3 Reasons Americans Count on Their Homes After Retirement

Retirees who own their homes outright are often at an advantage over their renting—

and retired—counterparts. There are two reasons for this: their housing costs are generally

lower, and they have access to safety-net cash in the form of home equity.

However, all homeownership is not created equal. For example, if you move often, owning

a home outright by age 62 can be challenging.

 

Since the big goal for retirement is to eliminate as many expenses as possible, erasing

a monthly housing payment is optimal. Having a long-term financial plan, including what

homeownership looks like in retirement, is extremely important. Renters who plan on

staying in the same general area for years to come should consider buying.

1. Benefit of eliminating monthly payments:

The twin bridesmaids of finances are income and expenses. When people retire, the money

coming in usually shrinks, which means so should the money going out. A mortgage payment

is one expense soon-to-be retirees should try to get rid of. If you can be mortgage-free by the

time you reach retirement, you'll be in a good position.

Mortgage-free retirees can save hundreds or thousands of dollars each month. Even with

property insurance, and taxes, the cost of owning a home is often less than renting.

Not only can retirees save on their housing costs; they can also make money on their homes.

Retirees who travel can earn money while they're on vacation through sites like Airbnb.

Another option to get extra cash flow is to rent a room. Downsizing can also save you money.

Going from a large family home to a cozy condo or smaller house can reduce utility costs as

well as allow you to cash out some equity in your home to fatten your nest egg. For people

not ready to sell, there are other options that allow you to tap the equity while keeping the house.

2. Benefit of having access to home equity, if needed.

There are several ways homeowners can tap the equity in their home without putting up

a for-sale sign; two of the most common ways are a cash-out refinance and a home

equity line of credit, or HELOC.

Equity-rich homeowners who want to lower their mortgage interest rate might consider

a cash-out refinance.  

A cash-out refinance is almost like selling your house to yourself. The bank would cut you

a check for the equity, which is the difference between what you owe on the house and

the market value. If your home is worth $200,000 and you owe $100,000, then you have

$100,000 of equity in the home.

Banks usually limit the amount you get to 80 percent of the total equity. That means with

$100,000 in equity, the bank might give you $80,000. The amount you qualify for is usually

based on income, credit score and other determining factors.

Now comes the tricky part: When you do a cash-out refinance, you'll get a new mortgage.

If your interest rate is high because of poor credit or market conditions and you think you

have a chance of getting a lower interest rate with a new mortgage, then a cash-out refinance

might be an appealing way to access your equity; however, if your mortgage interest rate

increases with a new mortgage, then you should consider other options, such as a HELOC.

Something else to keep in mind is the fact that a new mortgage usually means going back

to square one if you choose a longer term. If your house is a few years away from being

paid off, restarting the clock is probably not a good financial move.

3. Even with a mortgage, there are  liquidity options.

For people who want to keep their homes and existing mortgages while tapping their

home equity, one alternative is a HELOC.

The benefits of HELOCs are that you only pay on what you use and the interest is tax-deductible

if you use it to repair or upgrade your home. For retirees who want to retrofit their homes to

make life easier, such as installing stair lifts, grab bars and handrails, a HELOC could be a good

way to fund those upgrades and get a tax break. It is important to remember that once you use

that equity, it will likely take years and even decades to rebuild it.

The dual benefits of lowering your living expenses and having access to cash in emergencies

are great reasons to sail into retirement without a home loan springing a leak in your budget.

For more information go to https://homesalesneworleans.gardnerrealtors.com/

MAKE YOUR HOME MOVE-IN READY!

The moment you even begin to think of putting your home up for sale is the time to start thinking like a buyer. Why? Because thinking like a buyer will help you make your home move-in ready for just the right buyer. The less they think about what  they have to change, the shorter the distance will be between the viewing, their offer, and the day you say, “Sold.”

1.      Host a pre-listing party. Invite a few trusted friends over for an inventory. Make some cocktails and go from room to room in your home asking what they would either change if they were to buy your house, or see as a red flag if they were a potential buyer. This can help you create a solid list of potential improvements to discuss with your Realtor before you list.

2.      Consult with a great agent. Now that you have your friends’ opinions, run them by an expert.  See which problems you should address before listing and which fixes won’t be of financial benefit. 

3.      De-clutter. Closets get full. Extra pieces of furniture get crammed into corners. Bookshelves overflow with odds and ends. Help the potential buyers see your actual home and not the stuff in your home by moving out the extras. Try renting a portable storage unit that can be delivered to your home. This way, you can box up extras, and they’ll be ready to be delivered to your next dream home. In the meantime, you’ll be making room for someone else’s dreams.

4.      Clean out the garage. The future owners of your home want to know that their cars can fit into the garage.

5.      Think neutral. It’s hard for potential buyers to see themselves in a home that has you written all over it.  Since your home is soon to not be your home anymore, consider taking any brightly or bold-colored walls back to neutral. A simple beige satin wall paint with a semi-gloss white or off-white pain trim can do wonders for giving potential buyers the “blank canvas” feeling. You want future owners to be dreaming of picking out paint — not how to get rid of not-right-for-them color decisions.

