Archive for the 'Mortgages' Category

Comparing Home Equity Loans to Reverse Mortgages

Posted on May 20, 2013 by danni

Home equity loans all but disappeared a few years ago after the financial crisis. However, it appears that home equity lending may be on the rise – with banks approving more of these types of loans.

If you are considering tapping your home equity to fund retirement expenses, then comparing a home equity loan to a Reverse Mortgage may be a good exercise for you.

  • Home Equity Loans: A home equity loan is a loan against the equity you have built into your home and you must pay it back overtime, starting immediately. As such, to qualify you must be able to prove that you are able to make the loan payments.
  • Reverse Mortgages: A Reverse Mortgage is a kind of loan that is not repaid until you leave your home and is often repaid with the sale of the home.

Both loans are great ways for seniors to gain access to their home equity. The costs and interest may be lower for home equity loans, but the available money is often higher and eligibility is easier for Reverse Mortgages.

Estimate Your Reverse Mortgage Loan Amount Now.

Compare Costs of Reverse Mortgages to Home Equity Loans by Talking with a Lender Now.

Learn More About Using a Home Equity Loan.

Don’t Dismiss Reverse Mortgages!

Posted on August 14, 2012 by Rohith

The Consumer Financial Protection Bureau (CFPB) recently released a purely negative report that degraded the use of reverse mortgages. However, there are actually many benefits of a reverse mortgage.

First off, in order to qualify for a reverse mortgage, you must own and reside in your home and be a senior 62 years of age or older. (In most cases second homes, apartment buildings and homes less than a year old are not eligible for a reverse mortgage.)

Reverse mortgages must be considered with all other options like selling the home, downsizing, or moving to an assisted living facility. These types of loans are long term decisions because  there are insurance fees and mortgage interest that gets added to the loan balance every month. So someone that plans on selling in 5 years will have less equity.

For anyone who chooses to participate in a reverse mortgage program, they can take their money in regular payments for a fixed term, a line of credit, or select some combination of these choices by receiving the entire amount in a lump sum.

These special types of loans might be good options for homeowners that still have a mortgage, credit card debt, or need to make necessary repairs to their home. And with any financial decision, it is important to talk with trusted financial advisors to help make your decision.

The bottom line is this: reverse mortgages may not work for everyone but dismissing the service completely might prove to doom many households to poverty in old age.

Visit newretirement.com for a number of free services:

 

 



Retirement Realities in a Stumbling Economy

Posted on August 10, 2012 by Rohith

With a downward spiraling economy, there are a few realities that you need to keep in mind and take into consideration in order to land a safe and successful retirement.

  • The first strategy is working in retirement. According to experts, 70 is the new 65, in retirement terms at least. Working in retirement will keep paychecks coming and hopefully provide you with  benefits such as health insurance and retirement account contributions. Finally, continuing to work may also provide you the ability to delay claiming your Social Security benefits – for each year up to 70, your increase by about 8%.
  • Another strategy that can be taken to plan for a successful retirement is the Social Security claiming strategy. As mentioned above, delaying your social security benefits will result in an 8% increase each year. It may also be possible for one spouse to begin drawing half of the other spouse’s Social Security benefits while still delaying his or her own claiming date (and thus enjoying those 8 percent annual benefit increases).
  • Taking a reverse mortgage could be they key to plan for a successful retirement. A Reverse Mortgage, or Reverse Home Mortgage, is a great financial product for seniors to use in their retirement plan.When looking for ways to get cash from their home, most people consider selling their house or borrowing against their home equity and making monthly loan repayments on a home equity loan. To be eligible for most Reverse Mortgages, you must own and reside in your home and be a senior 62 years of age or older. (In most cases second homes, apartment buildings and homes less than a year old are not eligible for a reverse mortgage.)
  • Spending retirement assets is another consideration to take into account when planning for retirement. The standard advice given by a financial adviser is not to spend more than 4% of your assets a year. However, in reality, whatever number makes sense to you needs to be accompanied by a strategy to actually manage your retirement assets to produce whatever level of payouts you’ve selected.

