Author: Igor Nastaskin
Should You Sell Your Home When You Retire?
There are plenty of reasons why many people today aren’t financially prepared for retirement and question whether or not to sell your home when you retire. Americans are living longer, so they have to stretch their savings further, and the pensions that helped previous generations have largely vanished. But that doesn’t mean it’s time to panic quite yet. Many on the cusp of retirement do have one source of cash that could help them close the gap between what they have for retirement and what they’ll need to live well: their home. In fact, the majority of senior Americans have more money in home equity than they do in their retirement portfolios, according to an analysis last year by the Center for Retirement Research at Boston College. So how much cash are you sitting on, anyway? To figure out your home equity, subtract the amount you owe on your mortgage from the current market value of your property. Next, to see whether you’ll need that money in retirement, plug your other info (excluding the value of your home equity) into a retirement calculator, then see whether you’ll be able to comfortably live without it. If it looks like you’re going to have to tap your equity, you’ll want to make a plan for the best way to do so. Here, Realtor.com offers five options and the benefits of each. Sell and move This is probably the first thing retirees think of doing with their home, and for good reason: Many retirees feel liberated after shedding their excess stuff to move to smaller digs. By selling and moving to a less expensive house or region, you’ll not only bolster your portfolio with the proceeds, you’ll also lower your monthly expenses. And if you move to a condo or apartment, you won’t have to deal with external home-maintenance issues anymore. Open a HELOC If you have enough cash to cover your day-to-day needs but no cushion for unexpected expenses, such as medical bills, a home equity line of credit can serve as an emergency fund. You get to stay in your home. You’ll have to pay only the interest on the amount you use during the draw period, typically 10 years. Interest rates are so low now that those payments will be pretty minimal. Use a reverse mortgage A reverse mortgage allows you to tap your home’s equity but is different from a HELOC in that you don’t have to pay it back until you move or pass away. Unlike a HELOC, which is good for short-term borrowing, a reverse mortgage gives you cash for the long haul in the form of monthly checks. Become a landlord It may not be a huge investment to turn part of your home into an apartment with its own kitchen, bathroom, and entrance. Or, you can rent out your entire home for all or part of the year, rent a smaller unit yourself and pocket the difference. You can cover or offset your housing costs with rental income—and postpone selling your home for longer. Do a sale/leaseback to your kids If passing the family home to your children is important to you, you may be able to sell it to them now and then pay rent so that you can continue living there. You get to stay in your home and ensure that it remains in the family.
Knowledge Gap Contributing to Housing Market and Affordability Concerns, Cautiousness
A newly released survey of 1,000 nationally representative U.S. college-educated adults reveals that today’s housing and financial environment is impacting home-purchasing decisions. According to the survey—conducted by Wakefield Research for the national online lender and FDIC-insured bank Laurel Road—Americans are eying the housing market with caution, with more than half (53 percent) who have or plan to buy a home saying that they’re concerned about their ability to afford housing in the current market. The findings also revealed that Americans, on average, believe a housing crash similar to the one in 2008 will occur during the next five years, with almost one-fifth of respondents anticipating a crash in less than one year. The survey examines how misconceptions and unclear options are inflating anxieties when it comes to housing market decisions. For example, the down payment often is considered one of the main barriers to affordability, but nearly half (46 percent) of Americans are unfamiliar with alternative down payment options. Similarly, the National Association of Realtors found that, in 2017, the median down payment for first-time buyers was 6 percent of the total home price for three straight years. However, almost three-in-five respondents (58 percent) plan to put down a traditional 20-percent down payment, while 42 percent feel they would need to tap into other means, such as mortgage insurance (14 percent). The survey found that women, in particular, are potentially underestimating affordability, as they are significantly less likely than men (49 percent versus 59 percent) to be familiar with the alternatives. This lack of knowledge around alternative options potentially contributes to the fact that more than one-third (35 percent) of respondents—and 46 percent of millennials—do not feel confident that they could afford a 20-percent down payment. Women (45 percent) feel particularly less confident than men (24 percent), while more than two-fifths (42 percent) of student loan carriers do not feel confident. A knowledge gap also surrounds current interest rates. The survey revealed that Americans