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Give Your Home a Morale Makeover

7 easy ways to revitalize your space and boost your mood

With many Americans spending a lot more time at home, you may find your house taking on the roles of office, classroom, gym and community center — and it’s easy to feel uninspired by your surroundings after occupying the same space day in, day out. But all hope is not lost: There are simple and inexpensive ways to transform your home into a fresh and stimulating environment. Give your home some TLC with these seven tips from interior decorators, feng shui experts and design enthusiasts.

Break it up

If you’re working at home, it’s easy to feel overwhelmed by conflicting responsibilities. To help stay on track, designate different areas for specific activities. It’s important to ‘compartmentalize’ your living space. Assign specific areas for fitness, work and leisure: Dig out a yoga mat from under the bed and dedicate an area to working out. Clean and organize the desk in the living room or office to serve as a ‘command station’ for going online and making phone calls. The bedroom doubles as another workspace and is perfect for napping or watching movies in bed. If you live in a studio, you can simulate separate “rooms” by splitting up the space with curtains, bookshelves or other furniture.

Experiment with color

Painting the walls is one of the cheapest and easiest ways to immediately invigorate any home. For a classic look that will hold up against almost any decor, opt for cool neutrals; if you prefer something more dramatic, consider adding a pop of color to a feature wall. Feng shui experts and interior designers recommend greens and blues: they are most associated with health, calm and well being. If you’re not ready to commit to painting, it is suggested to use accessories like throw pillows, an area rug, curtains or artwork to bring color into your space.

Streamline and declutter

With millions of us now living and working alongside family members, significant others and roommates, our homes may suddenly seem more cramped than ever before. There’s no better way to create spatial harmony than decluttering: it works a powerful magic in that it gets your entire space up to speed with you.  Experts recommend starting small with a contained space like a bathroom, which “will give you a quick feeling of accomplishment and encourage you to do the next space.” The benefits of a tidy space extend beyond aesthetics — research has found that clearing clutter can lower stress levels.

Do a digital detox

The digital detox movement is not new, but it’s worth revisiting in this climate of constant COVID-19 news and social media chatter. Though it’s important to stay informed about the health crisis, it’s easy to slip from a healthy level of engagement to compulsive checking. To reduce screen dependence, set up manageable boundaries based on time or place. For example, designate dinnertime as phone-free, or remove mobile tech devices from your bedroom for a daily reset.

Invigorate with scents

Scent is a powerful vehicle for uplifting your mood. Every room should have a different scent track to score your moment. Use woody scents like cedar, palo santo, oud, copal and frankincense to feel grounded; rosemary for invigoration; and incense to focus and meditate. There are many ways to suffuse a room with scent — candles, oil diffusers, air mists and fresh flowers, to name a few. For a more subtle effect, crack open a window to balance out your chosen fragrance with fresh air.

Greenify and purify

While you’re staying put, there’s no better time to bring the outside world in. If there’s one thing that makes a space feel livable, it’s some elements of green. Not only do plants bring light and color, they also add oxygen to your home — something that many of us could use more of as we hunker down indoors. Consider the level of care you want to give: Some folks may find something less fussy to be easier to deal with, whereas others may want a more ‘high-maintenance’ plant that requires attention every day. Whichever plant you choose, she says that the ritual of maintaining it can be deeply healing.

Lighten up

Natural light is the top office perk, according to a study of workplace benefits published in the Harvard Business Review. If your home is now your office, you have more control than ever over the light conditions of your workday. To maximize your exposure to natural light, position your desk near a window and keep drapes and shades open during the daytime. If you don’t have much natural light coming in, it is recommended to affix aluminum mini-blinds to your windows. You can direct or cut out light (and inquisitive neighbors across the street) as needed, and when the sun hits them just right, you can use them to throw light into the room without getting blinded. Adding reflective surfaces — like a mirror, lacquered table, or chrome lamp — enhances the light in dark rooms.

How to Save for A Home

Have you been dreaming of owning your own home or even upgrading the one you currently have? With a few simple steps and a little saving, you could be well on your way to move-in day. If home ownership is on your to-do list, follow these simple steps to save throughout this next year.

