Baby BoomersDemographicsFor BuyersGen XMillennials November 17, 2024

Multigenerational Home Buying

For many homebuyers, multigenerational living used to be considered an option of last resort: it was a route families took only when they needed to ride out a financial storm or care for ailing family members. But that mindset is on the decline: A growing number of families now say that they are embracing multigenerational living and moving in together by choice.

In fact, research by the National Association of Realtors (NAR) found that the share of multigenerational home buyers rose to 14% in 2022––close to an all-time high.1 Buyers cite a multitude of reasons for choosing a multigenerational home, including saving money on living expenses, pooling resources, taking care of very young or aging relatives, and spending more time with family. “Multi-generational home buying is a way for families to care for one another, support one another, and often buy a home that may have been previously out of reach,” writes Deputy Chief Economist Jessica Lautz in a blog post about the trend.1

Living with extended family has become especially popular in recent years as younger generations face higher home costs and seniors embrace aging in place. According to Pew Research, the number of Americans living in a home with at least two generations of adults has more than quadrupled since the 1970s.2

For many families, the benefits are substantial. Research shows that people who live in multigenerational homes are healthier and tend to live longer. They also enjoy more financial security. Plus, research by Pew found that people who live with relatives are more likely than not to say that it has been a positive experience.2,3

That’s not to say that multigenerational living is easy: It can also be stressful––especially if you choose a home that isn’t suited for a larger family. The key to making it work is to pick a home that can accommodate young and old alike without requiring you to sacrifice comfort or privacy.2,4

Here’s a closer look at multigenerational living, along with tips for finding a home that’s suitable for a diverse group.

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WHAT TO CONSIDER BEFORE SHOPPING FOR A MULTIGENERATIONAL HOME
Before starting your house hunt, take the time to discuss your house plans as a family so that you’re all on the same page. Have you hashed out what you’re looking for in a new home? Can you agree on potential compromises? Are there any unaddressed concerns about the move?
You may also find it helpful to articulate your “why” for buying a multigenerational home and how each of you might benefit. For some families, multigenerational living is all about caring for relatives and sharing responsibilities. But for others, the goal is to pool resources so that you can purchase a more desirable property or cut down on expenses, like childcare or senior living.

For homeowner Jian Huang, she initially bought a multigenerational home to help her aging mother. But she says the purchase also helped her family save a lot of money on expenses––as much as $25,000 to $40,000 a year. “It makes so much sense financially and emotionally that we would not have it any other way,” commented Huang to Apartment Therapy.5

In addition to talking over your short-term wants and needs, you’ll also want to weigh long-term issues that could crop up in the future, like accessibility or money concerns. For example, if some family members are nearing retirement, accessibility issues (such as extra-steep stairs or a narrow hallway) could become a problem over time. Similarly, a more luxurious home with extra amenities like a pool may appeal to buyers who have gathered a lot of cash upfront, but it may also require a bigger long-term budget for maintenance and supplies.
If you haven’t had these discussions yet, set a date in your calendar so that you can talk it over as a group. We can help by interviewing family members individually and advising you on what you can realistically find in today’s housing market.

 

WHAT TO LOOK FOR IN A MULTIGENERATIONAL HOME 
Once you’ve settled on what you want and need from a new home, your next step should be to jointly draft a budget so that you’ll know what you can afford. To ensure that no one in your family gets accidentally overextended, think holistically when planning your new housing budget and determine what you would need to buy the home––and maintain it.

In addition to budget, you’ll also want to consider a home’s size and what kind of layout you might need. In general, homes that offer ample space for solitude and privacy are thought to be more practical for multigenerational living––especially if there will also be young children.4

However, the ideal layout for your family and the amount of square footage you’ll need to be happy long-term will also depend, in part, on family members’ personalities. Some people don’t mind sharing a bathroom or having bedrooms situated close to one another. But others may find that they need something more separate to relax. Different housing options to consider include:

 

  • A large home with plenty of rooms and at least one or more ensuite bathrooms.

  • A home with an accessory dwelling unit (ADU), such as a basement apartment.

  • A multifamily unit, such as a duplex.

