Roughly 9% of all U.S. homebuyers in 2020 were unmarried couples. If you and your partner are considering a house purchase before tying the knot, there are some important questions you should ask yourself to see if it makes sense.

1. How does the law see our purchase?
   In a few states, you are considered to be in a common law marriage by living together, but in the majority of the country, you are simply viewed as individuals when it comes to your assets.  That means you’ll need to decide together what clauses and protections to put into your property agreement.
   
2. Should we both be on the mortgage?
   If one of you can qualify on your own for the mortgage, you do not have to put both names on it. This might be more helpful if one of you has poor credit that might make it harder to be approved or would increase the interest rate on the loan. However, if there are disputes down the road, the partner not on the mortgage would lose all claim on the house, even if they have been contributing to the monthly payments all along. It is possible to put just one partner on the mortgage, but both names on the title. The risk is greater to the one on the mortgage though, as in a dispute they will have to legally split the home’s value with the partner who has had no technical financial responsibility for the home loan.
   
3. What happens if we break up?
   Of course, you never plan to break up, but things change. If there is no property agreement when you two split, the home must either be sold or one of you can buy the other out. It is much better to specify the details of such a situation while you are both amicable; otherwise, it could end up being a disastrous financial battle. 
   
   If you break up and one of you wants to keep the house, you’ll have to refinance the mortgage to get the other person’s name off the loan. If you have to buy the other person out, you might be able to use a cash-out refinance to pay them their portion from the saved-up equity. 
   
4. What happens if one of us dies?
   If you were married and without children, the house would legally pass to the surviving partner, but that will not necessarily apply to you if you have not left a will or specified such circumstances in the original purchase agreement. Before you sign on to the mortgage, you’ll need to decide the type of ownership you’ll have on the property deed. It can be “joint tenancy with rights of survivorship,” which means the survivor inherits the deceased person’s share of the home. The other option is tenancy in common, where each person owns a percentage of the house and when they die their share goes to their estate or trust. 
   
5. Who gets the tax benefits?
   If there are any mortgage interest deductions available for your house, only one of you will be able to claim them on your taxes as you are filing separately. You should decide who gets to take advantage of this and put it in writing to prevent any future disputes.

Buying a home with an unmarried partner can require extra caution and steps, so be sure you understand the implications before making your purchase. Call us today if you have any questions.

Mortgage interest rates have been near record lows for the past several years. At the same time property values have jumped dramatically, giving homeowners plenty of equity. Those two factors combine to make right now an excellent time to get a cash-out refinance loan. 

But what if you own rental properties or investment homes? Could you take out a cash-out loan on them? And should you? Here are some reasons you might consider using that type of mortgage on your rental properties.

Improving Your Rental Units

If your investment home or apartments have been in need of some significant repairs or renovations, pulling cash out of your equity could be a cost-effective way to pay for it. Once you update or fix the properties, the value will increase, bumping up your equity and allowing you to charge more in rent.  Refinance loans always come with closing costs and fees though (even if it's at the back-end) so be sure to make sure the numbers pencil out.

Expanding Your Rental Business

If your rental business is running smoothly, a cash-out refinance might be a way to get a down payment for another investment property to your portfolio. Depending on how much you have in equity, you may even be able to pay outright for your next rental unit.

Lowering Your Interest Rates

Since rates are still low for now, if you took out mortgages at a higher cost several years ago, this may be a good time to get a cash-out refinance. You’ll reduce your overall mortgage costs and still be able to pull out some equity for projects.

Personal Financial Help

Life is unpredictable and you might need the cash for your own life needs. It could be medical expenses, sending a kid to college, or even to pay for your retirement expenses. Cash-out refinance mortgages are great because even though the loan is tied to your property, you can use the money for any purpose whatsoever.

Requirements for an Investment Property Cash-Out Refinance 

Lenders will want to see that you have a significant amount of equity in your rental unit. That means having a nice low loan-to-value ratio. You will also need to have a decent credit profile for approval and the higher your score, the lower the interest rate you’ll pay. In addition, the mortgage lender will look for a low debt-to-income ratio. This does not mean that you can’t have any debt, but simply that even with all the money you owe on your rental property, the income being brought in by it provides plenty of cushion to make the payments.

So the answer is yes, you can take out a cash-out refinance on your investment properties, but whether you should depends on your individual situation and finances. Call us today, we can help you run the numbers.

Buying a home for the first time is often exciting, scary, and overwhelming all at the same time. When you’re ready to move on from your starter home, you will be familiar with the home buying process, but there are still a few things you might want to consider as a second-time buyer.

1. Interest Rates
   Depending on how long ago you bought your first home, conditions in the housing market may have changed dramatically and could affect second purchase. For example, long-term mortgage interest rates are current near historic lows, having stayed around or under 3% for over a year, whereas they were reaching around 5% three years ago. That amount of interest can make a big difference in how much house you can afford the second time around. If rates are significantly higher than when you bought your first place, you might need to save up a bigger down payment or consider paying more mortgage points to buy down your new interest rate.
   
2. Inventory
   You may be pickier the second time you buy a home; you’ve had time to figure out which features you do and don’t like in a house as well as ones you wish you had. Your selection of homes may be smaller just by virtue of your preferences, but you should also pay attention to house much inventory is available in general. In today’s market, demand is far outstripping available housing supply, limiting buyers’ ability to move up in homes. Your real estate agent can give you a good idea of current inventory conditions.
   
3. Home Prices
   How quickly home prices are rising may be a big factor in which next house you buy. Today, high demand, ultra-low interest rates, and anemic inventory have pushed prices to all-time records. Wages have not been keeping up with home value increases though, making it harder for Americans to afford a new home. General inflation levels are climbing faster than salaries as well. All these factors play into whether you can reasonably buy your next home now.
   
4. Available Mortgage Credit
   Mortgage lending standards vary from time to time and you may need to improve your credit profile this time around to qualify. For example, before the finance crisis in 2008, lenders were very liberal with funding, making plenty of riskier loans like interest-only and no-documentation mortgages. Today, however, standards are higher, with better credit scores and more proof of income and assets required. You should also take a look at your debt-to-income ratio; if you’ve taken on a significant amount of debt since buying your first home, it may change how much you can borrow or at what rate.
   
5. Selling Your Current Home While Buying
   This is one of the most nerve-wracking aspects of buying your next home. Typically, buyers can put in an offer with a contingency that they can back out if their own home does not sell in time. In competitive markets though, sellers may only accept contingency-free offers. In this case, one option is to try to sell your home first and then hope something is available when it goes under contract. Another option is to sell your home to one of the companies that buy homes with cash but let you stay in your place until you find that right one.
   
6. Changes to House Construction
   Housing codes are always being updated. You may want to familiarize yourself with what is being required in new homes in terms of safety to see if those changes are important to you in a second house. You may also want to consider finding a place with more energy efficiency upgrades to reduce your utility costs going forward.
   
7. Length of Stay
   Finally, consider how long you plan to live in this second purchase. If it’s a substantial amount of time, you may be more concerned with the longevity and quality of the roof and HVAC systems and other large structures and features that could cost you a lot to replace down the line. And if your family will be growing or shrinking during the time you live in this next place, its good to find a home that can adapt to those needs.