Resources:

Continue here to find a prescreened Reverse Mortgage lender

 

Use our free Newretirement Retirement Calculator to plan for a safe retirement

—–> https://www.newretirement.com/retirement-calculator/default.aspx

Use our free Reverse Mortgage Calculator to see how much you qualify for

—–> https://www.newretirement.com/Services/Reverse_Mortgage_Calculator.aspx

Use our free Social Security Calculator to find out when is the best time to take your benefits

—– >https://www.newretirement.com/Services/Social_Security_Start_Age_Calculator.aspx


Click here to be matched up with a financial advisor to help you plan for a safe retirement

 

 

Boom Towns, “UN-Retirement” Communities and Other Housing Trends of Interest to Older Americans

Posted on July 25, 2012 by Rohith

Housing will always be a major concern for retirees and all households – it is a major expense and can be a major source of wealth.  Here are a few headlines that may be of interest to you:

  • Interest Rates: Experts predict that struggling worldwide and domestic economies will keep interest rates low.
  • “UN-Retirement” Communities: Builders of planned “retirement communities” – also known as “active adult communities” – are shifting locations.  You can expect to see more of these facilities near big employment centers — outside of traditional Sun Belt locales.  This shift represents the trend toward of older Americans working longer.
  • Home Prices: One of the most respected voices on housing – Robert Shiller of Case-Shiller — predicts that we are half way through a lost decade of low or no growth in housing prices.  However, a recent Reuters poll showed that most economists think the U.S. housing market has now bottomed and prices should rise nearly 2 percent in 2013.
  • Boom Towns: Forbes magazine recently published a list of the next big boom towns in the United States.  The magazine predicts that the following communities will show continued vitality in the future.  What better for a “new retirement!?”
    • Austin, TX  (San Antonio and Houston also scored well)
    • Raleigh, N.C.
    • Nashville, Tenn
    • Multigenerational Households: In 2010 about 17 percent of the population was living in multigenerational households – a big increase over previous years.  The biggest reason for this trend is the ability to save money.  The Pew Research Center reported that the poverty rate among those living in multi-generational homes was 11.5 percent compared to 14.6 percent for those who lived alone or with their spouse or partner.
    • Reverse Mortgages: Interest in Reverse Mortgages continues to be strong.

RESOURCES from NewRetirement:

 

Comparing Refinancing with Reverse Mortgages — Weighing Your Options

Posted on July 23, 2012 by Rohith

If you are interested in tapping your home equity for retirement expenses, you may have a few options: refinance, secure a Reverse Mortgage, or downsize.

The solution that is best for you will vary greatly on your needs, time frame, other resources and goals.

  • Refinancing: Refinancing your mortgage can lower your interest rate and lower monthly payments and sometimes can enable you to also some money through a home equity line of credit, but it can be difficult to qualify — especially if you are retired without an income stream
  • Securing a Reverse Mortgage: Typically a Reverse Mortgage will cost more than refinancing but will enable you to access quite a bit more money and completely eliminate your monthly mortgage payment.
  • Downsizing: Downsizing is another option that many retirees find appealing. Downsizing enables you to cash in some equity on your home and/or lower mortgage payments. It also enables you to potentially relocate into a home that may better suit your retirement lifestyle.

The reality is that all options have significant pros and cons.  As such it can be a very good idea for you to actively explore all opportunities with lenders in order to get a better understanding of what each opportunity will really mean to you and your retirement – both now and in the future.

RESOURCES from NewRetirement:

 

Where to Retire Now?

Posted on July 11, 2012 by Rohith

Active. Feeling young. Adventurous.

These are words that a new CNN Money article gave to today’s retiring Americans.  The article suggests that today’s retirees are looking to live in locations that offer outdoor activity, great restaurants, educational opportunities and a strong job market for continued work!

