Tips to consider when buying a home with family members

The industry that brought you the iconic “location, location, location” has a new one for you: “multigenerational housing.” No, it’s not a new concept, but housing that caters to several generations under one roof is gaining in popularity.

We started seeing the demand during the recession, when unemployment propelled younger workers back to Mom and Dad’s house. Then, there’s the fact that millennials are tending to put off marriage and remain at home longer, according to Diana Olick at CNBC.

Immigration is also a driver of the multi-gen housing market. “In Asian and Hispanic cultures, multigenerational living is usually the rule. As these immigrants move to the U.S. in greater numbers, they bring the trend along with them,” Olick suggests.

Burns Consulting surveyed 20,000 homebuyers last year and found that 44 percent said they wanted room for their parents. Forty-two percent were parents wanting room for their adult children.

Thinking about moving in with your kids or your parents? Read on for some tips gleaned from the 51 million Americans who have done it.

Home shopping tips

The most important aspect to consider when shopping for a multi-gen property is privacy. Each member of the family should have some space to call his or her own that provides a place to retreat. This may mean building an “in-law” unit or constructing new walls to divide rooms.

You’ll need to look into the local zoning laws if you choose the former or find a large home to take advantage of the latter.

Lucky you if you choose a community in which home builders are catering to the trend. Lennar, for instance, offers NextGen homes, also known as The Home Within a Home®. They’re currently offered in 13 states (Washington, Oregon, California, Nevada, Arizona, Colorado, Texas, Minnesota, Florida, North and South Carolina, Virginia and Maryland).

The money stuff

Yes, it’s uncomfortable, but the financial aspect of the home purchase and ongoing costs are a discussion that needs to take place early in the process. And, the discussion should not be “a parent-kid thing,” according to John Graham, co-author of “All in the Family: A Practical Guide to Successful Multigenerational Living.”

He goes on to caution that families should aim to “level the hierarchy of the family,” treating each member as adults. Some of the topics of these conversations should include:

  • Who will buy the property?
  • How will title be held? It’s important to understand the different ways of holding title. For instance, what happens to the home upon the death of the primary buyer?
  • How much will each adult contribute each month to the mortgage payment?
  • Lists of each family member’s must-haves in a home and those he or she can’t tolerate.

Talk to your attorney to ensure you’ve discussed all the ramifications.

Talk to one another

Some families excel at open communication while others find it challenging. “The biggest factor in successful arrangements is communication,” Donna Butts, executive director of Generations United tells Sue Campbell, author of “The Aging Well Revolution: How new communities and technologies help us live.”

“You need to sit down before someone moves in and talk about expectations and parameters, including how you’ll divide up food, utilities and responsibilities. Another important question to ask is whether the situation is permanent or temporary,” Butts concludes.

Get clear on mutually-agreed upon house rules, preferably before everyone moves in together.

Dysfunctional families may find the thought of multigenerational living intolerable, but for those families who enjoy close ties and harbor respect for one another, it may just be the ideal lifestyle.

Get Help With Your Down Payment

It’s frustrating to have a decent-paying job, a bright earnings future and acceptable credit and still not be able to buy a home because you lack the thousands of dollars in cash needed for a down payment and closing costs.

The dreaded down payment stops more potential homeowners cold than any other aspect of the loan process.

To read articles about down payment headaches one would think it’s only millennials who have trouble coming up with the funds.

In reality, most would-be first-time homebuyers, regardless of age, find saving up 20 percent of hundreds of thousands of dollars challenging.

Sure, you may qualify for a loan with a lower down payment, but do you really want to add to your monthly house payment by purchasing the mandated private mortgage insurance policy? That’s what’s required if you don’t have 20 percent equity in a home you purchase.

Today, we’ll explore ways you can get help with the down payment on your new home.

Crowdfund your down payment

Enter, HomeFundMe CMG Financial, which offers a brilliant way for you to come up with that down payment: Crowdfunding – with the approval of Fannie Mae and Freddie Mac.

Before the crowdfunding concept came into being, lenders stipulated that your down payment and closing cost funds must come from your savings (mutual funds, stocks, IRA and 401(K) included), proceeds from the sale of another property, assistance from government programs or non-profits, union, employers or gift money from an immediate relative.

HomeFundMe allows anyone to donate funds to help you buy a home and CMG Financial provides the online platform.

While many crowdfunding endeavors offer a return on investment, the HomeFundMe program returns nothing to those who give. Money given is considered a gift, although they can make the gift conditional on the money eventually going to fund a home purchase.

The program offers incentives to savers, however. Attend credit counselling and education classes and you may receive a grant of up to $2,500. Then, the crowdfunding platform will match donations “$2 for every $1 raised, up to $2,500,” according to CNBC’s Diana Olick.

Get help from the government

The government, from local to county, state and federal, offers programs to help Americans get into home ownership. Some of these programs are geared toward the low-income applicant while others are open to all.

