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Posts Tagged ‘seniors’

Housing Crash Robs Senior Citizens

Thursday, June 11, 2009 posted by Tommi Crow

The worst housing market since the Great Depression is taking a huge toll on senior citizens in this country.  The crash in housing values, especially in retirement haven’s such as Nevada, Florida, California and Arizona, is robbing these long, hard working Americans of their retirement and adequate health care.

While most people believe that seniors have no mortgage on their homes, the reality is that hundreds of thousands of retiree’s owe money on their homes.  Even for those lucky enough to own their house outright, the unprecedented drop in home values means they have less equity to live on or exchange for a move to retirement housing or health care facilities.

  • According to the AARP, 25.5 million people over the age of 50 have a mortgage on their home.  More than 680,000 (which represents 30 percent of all distressed property) baby boomers are deliquent on their mortgage or are in the process of foreclosure. 
  • Many seniors have little saved, other than the equity in their homes.  36 percent of all retiree’s state that their savings and investment nest egg is less than $25,000, excluding home equity and benefit plans.
  • Seniors banked on rising home prices and leveraged their primary asset through equity loans and reverse mortgages.   Those that leveraged assets to afford retirement owe an average of $150,000 on their houses.
  • Retirement communities and long term care facilities are suffering from the housing market, too.  Seniors usually sell their homes to finance admission into senior housing facilities.   Dire market conditions often mean no sale at all, or one at substantially discounted prices.  Many people are left with no choice or options, forcing them to cancel plans to move to housing that fits their changing needs.

Although seniors and retiree’s are often overlooked in the news, the housing and stock market crash have taken a huge toll on their lives and well being.   Most have worked all their lives to build secure nest eggs for their golden years, only to discover that half a lifetime of work and savings vanished in the blink of an eye. 

Click Here to Read More from USA Today

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Reverse Mortgage-Keep Your Home and Make Money

Wednesday, November 5, 2008 posted by Tommi Crow

 High energy costs, the stock market crash and the dismal housing market have converged to make 2008 one of the scariest economies in over 70 years.  Many people fear that they can not meet their monthly expenses this winter.  Further, many feel trapped, living in houses that they can not afford  and can not sell.   One answer for those over the age of 62, may be a Reverse Mortgage.

 

What is a Reverse Mortgage?

A reverse mortgage is a program for Seniors age 62 and older.  The program enables homeowner’s to receive part of their home equity as tax-free income without having to sell their home, give up title or pay a mortgage payment.

How Does a Reverse Mortgage Work?

The homeowner pledges the home as collateral for the loan, but does not make any mortgage payments on the amount borrowed.  The borrower receives their equity as a lump sum, a monthly payment, a line of credit, or a combination of the three.   The amount owed to the lender can never exceed the value of the home

No money needs to be repaid to the lender until the borrower no longer occupies the property as a principal residence.   If the borrower dies, sells the home or moves, the lender will sell the property to pay back the loan.   If the amount owed is less than the sales price, the excess money is returned to you or your estate.

What Can I Use the Money For?

The money you receive can be used for anything.  You can use the funds to supplement your retirement income, repair or remodel your home, pay for health care, living expenses, pay off debt, buy a new car, take a vacation or prevent a foreclosure.

Why Should You Avoid a Reverse Mortgage?

If you intend to leave your home within 2-3 years, there are less expensive options you may want to consider.  Because of the upfront costs associated with a reverse mortgage (approximately 2-3 percent), home equity loans or a tax deferral program may save you money on borrowing costs.

If you want to leave your home to your heirs, you should also consider other options.   In most cases, the home will have to be sold in order to pay back the reverse mortgage.  A better option would be to sell the home to your heir’s now, and rent it back from them for your lifetime use.

How Did Reverse Mortgage Get Its Name?  

It is called a reverse mortgage because the typical flow of money is reversed.  Instead of the borrower making monthly payments to the lender, as is customary, the lender makes payments to you.

How Do I Find Out More About Reverse Mortgages?

The non-profit site Reverse Mortgage has all the facts and information you need to make a decision.  Topics on the site include the rates charged by different lenders, info about the effects of reverse mortgages on social security, medicare and medicaid benefits, special requirements and a whole lot more.

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