Track spending and make a budget
Prior to even looking at homes, decide what amount you can comfortably afford. January is a good time to not only track all your monthly spendings and create a budget of your expenses but to look at your spending habits from the previous year. Once you’ve looked at all your expenses, you’ll have a more complete picture of how much money you truly have at the end of the month and what you can do to increase your savings.

When you go to get pre-approved, keep in mind what the bank may say you can afford might be drastically different from what you can actually afford and maintain the lifestyle you want. Calculate your total home costs, including mortgage, property taxes, and home insurance, which can often add several hundred dollars to your total mortgage. A good agent can help you determine general numbers to start.

Save for a down payment
Having a low debt to income ratio will be beneficial when saving for a down-payment and getting a mortgage.  Your savings are another aspect of your financial picture that lenders will be very interested in. But you don’t only want to build up your savings to impress lenders. You’ll want to save money for a down payment on your new home. It’s also important to note that you will need to have cash on hand for closing costs.

Finally, nearly every homeowner would agree that you will want to have money saved up for things like home décor, maintenance, and renovations. Start saving early to put yourself in the best position possible to afford the home you want—and the things you want to put in it!

Check if you qualify for housing programs
Before you purchase a home, you will want to see if you qualify for any housing programs.  If this is your first home, you can qualify for a first-time homeowner’s loan. These loans have lower down payment requirements and are easier to qualify for than a conventional loan. FHA loans are excellent for first-time homebuyers because, in addition to lower upfront loan costs and less stringent credit requirements, you can make a down payment as low as 3.5%

If you are not a first-time homebuyer, you still might qualify for a loan that can help you save.  Military service members and veterans can get a Department of Veterans Affairs loan that doesn’t require a down payment or mortgage insurance and comes with low closing costs.  There are also other loans available for teachers, police officers and firefighters through the Good Neighbor Next Door Program.
Improve your credit score

Your credit score is a significant factor that lenders use to determine your eligibility to buy a home. The better your credit score, the better your chances will be to secure a home loan. Some ways to improve your credit score are to pay off any credit card bills, refinance student loans and refrain from opening any new accounts.

With these few simple steps, you will be well on your way to the closing table.

10 Winter House Plants for Your Home

Cold weather tends to keep some of us indoors during the long winter months. But there is some hope in battling the cabin fever that can make us feel a little blue. Houseplants are a great way to bring some fresh air and greenery into your home during winter.

With National Houseplant Appreciation Day (January 10) just passed, what better way to start combatting cabin fever than by adding a few houseplants to your home? Here are 10 easy-to-care-for houseplants that can help bring fresh life to your home this winter and all year long:

1. Garden Mums: Still have some mums left over from this fall? Keep them around to help you get through the cold this winter. They’re colorful and they’ll help provide cleaner, fresher air in your home during any season.

2. Spider Plants: This is one type of spider you’ll always be glad to find in your home. Spider plants add great color and grow well with little care. In fact, this plant doesn’t need much light and is even happy when its soil dries out between watering.

3. Ficus Trees: Want to add some height to the greens in your home? Bring in a ficus tree that could grow to be taller than you! This houseplant does like a lot of light, but it can grow well with little water.

4. Aloe Plants: You probably already know that this plant’s gel can help soothe burns and cuts. But did you also know that an aloe plant can help soothe cabin fever? This sun-loving plant will help clean the air in your home in addition to showing off its bright green hue.

5. Peace Lilies: Not only will this plant help freshen the air in your home all year long, but its flowers will also be a welcome sight each summer. Peace lilies do well in shady areas and will droop a bit to let you know they need a drink of water.

6. Bamboo Palms: Though it is important to make sure this houseplant gets lots of water, the bamboo palm grows well in both sun and shade. It can last in a home for years, which makes this houseplant an excellent addition to your regular décor.

7. Dragon Trees: If you’re looking to add more than just fresh green to your home, consider the dragon tree. Its leaves can be either green or purple! The dragon tree doesn’t need much light and will happily live indoors or outside once warmer weather arrives.

