Buying With Elderly Parents and Living in Harmony: Is Society Changing?

I have been consulting a client whom I have known for many years which prompted me to write about her experience.

My client lives in a house that is no longer worth what she paid for it. Like many Americans, she bought her home when the market was high, her family has grown and she needs a larger house. She is able to make her payments but her house is worth less so if she did sell she would be facing a short sale. Her credit for 3 years would be affected, so she would be unable to buy now.

We have discussed all sorts of methods and choices. Once choice is that she has a relative who has a small mortgage on her home with alot of equity. If that relative sold her home and they moved to a new home together then they would be able to purchase. That would still mean doing a short sale on her current home or choosing to rent it out.

You may have guessed it! Yes, that other person is her elderly mother! We discussed them finding a larger home for all of them. That got me to thinking, what about all of those people in similar circumstances with NO RELATIVES that could help like this?

Households are changing and many families now tend to live together for extended periods. Also, as the population ages, caring for senior family members has become an issue in many households, and nursing homes are not always the answer. If you’re one of the many adults considering having their elderly parents or other family members move in with them, consider the value of in-law apartments.

For many families, a successful living arrangement depends on being able to provide separate, private living space for the parent or adult child, and in-law apartments do just that. Buying a home already furnished with a separate apartment may not be feasible for you, but that doesn’t mean an in-law apartment is out of reach.
Whether converting existing space or adding on to your new home, a good bank or mortgage company can help.

If you are looking to purchase a new home, a bank can help you to finance both the purchase of your home and all your renovations with just one loan.

Wells Fargo Bank Web Site says the advantage of their loan is:

  • More Money — the amount of money you are permitted to borrow for the purchase and renovations is based on the increased value of the home after improvements are made.
  • Lower Monthly Payments — your renovation costs are spread throughout the entire term of the loan – so your monthly payments may be lower than other financing options.
  • Tax Deductibility — the interest on the cost of your improvements, included in your mortgage, may be tax deductible.*
  • Speed — start making improvements immediately after closing. No need to wait for that modern kitchen or new roof. And, no need to pass up a house that’s in the ideal location but needs improvement.
  • Simplicity — One application, one set of fees and closing costs, one closing to attend and one payment each month.
If you already own a home, the Refinance and RenovateSM Loan may be the right option for you. This loan can help you to simultaneously refinance your mortgage, possibly obtain a lower monthly mortgage payment and get the money you need to renovate – all in one transaction.
The Refinance & RenovateSM Loan offers:
  • More Money for Improvements — the amount of money you can borrow is based on the increased value of your home after improvements are made
  • Lower Monthly Payments — the interest rate on a Refinance and Renovate Loan will typically be lower than the combined interest you would pay on a first mortgage plus a home improvement loan
  • Tax Deductibility — Financing your improvements into one mortgage may provide a greater deduction than some home equity loans. Credit card debt and many other bank loans are not deductible at all.*
  • Speed — start making improvements immediately after closing
  • Simplicity — One application, one set of fees and closing costs, one closing to attend and one payment each month
If you need a referral to a Wells Fargo representative, please let me know. I have a wonderful contact with whom I have done business for many years….


Zoning and Insurance

While in-law apartments are a great choice for many families, there are still some issues you should consider before making a decision. Make sure you check the zoning ordinances in your community. In some areas, adding an in-law apartment to a single family home can change its property category to a duplex, especially if there is a separate entrance. Also, check with your insurance company to see if any extra home insurance may be required.

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