Here are some of the editors’ picks for the best places to retire now:

  • Santa Fe, New Mexico: 325 days of sunshine a year and a cultural hub with the median home price at $194,000.
  • Napa, California: Though home prices are still relatively expensive with the median at $363,100, you will be living the California wine country dream.
  • Charleston, South Carolina: Retirees can enroll in most classes at the College of Charleston tuition-free. Median home prices are $199,000.
  • Bend, Oregon: With a median home price of $134,100, you could have plenty of money for your ourdoor gear.
  • New York, New York: Housing might be expensive at $423,000, but you don’t need a car and almost everything is right outside your door.

 

Reverse Mortgages may be Riskier for Younger Retirees

Posted on May 7, 2012 by Rohith

A reverse mortgage taken too early could be a mistake, a New York Times article published last month points out. Homeowners who wait until age 72, as supposed to the minimum age of 62; to take out a reverse mortgage will get considerably more money. Gathering input from consumer advocates, the Times addresses what it finds as potential downsides for people taking reverse mortgages at a younger age and concludes that homeowners at or near retirement should work with a financial planner or a lawyer specializing in estates to make sure they have a clear plan for the next 20 years of living expenses

A reverse mortgage allows people age 62 and older to tap the equity they have in their home, pay no money to the bank as long as they stay in the home, and potentially have $1,000, $2,000, or more income each month. This may seem like a lifesaver, but like all other seemingly too-good to be true deals, it does run some risks.

According to Suze Orman, the biggest risk with a reverse mortgage is that while it can indeed be a viable way to generate income, it is very important to understand that after you take out a reverse mortgage you will still be responsible for paying the property tax, the insurance premium, and all the maintenance costs for your home. If you can’t continue to cover those costs you will risk losing your home to foreclosure.

Second, there are concerns over the expense of and use of the reverse mortgage proceeds. Some borrowers withdraw the maximum amount of equity (Which is a percentage of the appraised value based on age) because they think they should, rather than leaving it in a line of credit account to accumulate interest. Many borrowers also make the mistake of treating reverse mortgage proceeds as a windfall – when it is really a loan – and spend it on frivolous or lifestyle purchases, rather than on necessary living expenses.

Finally, borrowers also fail to realize that a reverse mortgage can affect their eligibility for certain government benefits, such as social security and Medicaid. According to Consumers Union, a ‘lump sum’ reverse mortgage payout may immediately put the elder above the asset limit for SSI/Medicaid and disqualify the senior for these important benefits, unless careful legal planning is done to avoid this result. Before obtaining a reverse mortgage then, all prospective borrowers should research the impact on the money they expect to receive from government entitlement programs.

Are you on the fence on whether or not you should receive a reverse mortgage? Take 30 seconds to use the Reverse Mortgage Calculator to help finalize your decision.

 

 

 

Medicare chief says health law working

Posted on February 10, 2011 by Jason

Yahoo News, February 10th, 2011

President Barack Obama’s chief of health programs for the elderly and
poor on Thursday said the year-old U.S. healthcare overhaul was
reducing Medicare costs and called a push by congressional Republicans to repeal the law unfortunate.

Medicare and Medicaid services administrator Donald Berwick, appearing
before a congressional panel, rebuffed Republican claims that the law
would raise costs for people enrolled in Medicare Advantage (MA), which
uses private insurance providers such as Humana Inc and UnitedHealth Group Inc, to deliver benefits.

Berwick told the House of Representatives Ways and Means Committee that
the latest data show premiums are down an average 6 percent this year,
while enrollment is up by 6 percent to more that 12 million people.

Separately, Oppenheimer & Co analyst Michael Wiederhorn said he
expects growth in private Medicare plans to continue to swell as more of
the nation’s baby boomer population qualifies for the program, which
covers people age 65 or older.

Such plans “should be an attractive alternative to control costs …
compared to the inefficient Medicare Fee-For-Service,” he wrote in a
research note, adding that cuts to the plans under the health law could
squeeze HMO profits.

