Posted on April 9, 2007 by Jason
South Florida Sun-Sentinel, April 8th, 2007
South Florida is one of the hottest
markets in the nation for reverse mortgages. And yet, these types of loans –
which allow people age 62 and older to get payouts on the equity in their homes
– are more expensive in South Florida than many areas of the
nation.
That’s the situation in a nutshell. And it’s easy to see how it
came about. People are pressed for money, particularly post-hurricane needs for
repairs and condo assessments. Reverse mortgages look attractive, because they
don’t require the borrower to pay the loan back unless they sell or move out of
their home.
Add in low interest rates and some huge marketing efforts
with such stars as Robert Wagner and James Garner as pitchmen. Borrowers are
lining up. The number of loans, nationwide, doubled last year. In South Florida,
the number of reverse mortgages grew faster than even that.
But some
caution is in order. These aren’t simple, grab ‘em-and-go loans. They have terms
that people trip over, such as who owns the house? (Answer: Not the lender. The
original owner). And reverse mortgages aren’t available to everyone,
particularly those who live in some of South Florida’s older condo
buildings.
Read more of this article Learn more about Reverse Mortgages
Posted on April 8, 2007 by Jason
St. Louis Post-Dispatch, April 8th, 2007
If you’ve been paying attention in the last quarter century, you’ve
noticed a gradual shift in responsibility for who’s going to pay for
your retirement. The message becomes more clear with each new piece of
tax legislation and every time a major employer freezes its pension
plan. More and more, it seems, we are on our own.
The largest generation America has ever birthed is reaching retirement
age. By their very numbers, 78 million baby boomers are forcing society
to rethink how retirement will be financed.
Yet as our responsibility for paying for retirement increases, so does
the opportunity to make those years even more golden. We have powerful
tools at our disposal, but it appears we’ve yet to learn how to utilize
them fully.
According to the Employee Benefit Research Institute, individual
retirement accounts held $3.67 trillion in assets in 2005. That’s more
than is held in private-sector pension plans ($2.15 trillion) and
defined-contribution plans such as 401(k)s ($2.97 trillion). Still,
only about one out of every 10 eligible taxpayers is making regular IRA
contributions.
Read more of this article.
Posted on April 8, 2007 by Jason
The Washington Post, April 8th, 2007
In areas like metropolitan Washington, where real estate values have soared
dramatically during the past decade, buying that house 20 or 30 years ago often
seems like the smartest investment you ever made.
But was it? And — if we view the roof over our heads as an investment, what
role should it play in planning for retirement?
Coming off the recent housing boom, it’s hard to think of investing in real
estate as anything but a slam dunk. Even if you lived through a dip in prices in
the early 1990s, and are watching prices settle now, the trend seems almost
unrelentingly up.
But a recent study by Fidelity Research Institute offers a longer-term dose
of reality, noting that inflation-adjusted returns on a dollar invested in
residential real estate from 1963 to 2005 have been only slightly better than
returns on low-risk Treasury securities over the same period. Stocks performed
much better as an investment, averaging a return of 5.95 percent versus 1.35
percent for residential real estate. Even in the Northeast and the West Coast,
where the growth in real estate values has been the highest, stocks and bonds
beat real estate.
If that seems surprising to you it may be because we often use selective
memory when we think about our homes as an investment. I’ve often bragged about
buying my house — now valued by the city at $730,740 — for $42,000 in 1972.
That makes me feel pretty smug, until I think about all the additional money
I’ve invested. There was the nearly $100,000 loan in 1978 for renovations; the
assets I gave up in return for my ex-husband’s share of the real estate, and
many thousands of dollars spent over the years for insulation, appliances,
windows, doors and other upkeep. On top of that, there’s the interest I’ve paid
on the mortgage and home equity line of credit. After several refinancings, my
current mortgage is for more than five times the original price of the house,
albeit at a low-interest rate.
Read more of this article.
