More and more households have extended family living together under one roof, and the tight fit has some families in the market for a larger home.
From 2007 to 2009, there was a 10.5 percent increase in multigenerational homes that translates to 51 million Americans, or 16.7 percent of the population, who lived in homes with at least two generations of adults, according to a recent report from Pew Research Center. If your household is growing and you're looking for a larger space to accommodate your needs and family size, the housing market is in your favor. Low prices and attractive interest rates have created an opportunity for anyone looking to make a larger housing purchase.
As multi-generational living becomes more prevalent, builders and re-modelers have found a niche market in creating homes designed to fit the lifestyle. For the "Sandwich Generation," a generation of people who are caring for their aging parents while supporting their own children, there are advantages to having children and grandparents under one roof such as sharing of household responsibilities and finances and increased focus on family time together. With these advantages, however, there may be a need for a larger home to accommodate a growing family.
A recent TD Bank survey found that of respondents who were planning to sell their current home and buy up, one-third attributed it to a larger or growing family. To finance a bigger home purchase, you can look to a jumbo mortgage. Jumbo mortgages are home loans that are bigger than normal. Normal varies by location, but in most housing markets, it's more than $417,000.
Choosing the right fixed rate fit
Fixed rate mortgages are currently at historic lows. These loans provide comfort and security though payments spanning 15 or 30 years. If you're planning to stay in your home for a long period time, they may be a good option.
Adjustable rate mortgages for your lifestyle
If you're not looking to own your home for an extended period of time, an adjustable rate mortgage may be the best fit for your lifestyle. An adjustable rate mortgage can allow you to save money if you're able to pay down your mortgage over a one-, five-, seven-, 10- or even 15-year period. Some lenders offer significant flexibility in the length of the loan and the frequency of rate adjustments in their ARM products. For example, a 5/5 ARM has the interest rate which remains stable for five years and then readjusts once every five years after that. Finding the right loan is important as even a 1 percent interest rate reduction created by taking out an adjustable rate mortgage may create sizable savings without necessarily sacrificing security.
Refinancing your home
Payback financing options, or piggyback options, allow for a second mortgage or home equity loan to be taken out by a borrower at the same time the first mortgage is started or refinanced. Some banks may offer a piggyback option but you might see a higher blended interest rate. Portfolio lenders, like TD Bank, can help minimize the down payment and interest rate. Portfolio lenders are able to do this because they don't sell their loans to third-parties, resulting in more affordable, flexible home financing options for a borrower.
Qualifying for your loan
Qualifying for a jumbo mortgage does require stronger credentials, so be prepared for the process. Though the process can be more rigorous, some banks like TD Bank treat jumbo mortgages as they treat other mortgage products, guaranteeing a decision on the loan in less than 24 hours. A quick decision can help buyers close sooner or move faster when making an offer on the property they are looking to buy.
Overall, the residential mortgage landscape is experiencing gradual improvements, with housing prices stabilizing and even improving in some markets. If you're looking for a larger space to accommodate your growing family, consider beginning your home buying process now. When looking into lenders, consider a portfolio lender, who can offer flexible terms and lending guidelines, to best fit your unique borrowing needs.