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 Renovate^SM 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 & Renovate^SM 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.

Do you want to own your own condo or house at a low price, low payment and still be able to be financially secure?

I remember many years ago when we bought our first house; sold it at a profit 8 years later, bought up again, and again. Made some profit for sure; isn’t that what we were supposed to do?

My husband and I also continued to buy “stuff”, because with a bigger house, you need to buy more things to fill it. It also meant buying two cars, commuting to work, etc. Many of us only realize after we buy the big house and the closets of clothing and toys that we have too much stuff and too many financial obligations. Unwinding ourselves from the financial burdens of a big house payment or car lease can be difficult, especially in this economy.

Therefore I have been noticing some changes not only in my family and friends but clients as well who want to downsize. How does one do that?

Make small changes little by little, not all at once. Do not discard all everything at once.

Think about what you want, not what you think you’re supposed to want.  Do not care about the Joneses. We used to want to be like the Joneses, and that only got many of us into debt.  Live below your means because you want to.

Save your money. Even if you earn little interest, at least you saved it.

Depend on spending as little as possible weekly so it is considered a fixed expense. The rest is yours to do whatever you want to do with it – save in savings account, and so on.

You will have less debt, perhaps live in a smaller home or condo and have less obligations. No doubt, you will be happier!

Paperwork/Rules for Offer Submission: Standard purchase and sale agreements are used as well as the banks’ own addendums and disclosures. Offers must be complete and filled out in accordance with the banks’ rules in order for the buyer’s offer to be considered. These offers are either delayed until corrected or rejected by the bank regardless of the price being offered. Any delay on a desirable property severely limits your chances of getting your offer accepted.

The bank orders an appraisal or a BROKR PRICE OPINION. Then at the time of foreclosure/listing they have the listing broker determine if that value is still valid. Most of the time the Bank is pricing near market and is expecting to transact the property close to the asking price. If you feel the asking price is well over market it is best for the buyer to perform your own market analysis (something your agent or broker can do) and provide that information to the listing broker along with the offer. Stories, letters, opinions etc that are not supported by facts are of no value and cannot be used by the listing agent to help your offer. Many times the listing agent is working within a system where all they do is go online and fill in a few boxes – price, loan type, down payment, close date, indicate if the earnest money is in cashier form or not and if there is a preapproval. The lender never has the opportunity to see additional paperwork nor do they care. But if the market analysis is done well, the listing broker might be able to use that to justify a lower price thereby making your offer acceptable.

Repairs: The Bank prefers not to make repairs so an “as-is” sale is best. If a few repairs need to be made to facilitate FHA or Conventional financing the Bank might be willing to accommodate that so it is certainly ok to ask for. It’s best for supporting bids for the repairs to accompany the offer so the Bank knows the buyer is not just making numbers up. Often times the house will be a fixer or in a condition such that traditional lenders will not lend on the property. In those cases, an all cash offer or possibly a construction loan are necessary to get the deal done. The bank does not like to consider FHA offers since many of these properties will not qualify, and the bank may prefer all cash offers.

Earnest Money: It will need to be in the form of a cashier’s check (not a note). Proof of funds for the down payment and loan approval for the balance will also need to accompany the offer.

Closing Date:  A short escrow closing is favorable. Many institutions are beginning to have penalties for closings that run beyond some date so make sure your lender can perform in that time frame. If there is any doubt you either need a different lender or need to have the lender agree to cover those late fees if they don’t perform timely.

 In all cases, the listing broker does not have any control over the response time no matter what timeframe you put in the offer for acceptance. The best approach is to ask the listing broker for an approximate length of time needed for response and use that in your offer. If the offer is for far less then the asking price do not be surprised if the response is an outright rejection. Banks are trying to maximize their returns and are not looking to give properties away. They are also usually unwilling to go through multiple counter offers and if they feel the potential buyer is trying to “steal” the deal they will not try to negotiate. If the offer is a solid offer (close to asking, few contingencies) it may get accepted without a counter.