201608.17
Off
0

Fear Mongering to Motivate Home Ownership?

The ever entertaining and thought provoking NREP (National Real Estate Post), formerly known as TBWS (Think Big Work Small) challenges our national leadership and loan regulators to promote home ownership by easing qualification regulations.  /Shocking Zillow Renter Report

The NREP blog also points out that the 50 year low in the home ownership index  may have some self-correcting consequences.  If all the laid back 20 and 30 somethings are satisfied with renting . . . .  the demand for rentals goes up, vacancies, or the supply of available rentals goes down, and the price of renting goes crazy.    The idea of living “on the cheap” to save money for a down payment (or that next big vacation or toy) is undermined increasing rents.

The reality is that home ownership can be a source of stability, tax savings and cost control!   A locked in rate of interest on your home mortgage can be a hedge against inflation and market pressures that drive up the rental rates that landlords can demand.

Listen to the “boys” of NREP and consider the bigger picture.  /Shocking Zillow Renter Report

Then find a good loan officer and take them to lunch.   Let us know if you need some recommendations.    We are seeing some new creative products emerge that are helping increase home ownership.   But even more importantly, a good L.O. can help you form a strategy for the short term and the long term to reshape your financial life so that you look better on paper.   Think of the L.O. as your personal financial fitness training.   They can radically improve your chances of meeting the current tough lending guidelines.

One of the big challenges that you will need help facing is the declining average U.S. income levels of the past 15 years.    Many tenants meet that problem by having roommates or co-tenants.    The good news is that more and more lenders are also offering loan products that cater to multiple unrelated borrowers.   Pooling income can be an excellent way to “quit pouring rent down a rat hole.”  But be aware – co-ownership has its own perils.    Rules, boundaries, exit strategies, etc., are all much easier to agree upon in the beginning of a co-ownership relationship.     After you take a loan officer to lunch, do take your favorite real estate lawyer to lunch and talk about getting an equity-sharing or co-ownership agreement to use.   This agreement between you and your potential co-owners will increase your purchasing power for buying your next home AND will provide a written safety net to untangle the co-ownership when the arrangement is no longer mutually beneficial or even becomes toxic.   Pay your lawyer now or pay later in litigation!