About one in five U.S. adults who purchased a home within the last three years as their primary residence say they spent above their suggested price range, while two-thirds stayed within their price range and 12 percent were below their price range, according to a Wall Street Journal Online/Harris Interactive Personal Finance Poll.

When obtaining a mortgage for their new home, recent home buyers who used a mortgage broker, direct lender or another source were nearly three times more likely to obtain a fixed-rate mortgage than an adjustable-rate mortgage, the poll also revealed, and one-third of respondents chose a creative or option mortgage.

The online survey of 2,300 U.S. adults was conducted from Aug. 19-23 for The Wall Street Journal Online’s Personal Journal Edition.

About 29 percent of people who bought homes in the West within the last three years went above their suggested price range when purchasing their home, compared to 22 percent in the South, 12 percent in the Midwest and 8 percent in the Northeast. About 83 percent of those in the Northeast and 80 percent in the Midwest stayed within their price range when purchasing their home, compared to 57 percent in the South and 56 percent in the West, the survey found.

Also according to the survey: Mortgage brokers (39 percent) edge out direct lenders (32 percent) as the primary source of mortgage providers for recent home buyers. Less than one in 10 (8 percent) used another source to obtain a mortgage, while 14 percent say they did not need a mortgage to purchase their home. Younger home buyers, 18-34, are most likely to have chosen a broker (55 percent) while home buyers 35-42 are most likely to have obtained their mortgage through a direct lender (42 percent).

“Nontraditional methods of funding a primary residence are becoming more commonplace and acceptable, especially in areas of the country that have seen housing prices skyrocket,” said Anne Aldrich, senior vice president of the Financial Services Research Practice at Harris Interactive. “It is important that consumers be aware of all of the options available to them, as well as the possible risks that they may take on with ‘creative’ mortgage options.”

About one-third of recent home buyers who obtained their mortgage through a broker, direct lender or someone else chose one of the following four creative or option mortgages, according to the survey:

  • An interest-only mortgage – where borrowers pay interest but no principal in the early years of the loan (17 percent).

  • A piggyback mortgage – where the loan combines a standard first mortgage with a home-equity loan or line of credit to avoid private mortgage insurance or the higher interest rates on jumbo loans (10 percent).

  • A payment option mortgage – where borrowers have four payment options each month and those who elect to make the minimum payment could actually see their loan balance rise rather than fall (4 percent).

  • A miss-a-payment mortgage – where borrowers are allowed to skip up to two mortgage payments a year and up to 10 payments over the life of the loan without ruining their credit rating (2 percent).


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