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A Reverse Mortgage Can Provide Tremendous Financial Relief, But Only If It’s Right For You

excerpts from article by Jarret DiToro | Updated March 14th, 2017 on LendingTree.com

Our mortgage experts are often asked about reverse mortgages, many times by folks who are interested in finding an extra source of income, but may have some concerns, and would like some straight-forward information before inquiring further. We’ve put together the pros, cons and hows of this increasingly common financial product in one place to make the learning process a bit easier.

Basic Facts About Reverse Mortgages
Reverse mortgages are loans
At least one of the borrowers needs to be age 62 or above
Those who take a reverse mortgage are borrowing against their home equity
Reverse mortgages do not need to be repaid as long as one of the borrowers lives in the house
Reverse mortgages usually eliminate any other ongoing mortgage payments
Borrowers can choose to receive a monthly payment, lump sum, or line of credit to use against the house (or even a combination thereof)
Reverse mortgages can be a welcome source of financial independence

It’s essential to do your homework before committing. We recommend arranging a consultation with one or more lender consultants.

As the name implies, a reverse mortgage is very much like a traditional mortgage, just in reverse. In a traditional mortgage, the bank hands over a large sum of money upfront so that the borrower can use it to buy a house. That borrower then pays it down over time by making monthly payments.

By contrast, with the most common forms of reverse mortgage, the borrower already has a house, which is usually all or mostly paid off. If they choose the monthly payment option, they receive fixed monthly payments from the bank that they can use on anything they like, and the amount owed to the bank grows over time as the borrower receives their monthly checks. The amount borrowed is only repaid in the event the borrower and their co-borrower (spouse) moves out of the home. This is a critical, and often misunderstood feature of these loans.

How To Determine If A Reverse Mortgage Is Right For You?

Like all financial products, reverse mortgages have pros and cons. Additionally, those who educate themselves can ensure that they maximize the pros while minimizing potential downsides. Here are some of the factors we recommend folks consider:
What is your need for supplemental income?
Do you need to eliminate your current mortgage payment?
Do you need financial independence?
Are you planning on staying in your home for the long term?
Your desire to maximize the estate you leave to heirs
Finally: make sure you’re only talking to reputable, FHA regulated lenders. This will ensure you benefit from a slew of regulations protecting borrowers and features subsidized by the federal government
Additionally, if you do decide to start looking into loans, we recommend people secure multiple offers, then evaluate each of them along fairly typical lines:
What is the interest rate being quoted? (the lower the better obviously)
How much total money is the lender offering and over what time period?
Are there any upfront fees or other charges?
Have you maximized your chances of getting the best deal by evaluating multiple offers?

Increasingly common: clever folks have started using reverse mortgages to buy their next home when they move, often following retirement. This means they put a certain amount down when they purchase the home, but then never have to make another mortgage payment as long as they live in the new house. This can really help remove some of the uncertainty around paying for increasingly long retirement years.

Disadvantages of Reverse Mortgages

Like any substantial financial decision, we strongly advise those considering a reverse mortgage to evaluate every angle, especially potential drawbacks. The most important things to consider are:
The Mortgage Accumulates Interest: While those who take out a reverse mortgage are not required to make any payments on the loan while they live in their home, interest does accrue on the balance as it builds. Eventually this interest will be paid back once the borrowers leave the home. Sometimes this occurs as a simple repayment from other funds, but often the home is sold once it is no longer being used in order to repay the loan and the interest.
One critical item to note: no matter how long the loan is outstanding, and no matter how much interest is built up, the amount owed will never be more than the value of the home. This is by design so that the debt won’t be passed along to the borrower’s heirs. Also, there is never any obligation to sell the home. The loan can always be repaid in full and the home kept.
The Loan Amount Offered Is Less Than Expected: The loan amount offered by a bank is determined by many factors, including the appraised value of your home, the amount of money, if any, you may owe on an existing mortgage, your age, the bank’s profit margin and the current interest rate environment.
Due to the fact that each bank has different underwriting goals and abilities, we cannot stress enough how critical it is to compare offers from multiple lenders before making any decisions. We also recommend being open about the fact that you are entertaining multiple offers when you speak with the banks. This will encourage them to sharpen their pencils and make a better offer right off the bat.
At the end of the day, the only way to really determine if a reverse mortgage is right for you is to get into the details of specific offers and to understand the available options. Even if it’s just to arm yourself with more information, or to know what you could get should you ever need it, having the offers in your back-pocket can be a great source of financial peace.

