Latest Homebuyer Trend

Wall Street Journal

It appears, doctors, that more folksare choosing the alternative route when itcomes to home mortgages. According toa recent article in the ,today's homebuyers are passing up conventionalfixed-rate mortgages for eitheran interest-only or adjustable-rate mortgage(ARM). For example, the articlepoints out that during the first 2 monthsof 2005, 61% of mortgages taken out byCalifornians were interest-only loans; in2002, that figure was less than 2%. Sowhat's influencing homebuyers to go thealternate route? Because both types ofloans carry lower initial monthly payments,borrowers are able to purchasehomes they wouldn't qualify for with afixed-rate mortgage. Despite the opportunityARMs and interest-only mortgagesoffer those in the market for a moreexpensive home, going the alternativeroute isn't always a smart move. In fact,some mortgage analysts predict that therecent popularity of these loans willresult in more foreclosures, as well asother market and economic problems.