House hacking is the art of making a primary residence out of an investment property, having rental income cover the homeowner’s costs. Millennial Money calls it a way to “use other people’s money (tenant rent) to pay down the mortgage and live for free.”
Of course, this is not a new idea in real estate investing,
but millennial buyers may have rebranded it as a solution to a problem
afflicting their generation. Younger home shoppers can quickly hit road blocks
buying a home. Reasonably priced homes are in low supply and high demand. This
imbalance has continually pressed home prices up, making it hard for first-time
buyers to enter the market.
Hopeful buyers may read websites that tout house hacking as
the best pathway to financial success. The housing market is on a roll; why not
tap into the market for income?
Some hold investment properties only as long as they need
to. Other home hackers repeatedly buy, building equity as they go and saving rental
income for future down payments. As experienced investors can qualify for
larger loans, their buying becomes more lucrative over time.
The title to a house can be conveyed from one owner to the
next by through a transfer
of a deed. Different kinds of deeds provide different levels of risk
for the person acquiring the title. Among the various types of deeds, one with a
moderate level of risk is the grant deed.
Quitclaims are sometimes used to transfer property interests
from one family member to another, or between divorcing
spouses. Parents might wonder if they should use quitclaims to pass
property to children to avoid the probate process. It’s easy enough to do. The homeowner
signs the document with a notary, takes it to the county recorder of deeds, and
has it recorded. Simple. No wonder adding
someone to a deed or relinquishing rights through a quitclaim is
often (mistakenly) called a “quick claim” deed. But what does the Internal
Revenue Service think?
A new administration might bring real estate tax changes. No
matter what happens in this area, it’s worthwhile to know what’s going on that
might affect your plans to bequeath your real estate. So here we take a look at
taxes on capital gains, and then at one form of tax relief that’s now a complete
question mark: the stepped-up cost basis of real property for your heirs.
Private mortgage insurance, commonly known as PMI, is a specific
type of insurance you might have to pay when you take out a mortgage. As a
rule, a mortgage lender tacks on the policy, which comes from a private
insurance firm, if a buyer doesn’t put at least 20% down on the purchase price.
PMI also comes into play in refinancing. A homeowner whose equity is less than
20% of the home’s market value will likely be asked to pay for private mortgage
The rationale? When a home buyer has less than 20% of a
home’s appraisal price to submit as a down payment, the loan-to-value (LTV)
ratio is above 80%. Borrowers in this category are considered more likely than
others to default on their mortgages.
So, like other kinds of mortgage
insurance, PMI protects the bank, not the borrower. It’s meant to
reimburse a lending institution if the borrower stops repaying the mortgage.
to your home is a precious document. It proves that you own your
home and that you may borrow money against your home equity. Can internet
hackers take it from you?
Cybercriminals are highly sophisticated. In 2020, they were able to hack into top cybersecurity firms that do business with the U.S. government. Three years earlier, hackers got into a credit reporting company’s database. The Equifax breach exposed personal details of about 143 million people.
Assume that your social security number, birth date and other
key identification numbers may have been exposed at some time. And if you’ve had
the deed to your home recorded, your signature is in a database, too. But while
we all could be vulnerable, knowledge is power. Here’s what to know about how title
snatchers work, and how to safeguard your identity and your homeownership.
About three quarters of the U.S. population — some 225 million adults — make regular use of social media. Real estate companies and agents, as well as sellers and buyers, are contributing to this energy, and exploring the opportunities it brings. Here, we take a look at some major ways in which the real estate world is interacting through Facebook, Instagram, and other popular social channels.
People have a chance to buy title insurance when they buy homes.
Homeowners might give these policies little thought until they need them. And
yet, lenders focus pointedly on the matter. Get a mortgage, and you get a
lender’s title insurance policy. Some people assume the lender’s coverage is
enough. As we’ll explain here, it’s probably not.
But there’s a further question. If an owner’s title policy
is so important to add, what level of coverage should the buyer consider? Is
extended coverage better than the standard policy?
Heirlooms and yard tools aren’t the only things you can get
at estate sales. Sometimes, the houses themselves are for sale. And sometimes
they’re great choices.
The local probate court oversees estate sales when homeowners
die intestate (without leaving a will). And where there is a will, the executor
may sell the late homeowner’s property to pay off the mortgage.
You might come across an estate sale in the listings. Or you
could contact the county, and go through the open probate cases. But perhaps the
easiest way to find good estate sales is to hire a local real estate pro. Some
specialize in estate sale houses. Your agent will assist with the negotiation
of a sales contract, the offer, and the closing — subject to court approval.