From the category archives:
In 1997, financial advisor Stephen Pollan and author Mark Levine stirred up some controversy with the four-step plan presented in “Die Broke.” This radical book became a national bestseller, but not everyone agrees with Pollan’s financial strategy, which includes essentially giving up on the idea of retirement. Many Baby Boomers are more comfortable with the conventional approach of saving for the future and leaving an inheritance to their children, but there’s no doubt that Pollan’s strategy has changed the way some active adults approach their golden years.
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The recent collapse in the housing market has made it more difficult for some active adults to secure the loans they need to buy their retirement homes. Fortunately for veterans, using a VA loan can be a great way to cut through some of the red tape and walk away with a comfortable repayment schedule.
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Older adults often assume that they would not be eligible for a 30-year mortgage. Legally, however, banks can only offer loans based on financial qualifications alone. This means applicants cannot be turned away based on their age, whether they are 50, 60, or even 90 years old.
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Though most active adults understand the importance of saving for retirement, many may underestimate the amount of money they will need to have saved. This is especially true as the average lifespan is growing and workers can no longer expect defined-benefit pension plans or social security income. How can you be sure that you will not outlast your own retirement savings?
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For some eligible homeowners, a reverse mortgage can be an attractive option. It is a way to bring in extra money, without having to pay taxes on the additional income. There are pros and cons to setting up a reverse mortgage, but recent Federal Housing Administration (FHA) changes to reverse mortgage options make this financial move worth a second look.
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Each year many active adults retire to communities all along the east coast. To make the most of their retirement funds, retirees often search for areas that have low taxes and other financial incentives. Delaware is one great retirement state that offers low taxes, including no sales tax. If you are interested in retiring to Delaware, here are eight communities worth considering.
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The name ‘reverse mortgage’ almost speaks for itself in the sense these types of mortgages reverse a home’s equity accumulation through payment(s) to the homeowner. To understand the pros and cons of reverse mortgages, taking each element of the mortgage one step at a time can help build a familiarity with its features. A good starting point for becoming informed about these loan products is eligibility which includes applicants aged 62 years old and above. Another qualifying criteria is the value of a home’s equity, and any pre-existing debt on the property.
The pros and cons of reverse mortgages differ from person to person, however since reverse mortgages allow the homeowner to receive payment and remain in the home until they leave, three financially important benefits exist.
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The home buyer tax credit is a chance to financially augment retirement living with a new home and lower taxes. The first and most clear way to benefit from the new home buyer tax credit is the $6,500.00 check that could be paid to home buyers by the Department of the Treasury if the property is indentured by April 30, 2010. In the case of first time home buyers the tax credit is even higher at $8,000.00. Each qualifying home is subject to one tax credit regardless of the number of buyers, however the buyers can agree upon the distribution of the credit.
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The Home Equity Conversion Mortgage (HECM) is a program available to homeowners over the age of 62. The HECM is a type of reverse mortgage that enables homeowners who have little or no mortgage balance to borrow against the equity in their home. The main benefit of this type of loan is that it allows seniors to convert home equity into cash. The FHA insurance program insures this HUD approved loan. This is a good option for senior homeowners who have a small outstanding mortgage and want to cash it out without selling their homes.
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On Tuesday, President Barack Obama signed into law the new $787 billion stimulus bill. While the proposed $15,000 home buyer tax credit died in negotiations between the House and the Senate, a similar—albeit smaller-$8,000 first-time home buyer tax credit passed which is designed to help revive the ailing real estate market. If you are a retiring Baby Boomer here are some things you should know about how the bill will affect you. Unfortunately, for most Boomers, the new tax credit will have little to no effect.
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The recent historic bailout of mortgage giants Fannie Mae and Freddie Mac will likely come as welcome news to many homebuyers and homeowners looking to refinance. Already, interest rates on 30-year fixed mortgages are down as much as three quarters of a point or more from their recent high of around 6.5 percent. As a result, more applicants are entering the home buying pool and those in desperate need of refinancing are finding some relief.
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Home financing for active retirees is a complicated process, especially in today’s financial environment.
Generally speaking, fixed rate mortgages, or FRMs, are a better option for retirees who are on a single-source fixed income. The decision to get a 30-year or a 15-year FRM depends entirely on the level of that income. A retiree should not have more than 30-35% of his or her monthly income going towards the mortgage payment, as the “other” costs of living can add up quickly, and funds should be kept available for any increases in medication or hospitalization expenses. The fixed rate mortgage helps to prevent the retiree from any “payment shock” in the future which may lead to a situation where he is unable to continue making payments.
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I recently discussed the fact that the Senate Panel is reviewing the practice of reverse mortgages, and I received a number of inquiries from readers asking about more information on reverse mortgages and whether or not they should consider this avenue. While I am not a mortgage expert, I have done some research to help you better understand the reverse mortgage process so you can decide if one is right for you. Reversemortgage.org is a great site for people who want to get more information on this topic, and I have summarized some of their information below.
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