HUNTSVILLE, Ala. (WAFF) –
Baby boomers looking to buy homes face a key decision: make a lateral move or downsize, according to financial expert Marshall Clay from The Welch Group.
Clay cautioned that downsizing to a smaller home may not result in lower prices in today’s market. Starter homes face high demand from both baby boomers looking to downsize and millennials buying their first homes, driving property values higher.
“Sometimes a downsize in terms of size is not necessarily downsizing in terms of price,” Clay said.
Cash purchases offer strategic advantages
Buyers with cash have more negotiating leverage, Clay said. Sellers prefer cash buyers because they avoid contingencies and reduce the risk of deals falling through.
Cash purchases also help buyers avoid current mortgage rates of 6% to 6.25%, which remain high compared to rates of around 3% from five years ago.
Financing alternatives for non-cash buyers
For buyers without cash, Clay recommended not only looking at interest rates when considering financing options. Hidden banking fees are often rolled into mortgages, adding thousands or tens of thousands of dollars in costs.
Alternative financing options include home equity lines of credit on existing properties or leveraging investment assets. Clay said many clients use existing savings to facilitate deals, then sell their current home within a few months to close out leveraged loans.
“There are a lot of different things that you can do,” Clay said.
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