Put the Cool Back in Ranch Style Homes

Excerpts From RealtorMagazine.Org, a reprint of an article dated JANUARY 2016 | BY BARBARA BALLINGER

What Is A Ranch Style Home?

This common, one-story house with a low profile has a distinguished American pedigree. Yet, for decades it’s been overshadowed. As the ranch again attracts attention, learn about its best features and how older, dated examples can become strikingly modern.

Cliff May, considered the father of the ranch house, drew his inspiration from Frank Lloyd Wright’s Prairie-style and Usonian homes, as well as later Arts & Crafts designs. May designed and built these ranch homes in Southern California from the 1930s on with a goal to develop a prototype that would suit home owners in a warm climate who favored informal living and easy outdoor access.

After the Second World War, developers borrowed May’s concept to construct small variations quickly and affordably and meet growing housing demand. Some ranch-style homes were cranked out, cookie-cutter-style, in large tract developments such as Levittown on New York’s Long Island. Yet at the same time, other iterations grew into more sophisticated “California Modern” designs in the hands of developers such as Joseph Eichler, who had lived in a Wright home.

Hot, Then Not

In more recent times, the popularity of ranches has waxed and waned, depending on typical homebuying criteria: location, condition, and price. In Southern California, they remain a favorite that can command top dollar, especially if they’re near the ocean and good schools, says Kelly Morgan, sales associate with Troop Real Estate in Westlake Village, Calif. “A single-story in Thousand Oaks, closer to water, will bring a higher price than in Santa Clarita,” she says.

Back East, they remain popular on New York’s Staten Island because they’re among the more affordable options and offer relatively open plans as opposed to Colonial- and Victorian-style layouts, says broker-owner Holly Wiesner Olivieri of Holly’s Staten Island Buzz. She and her husband bought a ranch 17 years ago for its private cul-de-sac location, proximity by ferry to Manhattan, and handyman-special price. In other parts of the Northeast and Midwest, ranches can be a tougher sell, as more home owners typically prefer a two-story Colonial or Cape, says Connecticut architect Duo Dickinson.

Who’s Buying Now?

Overall, the greatest interest nationwide is coming from two demographics:
• Young couples find them an affordable entry-level option that they see remodeled and decorated often, thanks to HGTV shows and hipster home magazines. “It’s the style that appeals to the young ‘hip’ L.A. buyer who’s interested in simplicity,” says Kate Guinzburg, a partner at Deasy/Penner and Partners, a Los Angeles real estate firm that specializes in mid-century modern and other styles of homes. And in certain markets like Austin, Texas, it’s a style that’s prevalent in neighborhoods that are close to downtown, which appeals to a young professional segment of buyers who want to avoid long commutes as their city gets more congested, says Austin-based builder Dominique Levesque of Another Great House.

• The second big cohort is baby boomers looking to downsize to one level and gain more maintenance-free living but remain in a single-family home environment. Craig McMahon, whose eponymous firm is in San Antonio, Texas., says boomers might also be inclined to choose a ranch when looking for a second home.

To take advantage of this ranch revival, share with clients how these homes can both be livable and convey mid-century cool:
Give it the right name.

Ranches share many similar features — a single story with low-pitched gabled roof, for example. But that doesn’t mean that one moniker works everywhere. In some areas, the term “ranch” won’t raise red flags. But Chicago architect Stuart Cohen of Stuart Cohen & Julie Hacker Architects thinks that for some buyers, it has a negative connotation in the same way “tract” housing does. “‘Mid-century modern’ is a better term since it connotes a classic collectible,” he says.

In parts of the West, “ranch” implies that it’s a home where horses can be stabled, says Morgan, whose ranch-seeking buyers typically want land for a barn and sometimes a pool. That’s why she prefers to call ranch-style homes “single-story.” Other terms you might hear are “American ranch,” “rambler,” and “rancher.” “Split-” and “bi-level” connote ranches with an extra half-level.

Play up its manageable, affordable size.

Averages vary, but generally these homes are under 2,000 square feet, and some are less than 1,000 square feet. Rooms are usually small by modern building standards. Most were built with three bedrooms and two full bathrooms, though this also varies, says Levesque. The small footprint, along with a typically small lot, works well for those interested in keeping down costs, maintenance, and taxes.

