Real Estate Matters
www.reporterherald.com • Saturday, December 31, 2011 • Reporter-Herald
Is reverse mortgage a good option? ILYCE GLINK TRIBUNE MEDIA SERVICES
Q
uestion: Would you recommend that my 86-year-old grandmother consider a reverse mortgage to pay for health care expenses? Answer: While you ask a simple question, there are many factors to consider before applying for a reverse mortgage. A reverse mortgage is a loan product available to homeowners age 62 or older who own their home mortgage-free or are nearly mortgage-free. Reverse mortgages allow you to tap into the equity of the property, and that loan doesn’t have to be paid off until you sell the home or move from it permanently. The problem is that reverse mortgage fees can be quite high, and if your grandmother needs a small amount of money for health care expenses, the cost of the reverse mortgage may exceed the health care costs involved. Keeping that in mind, you have to determine what health care costs your grandmother has now and faces in the future. If you are dealing with assisted care or long-term care issues, a reverse mortgage might be worthwhile. If your grandmother is no longer living in the home, you might consider selling the home and using the proceeds to assist your grandmother in all of her living and health care costs. Reverse mortgage lenders can distribute funds in a lump sum or make payments to the senior citizen over time. Those payments over time can be similar to an annuity that pays a monthly amount until the senior citizen dies, sells the home, or no longer uses it as a primary residence. In addition to the age requirement, the senior citizen must have sufficient equity in the home to qualify. In other words, the senior citizen must have no loan on the home or a loan that is well below half of the current value of the home. If your grandmother has a mortgage on the home now and it has a high balance, she probably is not a candidate for a reverse mortgage. You should also know that each reverse mortgage lender may have different parameters for granting loans. Some of these parameters relate to the value of the home and the age of the borrower. If you seriously want to consider a reverse mortgage, talk to a lender about your options. And without applying for a loan, try to determine what the costs would be to obtain the reverse mortgage and how much money your grandmother might obtain from it. Then you’ll have a better basis to judge whether a reverse mortgage is right for your grandmother. If it isn’t, then you can decide whether selling the home would work or whether it would be too disruptive to your grandmother. In addition to her health issues and financial issues, you need to consider her personal needs.
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ILYCE GLINK TRIBUNE MEDIA SERVICES
A
re you tired of thinking about your finances? The Great Recession has had a lasting impact on how we think about and manage our money, especially among those of us who have been unemployed or faced a work furlough or temporary pay freeze. However, even you're sick of thinking about money, chances are that your personal finances could use a tweak this year. Especially if you are preparing to buy a home or refinance, you should do your best to follow these New Year's resolutions.
PUT YOURSELF AND YOUR FAMILY ON A BUDGET YOU CAN AFFORD For most Americans, the word "budget" turns the stomach. If that's how the word makes you feel, don't use it. Let's look at smart spending concepts instead. Simply put: Spend less than you earn. Buy in bulk (if it's cheaper), at sales, and in advance of when you'll actually need something. (If you wait until the last minute, it will generally cost you more to get the same item.) Cook at home more often, and use coupons if you can. Avoid takeout foods and save restaurants for special events. My favorite money-saving concept is "trading down." Each week, try to find a simpler and less expensive way to do the same thing. If you
drink a bottle of $25 wine each week, try to find one you like at around $8 to $10 per bottle. If you typically eat out twice a week in restaurants, cut back to once a week or once every other week. If you spending $200 for night out (including babysitter, dinner, tickets to the theatre or movie, transportation, etc.), cut that to $100 per night. You don't have to use the word "budget." But you should find a way to track your expenses (Mint.com and QuickenOnline.com are two of many choices), income and investments electronical- mortgage payment. (While ly, so you can see what you're lenders have, in the past few years, extended an increasing spending and when. amount of credit, traditional debt-to-income ratios are PAY OFF YOUR now being enforced.) CHARGE