think mortgage interest rates in the U.S. will reach 6 percent, on average, by the end of the year, while the Mortgage Bankers Association expects a more modest 4.6 percent. Interestingly, millennials (70 percent) are the most concerned about the impact of rising rates, compared with 60 percent of Gen Xers and 35 percent of boomers. Compared with boomers (78 percent), millennials (53 percent) are less likely to think it’s best that others pull the trigger and buy now, suggesting those that are more likely to be buying their first home are apprehensive about purchasing decisions. In summary, these findings suggest consumers are concerned and cautious about housing decisions in the current market, despite the fact that interest rates are historically low. In fact, the majority of people (74 percent) who have bought, or plan to buy, a home would only accept an interest rate of less than 6 percent before deciding not to move forward with a purchase. However, a lack of historical context may contribute to this sentiment. Americans believe the highest U.S. mortgage rates have ever reached was 12.25 percent, on average. In reality, rates have exceeded 18 percent—a fact only 8 percent of Americans know. Here, some additional findings from the study: Setting timelines: Americans estimate they will buy a home in the next six years, on average. First-time homebuyers plan to purchase a home in just two years—at age 36, on average. Concern may even play a role in buying patterns, as 62 percent of those who are concerned about affordability are currently looking or plan to buy in less than five years, compared with 33 percent of those who aren’t concerned. Planning ahead: Among Americans who have ever bought, or plan to buy, a home, 85 percent have plans for their savings if they refinanced their mortgage. Forty-eight percent would put it into savings; 41 percent would pay off debt, such as credit cards or student loans (50 percent of millennials versus 45 percent of Gen X and 32 percent of boomers); and 27 percent would remodel their home. Spurring action: Among current and prospective homeowners, nearly one in three (32 percent) are more likely to refinance their home, specifically because of the potential for a future rate hike.
Buying Your First Home? Plan for These Hidden Costs
Great news! You just found the perfect home in the ideal neighborhood. However, if you’re a first-time home buyer, you need to prepare for additional—and often unexpected—home-buying costs. Here, Zillow details some expenditures that might catch many home buyers unaware. Unexpected costs Homeowner’s insurance and closing costs, such as appraisal and lender fees, usually are easy to plan for because they’re added into the home-buying process. But most costs beyond those vary. If the previous owners of your home take appliances when they move out, you’ll have to buy more to replace them. You also will have to pay for any immediate improvements the home needs, unless you negotiate them as part of your home purchase agreement. And you’ll definitely want to hire a home inspector to look for bad electrical wiring, weak foundations, wood rot and other hidden problems you may not find on your own. Keep in mind, these problems are rarely covered by home insurance. If an inspector discovers a serious problem, you then will have to decide if you still want to purchase the home. Either way, you’ll be out the cost of hiring the inspector. Creature comforts Once you move in, you’ll start thinking fully about what you’re expecting from your new home. Are you used to having cable? If so, is your new home wired for cable? It’s much more difficult to watch a technician crawling around punching holes in your walls when you own those walls. And if you’re moving from renting to owning a home, you likely will be faced with much higher utility bills. You also could find yourself paying for utilities such as water and garbage pickup that once were covered by a landlord. Planning ahead The only ways to face the unknown and unexpected is with research and planning. This begins with budgeting both before house hunting and throughout your search. Look at homes in your budget that need improvements, and then research how much those improvements could cost. Nothing is worse than buying a home thinking you can fix the yard for a few hundred dollars and then realizing it will cost thousands. There really is no limit to how prepared you can be. For example, you may save money on the list price if you find a nice home that’s priced lower than others in the area because of its age. However, with an older house, you could be faced with a much higher home insurance payment, making the house more expensive in the long run. This is where preparation comes in. Research home insurance and property prices in the areas you’re considering to make more educated decisions before you ever make that first offer. Clearly define how much you intend to put toward your down payment, and then look at how much cash that leaves for improvements and minor costs, such as changing the locks. That way, when you find a house at the high end of your range, you’ll know to walk away if it requires a new washer and dryer or HVAC system upgrade. Establish a rough estimate for as many costs as you can think of, and be extremely critical of homes at the top of your budget. Otherwise, you could easily end up being house poor.
