The all-ages home A MULTIGENERATIONAL GUIDE TO HOMEBUYING
It may not be a surprise, but 1 in 5 American families now consists of adults from different generations, such as grandparents, parents and children, or parents with adult children, according to the Pew Research Center.
But home-related legalities are still rooted in the days when the nuclear family was the dominant model.
“Not thinking through all the legal and financial implications is a big barrier” for problem-free, multigenerational living, says Renee Bergmann, a real estate attorney in New Jersey. Here is a quick primer on avoiding pitfalls.
1. Can the income of all adults living together be considered for mortgage approval?
“We have seen an increase in multigenerational households (applying for a mortgage) over the last two to three years,” says Christine Villano of HomeBridge Financial Services.
All the adults in the multigenerational household can apply together, with their total income considered. “Seniors may apply using retirement income, in a joint application with their adult children,” observes Hugh Suhr, spokesperson for SunTrust Banks Inc.
2. Should all members be listed on the title to the home?
Most mortgage types require that all parties named as borrowers be listed on the title to the home.
However, Bergmann warns that putting all parties on the title could lead to later problems. For one, the older parent not being able to qualify for Medicaid to pay for nursing home care. And, should one couple divorce, or one generation later moves out, how will the value of the property be divided? “Until the public becomes informed on the legal and financial aspects of it,” Bergmann adds, she expects problems to ensue.
3. What are the zoning rules?
Homebuilders are rolling out models to appeal to multigenerational borrowers. Many families are also buying existing homes with the intent of adding on, Bergmann adds. “Many towns have zoning rules concerning separate living quarters within an existing home,” she notes, so before buying, check local laws.