For home buyers looking to age in place, a home that offers a separate ground-floor unit, such as a backyard ADU, could be the most comfortable (and the most practical) option, says author Sheri Koones. “It’s a way for many older people to avoid having to go into an expensive assisted living or other facility as they age,” said Koones in an interview with Realtor Magazine.6

Another possibility to consider would be a home you could add onto or retrofit into multiple units. However, building a brand-new accessory unit or renovating an existing space can be pricey. When visiting a property, we’ll help you weigh potential costs and estimate whether it’s a good investment. We can also connect you with a trusted contractor who specializes in renovations.

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HOW TO BUY A MULTIGENERATIONAL HOME

Buying a home with family can be complicated––especially if you plan to jointly apply for a mortgage. However, depending on your financial resources, you may be surprised to find that it’s sometimes easier to qualify for certain mortgages as a group than if you tried to go it alone.7

Talk it over with a mortgage lender or broker and ask for advice on what’s best for your situation. I would be happy to connect you with a professional who understands the nuances of co-buying.

Technically, there’s no limit to the number of co-borrowers you can have, but some lenders may be more lenient with their lending requirements than others. For example, most conventional lenders will only work with a maximum of four borrowers for a single loan. If you want to buy a home with a larger number of co-borrowers, you may have to look to an alternative lender.7

Your credit will also be an important factor in determining your mortgage qualifications and what you can buy, so have everyone check it as soon as possible. Pulling your credit reports and scores will not only tell you where you stand. It will also alert you to correctable issues with your credit, such as mistakes on your credit reports or too much debt on your cards.8

As you discuss your homebuying budget and strategy, jointly consider the following:

  • Who will be on the mortgage?

  • What about the title?

  • Would including everyone on the mortgage be beneficial for your mortgage rate?

  • For those who don’t qualify for the mortgage or have a lower credit score, can you make other arrangements so that they can still financially contribute?

Next, consider potential tax and estate planning implications of your home purchase and what might happen if some family members later decide to drop out of the arrangement.9
To ensure you make an informed decision, it’s best to speak with a licensed professional. Ask us for a referral to a legal professional or an accountant who can advise you.

BOTTOM LINE 
Multigenerational home buying has grown more popular for a reason: it’s a great way to combine resources and buy a supportive home for more than just your immediate family. It can also be a smart lifestyle choice, helping reduce loneliness and promote health and well-being.10
If you’re wondering whether multigenerational living is right for you, call me for a consultation. I’d be happy to walk you through potential options and help you envision your own full house.

The above references an opinion and is for informational purposes only.  It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.

National Association of Realtors – https://www.nar.realtor/blogs/economists-outlook/all-in-the-family-multi-generational-home-buying
Pew Research Center – https://www.pewresearch.org/social-trends/2022/03/24/financial-issues-top-the-list-of-reasons-u-s-adults-live-in-multigenerational-homes/
SSM – Population Health – https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5769098/
Better Homes and Gardens – https://www.bhg.com/what-to-look-for-in-a-multigenerational-home-8409277
Apartment Therapy – https://www.apartmenttherapy.com/multigenerational-homes-37412085
Realtor Magazine – https://www.nar.realtor/magazine/real-estate-news/home-and-design/all-under-one-roof-trends-in-multigenerational-living
Bankrate – https://www.bankrate.com/mortgages/how-many-names-can-be-on-a-mortgage/
Experian – https://www.experian.com/blogs/ask-experian/what-credit-score-do-i-need-to-buy-a-house/
Kiplinger – https://www.kiplinger.com/retirement/estate-planning-for-multigenerational-living-arrangements
Institute for Family Studies – https://ifstudies.org/blog/multigenerational-living-is-it-a-solution-for-our-aging-population

Buying MythsDownpaymentsFinancingFor BuyersHousing MarketInterest Rates October 1, 2024

Top 4 Factors to Consider When Choosing Your Mortgage

Buckle up, folks. Navigating the East Texas real estate market with today’s home prices and interest rates can feel a bit like trying to herd cats in a windstorm. 🌪️ But don’t let that deter you! 💪 Most homeowners eventually find a mortgage that fits them just right. 👍

In fact, a recent survey showed that most folks are pretty darn happy with their home loans, and most would even buy their current homes again if they had the chance (hindsight is 20/20, right?). 😉

So, how do you find your perfect mortgage? 🤔 It’s not just about rates and terms; it’s about finding a loan you’ll be comfortable with for the long haul. 🏡 After all, it’s not just a house, it’s a home – and a mortgage is a commitment, not a fling. 💕

Think about it: Are you a risk-taker or do you prefer a predictable plan? 🎲 Can you handle a bigger payment if rates rise, or is your budget already stretched thin? 💸

To help you sort through the options, let’s look at four big factors when picking a mortgage:

1. Your Credit Score

That magical three-digit number isn’t just for show. It affects your interest rate AND the types of loans you can even get.