The Ins and Outs of Home Buyer & Seller Contingencies
If you’re thinking about buying a home, then you’ve likely heard of contingencies—the clauses in a real estate contract that stipulate conditions for the buyer and seller to agree upon for a sale to be completed. While contingencies help protect buyers if they’re unable to complete the sale, some people may be tempted to go without them in a hot market to make their offer look more appealing. However, understanding and including contingencies in your contract is key to safeguarding yourself. Here, Trulia explains how a home’s status changes once a contingent offer is accepted and recommends a few important contingencies to consider as part of your offer. Active contingent A home’s status changes to active contingent when a home seller has received an offer from a buyer, but the buyer needs to meet certain conditions before the sale can be finalized. These conditions may include a home inspection or being approved for a mortgage loan. Types of contingencies for buyers to consider: A mortgage financing contingency gives the buyer a way to back out of the contract if an application for financing is denied, or if financing is granted for a lesser amount (for example, if the home appraises for less than expected). The general inspection clause allows buyers to bring in a professional home inspector to check out the property—and to cancel or renegotiate the deal. If the inspection turns up a less than satisfactory result, such as significant structural flaws or major costly repairs, buyers have the right to ask the seller to lower the sale price, offer buyer credits or ask for necessary fixes to be completed before the close of sale. If the initial inspection turns up issues, contingencies for additional specialists and tests may be required. This contingency allows buyers to have the home checked for mold and other toxic substances, as well as wood-destroying pests such as termites. It also allows for other specialists like chimney inspectors and foundation experts to look at the property before the sale is completed. If any problems are found, the buyer should have the opportunity to renegotiate the deal or cancel it completely. The attorney review contingency can give the buyer and the seller a specific amount of time, as specified in the contract, to have their legal team inspect the signed contract. The lawyer will review the legality of the contract and check for important safeguards for their client before the deal is done. The buyer’s home sale contingency allows the buyer to cancel the contract without penalty if they’re unable to sell their current home in a specified amount of time. If the buyer is under contract to sell their residence and the deal falls through, they won’t be obligated to purchase the new property. An appraisal contingency permits the buyer to have the home appraised—a must for many buyers financing their purchase—and to only follow through with the sale if the appraisal matches or exceeds the home’s price. If you’re using a lender, it’s smart to check and see if they require this contingency as part of your purchase contract.
Ready to Stop Renting and Start Owning a Home?
If you’ve been renting for a while and now think you’re ready to take the big step and move into a home you can call your own, you’ll want to make sure you’re prepared. Bottom line: Owning a home is a big commitment. So before you jump into it, you should have confidence that it works for your circumstances. Here are 4 questions to ask that will help you transition into the home-buying mode, and stop renting. 1. Can you afford to buy a home? A house likely will be the largest purchase you’ll ever make. You’ll need a down payment (typically 20 percent of the home’s purchase price) and steady income to pay your mortgage. Other fees associated with homeownership include closing costs (usually 2 percent to 5 percent of the home’s purchase price); home insurance (cost varies by state); maintenance; utilities; and budget for unforeseen repairs and emergencies. Although renting may seem more economical than owning at first glance, that’s not always the case. Use Realtor.com’s rent vs. buy calculator to help compare the costs, and you could be surprised by the results. Another good first step to figuring out whether you can afford a house is to enter your salary and town of residence into a home affordability calculator, which will show you how much you’d pay for a mortgage on a typical house in that area. Or talk with a loan officer about whether you would qualify for a mortgage, and how much you can comfortably spend. Such consultations are free and will give you a concrete idea of where you stand. 