CARDS Finally, while you're paying The average American has off your charge cards, remore than $8,000 in credit card debt. For some, that's in member to pay them on addition to a mortgage and a time. Paying on time, over time, is the sure fire way to car loan. More twentysomeimprove your credit history things are facing higher levand your credit score. els of school debt than ever before, and graduating with credit card debt on top of their school loans. The good news is that 2011 has been another year of deleveraging. Americans are finally starting to pay down their debts and save more. Debt isn't much of a problem unless you have financial dreams you hope to achieve - or you like to sleep at night. For future homeowners, every dollar you spend to pay down your charge card debt or car loan each month is a dollar less that you'll be able to put toward your monthly
sion, pay yourself again. The high-tech way to do this, of course, is to have your bank or financial investment company electronically pull the money out of your checking account each month and send it to a different account. The thinking is, if you don't have the cash in your pocket, you won't spend it. (Remember to mark this down, however, or you could wind up bouncing checks and needlessly wasting addiPAY YOURSELF tional dollars on bank fees. FIRST AND LAST And those fees have certainly This little bit of common sense is particularly helpful if increased even during the past year or two.) you're trying to save for a Once the money is out of down payment or another your checkbook, you won't major purchase. Each month, make out an invoice waste it thoughtlessly. It doesn't matter where you put to yourself for the amount the money, although if you you wish you were saving. It could be $50 or $500. When write the check to your Roth you pull out your checkbook IRA account, you'll get a to pay your bills each month, bonus: The money will grow tax-free forever. take out the invoice and litLooking for another good erally pay it first. Then, if you idea? Send the second check have any cash left over in your checking account at the to your child's 529 college savings plan. The money will end of your bill-paying ses-
also grow state and federal tax free (depending on the plan you choose), and you may get a state tax deduction for your contribution next April 15. If you're saving for a large purchase such as a house, put it into an interest-bearing account somewhere relatively inaccessible. In recent years, companies began introducing the Roth 401(k), an after-tax option that allows you to salt another $15,000 away for your retirement. Like a Roth IRA, the cash grows tax-free forever. While there are no income limits for participants, your company has to offer it as a benefit. See your human resources department for details. For more information, call Glink’s radio show at 800-972-8255 on Sundays from 9 to 10 a.m., write to Real Estate Matters Syndicate, P.O. Box 366, Glencoe, IL 60022 or visit www.thinkglink.com.
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Loveland
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Tressler from Kenneth M Labas Trust, 1554 Homeland St, Loveland, $390,000, home • Justin King from Randal King, 3719 Avery Pl, Loveland, $250,000, home • Eric & Stacey Solanyk from Gene Libbea, 1256 Alpine Pl, Loveland, $175,000, home • Donald Fairbanks from Pamela Libretti, 560 Sunwood Dr, Loveland, $184,000, home • Navdeep Dunn from Daniel Moyer, 221 W 5th St, Loveland, $144,000, home • Amadeo & Jennifer Barela from Prudential Relocation Inc, 1083 Centennial Dr, Loveland, $244,500, home • Michael Adams from Richard Rogers, 229 Blossom Dr, Loveland, $130,000, home
• Mitchell Demko from Duane Scoular, 1727 Axial Dr, Loveland, $184,500, home • Garry & Peggy Ewing from Linda Vanderah, 2629 Gilpin Ave, Loveland, $155,000, home • Resident from Paula Woodward, 5337 Fox Hollow Ct, Loveland, $95,000, home
Berthoud
$585,000, home • Resident from Jay Jacobs, 948 6th St, Berthoud, $91,000, home
Estes Park • Aleksandar Kostadinov from Neigborhood LLC, 1675 Gray Hawk Ct, Estes Park, $295,000, home • Jeffrey & Deborah Meador from Ronald Noble, 620 Whispering Pines Dr, Estes Park, $456,000, home • Daniel & Lafonda Sharp from Kirk Drake, 525 Pine River Ln Unit A, Estes Park, $455,000, condo • Four LLC from Droll Real Estate Holdings LLC, 2625 Marys Lake Rd Unit 26b, Estes Park, $175,000, condo
• Jason & Stephanie Brothers from Home State Bank, 4641 Malibu Dr, Berthoud, $70,000, home • Anne Uhlir from Peakview Homes Inc, 725 Mt Massive St, Berthoud, $210,000, home • Adele Work from Sam Dianne Macdonald Trust, 19417 County I See Transactions/Page C2 Road 3, Berthoud,
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