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Renting rooms becomes viable option for homeowners

December 05, 2009|By ARNOLD PLATOU

After his employer cut his hours, homeowner Brian Jacobs was losing about $1,000 a month in income and could see only one solution: bankruptcy.

But when he called his mortgage lender to say he was giving up, a female clerk spoke the words that rescued his financial future.

"The lady said, 'Have you considered roommates?'" Jacobs, 48, recalled last week.

The idea saved Jacobs from bankruptcy and now, six months later, with three roommates paying rent, is keeping him in his four-bedroom house -- paying his mortgage in full and on time as the recession wears on.

James Francis, 45, was in a similar crisis this past spring when, a month after buying his first house, the weakening economy forced his jewelry store boss to cut Francis' hours.

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Now Francis, to whom the idea of renting out part of his four-bedroom upscale house was "just common sense," is getting by, too.

"That was the easiest thing to bring in some extra money and, you know, not have to go out and work for another job," said Francis, who took in his first roommate just a week ago.

"It worked out," he said. "Made ends meet."

Fewer young adults live solo

Having recessionary roommates is an idea whose time has come, unfortunately, as the economy shows few signs of easing up on those who are unemployed, losing work hours, and/or unable to refinance their mortgages as home values slip.

Indeed, data from national surveys suggests that fewer people are living by themselves and more adult children are moving back in with their parents -- and the reasons are tied to the recession.

A recent survey by the Pew Research Center, a nonpartisan public opinion research organization, found that 13 percent of parents with grown children say one of their adult sons or daughters has moved back home in the past year.

According to the center's Web site, Census Bureau data confirm that proportionately fewer young adults are living solo now than before the recession.

Overall, it said, the proportion of adults ages 18 to 29 who live alone declined from 7.9 percent in 2007 to 7.3 percent this year. It said similar drops in the proportion of young people who live by themselves occurred during or immediately after the recessions of 1982 and 2001.

The Pew center said the current decline "has been particularly steep among young women; the proportion who live by themselves fell by a full percentage point to 6.1 percent. Among young men, the share living on their own fell 0.2 percentage points to 8.4 percent, a statistically insignificant change."

In Washington County, such changes are hard to gauge.

As the number of homes "for sale" has soared and sales have lagged, many have put up "for rent" signs also in an effort to get some kind of revenue out of their empty houses.

But area Realtors said they hadn't heard of anyone staying in their house and taking in roommates.

"I don't have anybody who takes in renters, but I have a lot of people who moved out of their place, trying to rent their place because they can't make the mortgage payments," Realtor Cynthia Moler said.

But Moler and Joan McLernon, president of the Pen-Mar Regional Association of Realtors, weren't surprised to learn there are homeowners who are taking in roommates. "I think that people are going to try to get creative, " McLernon said.

McLeron said the real estate market is looking better, however. She noted home sales actually rose here in October, for the first time in several months. Figures for November aren't out yet, but she thinks they will show the upswing is continuing.

No overtime

This past summer, Jacobs was alarmed when the metal fabricating shop where he said he has worked for more than four years cut his hours.

Instead of working 10 hours a day, five days a week, building aluminum boxes that are shipped all over the country to be mounted on cars and trucks, Jacobs said, he was suddenly working just four days a week -- 40 hours, but with none of the overtime pay that was figured into his mortgage payment.

The pay had been so good that in April 2007, shortly after seeing the four-bedroom, two story-plus-attic, half-double for sale at 826 Pope Ave., Jacobs bought it.

Having been raised in Hagerstown's Noland Village and living in rented property since, Jacobs was buying a house for the first time. Built in 1913, the house had been remodeled and given new electric service, new plumbing and a new furnace.

Jacobs paid $146,000 for the house but was very cautious in structuring the mortgage.

People he knew "bought a house and went with an adjustable rate, and they didn't understand it," he said. "And, just about a year ago, they lost the house because their payment more than doubled."

So Jacobs "demanded fixed rate and no prepayment penalty, right from the beginning." He got a fixed interest rate of 6.5 percent on a 30-year mortgage, requiring him to pay $1,200 a month.

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