Wednesday, October 26, 2022

PSL ranks No. 6 city in Florida with the most new businesses




22 FL Cities With The Most New Businesses: Study


 


Florida and other Southern states rank high for new businesses, a study said. 22 FL cities are on a list of most new businesses per capita.


 



FLORIDA — As worries about the U.S. tipping into a recession continue, one study says a reason for optimism is an elevated level of new business creation since the start of COVID-19.




The U.S. has averaged more than 400,000 monthly applications for new businesses since the pandemic began, buoyed by government stimulus payments, low interest rates and increased home values during the pandemic, along with the Great Resignation as workers decided to strike out on their own, according to the analysis by Smartest Dollar.


Florida and other parts of the South rank high for entrepreneurs starting their own businesses, the study said. From the Miami metro leading the largest category of cities, to The Villages at the bottom of the small cities list, the state has 22 cities among the tops for new businesses, Smartest Dollar’s report said.


Among metro areas, Florida’s cities stand out as the nation’s leaders in new business formation. With a fast-growing population, low taxes, and other business-friendly attributes, the Sunshine State is home to four of the top six major cities for new businesses per capita, according to data from the U.S. Census Bureau.


Here are the Florida metropolitan areas with the most new businesses, broken down by large, midsize and small metros.



Large Metros


No. 1 Miami-Fort Lauderdale-Pompano Beach



  • New business applications per 1k residents: 44.14

  • Total new business applications (2021): 270,966


No. 3 Orlando-Kissimmee-Sanford





  • New business applications per 1k residents: 30.76

  • Total new business applications (2021): 82,239


No. 5 Tampa-St. Petersburg-Clearwater



  • New business applications per 1k residents: 25.22

  • Total new business applications (2021): 80,089


No. 6 Jacksonville





  • New business applications per 1k residents: 25.18

  • Total new business applications (2021): 40,436


Midsize Metros



  • No. 2 Naples-Marco Island, 9,536 new business applications

  • No. 6 Port St. Lucie, 11,670

  • No. 9 Tallahassee, 9,054

  • No. 10 Cape Coral-Fort Myers, 17,719

  • No. 12 Lakeland-Winter Haven, 16,066

  • No. 14 North Port-Sarasota-Bradenton, 17,273

  • No. 19 Deltona-Daytona Beach-Ormond Beach, 12,758

  • No. 21 Ocala, 7,045

  • No. 26 Palm Bay-Melbourne-Titusville, 10,655

  • No. 28 Pensacola-Ferry Pass-Brent, 8,662


Small Metros



  • No. 10 Panama City, 4,197

  • No. 13 Crestview-Fort Walton Beach-Destin, 6,605

  • No. 26 Sebastian-Vero Beach, 2,878

  • No. 34 Gainesville, 5,666

  • No. 38 Sebring-Avon Park, 1,592

  • No. 40 Punta Gorda, 2,837

  • No. 72 Homosassa Springs, 1,912

  • No. 123 The Villages, 1,283


Wyoming leads the U.S. with 58.12 new business applications per 1,000 residents — potentially a product of the state’s low population, but also its lack of income taxes — while Delaware, a famously business-friendly state, comes in second at 44.98.


Other more active states for new business tend to be found in the South, while New England and the Midwest have lower levels of new business applications.


To determine the locations with the most new businesses per capita, researchers at Smartest Dollar — a website that compares small business insurance and products — calculated the number of new business applications per 1,000 residents for the year 2021.


Read the full report at https://smartestdollar.com/research/cities-with-the-most-new-businesses-per-capita.



Methodology & Detailed Findings


The data used in this study is from the U.S. Census Bureau’s Business Formation Statistics dataset. To determine the locations with the most new businesses per capita researchers at Smartest Dollar calculated the number of new business applications per 1,000 residents for the year 2021. In the event of a tie, the location with the greater total number of business applications in 2021 was ranked higher. Researchers also provided statistics on the one-year (2020–2021) and two-year (2019–2021) change in new business applications. To improve relevance, only locations with at least 100,000 residents were included. Metropolitan areas were further grouped based on population size: small (100,000–349,999), midsize (350,000–999,999), and large (1,000,000+)





Rising debt may ‘adversely affect’ older adults’ health




Debt has risen among older adults which could correlate with multiple illness diagnoses, but secured debt was less detrimental than unsecured debt according to data


Older adults who find themselves burdened by debt in later life are faring worse on a variety of health-related issues when directly compared to their less-indebted counterparts. This is according to research from the Urban Institute, highlighted recently in a story published by the New York Times.


“[R]esearchers at the Urban Institute, by analyzing broad national data over nearly 20 years, have reported that indebted older adults fare measurably worse on a range of health measures: fair or poor self-rated health, depression, inability to work, impaired ability to handle everyday activities like bathing and dressing,” the story reads.


Those who reported themselves as in debt were also more likely to have ever had at least two or more illnesses diagnosed by a physician, including heart and lung disease, cancer, heart attacks, strokes, diabetes and hypertension, the story reads based on the data.


However, drawing a direct link between the accumulation of debt and a higher degree of health risks is not necessarily the aim of the research according to Stipica Mudrazija, a senior research associate with the Urban Institute.


“Debt is not a bad thing in and of itself,” he told the Times. “If it’s used cautiously, it can build up wealth over time.”


In eras past, it was more typical for seniors to reduce their levels of debt the closer they became to retirement. In more recent times, however, succeeding generations of seniors have increased their debt levels as opposed to their predecessors, the story reads.


“There’s a group of older people in financial distress,” said Annamaria Lusardi, an economist at the George Washington University to the Times. “They’re highly leveraged; they’re carrying high-cost debt. They’re being contacted by debt collectors. They’re not going to enjoy their golden years.”


