median existing-home sales price increased at a slower year-over-year pace of 14.8% in April. Home prices continued to increase in every region of the U.S.
  • Days on the market: Eighty-eight percent of homes sold in April were on the market for less than a month. Properties remained on the market for 17 days in April, the same as last month and as a year ago.
  • First-time buyers: First-time home buyers comprised 28% of sales in April, down from 31% a year ago
  • Foreclosures and short sales remain historically low, representing less than 1% of sales in April and down from 2% a year earlier.
  • Housing inventory: Total housing inventory is up 10.8% in April compared to March and down 10.4% from a year ago. Unsold inventory sits at a 2.2-month supply at the current sales pace.

MS Walk Update

Thank you so much to everyone who donated to our MS Walk fundraiser! I sincerely appreciate all the support. In total for our team, over $800 was raised. These funds will help in MS research and will ultimately help countless lives.

The walk itself happened on a pristine Saturday in beautiful downtown Cleveland. Thousands of walkers raised significant funds and filled the streets. It was a fantastic event and I am so grateful to be involved. Thank you again!
Pat Barmann
216.990.5719