By Kelly Overgard, Mortgage Loan Officer, NMLS #1610871
In the midst of the affordable housing crisis, there are still some silver linings to consider as the close of 2021 is near and the future of the housing market remains a bit volatile. On the one hand, anyone age 57 or older should be elated since numbers show we are living longer, healthier lives on our own. This means we are staying in our homes longer and the decision making when it comes to assisted living or nursing homes can wait a few more years. In fact, over the next 20 years, the number of people in their 80s and 90s living at home will dramatically increase as the first baby boomers reach age 80 within the decade.
With that great news comes the sobering fact our aging parents (baby boomers) are faced with an affordable home and rental crisis right alongside the rest of the housing market. Lower fixed retirement income makes it more difficult to afford housing as the rising costs of property taxes and insurance amounts can create a unique cost burden. Even when the home doesn’t have a mortgage, the cost adds up quickly.
According to senior studies if you pay more than 30 percent of your income on housing, you meet the definition of “housing cost burdened”. In simple terms that means your housing costs are at a higher percentage of your overall income than what is considered ‘affordable’. Combine that with a shortage of affordable homes to buy, solving the cost burden or crisis for those in the baby boomer generation becomes quite the “task at hand”.
Luckily, the Conventional housing market (Fannie Mae and Freddie Mac) recognized this problem and created a program where a child can buy a home for their parents and qualify under primary residence guidelines. Some lenders call it a “Family Opportunity Mortgage”. We call it common sense and work with families, financial planners, CPAs, and Realtors to create a meaningful path to low down payment and low interest rate mortgages to keep parents in their homes.
Under normal circumstances, if a borrower buys a property for someone else to live in, Conventional housing declares this purchase as an investment property. These types of loans are considered riskier and require larger down payments and higher interest rates. The advantage of purchasing a home by a child for their aging parent allows us to keep withing the primary residence guidelines and bypasses the higher interest rate and down payment required by investment property loans. Additionally, by talking through your family’s situation with a mortgage professional, we can quickly assess if you qualify for this program.
And it doesn’t stop there – what about parents who want to stay in the home? We can use this aging parent financing to work with the current equity in a home as well to help with financial relief on the rising costs.
Wouldn’t it be nice to enjoy those later healthier years without the burden of your housing cost? Whether you are the aging parent or the adult child, I encourage you to learn more about this program and consult a mortgage expert.
For more information call 952-913-7797, email kelly@kevnikmortgage.com or visit the website https://kevnikmortgage.com/kelly-overgard.
*Kevnik Mortgage is an Equal Housing Lender located at 16180 Hastings Ave SE #301, Prior Lake, MN 55372. Kevnik Mortgage*, NMLS #1639268
