Multi-Generational - Cross-Generational Home Buyers:
Meeting Their Needs
Multi-Generational Homes ... Cross-Generational Homes. No matter what you prefer to call them, they're gaining in popularity all across America ...
Two statistics speak to this growing trend:
- 64 Million Americans, roughly 20% of the population, now live in a multi-generational home (Pew Research Center statistics, as of 2016, the last statistics available)
- 41% of Americans considering the purchase of a home are thinking of buying a home that will accommodate adult children or senior-aged parents (John Burns Real Estate Consulting survey)
These stats prove that last century's custom of families' independent living arrangements is slowly morphing and transforming back into the more historical mode of living arrangement ... that of extended family and multiple generations living together under one roof.
- Financial Concerns
- Challenging economy
- Rising housing prices
- High child-care costs
- Senior-aged parents living longer or experiencing health concerns
- Student loans
- Children marrying later in life
- Down Payment savings concerns
These changes are coming to all our communities. But are American communities prepared for the changes in housing demands?
Not only existing homes are needing to being altered and modified to fit the changing needs of families. Housing developers and homebuilders are now having to include multi-generational accommodations within their menu of new construction floor plans. This is being done in order to accommodate and fulfill the needs of these families as the type of housing being requested for construction is also changing.
This new trend also affects the needed physical attributes of subdivisions and communities. Housing developers will be called upon to meet the new demands for multi-generational amenities provided within their developments for as well. This can all prove to be a challenge.
Often, new housing needs do not currently meet or "fit" with zoning rules and regulations now in place in many municipalities or counties. Separate in-law or mother-in-law suites are not allowed ... or needed expansions of homes overflow the square footage restrictions in place. Shifts in zoning and restrictions on denser housing may have to be changed, then implemented if this trend continues.
Another consideration brought into play with this type of housing is the borrowing of money. When multiple generations consider home buying together, it also means that they will often need to finance that purchase together.
When borrowing for a mortgage is involved in a multi-generational purchase, I strongly suggest that those involved in the home's financing should have a long, thorough, and honest talk together about finances, both in the short and long term.
That inclusive talk should include:
- Credit Scores (By ALL Parties)
- Debt held
- How delinquent payments on the newly-acquired loan can impact the credit of ALL borrowers on the mortgage
- Bankruptcies, Judgments, Collections, if applicable
- A formal document/"prenup". (What happens if one of the parties defaults or must "exit" or move out of the housing arrangement)
- Individual contributions
- Future maintenance/repair contributions
- Employment stability
- Financial stability
- Savings available
- A conversation regarding long-term plans
- A conversation concerning how title will be held
- How will credit scores be weighted when multiple applicants are involved?
- How is debt viewed by mortgage underwriters?
- Are Gift Monies included?
- Are any applicants a Veteran or qualifying spouse, widow/widower? (Please talk to an experienced VA Lender for the particulars on the requirements in play)
- Who is supplying the Down Payment?
- Who will actually OCCUPY at the time of Purchase?
- More ...
While it's true that this type of lending scenario can certainly be more detailed in nature, it can also offer many extra benefits to the home buyers. All is dependent on the amount of debt held by the applicants as all named borrowers are subject to underwriting scrutiny ... but the scope of the home search may be able to be broadened as a result of the number of borrowers included on the loan.
Why? Multiple applicants might be able to qualify for more home, more needed housing features, and a higher mortgage amount.
Are mortgage lenders and banks prepared for this new trend? Can they fulfill the needs of future buyers?
Mortgage programs do currently exist that recognize this growing trend and need of multi-generational family homes. Traditional loan options do exist that can be of assistance. But Fannie Mae's "HomeReady" program (with Income Limitations) and Freddie Mac's HomePossible Program and HomeOne Programs are examples of financing programs that exist that can also be considered.
Bottom line: The number of home buyers considering a multi-generational or cross-generational home has and is continuing to increase. So finding the right lender ... an experienced lender ... capable of determining, then providing a mortgage that best fits the needs of multi-generational buyers is growing in importance too.
When it comes time to buy your Multi-Generational/Cross-Generational family home, work with a lender that offers a full menu of mortgage programs. That way you'll find the most advantageous financing for all involved.
* Hoping to Buy or Refinance a Home or Investment Property in the New Lenox - Will County - Chicagoland - IL/WI area?
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