8. Chinese Evergreen: Also known for its vibrant colors, the Chinese evergreen grows well with little light. It is great for most homeowners but is one that pet owners might want to stay away from as it can be toxic to our four-legged family members.

9. Snake Plants: Don’t be turned away by this houseplant’s name. The snake plant can be a beautiful addition to your home décor. The fact that it is easy to care for doesn’t hurt either! This plant does well in dry conditions with some sun and occasional water.

10. English Ivy: With just a little water, a little sun and a little shade, an English ivy plant can thrive in your home all winter long. In fact, it can live for several years. Or, once the weather breaks, you could transfer this houseplant outdoors to welcome spring.

Celebrate a belated National Houseplant Appreciation Day by picking up an easy-to-care-for green or two for your home decor.

3 Ways You Can Use Your Home Equity

If you’re a homeowner, odds are your equity has grown significantly over the last few years as home prices skyrocketed and you made your monthly mortgage payments. Home equity builds over time and can help you achieve certain goals. According to the latest Equity Insights Report from CoreLogic, the average borrower with a home loan has almost $300,000 in equity right now.

As you weigh your options, especially in the face of inflation and talk of a recession, it’s important to understand your assets and how you can leverage them. A real estate professional is the best resource to help you understand how much home equity you have and advise you on some of the ways you can use it.  Here are a few examples.

1. Buy a Home That Fits Your Needs
If you no longer have the space you need, it might be time to move into a larger home. Or it’s possible you have too much space and need something smaller. No matter the situation, consider using your equity to power a move into a home that fits your changing lifestyle.

If you want to upgrade your house, you can put your equity toward a down payment on the home of your dreams. And if you’re planning to downsize, you may be surprised that your equity may cover some, if not all, of the cost of your next home. A real estate advisor can help you figure out how much equity you have and how you can use it toward the purchase of your next home.

2. Reinvest in Your Current House
According to a recent survey, 39% of homeowners would invest in home improvement projects if they chose to access their equity. This is a great option if you want to change some things about your living space but you aren’t ready to make a move just yet.

Home improvement projects allow you to customize your home to suit your needs and sense of style. Just remember to think ahead with any updates you make, as some renovations add more value to your home and are more likely to appeal to future buyers than others. For example, a report from the National Association of Realtors (NAR) shows refinishing or replacing wood flooring has a high-cost recovery. Lean on a local professional for the best advice on which projects to invest in to get the greatest return on your investment when you sell.

3. Pursue Your Personal Goals
In addition to making a move or updating your house, home equity can also help you achieve the life goals you’ve dreamed of. That could mean investing in a new business venture, retiring, or downsizing, or funding an education. While you shouldn’t use your equity for unnecessary spending, leveraging it to start a business or putting it toward education costs can help you achieve other lifelong goals.

Bottom Line
Your equity can be a game changer. If you’re unsure how much equity you have in your home, let’s connect so you can start planning your next move.

2023 Resolution: Improve Your Credit

Is 2023 finally the year you push your credit score to Very Good? With the New Year finally here, it’s the perfect time to set goals and improve your credit score. With a few simple changes to your spending habits and payments, you can be well on your way to a better credit score in a couple of months! Here are some resolutions to help raise your credit score.

Pay Bills on Time
You probably already know late payments can hurt your credit score. And while carrying a credit card balance comes with its own financial risks, it’s important to know that most credit card accounts will only report a late payment to a credit bureau if you fail to make the minimum payment more than 30 days from the due date. So, if you’re able to pay your bills in full every month, keep doing so. But if you’re in a jam and can’t pay the full amount by the due date, just make sure to pay as much as you can and, at the least, the minimum.

Keep Your Credit Utilization Low
When your credit utilization is low, lenders will see you as less of a risk and your credit score will remain a lot higher. Credit Utilization is the amount of credit line you have versus the amount used. The lower the number, the better! To raise your credit score, keep credit utilization below 30%, but it’s a good idea to aim for 10% or less whenever possible. It’s okay to put most purchases on a primary card to maximize rewards, but make sure you aren’t damaging your credit score in the process by approaching your limits.