Highlight the open layout.

Most feature a small center hallway that separates living quarters from bedrooms; the living area often consists of an L- or U-shaped living-dining room with a small, separate kitchen, says Dickinson. While not as open as many of today’s informal loft-style plans, ranches offer more openness than other older traditional homes do. That arrangement works especially well for young families who want to keep a close eye on children, says Guinzburg.
Share how to improve profile and layout.

Because of the style’s simple form, roofline, and construction method, ranch homes’ low ceilings can be raised and vaulted to 10 to 12 feet or higher. A second story can be added and interior walls can be removed, says architect Jeff DeGraw of DeGraw and DeHaan in Middletown, N.Y. By replacing the genre’s small windows with bigger panes, the home can also look larger. In fact, new windows are often a good investment here, since the originals weren’t usually the most energy-efficient, DeGraw says. On Staten Island, most ranches were built with a basement, so Olivieri often hires an architect to draw a simple floor plan to show how an unfinished lower-level space can be transformed.

Explain how to modernize while respecting the facade.

The exteriors of ranch homes can easily be updated with paint or new siding materials. But the goal should be to respect the home’s roots and not turn it into a totally different animal, says DeGraw. “Keep it simple, with the same proportions and trim, so it still reads as a mid-century modern house rather than a New England-style Colonial with shutters,” he says. Levesque follows a similar mantra and also makes changes that fit the house into its site and neighborhood. Due to its small footprint and one-story design, adding on can be relatively easy if funds and the site, setbacks, and septic system permit, says Cohen. The key is to do so with similar proportions so what’s new fits with the original, he says. Levesque stresses the importance of respecting the site and existing trees.

Channel the modernist spirit.

To attract buyers who find it hard to visualize furnishing a ranch, consider staging with mid-century modern pieces. Reproductions are readily available online at sites such as Allmodern.com and Retrofurnish.com. Los Angeles designer Kimba Hills, owner of Rumba, a mid-century modern design store, also advises installing modern light fixtures and cabinet hardware, painting backgrounds white, and adding a skylight if the house is dark. “So many buyers want what’s modern, yet they also want something with character and a hint of nostalgia,” McMahon says.
When all’s said and done, the ranch provides a cool way to live for another generation. Ultimately, Dickinson says, “It’s more about the living that goes on within.”

Tarrant County Property Tax Appraisal

Excerpts from 04/10/17 Star-Telegram article by writer MAX B. BAKER

For those of you suffering sticker shock after getting your annual property appraisal notice, Tarrant County officials have this advice: Don’t panic.

Tarrant Appraisal District officials mailed out 555,000 property tax appraisals last week. Chief Appraiser Jeff Law estimates that taxable values on Tarrant County homes went up an average of 5 to 8 percent, which has already created some social media howling, especially since it follows a double-digit value jump in 2016.

First, this mailing is NOT A BILL, it is an estimate of the property tax amount you will owe! The actual tax rates for 2017 will be established in September. You can challenge your appraisal values, the deadline for filing a protest for most homeowners is May 31, 2017 but should be done within 30 days of receiving your appraisal in the mail. Chief Appraiser Jeff Law recommends that you first sit back, look at the data and consider what it means before deciding whether to pursue a protest.

Before making a decision to protest your home’s value, Law suggests first using the eAccess feature on TAD.org. By using the PIN number on the notice, homeowners can review comparable home sales in their area to see how TAD came up with their value. The real estate market has been hopping this year and homeowners may be surprised to learn what homes in their area are selling for. The Texas A&M Real Estate Center reports that a lack of inventory — less than a two-month supply of homes for sale, compared to the preferred five to seven months — is driving up prices.

While TAD is planning for another “heavy protest season,” Law expects 2017 “to be a better year than the past two.” Still, it’s never too early to get your place in line. The review board begins hearings April 17.
“Again, we encourage anyone that feels they need to protest their market value to do so early,” Law said.

Have you ever…?

Have you ever wanted to live in your own home?  The home your hard work and dreams build into a nest egg and possible retirement source for your future?

Since becoming an adult, have you spent most of your income on a living space that belongs to someone else?  Now is the time to think about changing the pocket where your housing payments go.  Pay yourself, not your landlord by buying your own home.

Recently a memory was shared.  A couple who had been through tough times financially didn’t believe they could ever own a home of their own.  Fortunately they were connected with a knowledgeable lender that walked them through the steps necessary to get their finances in order to purchase the first home they would ever own.