6.      Grout, tile, and natural stone restoration. Have your bathrooms and kitchen counters lost their luster? You might want to look into having them refreshed (and it’s much less expensive than having them redone).  For not a lot of money, you can kick up the shine on your tiling and counters and get that long-neglected grout back to clean.

7.      Make those hardwood floors spiffy. Wash all surfaces with a simple mild, soapy water first (avoid Murphy’s Oil Soap — it leaves a residue). Next, use a hardwood floor polish like Bona or a product like Rejuvenate to bring the beauty back — and all for under $40-$50 for the average sized home. Be sure to use the cleaners recommended by each product to prevent buildup and to keep the shine going through your whole listing. There’s nothing that can kill a deal like your perfect buyer thinking that they have to refinish a few thousand square feet of hardwood. Help them see hope, not hardwood-related dollar signs.

 For more information visit http://findneworleansproperties.com/

Closing Costs: What You Should Expect‏

When it’s time to sign on the dotted line, do you know what costs to expect?

Closing costs are a major part of buying a home. Depending on the cost of the home, they can really add up, too. Typically, a home buyer can expect to pay between 2-5% of the purchase price of a home on closing costs. That’s not an insignificant sum.

What are the closing costs? They are fees related to the purchase of your new home. These are things over and above the amount you’re borrowing for your mortgage and any associated interest charges. In addition to your down payment, there are monies due to your lender and other parties–and it’s important to note that most of these are the responsibility of the buyer (there are some exceptions, like in the case of VA and other such loans).

What You Can Expect To Pay In Closing Costs

·         A fee for running your credit report–this fee is minimal and usually paid at the time the report is run.

·         A loan origination fee, which lenders charge for processing the loan paperwork for you.

·         Attorney’s fees.      

·         Discount points, where applicable, which are fees you pay in exchange for a lower interest rate (be sure to check with your lender).

·         Appraisal fee (charged by your lender).

·         Survey fee, which covers the cost of verifying property lines.

·         Title insurance, which protects the lender (and you!) in case the title isn’t clean.

·         Title search fees, which pay for a background check on the title to make sure there aren’t things such as unpaid mortgages or tax liens or any other such holds on the property.

·         Escrow deposit or earnest money, which may pay for a couple months’ property taxes and private mortgage insurance.

·         Title recording fee, which is paid to a city or county in exchange for recording the new land records.

·         Underwriting fee, which covers the cost of evaluating a mortgage loan application.

We mentioned that closing costs average between 2-5% of the purchase price of your new house. So, if your home cost $150,000, you can expect pay between $3,000 and $7,500 in closing costs. These costs can’t be rolled into your loan, so you should make sure that you have that cash reserved.

Your lender will give you a good faith estimate of what you can expect at closing, but this isn’t an exact figure. Within a day of your closing, you will receive a form HUD-1, which will go over, in detail, all of your closing costs.

Remember: these costs aren’t always set in stone and if they’re too far removed from what you’ve been led to expect, you can always walk away.  As with all matters related to purchasing a home, be educated. The last thing you want is to be taken by surprise.

Have Questions? Need Help? Visit http://findneworleansproperties.com/

Adjustable-Rate Mortgages Regain Popularity as Prices, Rates Rise

Adjustable-rate mortgages, which all but vanished during the housing bust, are again gaining popularity. Home prices and interest rates rose last year, and adjustable mortgages can help keep the monthly payment affordable — at least temporarily. Such mortgages offer a lower initial rate, but that rate can rise over time with market changes.

With interest rates expected to rise this year, the proportion of ARMs could increase further. Last week, lenders offered, on average, a 3.05 percent interest rate for a 5/1-year ARM — which means a borrower receives that rate for five years, before the loan starts to adjust annually with the market. That’s compared with 4.53 percent for a 30-year fixed loan, according to mortgage giant Freddie Mac.

Mortgage brokers say borrowers who plan to move after a few years, or those with considerable, but irregular, income could be well-suited for an ARM. ARMs have been most popular in some higher-priced communities. That’s a contrast to last decade’s housing bubble, when lenders flooded working-class communities with extremely risky mortgages. One such product — known as the option ARM — allowed borrowers to pay even less than the interest owed, swelling the size of the loan as unpaid interest was added on to principal.

Many borrowers who took such loans bet home prices would continue to rise, allowing them to easily refinance or sell before the first adjustment. Many got burned when home prices plummeted, preventing any refinancing.

Largely gone are option ARMs and loans with very low “teaser” rates that quickly exploded into payments that borrowers couldn't afford. Lenders during the bubble years also qualified borrowers based on teaser rates, increasing the likelihood of default. New federal regulations taking effect this month should further curtail some of the riskier ARMs, including interest-only products and those with balloon payments. Of course, rates could adjust downward in favorable market conditions. But ARMs are still riskier than fixed-rate loans — especially when rates remain at historical lows but are expected to rise.

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