Choose the Right Card For You
There are a lot of credit card options out there and choosing the right card for you is just as important as paying off your card on time! Maybe you are paying a yearly fee that you don’t need to or perhaps you’d rather have a card that pays for travel as opposed to a percentage of cashback. Before you open a new card, make sure you look into all the benefits it has to offer. You can even use multiple cards. For example, one card might give better cashback on gas and one card might offer better travel points.  It’s okay to use both as long as you are diligent about paying them off!

Use Your Credit Card for Points
One of the biggest benefits of a credit card is the cashback and points that you receive.  Aim to use your credit card as a debit card and only put on it what you can afford. If you only use your credit card on what you can afford and then pay it off in full each month this will not only help you earn the maximum amount of points, but also help raise your credit score and help lenders see you as low risk!

Stick to a Budget
If you are working to raise your credit score this year, have your New Years’ resolution be to actually stick to a budget! A reasonable budget is key to prevent overspending that can harm your credit score. A good starting point is to lay out a long-term budget that covers all monthly expenses along with a few contingencies for unplanned bills. It’s always important to have money in savings for emergencies like car breakdowns, house repairs, and medical expenses.

Also, avoid opening new credit accounts just to get rewards.  If you have a larger credit limit, you’re likely to overspend and carry a balance – wiping out your rewards with interest charges.

Watch Your Credit Score
When you are trying to raise your credit score, it’s also important to monitor where your credit is currently sitting. There are a lot of great apps like Mint and Experian that not only show you your current Credit and FICO score but also have great built-in budget tools to keep you on track.

Whether you are trying to raise your credit score, or gain the maximum amount of credit card benefits, focusing on budgeting and paying off your cards will help! This year, make it a resolution to say goodbye to credit card debt and hello to a better credit score!

What is a reverse mortgage?

A reverse mortgage is a loan based on the current paid-up value or equity in your home. Instead of making a monthly mortgage payment, your lender can use your equity to pay you a set monthly amount, provide a credit line for you to draw upon as needs arise, or pay out a lump sum to you. While gaining access to this money sounds great, it’s essential to understand how a reverse mortgage works to avoid any pitfalls.

 

How does a reverse mortgage work?

When you have a regular mortgage, you pay the lender every month so you can eventually own your home outright. With a reverse mortgage, you get a loan in which the lender pays you. Reverse mortgages use part of the equity in your home and convert it into payments to you. You do not need to pay back this loan until you move, sell the home, or pass away. When you (or your heirs) sell the home, the reverse mortgage loan balance is deducted from the proceeds of the sale. Any balance remaining from sale proceeds reverts to you or your heirs.

 

What can you pay for with a reverse mortgage? 

Here is a shortlist of expenses you can pay for with funds from a reverse mortgage:

  • Medical debt
  • Living expenses
  • Debt consolidation
  • Home improvements
  • College tuition
  • Another home purchase
  • Or, you can use it as supplemental income

 

There are no stated constraints for how you use the money. But that doesn’t mean you should run right out and get one. Be sure to read the pros and cons to understand if this financial tool makes sense for your situation.

 

How do I qualify for a reverse mortgage?

Prepare to shop around for the right type of reverse mortgage to suit your situation. If you meet all of these qualifications, a reverse mortgage might meet your needs:

  • The primary loan holder must be age 62 or older – your spouse may be younger.
  • You must own your home outright or have just one mortgage which you are the borrower.
  • You’ll be required to pay off the existing mortgage using the proceeds from your reverse mortgage.
  • The home must be your primary residence.
  • You must be current on all property taxes, homeowners’ insurance, and other mandatory legal obligations (like HOA dues).
  • You must attend a consumer information class led by a HUD-approved counselor.
  • Your home must be maintained and in good condition.
  • The home must be a single-family home, condo, townhouse, manufactured home built after June 1976, or a multi-unit property with up to four units.

