Home Buying Hack for Roommates

I have a great tip for you if you’re currently renting with a roommate and considering buying a home. The HomeReady program allows for you to use “boarder income” to qualify for your next home. If you’re thinking about buying a home where your roommate will continue to pay you rent, you may be able to use that rental income for qualifying for your new mortgage on a one-unit home.

In order to be able to use boarder income, the following is required:

  • Documentation to show the roommate has paid the borrower rental payments (cancelled checks paid to the borrower) for at least the last 9 months. Rental payments to a third party are not acceptable.
  • The roommate must have lived with the borrower for the last 12 months and will need to provide proof of having the same address (ex. drivers license, bills, bank statements, etc.).
  • The roommate will not be on the property title or mortgage.
  • Credit scores must be 620 or higher.
  • A home buyer class may be required.

I have used “boarder income” to help couples buy their first home. One of them had better credit and the funds for closing. The other happened to be paying the other their rent, which they had documentation for. A couple years later, they came to me for a refinance as mortgage rates were lower and they were able to record a deed and the new mortgage in both of their names.

The HomeReady program is also a wonderful program because it allows for lower down payment, improved interest rates and lower private mortgage insurance premiums. Freddie Mac’s Home Possible is very similar to Fannie Mae’s HomeReady program. Which program we utilize will depend on the nuances of the borrower’s application.

So… if you can meet the above guidelines, you may be able to use that rental income for qualifying! Or you can find a roommate (or your significant other, if you’re living together) and start documenting the rental payments for 9 months and have documentation that reflects where you’re both living.

Of course, all things being equal, the other possible option is that you and your roommate buy the home together. You may still qualify for programs like HomeReady or Home Possible (depending on incomes and the area the home is located in).

Bottom line, if you are thinking about buying a home, even if it’s more than a year away, I’m happy to talk with you to answer any questions and start creating a game plan. Buying a home with your best friend or new friend can help you buy your first home!

Visiting Open Houses? You Need to Be Fully Preapproved

It’s fun to visit open houses on the weekends. You may be picturing yourself living in the home, enjoying the backyard or perhaps making a few home improvements to really make it “yours”.

If you’re even thinking about buying a home, I strongly encourage you to get fully preapproved before you find yourself at an open house wanting to present an offer.

Here are some steps I recommend for anyone considering buying a home. [Read more…]

Looking for Affordable Housing? Check out Greater Tacoma!

If you’re looking to buy your first home, you may have to expand your horizon to find a home that’s more affordable. When I bought my first home many years ago, I wound up with a small rambler in Northeast Tacoma. We used an FHA mortgage with a 3.5% down payment (you do NOT need 20% down to buy a home). At the time, I was working in downtown Seattle at the Columbia Center and it was a heck of a commute…but I was so proud to own a home. We only owned it for a couple of years before we were able to sell it and use the appreciation to buy our next “move up” home. [Read more…]

Should You Wait to Buy A Home?

If you’ve been considering buying a home or if you’re a real estate agent who is working with clients who are on the fence about buying; please check out my latest resource page: Should You Wait to Buy a Home (mortgageporter.loans)

I have prepared various scenarios that compare renting to buying a home as well as a report on the cost of waiting.

Of course, I’m more than happy to prepare scenarios to help you decide if you should wait to buy a home now or rent. Please reach out to me if I can be of any assistance!

BREAKING NEWS: HUD Reduces FHA Mortgage Insurance

FINALLY!!! HUD just announced that the mortgage insurance on FHA mortgages will be reduced by 30 basis points on most mortgage loans.

FHA mortgages typically have two forms of mortgage insurance. Borrowers pay for both an upfront premium, which is often added to the loan amount and financed over the life of the loan and an annual premium, which is paid monthly. The mortgage insurance which has been reduced is the annual mortgage insurance. [Read more…]

Just Released: Resources for First Time Homebuyers

I have just created a page on my blog dedicated to first time homebuyers. Right now, you can access this on the column to the right.

I will be updating this page with information that first time homebuyers or people who have not bought a home recently may find useful. Currently, I have a couple of different scenarios intended to help demystify the homebuying process. I hope you’ll check it out!

If you or anyone you know are thinking about buying their first home or re-entering the home buying market, please feel free to share this with them. 🙂

And of course, I would love to help you with your mortgage needs. Please contact me if I can be of any assistance.

Price Adjustments coming soon to Conforming Mortgages

Last week, the FHFA (Federal Housing Finance Agency) announced changes to how conforming mortgages are priced with loan-level price adjustments (LLPAs). Some borrowers will find improved pricing where others will have to pay more in fees. The fees are typically incorporated into the interest rate for the mortgage.

From Fannie Mae’s Lender Letter dated January 19, 2023:

“We are implementing additional changes to our LLPA framework that represent the next step in our effort to increase support for borrowers historically underserved by the housing finance market…”.

[Read more…]

How to prepare for buying a Home this Spring

If you have been thinking about buying a home this spring, you’re not alone. Experts predict there is quite a bit of pent-up demand following the recent sellers’ market and higher interest rates. Many homebuyers have been waiting patiently for a cooler market with lower interest rates…the key word here is MANY. It’s not anticipated that we will see a flood of new listings as homeowners who currently have extremely low mortgage interest rates seem to be less likely to want to sell and lose the rate. As people start to list their homes in the new year, and more buyers get off the fence, we could see housing prices push higher or at the very least, stay the same as the demand for homes is still strong. [Read more…]