2. Are you settled in your job? Your job situation is important in terms of having an income to buy a home, but also it will dictate if you’re likely to stay put or move. Once you own a home, your career prospects tend to narrow somewhat, mostly because a home anchors you to one area. A renter can be flexible and easily accept a job in another city or state, a homeowner might decline a job offer rather than go through the cost, time and expense of selling a home. Ultimately, it may be better to wait to purchase a house until after you’re firmly established in your employment situation. 3. Do you know where you want to live? Moving once you own a home is not as simple as packing your bags. You should make sure that you’re choosing a home in an area where you’ll be happy. Scope out the neighborhood in advance, or even try renting for a few months to make sure you like the area before you begin shopping for a home. There is wisdom in trying before buying; which will eventually allow you to stop renting, and start on the path to ownership. 4. How much home maintenance are you willing to tackle? If you love the challenge of fixing a leaky faucet and deciding which shrubs will flourish in your yard, then ditch renting and lean into homeownership. However, if the idea of mowing a lawn or fiddling with the HVAC depresses you, then you may want to stick with renting, which gives you a roof over your head without too much work. There’s no landlord to call if anything goes wrong; it’s all up to you. So, you have to be either adept as a handyman, or willing to find and pay someone else to do such tasks. Or else consider buying a condo, where the lawns and public areas around your home are maintained by hired help.
What’s the Best Day to Put Your Home on the Market?
When it comes to listing a home, sellers don’t want to leave anything to chance, including what day they put their home on the market. Toward that end, Redfin analyzed a sample of 100,000 homes that sold in 2017 and found that homeowners should put their property up for sale on a Wednesday to gain the most money; a Thursday for the quickest sale; and to avoid Sunday altogether. Here, more about the findings: Wednesday’s Price Advantage Homes listed on Wednesday had an advantage of $2,023 in sale price over homes listed on a Sunday, a sale-to-list premium of 0.53 percent. For a $500,000 house, that means you could make $2,650 more just by listing on a Wednesday instead of a Sunday. Thursday’s Speed and Certainty Advantage For speed, Thursday had a clear advantage, with Thursday-listed homes finding buyers five days faster than the baseline. Homes listed on Thursday also had the edge as far as being more likely to be sold within 90 and 180 days. There isn’t one clear reason why Wednesday outperforms on price, while Thursday wins on speed and certainty. Possible explanations include that agents who list on Wednesdays tend to be better at pricing strategically to command the best price, or that in this fast-paced, low-inventory market, there’s simply a sweet spot for garnering the maximum sense of urgency and competition among eager home buyers. Another theory is that the advantage of Wednesday and Thursday simply correlates to buyers’ house hunting schedules. Don’t Forget Regional Customs Keep in mind, in some markets such as San Francisco, weekday broker’s opens are common. A broker’s open is an open house for agents. In some markets, agents may visit a series of broker’s opens on Tuesday, for example, to preview all the new homes that are on the market for their buyers. Plan the Perfect Debut Homes get five times more online views the day they hit the market than they do a week later, so making a positive online debut is critical. Besides pricing right, professional photography is another way to optimize your home sale. Homes with images taken by professional photographers tend to get more money and sell faster. Sellers who used a high-quality camera for their listing photos got an average of $3,400 more for their homes.