The Broker and Agents here at Trophy Realtors can recommend several reputable mortgage contacts for you to interview.  Talk to the financial people to get your “ducks in a row” (as the saying goes) then let our team work with you to find a property to fit your pocket, needs and dreams.

Are you able to purchase your dream house, with all the amenities and upgrades in your wish book?  Possibly, but start at step one, with a financial review.  Establish a realistic budget then sit with a Realtor to develop search criteria that fits.

The memory I mentioned before?  That couple started with a small home then eventually sold it to invest in a larger home in a neighborhood they felt suited them better for the next phase of their lives.

“Every journey begins with the first step” is an excerpt from an ancient Chinese proverb by Lao Tzu.  Let Trophy Realtors help you on that journey to owning your own home.

How will home prices fare in 2017?

By Jonathan Berr, CBS News, December 6, 2016

Nothing can chill the real estate sector in the U.S. like rising interest rates. So is the Federal Reserve’s expected move to boost borrowing costs likely to dent the housing market?

Don’t bet on it. Experts predict that housing prices will continue to rise in many markets around the country next year even as mortgage rates drift up. The Federal Open Market Committee — the panel at the central bank that sets monetary policy — will hold a two-day meeting next week, with most forecasters expecting 0.25 basis point increase in short-term rates. Market watchers expect the Fed to hike rates several times next year is the economy stays on its current course.

But that small initial increase, which would be the first upward tilt in rates since December of 2015, is unlikely to reduce demand for housing. Home prices have continued to rebound this year. The Federal Housing Finance Agency (FHFA) House Price Index posted a 6 percent gain in the third quarter on a year-over-year basis.

Economist Andres Carbacho-Burgos of Moody’s Analytics expects nationwide housing prices as measured by that index to rise an average of 4 percent in 2017. Steve Hovland of online real estate management firm FirstUnion projects a similar uptick, while noting that some markets that have seen have seen the sharpest price increases during the recovery, such as New York, Los Angeles and Austin, Texas, could see a dip.

Mortgage rates have already started to creep up as house hunters ponder the impact of an imminent Fed hike. “Since early November, you have had a significant jump in purchase mortgage applications,” Carbacho-Burgos said. “A lot of that has to do with the expectations effect. People think `Oh my God, interest rates are increasing and we better purchase now before mortgage interest rates go higher.’”

Despite that perception, borrowing costs remain exceptionally modest by historical standards, while the average mortgage payment around the U.S. is still significantly below its level before the housing crash, Capital Economics notes. The average 30-year fixed rate mortgage is 4.04 percent, up two basis points over the last week, the lowest level they have been since 2014. Rates last month were 3.51 percent. That compares with an average of 6.41 percent since 1990, according to the Mortgage Bankers Association.

“Buyers that have committed to a home purchase are unlikely to be swayed by the increase in interest rates,” Hovland said in a statement. “In fact, the change in the monthly mortgage obligation is approximately $65 for a median-priced home. The lower end of the market can absorb that increase. However, sellers are going to need to bear some of the cost of capital increase at the top of the market.”

Another support for the housing sector is the U.S. economy, which continues to see modest growth. Unemployment in November fell to 4.6 percent, its lowest level in more than a decade. Wage growth, which has been stagnant for years, has also ticked up this year.

“The employment picture has brightened considerably,” Bob Walters, chief economist with Quicken Loans, said. “There is a ton of pent-up demand over the last eight, nine years.”

Millennials, America’s largest generation, are also starting to enter the housing market and in 2017 will make up roughly 40 percent of first-time home buyers, according to Hovland.

Still, finding an affordable home in many markets remains a challenge because of a lack of inventory, according to realtors’ associations in those markets. For people buying their first homes, “It’s very difficult to find a product for them that they can afford,” said Lane McCormack, president of the Atlanta Board of Realtors, adding that starter homes in her area can fetch $300,000 to $400,000.

Christopher Zoller, chairman-elect of the Miami Association of Realtors, said sellers of homes priced between $300,000 and $600,000 are getting multiple offers while sellers of luxury properties are having difficulty attracting buyers. “We see some buyer reluctance at the high-price end and we see some seller intransigence,” he said.

Tight credit conditions are also making it hard some house hunters to get a mortgage. Although average down payments are not much higher these days than in the past, lenders require borrowers to have good credit.