Overall, shares of HMOS were up slightly compared to the larger S&P
500 index. Humana shares were down 0.7 percent at $58.14 while UnitedHealth was up nearly 1 percent at $42.46 in afternoon trade on the New York Stock Exchange.

As Berwick testified, Democrats released a report by the Government Accountability Office that said many Medicare Advantage programs spend a high percentage of premiums on administrative costs and profits.

“One out of every three MA enrollees is in a plan that spends less than
85 percent of their projected Medicare payment on medical expenses,
which means more than 15 percent of their projected Medicare payment
goes to overhead and profit,” the report said. The healthcare overhaul
places limits on how much insurers can spend on profits and
administrative costs.

Read more of this article.

Supplemental Medicare Insurance:  The new healthcare reform laws have definitely affected Medicare, but there is still a need at times for additional insurance.  Consider the options available to you at NewRetirement.com

Making Mortgage Lending a Family Affair

Posted on November 10, 2010 by Jason

The New York Times, November 4th, 2010

MATT RADO is in the market for his first home, but the 41-year-old in Santa Ana, Calif., does not plan to get a loan
from a bank. Instead, Mr. Rado, who works in sales for a technology
company, plans to have his retired parents lend him the money.

The idea behind the lending strategy is this: Mr. Rado, who is preapproved for a 30-year fixed mortgage
at about 4.75 percent from a commercial lender, will get at least as
favorable a rate from his parents along with lower closing costs. At the
same time, his parents will get a higher rate of return than is offered
by a traditional savings vehicle like a savings account.

In addition, the mortgage payments will function like the annuitylike investments
that Mr. Rado’s 71-year-old father had been considering. “I just feel
better about the money going to my dad as opposed to going to some
bank,” Mr. Rado said.

With credit tight and interest rates at historic lows, such intrafamily
loans can be a win-win for parents and children. “It’s an absolutely
terrific time to make an intrafamily loan,” said Carol G. Kroch, head of
wealth planning for Wilmington Trust.

Such loans, whether for a home, car or education, are essentially family bonds that could protect money from risky behavior by others.

Rick Kahler, a financial adviser
in Rapid City, S.D., who has experience in the real estate industry and
is the author of four books on financial planning, said such loans
could potentially deliver higher returns than a double-A-rated 10-year
corporate bond, which he said was returning about 4 percent; a triple-A
bond, which he said was delivering around 3 percent; or a certificate of
deposit, which has rates that are even lower. Still, he said, the
intrafamily loans are much riskier than such investments, and so are not
necessarily equivalent to them. With an intrafamily loan, parents are
betting that their children and their children’s significant others will
have the income to repay the loan. And even if the children have
excellent credit scores
now, their status could change drastically — much faster than a
corporation’s — if a job loss or illness were to occur. To help lessen
these risks, financial planners have specific recommendations about who
should make and get such loans.

Read more of this article.

Mortgage applications rise 7 pct. as rates fall

Posted on July 14, 2010 by Jason

Yahoo Finance, July 7th, 2010

Applications for home loans rose last week as consumers
raced to refinance at the lowest rates in decades.

The Mortgage Bankers Associations said Wednesday that
overall applications increased nearly 7 percent from a week earlier.
While they have been increasing in recent weeks, they remain below early
2009 levels.

Applications to refinance home loans
were up 9 percent to the highest level since May 2009. But new
mortgages taken out to purchase homes fell 2 percent.

Those applications have fallen in eight out of the
last nine weeks, after government tax credits
that spurred home sales ended on April 30. Applications were 35 percent
below last year’s levels.

The average rate for a 30-year fixed loan sank to
4.58 percent last week, according to Freddie Mac. That was the lowest
since the mortgage company began keeping records in 1971.

About Reverse Mortgages:  Reverse Mortgages and normal home loans are tied to the same prime index rates.  When one interest rate is low, so is the other.  Accordingly, it is also an excellent moment to look into getting a low-interest fixed-rate Reverse Mortgage.  Learn more at NewRetirement.com

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