Federal Home Loan Bank

The Federal Home Loan Bank offers three programs to help homebuyers with their down payments and closing costs:

  • Home$tart® — Assistance up to $7,500 for borrowers who take the homebuyer education program and earn up to 80 percent of their area’s median income (find yours on HUD’s website). Unlike the aforementioned programs, these funds come in the form of a grant.
  • Home$tart Plus — $15,000 to borrowers who are currently receiving public housing assistance. Borrowers must complete a financial literacy program and be income qualified.
  • Native American Homeownership Initiative (NAHI) — $15,000 to eligible Native American households to help with a down payment and closing costs.

Good Neighbor Next Door

This program falls under the auspices of the United States Department of Housing and Urban Development (HUD) and offers a discount (typically 50 percent) off the asking price of a home. The program is open to applicants in the following professions:

  • Pre-Kindergarten through 12th grade teachers
  • Law enforcement officers
  • Emergency medical technicians
  • Firefighters

Be aware that this program only covers homes in HUD’s revitalization areas that are listed for sale through this program.

Learn more about the program and how to apply on HUD’s website.

State and local programs

FHA offers state-wide down payment grants through a variety of programs. Search for them here.

Search for local programs at Freddie Mac’s website.

The National Association of Local Housing Finance Agencies (NALHFA) suggests using downpaymentresource.com to find information on local assistance programs.

provides local-level program information.

Finally, several labor unions, such as the Culinary Union, offer homebuying assistance programs for members.

3 Words You Must Learn And Understand Before You Buy A Home

When you’re shopping for homes you’ll be introduced to an entirely new vocabulary and I’ll be the first to agree with you that some of it seems downright boring. Take encroachments and easements, for instance.

Though they sound ho-hum, they are both important concepts so today I thought I’d try to put them in plain English for you.

What’s an encroachment?

Encroachment describes the violation of a homeowner’s property rights. Imagine your next-door neighbor, Frank, decides he is tired of having only a carport and builds a garage. When complete, the structure extends onto your property. This is encroachment.

Encroachment can be intentional or unintentional

And, typically, it’s the latter. Unless you are absolutely sure where your property lines are — down to the inch — you’ll have no way of knowing if you’re encroaching on your neighbor’s property when you decide to plant that gorgeous oleander hedge between the two homes.

And, an easement?

In Hawaii, all beaches are publicly-owned and the public is ensured access to all “land below the high-water mark on any coastal shoreline.”

In other words, should you purchase a home on a beach in our 50th state, you cannot block the public from using that beach. In Kahala (on Oahu) for instance, you’ll find pathways that cut between multi-million- dollar homes, from Kahala Avenue to the water.

These paths are public rights-of-ways, or easements — allowing others to travel or pass through their land. And the homeowners on either side have no say in the matter.

The primary distinction, then, between encroachments and easements, is one of permission.

How to deal with encroachment — and why you must

When an encroachment comes to light, both parties have options. Remember Frank – the neighbor who built his garage partially on your property? Suppose this happened decades before you figured out that he had encroached on your property.

You approach Frank, voicing your displeasure. Your most common options include ignoring the trespass, forcing the removal of the garage, offer Frank an easement or have him sign an encroachment agreement.

All of these remedies require the advice and assistance of an attorney

What if Frank doesn’t like any of these options? He may have one of his own (and you won’t like it): adverse possession.

Yes, another ho-hum real estate/legal term, but one that has a huge impact, if invoked. Through the adverse possession process, Frank may be able to gain ownership your portion of the land on which the garage sits.

In fact, adverse possession can be used to gain ownership of “just a few feet of property or hundreds of acres,” according to Emily Doskow, attorney and author of “Neighbor Law: Fences, Trees Boundaries & Noise.”

Although state laws vary, Doskow says that courts generally apply a “four-factor test” when looking at adverse possession claims. The occupation of the land must be:

  • hostile
  • actual
  • open and notorious
  • exclusive and continuous for a certain period of time

Courts don’t define “hostile” the way we do. In an adverse possession case, it describes that Frank’s possession of your land is hostile to your interests.

Then, the courts will want to see that Frank actually used your land as if he were the owner.

He can prove this, according to Doskow, if he can produce records showing he maintained or improved the property or paid taxes on it.

The third factor of the test is that Frank’s use of your property must be obvious “to anyone – including a property owner.”

Finally, Frank must prove that he controlled the land exclusively (meaning he didn’t share it with you) and that he did so for certain amount of time (which varies by state).

How to avoid adverse possession

When determining how to deal with encroachment, it’s important to keep Frank’s option in mind.

Your best option, in any type of encroachment, may be to either offer to rent the offender that piece of your property or grant him an easement.

But, it’s critical that you contact a real estate attorney who will help you consider all possible options. And do it quickly because there is a statute of limitations.