  • Conventional loans from big banks usually want a score of 620 or higher. 🏦
  • USDA loans (for rural properties) like to see 640+. 🌾
  • Jumbo loans (for those fancy, high-priced homes) may need 700+. 🏰

But don’t worry if your score’s a bit lower.

  • FHA loans can work with scores as low as 500 (with a bigger down payment). 😊
  • VA loans are great for military folks, even with scores in the 580-620 range. 🇺🇸

Some local lenders might be flexible too. But if you can, improving your credit before buying can save you a bundle in the long run. 💰

2. Your Income and Expenses 💼

How much you make and how much you owe matters a lot. Lenders want to see you have breathing room after paying bills, ideally spending no more than 28% of your income on housing (36% max).

They’ll also look at your debt-to-income ratio (DTI) – how much debt you’ll have compared to your income. High DTI is the #1 reason mortgage applications get rejected! 🚫

  • Conventional loans: Aim for a DTI below 36%. ✅
  • FHA loans: Can go up to 43-57% depending on your situation. 🤷‍♀️
  • VA loans: Can go above 41%. 👍
  • USDA loans: DTI can’t be higher than 41%, and your income needs to be below a certain limit. 🧐

3. Your Down Payment 💰

The bigger your down payment, the more options you have. While you don’t need 20% for a conventional loan, the median in 2023 was 14%.

  • Larger down payment: Can help you qualify for loans you might not otherwise, like if you’re self-employed. 💪
  • Smaller down payment: Consider FHA loans (3.5% down) or VA/USDA loans (no down payment, but there’s a funding fee). 🤝

Remember, a smaller down payment means higher monthly payments and more interest paid over time. You’ll also likely need mortgage insurance. 😕

4. Your Lifestyle and Risk Tolerance 🧘‍♀️

Mortgages are long-term commitments. Find one you can live with!

  • Fixed-rate mortgages: Predictable payments, but you might pay more interest overall. ⚖️
  • Shorter-term mortgages: Lower total interest but higher monthly payments. 🚀
  • Adjustable-rate mortgages (ARMs): Lower initial payments, but rates can change, so they’re riskier. 🎢

Bottom Line

Buying a home in East Texas is achievable, even in today’s market. 🎉 The key is to find the right mortgage for you. Shop around, compare terms, and don’t be afraid to ask questions. 🙋‍♀️

And hey, if you’re feeling overwhelmed, reach out! I’ve got a network of trusted mortgage pros who can help you find the perfect loan and home. Let’s make your East Texas dream a reality. ✨

FinancingFirst Time Home BuyersFor BuyersHousing MarketInterest RatesInterest Rates February 12, 2024

East Texas: What’s Really Happening with Mortgage Rates?

Mortgage rates don’t move in a straight line. There are too many factors at play for that to happen. Instead, rates bounce around because they’re impacted by things like economic conditions, decisions from the Federal Reserve, and so much more. That means they might be up one day and down the next depending on what’s going on in the economy and the world as a whole.

FinancingFirst Time Home BuyersFor BuyersHousing MarketInterest RatesMove-Up Buyers February 7, 2024

Why Pre-Approval Is Even More Important This Year

On the road to becoming a homeowner? If so, you may have heard the term pre-approval get tossed around. Let’s break down what it is and why it’s important if you’re looking to buy a home in 2024.

What Pre-Approval Is

As part of the homebuying process, your lender will look at your finances to figure out what they’re willing to loan you. According to Investopedia, this includes things like your W-2, tax returns, credit score, bank statements, and more.

From there, they’ll give you a pre-approval letter to help you understand how much money you can borrow. Freddie Mac explains it like this:

A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. . . . Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”

Now, that last piece is especially important. While home affordability is getting better, it’s still tight. So, getting a good idea of what you can borrow can help you really wrap your head around the financial side of things. It doesn’t mean you should borrow the full amount. It just tells you what you can borrow from that lender.

This sets you up to make an informed decision about your numbers. That way you’re able to tailor your home search to what you’re actually comfortable with budget-wise and can act fast when you find a home you love.

Why Pre-Approval Is So Important in 2024

If you want to buy a home this year, there’s another reason you’re going to want to be sure you’re working with a trusted lender to make this a priority.

