What's the deal with everyone thinking a reverse mortgage is a bad thing? I think they are excellent! Especially, "Purchase Money Reverse Mortgages". For those who don't know what a Purchase Money Reverse Mortgage is, it's a mortgage in which you make no monthly payment on your newly purchased home. Instead of making a monthly payment the interest payment is added to the existing balance of the loan to be paid off after you die. The catch is "you must be 62 years or older to qualify" but the best part is "there is no credit check required". You simply must be over 62 years in age and have sufficient funds to make the downpayment. The downpayment amount varies pending the age of the applicant and the company processing the loan. Like all things there are drawbacks. The main drawback with a purchase money reverse mortgage is that your residence will not be paid for when you die so your hiers do not inherit a home free and clear of debt. Instead they inherit a home that has a reverse mortgage on it that must be paid off within 6 months. This means the hier will have to pay back the loan or give the house back to the bank so they can sell it for repayment. However, the hier does have the opportunity to file a one time 6 month extension. So in reality the hier can live in the house for up to one year without making a mortgage payment! Not bad in my eyes.
So let's look at an example of what a 62 year old man/woman could do if they take advantage of a purchase money reverse mortgage. For the sake of our discussion let's call our client "Dale". Dale is 62 years old and lives in Amelia. He decides that it would be best if he moved into Richmond to be closer to his brothers and sisters. Dale's current residence is paid for but the houses in Richmond cost more then they do in Amelia so he's not quite sure if he can get the house he wants in the City. Dale gives me a call to see if I can help. This is what I would tell Dale. Dale, I checked the value of your current home and it's worth $110,000.00 in our current market. I'm positive that I can find you a buyer at this price. After commissions and closing cost you should net roughly $100,000.00 even. Dale, to get a comparable house in the City it's going to cost you $150,000.00. Dales says, "Well, I don't want a mortgage payment at my age and I only have $100,000.00 to work with so I guess I either have to buy a smaller house in a not so great neighborhood or stay were I am". Not so fast Dale! We can set you up with a Purchase Money Reverse Mortgage and everything will work out just great, PLUS you will have cash in your pocket and NO MORTGAGE PAYMENT as well. So I take Dale to the mortgage specialist and run the numbers for him. They come out like this:
Dale = 62yrs of age
Money to work with from sale of existing home = $100,000.00
Purchase price of new residence Dale wants to offer on = $150,000.00
Downpayment required = 46% or $69,000.00
closing cost = financed in to mortgage roughly $12,000.00
Dale's figures: $100,000.00 from sale of existin home, est.
-$ 69,000.00 Down payment on future home, est.
cash leftover $ 31,000.00 cash left over, est.
Financed amount = $92,000.00 reverse mortgage amount, est.
So in the end, Dale has a new $150,000.00 valued house in the City just like he wanted. He has NO MORTGAGE PAYMENT to make each month as the interest is added back to the overall loan amount automatically each month to be paid of after he dies. Plus, Dale has $31,000.00 to do with as he pleases! I think Dale got a pretty sweet deal. Not bad at all.
Also keep in mind that the older you are the less downpayment is required so you are left with more of your money in your pocket. My point is, we live this life on a shoe string budget most of our lives. Why not take advantage of a purchase money reverse mortgage in our old age if we can and live like a King or Queen in our golden years? If I last that long, I promise you I'm taking advantage of this sweet deal!
If you would like to take a closer look at "Purchase Money Reverse Mortgages" for yourself or a family member feel free to give me a call or shoot me an email! I would be delighted to walk you through the process from start to finish.
As always, your referrals are welcomed and very much appreciated! :)
Lee Newcomb, Realtor
Long and Foster Realtors
804-327-1056
Lee.Newcomb@longandfoster.com
http://www.leenewcomb.lnf.com/
Wednesday, March 16, 2011
Monday, March 14, 2011
What's my home worth?
