Cash-challenged seniors who want to stay in their own homes have kept reverse mortgages high on the public radar. But not everyone thinks they’re such a good idea. In general, a reverse mortgage converts home equity into cash in several different ways, ranging from monthly payments to an equity line to one-time payouts _ or a combination. The amount you can borrow varies according to your age, the value of the home, current interest rates and loan fees. Reports suggest reverse mortgages can be a source of ready cash when it’s needed, similar to other investments. But taking out a reverse mortgage isn’t a no-brainer. Candidates for these mortgages should consider both the benefits and the drawbacks before jumping in.

To qualify for a reverse mortgage, you must be at least 62 years old. Younger borrowers can’t cash out as much equity as older borrowers. Since banks are repaid when the house is sold, it’s quite possible a lender might have to carry the note for 20 to 25 years or more. For that reason, a 79-year-old is a much more attractive loan candidate from the bank’s perspective. Depending on where you live, the proceeds from a reverse loan could prove a barrier to qualifying for Medicaid, which counts loan proceeds as an asset. Although each state differs in the fine print, untapped equity in the home is not considered an asset in determining Medicaid eligibility, as long as it’s owner-occupied. Recent federal legislation placed the home exemption ceiling at $500,000. (more…)

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Economic market conditions shifted in vacation home buyers’ favor in some regions of the country last year, just as the traditional winter weather season took still more heat out of the second home and resort markets.But that doesn’t mean vacation home buying is a breeze.

Just ask some late-to-market speculators who lost their shirts as the last boom faded. Other investors saw their cash flow become cash slow as speculators fled. Still others made buying mistakes that put their second shot at the American Dream, physically out of reach.Buying a vacation home as an investment or rental property requires the same careful forethought necessary for any investment as well as professional assistance where warranted. (more…)

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Think you know what you can afford as a first-time home buyer? Grab a calculator and run those numbers again. There’s a lot more to a mortgage payment than the loan amount and interest rate. Extras such as property taxes, mandatory structural insurance and private mortgage insurance, or PMI, can add as much as 30 percent to 50 percent to your monthly payment. If you don’t realize that going in, you could end up shopping for too much house or falling in love with a home that’s really more than you can afford. Many of these costs will vary with the home, the location, the type of loan and the amount of your down payment.

Some components you want to consider: Homeowners insurance: “A good rule of thumb is $3 for every $1,000 of the loan amount annually,” says Jennifer Gavre, Wachovia mortgage banking executive for Georgia. So that $200,000 home would cost you about $600 a year. Typically, you’ll pay a year in advance at closing, and the next year’s premium will be equally divided among your payments. That 0.3 percent rule of thumb was blown away in hurricane-prone areas after the catastrophic 2004 and 2005 seasons. Homeowners on the Gulf Coast can expect to pay two to four times as much. Flood insurance: If you live in a flood-prone area (usually termed “100-year flood plain”), your lender will likely require you to have insurance that covers flood damage. The cost will vary based on how close you are to flood-prone areas. Figure about $150 to $200 per year, says Gavre. Again, you’ll pay a year in advance at closing, then next year’s premiums will be divided into your monthly payments. (more…)

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If you buy or sell a house in the coming year, say Charlotte real estate pros, you’ll be even more likely to work with a team of specialists instead of with a single general agent. Cindy Chandler, president of the N.C. Association of Realtors, predicts the move toward specialists will accelerate rapidly. The real estate business today is more sophisticated than it used to be, she said, requiring more detailed work. Financing options are more varied and complicated. And, of course, Charlotte and other urban markets are growing rapidly.

General agents also face more competition from lower-cost listing services and are seeking ways to add value for their clients. Agents at large general firms in urban areas will need to specialize, said Chandler, a Charlotte commercial broker who also works as a consultant and educator. They’ll focus on a particular area, price range or type of housing. “(Agents) no longer have the luxury of being generalists,” she said. “From affordable housing to a home in Eastover to a condo in the Vue uptown — there’s just no way you can get your arms around all that.” (more…)

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Home sellers looking to put their best foot forward in some tough housing markets would be well advised to bring their homes up to date. When buyers have hundreds of similar properties to choose from, small details can make a big difference. Having a refrigerator integrated into your kitchen cabinets is one of the hot trends of home design. “New buyers, especially, want the house done in today’s look,” says Mark Nash, a Chicago-area realtor and author of Real Estate A-Z for Buying and Selling a Home, who surveys more than 900 real estate agents and brokers every year to find out the home design trends of most interest to their clients.

Many new homeowners mix natural, well-textured materials, according to Nash, to take away some of that mint-fresh look the home would otherwise have. That means floors of slate or terra cotta, recycled wood from old barns and weathered metal and glass. Nash also points out a couple home amenities coming increasingly into vogue that are designed to meet the needs of changing lifestyles. One is the luggage room, a place to keep your travel bags. As a people, we’re going more places than ever and frequent business trips and vacations have made it desirable for harried travelers to have all their bags in one handy place rather than stowed away in the attic or stuffed into an already crowded closet. (more…)

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Just after the holidays, I decided to preview a few homes in the area to see what’s available in my market area as we approach the new year. What I found is a phenomenal selection of houses with various amenities and value adds. What was disheartening was the apparent lack of market knowledge of either the agent or the unwillingness of some real estate sellers to get with the program on how much their homes are worth.

A quick comparative market analysis of the five-acre property revealed that an identical home with the same lot size sold three months ago for $74,000 less than this seller’s asking price. Where is the owner coming from? Why did the agent even take the listing? Agents working in a buyers market need to look at solds in the last 60 days — no further back. Then take a temperature on the pending sales — which houses are drawing contracts? More than likely there will be a correlation between the houses priced low enough to draw offers and the pending sales. In addition, compare tax assessments and the sold prices. In today’s market, more than likely, the sold prices will be substantially under the tax assessments. The above houses provide a good example. The cheapest, but newest house is priced $59,000 under the tax assessment. Meanwhile, the other two properties are $39,950 and $84,000 over their tax assessments. (more…)

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The North Carolina Banking Commission recently proposed stricter guidelines for state regulated brokers, bankers and lenders offering nontraditional loans. Minnesota has already tightened its lending guidelines on the loans and recently notified more than 3,000 state-licensed residential mortgage originators of the changes. To date, 19 states and the District of Columbia have at least warned state-regulated lenders about the hazards of nontraditional mortgages, indicating new federal guidelines for federally regulated lenders are already trickling down to state regulatory offices.

The rules are designed to curtail the rise (during the past housing boom) in the risky business of “nontraditional,” “alternative,” “exotic,” even “toxic” mortgages, including interest-only, payment-option, piggy-back, stated-income (no-doc) and other types of adjustable rate mortgages (ARMs), as well as some home equity loans. The high-leverage products can be useful, allowing borrowers to buy a home (or qualify for a larger, more expensive home) they perhaps couldn’t afford with a standard, fixed rate loan (FRM). However, the rapid growth in the use of nontraditional mortgages, especially among the population of less creditworthy borrowers has alarmed regulators who have begun to mandate that lenders tighten requirements for those who want the loans. (more…)

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