While more homes are being listed for sale, the overall number of available homes is still below the norm. At the same time, the recent downward trend in mortgage rates compared to last year is bringing more buyers back into the market. That imbalance of more demand than supply creates a bit of a tug-of-war for you.

It means you’ll likely find you have more competition from other buyers as more and more people who were sitting on the sidelines when mortgage rates were higher decide to jump back in. But pre-approval can help with that too.

Pre-approval shows sellers you mean business because you’ve already undergone a credit and financial check. As Greg McBride, Chief Financial Analyst at Bankrate, says:

“Preapproval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements. A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”

Sellers love that because that makes it more likely the sale will move forward without unexpected delays or issues. And if you may be competing with another buyer to land your dream home, why wouldn’t you do this to help stack the deck in your favor?

Bottom Line

If you’re looking to buy a home in 2024, know that getting pre-approved is going to be a key piece of the puzzle. With lower mortgage rates bringing more buyers back into the market, this can help you make a strong offer that stands out from the crowd.

FinancingFirst Time Home BuyersFor BuyersInterest Rates January 5, 2024

Thinking About Buying a Home?

If you’re thinking of buying a home this year, you’re probably paying closer attention than normal to the housing market. And you’re getting your information from a variety of channels: the news, social media, your real estate agent, conversations with friends and loved ones, the list goes on and on. Most likely, home prices and mortgage rates are coming up a lot.

Here are the top two questions you need to ask yourself as you make your decision, including the data that helps cut through the noise.

1. Where Do I Think Home Prices Are Heading?

One reliable place you can turn to for information on home price forecasts is the Home Price Expectations Survey from Fannie Mae – a survey of over one hundred economists, real estate experts, and investment and market strategists.

According to the most recent release, the experts are projecting home prices will continue to rise at least through 2028 (see the graph below):

So, why does this matter to you? While the percent of appreciation may not be as high as it was in recent years, what’s important to focus on is that this survey says we’ll see prices rise, not fall, for at least the next 5 years.

And home prices rising, even at a more moderate pace, is good news not just for the market, but for you too. It means, by buying now, your home will likely grow in value, and you should gain home equity in the years ahead. But, if you wait, based on these forecasts, the home will only cost you more later on.

2. Where Do I Think Mortgage Rates Are Heading?

Over the past year, mortgage rates spiked up in response to economic uncertainty, inflation, and more. But there’s an encouraging sign for the market and mortgage rates. Inflation is moderating, and here’s why this is such a big deal if you’re looking to buy a home.

When inflation cools, mortgage rates generally fall in response. That’s exactly what we’ve seen in recent weeks. And, now that the Federal Reserve has signaled they’re pausing their Federal Funds Rate increases and may even cut rates in 2024, experts are even more confident we’ll see mortgage rates come down.

Danielle Hale, Chief Economist at Realtor.comexplains:

. . . mortgage rates will continue to ease in 2024 as inflation improves and Fed rate cuts get closer. . . . a key factor in starting to provide affordability relief to homebuyers.”

As an article from the National Association of Realtors (NAR) says:

Mortgage rates likely have peaked and are now falling from their recent high of nearly 8%. . . . This likely will improve housing affordability and entice more home buyers to return to the market . . .”

No one can say with absolute certainty where mortgage rates will go from here. But the recent decline and the latest decision from the Federal Reserve to stop their rate increases, signals there’s hope on the horizon. While we may see some volatility here and there, affordability should improve as rates continue to ease.

Bottom Line

If you’re thinking about buying a home, you need to know what’s expected with home prices and mortgage rates. While no one can say for certain where they’ll go, making sure you have the latest information can help you make an informed decision. Let’s connect so you can stay up to date on what’s happening and why this is such good news for you.

Buying MythsFor BuyersMillennialsMove-Up BuyersRent vs. Buying August 2, 2023

How To Know If You’re Ready to Buy a Home

If you’re trying to decide if you’re ready to buy a home, these questions can help.

FinancingFirst Time Home BuyersFor BuyersInfographics March 31, 2023

Facts About Closing Costs

If you’re thinking about buying a home, be sure to plan for closing costs.
Closing costs are typically 2% to 5% of the total purchase price of a home, and they can include things like government recording costs, appraisal fees, and more.
Let’s connect so I can answer your questions about the homebuying process.