First of all, it's not worth what you think it is! More then likely it's worth much less. When I say "worth", I mean "what the market is willing to pay". What your home is truly worth is determined by you and you alone. If it's worth 1 million dollars to you then that's what it is worth. However with an inflated price tag you will never find a BUYER that agrees with you! SO.......What I want to talk about is Fair Market Value!
There is no perfect way to find your homes Fair Market Value without doing an in depth market analysis. However, there is a way to get a rough idea and usually it's a fairly accurate indicator. First you will need to look up your tax assessed value with your local County in which the residence is located. For example, let's say your homes assesed value was 200k even. In today's market your home would not sell for over that figure and usually it would find a buyer at a 10-15% discount of that figure. This equation does not work for new construction, historic homes, and some random neighborhoods that have managed to hold their values fairly well. In general it does work well for most any run of the mill neighborhood. If your house was in great shape you would expect to sell for the full 200k in our example but if it needs repairs you would expect to discount that price. Keep in mind, when I say great shape I mean GREAT SHAPE! This would include upgraded kitchens and baths as well as being staged and very clean!!! To get top dollar in this market you need to make your house stand out from the crowd. To do that you must offer a great price, be in great condition, and be willing to help your buyer out with any assistance he/she may need. Don't give it away. Just make sure you stay FAIR and help your qualified buyer!
Now be sure to remember that I am just the messenger here! I deliver the bad news but I did not create or cause it. After you use this equation to find the estimated value of your home feel free to email me and cuss me out! Hahahahaha. I know, I know......your home is worth more then this equation shows. I agree with you but if you wanna sell it, you'll have to agree with me at some point.
Have a great day and remember the tissues are on row 3 at Wal-Mart! ;)
Sincerely,
Lee Newcomb, Realtor
Long and Foster Realtors
www.leenewcomb.lnf.com
There is no perfect way to find your homes Fair Market Value without doing an in depth market analysis. However, there is a way to get a rough idea and usually it's a fairly accurate indicator. First you will need to look up your tax assessed value with your local County in which the residence is located. For example, let's say your homes assesed value was 200k even. In today's market your home would not sell for over that figure and usually it would find a buyer at a 10-15% discount of that figure. This equation does not work for new construction, historic homes, and some random neighborhoods that have managed to hold their values fairly well. In general it does work well for most any run of the mill neighborhood. If your house was in great shape you would expect to sell for the full 200k in our example but if it needs repairs you would expect to discount that price. Keep in mind, when I say great shape I mean GREAT SHAPE! This would include upgraded kitchens and baths as well as being staged and very clean!!! To get top dollar in this market you need to make your house stand out from the crowd. To do that you must offer a great price, be in great condition, and be willing to help your buyer out with any assistance he/she may need. Don't give it away. Just make sure you stay FAIR and help your qualified buyer!
Now be sure to remember that I am just the messenger here! I deliver the bad news but I did not create or cause it. After you use this equation to find the estimated value of your home feel free to email me and cuss me out! Hahahahaha. I know, I know......your home is worth more then this equation shows. I agree with you but if you wanna sell it, you'll have to agree with me at some point.
Have a great day and remember the tissues are on row 3 at Wal-Mart! ;)
Sincerely,
Lee Newcomb, Realtor
Long and Foster Realtors
www.leenewcomb.lnf.com
Friday, March 11, 2011
Real Estate Values 2013!
Everyone knows that Real Estate values are in the dumps right now. Like all things, nothing lasts forever. Real Estate values have always increased over the long term and they will again. What you need to remember about Real Estate is that it's a long term investment not a get rich quick scheme. Some people seem to have lost sight of this in the midst of a once in a lifetime spike in Real Estate values from 2003 - 2007. Now everyone is down on Real Estate and all the talk you here is how bad it is but the truth is in the facts and the facts tell a different story. Yes, your value is not what it was in 2007 but it's still much more then it was in 2000 and that's a fact! So when will those who bought at the top stop drowning from being under water? The answer is not a definite but it appears that hear in Richmond Virginia the answer may start with the date 2013. This is when I expect the values in our area to begin to rise again. Until then I expect mainly a sideways trend but a dip here and there is still possible. So why do I say 2013? Look at the facts, add a few assumptions, and you have good idea of what's going to play out. If you did this back in 2005 you would have clearly began to see the signs that a collapse was imenent. Then you might not have bought that overpriced house!
