While Bay Area homes for sale continue to their slow price decline, interest rates remain high and many buyers are choosing adjustable-rate mortgages instead of 30-year fixed rates. Nationwide, Zillow reports that 12 percent of all mortgage applications in July were for ARMs.

While adjustable-rate mortgages are considered risker than fixed rates, analysts say most buyers shouldn’t have to worry if rates rise as there are many more safeguards in place since the 2008 housing crash.

Most homebuyers are trying to ride out their initial term – usually 5 or 7 years – then refinance when fixed rates are lower.

As 30-year fixed-rate mortgages continue to rise – averaged 4.67percent during the last week in March – adjustable-rate mortgages may be just the answer for some homebuyers. Last week the five-year ARM averaged 3.5 percent.

Of course, ARMs are risker than 30-year fixed-rate mortgages. Once the lock period ends – typically three, five, or seven years – the borrower must pay a higher rate, often – but not always – capped at 2 percentage points over the initial payment for the first adjustment.

Analysts say that ARMs are often chosen for higher-priced homes where the savings can be significant.

As buyer demand increases and inventory remains low, many first-time home shoppers are getting creative as they find their budgets stretched. Some are putting less money down while others are choosing adjustable-rate mortgages in an all-out effort to win the inevitable bidding war. Many realize that they’re not going to be in that particular house for 30 years and it makes sense to at least enter the game at a price they can afford.

Other strategies include lower down payments – Freddie Mac has recently launched a three-percent down option as well as “nonprime” loans which are an outgrowth of the infamous subprime mortgages.