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Home Buyers Forced to Change Tactics
Stidham, who works in advertising sales, put no money down, something lenders now frown upon. His lender had his home reappraised at the last minute. The value came back lower than the original appraisal, and the lender canceled the loan.
Stidham scrambled and found a new loan through his mortgage broker at Universal Trust Mortgage in Columbia. But the jumbo rates had increased in the meantime and now he's paying $230 more a month than he would have under the original loan.
"We had no choice. I had sold my house that Monday and I had to settle on Tuesday," Stidham said. "So I had to take my lumps."
Tammy Arbogast and her husband, Derrick Fouts, were in less of a bind. They own a townhouse in Germantown. Now that they have two young children, they want a larger home and were planning to buy one nearby until jumbo rates shot up and pushed them to reconsider their options.
Instead of buying the home and then selling the townhouse, they hope to do the reverse. But even if they get the asking price for their townhouse, they may need a jumbo loan. To lessen the borrowing costs, they could make a larger down payment by dipping into their kids' college savings, but they prefer not to.
"We can just stay put in our townhouse," said Arbogast, an environmental health and safety specialist at a nonprofit organization. "We'll just wait it out."
Doing so might mean passing up the house they've been eyeing, but that's okay, said Fouts, a scientist at a nonprofit group. "You can't get attached to a house in this climate. It's so easy to lose a house because of variables out of your control."
The question now is how long the jumbo rates will stay this high, said Mark Fleming, chief economist at First American Core Logic. "If this lasts much longer, then people will begin to reevaluate what they can afford."