We have a good amount of foreclosures and short sales on the market today. This is the key to the fall and it's the key to the future rise as well. These short sales and foreclosures will not last forever. The only reason so many of them are on the market now is because lenders were encouraged to give away money to unqualified borrowers and as a result these borrowers defaulted on their loans. Am I Surprised? Not exactly! However, for the last 3 years lenders have been very strict on who they lend to which means you will soon have very few defaults and the existing flood of foreclosures and short sales will dry up. This will happen faster then you think. As soon as it appears these foreclosures are drying up the BUYERS will come out of the wood works. People like to follow the leader so once the buying begins it will snowball. They key is this, while people have been buying foreclosures and short sales they have NOT been buying new construction. As a results builders have come to a stand still on construction projects. Once the foreclosures and short sales dry up people will find that there is a lack of inventory due to stalled building projects. This will lead to a 1 MILLION HOME SHORTAGE in the Richmond Metro area! Believe it. It's true. You always have to focus on the future because the present is a result of the past and the future a result of the present. Presently we have the lowest interest rates in over 40 years combined with extremely low home values and lenders who are loosening their purse strings a bit. Not so loose that we get back in the same situation all over again but loose enough to qualify worthy borrowers. The only thing holding back the Real Estate market is the economy and high inventory. The economy is in recovery and the foreclosures and short sales are expected to dry up over the next 12-18 months. This combined with the assumption that interest rates stay low will lead to a nice reversal in Real Estate trends in the Richmond area and Nation wide by 2013. That's what the facts tell say but keep in mind the facts change daily.
Visit http://www.leenewcomb.lnf.com/ for more Real Estate related information and to view listings in the Richmond Virginia area.
"And that's my opinion, what's yours?"
Lee Newcomb
We have a good amount of foreclosures and short sales on the market today. This is the key to the fall and it's the key to the future rise as well. These short sales and foreclosures will not last forever. The only reason so many of them are on the market now is because lenders were encouraged to give away money to unqualified borrowers and as a result these borrowers defaulted on their loans. Am I Surprised? Not exactly! However, for the last 3 years lenders have been very strict on who they lend to which means you will soon have very few defaults and the existing flood of foreclosures and short sales will dry up. This will happen faster then you think. As soon as it appears these foreclosures are drying up the BUYERS will come out of the wood works. People like to follow the leader so once the buying begins it will snowball. They key is this, while people have been buying foreclosures and short sales they have NOT been buying new construction. As a results builders have come to a stand still on construction projects. Once the foreclosures and short sales dry up people will find that there is a lack of inventory due to stalled building projects. This will lead to a 1 MILLION HOME SHORTAGE in the Richmond Metro area! Believe it. It's true. You always have to focus on the future because the present is a result of the past and the future a result of the present. Presently we have the lowest interest rates in over 40 years combined with extremely low home values and lenders who are loosening their purse strings a bit. Not so loose that we get back in the same situation all over again but loose enough to qualify worthy borrowers. The only thing holding back the Real Estate market is the economy and high inventory. The economy is in recovery and the foreclosures and short sales are expected to dry up over the next 12-18 months. This combined with the assumption that interest rates stay low will lead to a nice reversal in Real Estate trends in the Richmond area and Nation wide by 2013. That's what the facts tell say but keep in mind the facts change daily.
Visit http://www.leenewcomb.lnf.com/ for more Real Estate related information and to view listings in the Richmond Virginia area.
"And that's my opinion, what's yours?"
Lee Newcomb
Subscribe to:
Posts (Atom)