 

There are 3 reverse mortgage types

  1. Single-purpose reverse mortgages: These are offered by some state and local government agencies and nonprofits. For a single-purpose reverse mortgage, the lender specifies how loan proceeds must be spent. For example, you may only be able to use the funds for property taxes or home repairs. This is the least expensive type of reverse mortgage, and low and moderate-income homeowners can often qualify.
  2. Home Equity Conversion Mortgages (HECMs): HECMs are reverse mortgages backed by the Department of Housing and Urban Development (HUD). You can use proceeds from a HECM for any purpose. This type of loan will be more expensive than a single-purpose reverse mortgage or traditional home loan, including high closing costs. If you plan to stay in your home for a long time, the upfront costs are less of an issue.
  3. Proprietary reverse mortgages: These loans are offered by private lenders. You may be able to get a larger loan from a private lender if you own a high-value home over $500,000. These loans are more expensive than single-use loans and similar to HECMs.

 

How much money can you get from a reverse mortgage?

The amount of money you can access from a reverse mortgage will vary with the amount of equity you have in your home, your age, the home’s current market value, current interest rates, and the specific type of reverse mortgage. If you have another loan, lien, or outstanding balance on your home equity line of credit, you will be required to pay the outstanding balances first with any funds you received from a reverse mortgage. The obligation includes any property tax liens, or contractor, or other private liens.

 

How much does a reverse mortgage cost?

The costs and terms for a single-purpose reverse mortgage and a proprietary reverse mortgage can vary. You’ll want to shop around with different agencies and mortgage lenders to find the most favorable terms. Costs for HECM loans are well-documented since the government backs such loans. However, you will not need to pay loan costs out of pocket because the costs can be covered by loan proceeds, which will reduce the net loan amount available for expenses.

 

HECM costs include: 

  • Mortgage Insurance Premium (MIP): This mortgage insurance guarantees that you will receive expected loan advances. You can finance the MIP as part of your loan. Initially, you will be charged 2% of the loan amount for MIP at closing. This is followed by an annual MIP equal to 0.5% of the mortgage balance over the loan’s life.
  • Third-party Charges: Third-party costs include an appraisal, title search and insurance, surveys, inspections, recording fees, mortgage taxes, credit checks, and other fees. These costs are paid at closing.
  • Origination Fee: Like any mortgage, the lender gets paid to process your loan. A lender can charge the greater of 2% of the first $200,000 of your home’s value + 1% of the amount over $200,000 or $2,500. All origination fees are capped at $6,000.
  • Servicing Fee: Service fees over the term of the loan cover services that include sending the account statements to you, paying property taxes and insurance on your behalf, and disbursing loan proceeds. If the loan has an annual adjusted interest rate or a fixed interest rate, the service fee caps $30 per month. If your interest rate adjusts monthly, the monthly service fee caps at $35.

 

At loan closing, the lender deducts the first servicing fee from your available funds and then adds each monthly servicing fee to your loan balance. Alternatively, lenders may include the servicing fee in the mortgage interest rate by charging a higher rate.

 

Reverse mortgage pros and cons

Pros: 

  • A reverse mortgage can give you financial options and additional income during retirement.
  • If the primary loan holder passes away, the spouse can stay in the house and continue to receive payments from the loan.
  • You don’t have to make monthly mortgage payments.
  • Depending on the type of reverse mortgage, your funds can be used for any expense.
  • It can be used as a way to stop or prevent foreclosure and loss of the home.

Cons:

  • You will owe more over time due to interest on the loan.
  • You could lose your home if you don’t maintain payments for property taxes and insurance.
  • You reduce the equity in your home because you are, in effect, lending it to yourself.
  • The upfront cost of a reverse mortgage can be thousands of dollars.
  • Your heirs may not be able to keep the home if they can’t afford to pay off the loan.

Is a reverse mortgage a good idea? 

While a reverse mortgage involves certain complications, it can be an excellent way to supplement your income during retirement, pay for medical expenses, or home improvements that allow you to age in place. As with any loan, it makes good sense to shop around for the best terms and fees. Guidance from a HECM counselor can help you make the best choice.