Hollywood Riviera Sportsman’s Club a Local Tradition
Calling all male residents of the Riviera looking for a chance to give back to the community and have a great time doing it: join the Hollywood Riviera Sportsman’s Club. Established in 1949 by a handful of civic-minded residents, the club was organized to promote community improvement. The Club is non-sectarian and non-political, and is devoted exclusively to promoting fellowship among the families of the Riviera and sponsoring positive community projects. Its members raise money to support our children and schools, and volunteer their time to support community activities. The Sportsman’s Club has raised over $250,000 over the past decade through fun events such as golf tournaments, pancake breakfasts, wine tastings, steak dinners, chili-cook offs, Relay for Life events, holiday parties, Hometown Fairs, beer tastings and more. No other philanthropic organization in the South Bay makes as big of an impact — and has as much fun doing it. “I never imagined that getting involved and supporting our community could be such a personally rewarding experience,” says Brian Rickey, a seven year member and current Sportsman’s Club president. The Club’s annual Easter Egg Hunt, held the Saturday before Easter, has been a Riviera neighborhood tradition for decades. This event for kids has been a sellout every year, even in the rain. The Sportsman’s Club also raises funds for the American Cancer Society by participating each year in the Torrance Relay For Life held at South High School. Igor has been the club’s Relay For Life captain for 13 years. Through the leadership of the Hollywood Riviera Sportsman’s Club, the first Community Building was erected at El Retiro Park. Senior Citizens’ shuffleboard courts were constructed and equipped at Walteria Park with the Club’s support and guidance. The Club also provided the funds to build the snack shack at the South High School football field and provided much-needed computer equipment to Riviera Elementary and Richardson Middle Schools. El Retiro and Walteria libraries have received magazine racks and other equipment over the years through Club donations. In addition, the Club recognizes scholastic achievements by awarding annual scholarships to selected graduating seniors at South High. The Club also recognizes outstanding efforts by South High teachers with its highly regarded Socrates Award. Members of the Hollywood Riviera Sportsman’s Club meet at 7:00pm the second and fourth Wednesday of the month (September through June) at the Clubhouse, located at 24004 Neece Avenue in Torrance. To learn more, please contact the Membership Chairman, Mr. Brian Dean, via email at [email protected].
Do’s and Don’ts of Selling Your Home in 2017
Plan to sell your home in 2017? According to Realtor.com, certain blunders can hurt a homeowner’s odds of selling their residence. Here, some tips to follow when placing your property on the market. Don’t over-improve your home. Homeowners often assume that any upgrades they make will pay them back in full once they sell. That’s rarely the case. On average, you will recoup only about 64 percent of the money spent on renovations once your home sells — and certain improvements actually can work against you if they’re unusual or undesirable in your market. For example, you might consider a new swimming pool a plus, but many homeowners don’t want the hassle of maintaining it. Do check out a remodeling magazine’s cost versus value report to determine which upgrades provide the best return.You also can ask a Realtor for advice on which amenities are desirable (or nor) in your area Don’t renovate without permits. Failing to apply for permits before you knock down a wall or add a deck can come back to haunt you when you decide to sell. Without proper permits, buyers may worry whether the work done on your place is up to code, and as a result, refrain from making an offer. Do pull necessary permits. Building permits usually are required for any renovation that involves opening/building walls, electrical and plumbing changes. Don’t limit showing hours. Buyers are busy juggling work, family and looking for a new home. If you limit showings to a few hours on weekends, you might miss a potential sale. Do stay flexible. Cooperate with buyer’s agents who want to show your house, even if it’s inconvenient. Limiting showing times gives buyers the impression that the sellers will be difficult. Don’t overlook curb appeal. Although you lavish tons of attention on preparing the inside of your home for buyers, it’s easy to overlook the outside. Keep in mind that curb appeal is the first impression buyers have of your home, so it also pays to put some elbow grease into beautifying the exterior. Do make sure your paint job is pristine and your lawn is tidy and mowed. Be sure to replace any dead shrubs, prune trees, put out some potted plants, mulch garden beds and freshen your mailbox. Don’t rely heavily on open houses. While open houses once were a great way to sell a house, the vast majority of houses today are sold via the Internet. Do hold open houses, but don’t depend on them too much. Try to seek out agents who mine for buyers by using the Internet and social media. Don’t neglect to follow your agent’s advice. You might know more about your home than anyone else, but your real estate agent knows more about how to sell it. Your agent might make some suggestions you won’t like to hear — such as you need a new paint job or that the asking price you had in mind needs to be lowered a bit — but if you ignore your agent’s advice, you could risk seeing your house sit on the market and grow stale. Do listen to your agent. When it comes to pricing, consider the comps your agent presents. Agents buy and sell hundreds of houses in their career. You’re paying for their experience, so follow their advice.