Mortgage California Blog

Mortgage News Roundup

August 21st, 2014

Senior couple meeting realToday, we’ll see two reports released that could affect mortgage interest rates. The first is last week’s unemployment figures. The higher the number, the better it tends to be for bonds and interest rates. Then July’s existing home sales report will be released by the National Association of Realtors giving us an indication of the strength of the housing sector.

5 myths about buying a home

Here’s a great article about 5 myths and misconceptions about purchasing a home.

Myth #1: Buying a home is a great investment

If the housing bust taught us anything, it’s that the housing market can be just as risky as the stock market. Many homes lost on average about a third of their value.

Myth #3: The three most important factors are location, location, location.

Finding the perfect home used to mean that it had to be in a well-established community with low crime, good schools and far from nuisances like high traffic malls. But these days some of the best deals are found in neighborhoods that have yet to reach their peak.

Look for future potential as well as current conditions.

Myth #4: Buy the worst home in the best neighborhood.

The advice used to seem sound because you can fix up a bad home but you can’t clean up a whole neighborhood.

Those bad homes, though, can come with some pretty huge flaws. If you’re already paying a premium for a home, you may not want to have to do major repair work such as repiping or reroofing.

Know risks of buying in-laws’ home

Sometimes, Life hands you an interesting cocktail of lemons. What if your in-laws used up all their retirement savings and still had a mortgage. And you were in a position where you could buy their home so they could stay there. Is it a good idea? That was the question posed to the LA Times. What are the risks of buying your in-laws’ house?

There are options such as quit claim  and direct sale. But the first thing you should do is consult a tax professional and an attorney with experience in estate and elder law. If the in-laws sell to you at a below market value, you run into issues with gift tax issues. Then there’s issues with their income and how that affects Medicaid. There are other risks to your in-laws. If you were sued and lost, the creditors could come after the house as part of your assets. You could sell the home without their consent, and you would have a claim on the property if you and your spouse split up.

There are some difficult conversations ahead about what is an affordable lifestyle, and what is the best way to handle either taking over mortgage payments, buying the home outright, or looking into other options such as having the in-laws move in with you. And those answers won’t come quickly. Spend some time figuring out what’s going to be the best solution for everyone in the long term.

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