Mortgage Misunderstandings That Can Cost You

The spending season is upon us. But that doesn’t mean you should be spending in excess everywhere you go. Just like you may be waiting for the best deals on those perfect holiday gifts, you also should be aiming for the best deal if you’re shopping for a home mortgage.

Unfortunately, just like the flurry of holiday sales can have you confused about what price is best, a few mortgage misunderstandings could confuse you also. Today, we’re debunking five common mortgage misunderstandings that could be costing you more money.

1. “I don’t need loan pre-approval to find the right home.”
Beginning to look for a home before you know what you can afford actually can cost you a lot more than just money. It could cost you the home of your dreams. In today’s competitive market, buyers who take the time to gain loan pre-approval before they begin searching for a home are seen as more credible than those buyers who just start looking. So, if you fail to gain mortgage pre-approval and happen to enter into a bidding war with a buyer who has already secured that lender “OK,” you may lose out on a home that seems to be just perfect for you.

2. “As long as I’m approved, my credit score doesn’t matter.”
When you go to buy a home, of course, mortgage approval is your main concern. So, if you know you have a credit score that is good enough to get your mortgage approved, you may not be worried about trying to boost it just a bit higher. But, in fact, you should! A higher credit score often means a lower interest rate, which means lower payments throughout the course of your mortgage. Ultimately, that means you pay less for your home. Your credit score matters – a lot!

3. “Once I’m approved, I can stop looking for a mortgage.”
Though gaining initial loan pre-approval is an immensely satisfying feeling, it does not mean that you can stop shopping around. If you do, you could miss out on the best rate. Instead, you can take that initial pre-approval and continue shopping for a better rate with peace of mind, knowing that your mortgage can only get better!

4. “My home only costs as much as my mortgage payment.”
Once you gain loan pre-approval, you may begin to try to determine what your monthly mortgage payments will be. But don’t be fooled into thinking that estimated payment will be the only monthly expense associated with your home. You need to include property taxes, insurance, and possible homeowner association fees as well. When you add in those necessary extras, you need to make sure you’re not pricing yourself out of your available budget.

5. “I don’t need to put 20% down on my home.”
Frankly, you’re right. You don’t. But this mortgage misunderstanding certainly can cost you. If you choose a conventional loan that is lenient when it comes to your down payment, you’ll probably be paying a little extra in other places. It is likely you’ll need to pay for private mortgage insurance, or PMI. You’ll also likely face a higher interest rate than a buyer who is willing or able to put more money down. If you can afford to put the entire 20% down on your new home, save somewhere else by making that payment!

Tips For Online Home Searches

Today’s home searches do not begin by simply driving by a “for sale” sign and stopping in to view a home. In many cases, buyers begin searching for their next properties from the comforts of their current homes.

In fact, online home searches have become such a reality for today’s home buyers that listing photos have become an integral part of curb appeal. If you’re planning to start your new home search online, how can you be sure you’re finding a home that will match your needs?

Here are five tips to help you get your online home search started:

1. Know your needs and wants list.
One major difference between searching for homes online and scouring local neighborhoods for available homes is the sheer number of homes available. If you don’t have a clear idea of the features you want to find in a home, you might spend a lot of time sorting through available inventory online to find even a couple homes that meet your desired criteria. Spend some time before you begin your search and determine the home features that are most important to you. Focus your online efforts on finding homes that meet all or most of those criteria.

2. Use available tools to narrow your home search.
Once you have a good grasp of the home features you’re looking for, allow online search capabilities to assist you! Use search filters to eliminate homes that are not in your price range, or those that do not have the features you’re looking for. Want a single-family ranch with at least three bedrooms, a finished basement, and a little yard space? Use search filters to find homes that might meet all or most of those wants.

3. Be sure to do neighborhood research.
You can learn a lot about a home through an online search. Once you find a home or homes that might be right for you, be sure to take time to learn about their neighborhoods too. Check out what kinds of restaurants, entertainment options, and amenities are nearby. Learn about the schools, commutes and crime rates too. Even if a home seems to have everything you’re looking for, it’s location might not be right for you and your family. Research any neighborhoods you might not be familiar with when you’re searching online.

4. Don’t believe everything you see.
A picture is worth 1,000 words, right? When it comes to an online home search, buyers might need to make sure those 1,000 words are accurate. Professional listing photos can paint an incredible picture of a home. And kudos to all sellers who represent their homes with awesome listing photos. But, buyers beware, seeing really is believing when it comes to a home. Let online photos draw you into a home, but take the next step and schedule a showing before becoming too captivated. Make sure the real thing lives up to the online representation during your home search.

5. Hire a professional to guide your search.
An online search is a great place to start looking for a new home. Once you find a home or a few homes that you’re interested in, allow a professional real estate agent to schedule showings for you. Once you share the homes you’re interested in with your agent, he or she might be able to point you to other homes that meet your desired criteria too. Of course, your agent will also represent your needs when it comes to negotiating a price, working with inspectors and other service professionals, and helping you get all the way to closing.

Buying a Home with Friends: Conversations to Have Beforehand

Some of them have been around since you were a child. Some you may have found in college. Some may even be in your neighborhood or at work. No, we’re not talking about your sweater collection—though sweater season is in full swing. We’re talking about your friends. You know, the people who you rely on, confide in and maybe even vacation withY

You probably have no reservations about sharing secrets with your friends, but have you ever considered sharing a mortgage with them? It is not uncommon for friends to join forces to take on a second mortgage for a vacation home or investment property. It seems like a no-brainer, right? You’ve already vowed to be friends forever. A 15-or-30-year mortgage should be no problem

However, even the most maintenance-free friendships can face some tough times when it comes to sharing a home purchase. That is unless both parties are prepared for what co-ownership may bring. If you’re considering buying a second home with a friend, here are three major conversations you must have first.

How will you split the costs?
Unless you and a friend are planning to pay for a second home with cash, you’ll both be responsible for making monthly mortgage payments on the property. And, no, splitting a mortgage is not like splitting the bill for a night out. Having a conversation about fees like the down payment, closing costs and monthly mortgage payment is crucial before you even begin to consider looking at homes together.
While you’re chatting, don’t forget to include other monthly homeownership fees like utilities, regular maintenance, homeowner association dues or other services. It is also important to bring up potential scenarios like plumbing issues, roof leaks or other home damage. How will you split all of the certain costs that come along with owning a home?

What will happen if someone is unable to hold up their end of the deal or wants to get out of the mortgage?
Any conversation about the potential costs of owning a second home must be accompanied by a conversation about what will happen in the event that one or both parties is unable to make their payments or wants to leave the agreement altogether. Though this conversation may not be as fun as reminiscing about your old college antics, it is a must-have talk before you can confidently enter a home purchase with a friend.
With all the excitement of potentially owning a vacation home or investment property, who wants to get mired down by thinking about the negative aspects of sharing a mortgage? Hard times happen for everyone. Before they happen in your blissful home-buying experience, have a plan. Will one person take over the entire mortgage payment? Will you be forced to sell the property? Make sure you consider the “what ifs” before you and your friend are forced into an uncomfortable situation.

How will you use your new property?
Once you get the tougher financial conversations out of the way, you can begin to consider the possibilities of what it will be like to own a second home with your friend. If you’re planning to purchase the home as a vacation property, you’ll need to decide if you’re going to split time there, vacation together or rent it out on a seasonal basis.
If you and a friend are looking to buy a second home as an investment property (or if you’re planning to rent out that vacation home), you’ll need to draft a rental agreement, plus decide how you’ll deal with tenants and their issues. You’ll also need to map out a plan for marketing and maintaining your property so that it continues to be a worthwhile investment.

Are you prepared to have a few tough financial conversations with a friend? Are you also prepared to face a few certain disagreements along the way to happy homeownership? If you confidently answered “yes,” you—and your friendship—may be ready to stand the test of owning a second home together!