Based on data from the nationwide Health and Retirement Study (HRS), 43% of older Americans at or over the age of 55 carried debt at a median level of just over $40,000. By 2016, the percentage of affected older adults had risen to 57%, with the median level rising to just under $63,000.


The kind of debt, however, factored into the data. Secured debt — including from a mortgage or derived from some other kind of home loan — appeared less detrimental to health than unsecured debt — such as credit card debt, student loans or medical balances — according to the study published by the Boston College Center for Retirement Research (CRR).



Tuesday, October 25, 2022

Where Are Young People Buying Homes?





The housing market has increasingly discouraged young people from buying homes. A June 2022 survey by Money and Morning Consult found that given the state of the housing market over the past two years, 48% of Generation Z and 44% of Millennials report that they are less likely to buy a home. This is significantly higher than the 38% of people overall who report wariness.


Some cities, however, have attracted more young homebuyers in recent years than others. In this study, SmartAsset analyzed the cities where more (and fewer) young people are buying homes. We compared 200 of the largest cities across two metrics: 2021 homeownership rate for those under 35 and the 10-year change in homeownership rate for those under 35. For more information on our data and how we put it together, read our Data and Methodology section below.


This is SmartAsset’s second annual study on where young people are buying homes. Read last year’s version here.


Key Findings



  • In eight cities, more than half of young people own their homes. The under-35 homeownership rate is highest in Florida’s Port St. Lucie (roughly 60%). In comparison, nationally, only about 37% of individuals under the age of 35 own their home or apartment.

  • California cities rank at the top and bottom of our list. Two California cities rank in our top 10 places where more young people are buying homes (Ontario and Roseville), while four rank in our bottom 10 (Fullerton, Glendale, Torrance and Salinas). Interestingly, though Ontario and Fullerton are less than 30 miles away from each other, the under-35 homeownership rate varies by more than 27 percentage points (41.25% in Ontario and only 13.32% in Fullerton).

  • Across the 10 largest cities, Philadelphia ranks highest. Ranking in the top half of the study, about 27% of young people in the City of Brotherly Love are homeowners. In stark contrast, this figure is less than 13% in the two largest U.S. cities (New York and Los Angeles).


 


Where More Young People Are Buying Homes


Surprise, Arizona ranks as the top place where more young residents are buying homes. Surprise has seen a 10-year increase of 15.88 percentage points in the homeownership rate among people younger than 35, the second-largest growth in our study. The total homeownership for that age cohort in 2021 was 57.60%, also the second-highest rate we analyzed for that metric.


Across the other top nine cities where more young people are buying homes, Chesapeake, Virginia had the best overall 10-year change in the homeownership rate for those under 35. Census Bureau data shows that from 2011 to 2021 the under-35 homeownership rate in Chesapeake grew by almost 16 percentage points. Meanwhile, the 2021 homeownership rate for young people is highest in Port St. Lucie, Florida (60.23%).


Where Fewer Young People Are Buying Homes


Two of the three places where the fewest young people are buying homes are in New Jersey. These Garden State cities are Paterson and Jersey City. In both cities, less than 12% of people under 35 are homeowners and the under-35 homeownership rate is declining. In Paterson, the under-35 homeownership rate dropped by more than nine percentage points between 2011 and 2021.


As previously noted, four cities in California rank at the bottom of our list. Across those cities, the under-35 homeownership rate is lowest in Glendale (9.90%) and declining the most in Fullerton (-8.73%). The table below shows the top 10 cities where fewer young people are buying homes.


Data and Methodology


To find the cities where more and fewer young people are buying homes, SmartAsset examined data for 200 of the largest cities in the U.S. We considered two metrics:



  • 2021 homeownership rate for those under 35. This is the homeownership rate among 18- to 34-year-olds. Data comes from the U.S. Census Bureau’s 2021 1-year American Community Survey.

  • 10-year change in homeownership rate for those under 35. This compares the homeownership rate among 18- to 34-year-olds in 2011 and 2021. Data comes from the U.S. Census Bureau’s 2011 and 2021 1-year American Community Surveys.


First, we ranked each city in both metrics. Then we found each city’s average ranking and used the average to determine a final score.


Saving Tips for Millennials



  • Invest early. At the onset of your career, it’s important to dedicate some of your earnings to building up savings for retirement. By planning and saving early you can take advantage of compound interest. Take a look at our investment calculator to see how your investment can grow over time.

  • Buy or rent? When you’re moving to a new city, you need to decide if you are going to rent or buy. If you are coming to a city and plan to stay for the long haul, buying may be the better option for you. On the other hand, if your stop in a new city will be a short one, you’ll likely want to rent.

  • Consider a financial advisor. An expert can help you maximize your money with guidance on savings, investments and retirement. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.



 



STEPHANIE HORAN, CEPF®Stephanie Horan is a data journalist at SmartAsset. A Certified Educator of Personal Finance (CEPF®), she sources and analyzes data to write studies relating to a variety of topics including mortgage, retirement and budgeting. Before coming to SmartAsset, she worked as an analyst at an asset management firm. Stephanie graduated from Williams College with a degree in Mathematics. Originally from Philadelphia, she has always been a Yankees fan and currently lives in New York.




Reverse mortgages have gotten ‘a makeover’




Reverse mortgages have often been described by both industry insiders and outside observers as having a reputational problem with the general public. However, as more product reforms have proliferated on the side of the Federal Housing Administration (FHA)-sponsored Home Equity Conversion Mortgage (HECM) program and as lenders have developed their own private-label reverse mortgage products, the tide may be beginning to turn.


This is according to a new feature published in the Wall Street Journal, which interviews financial advisors and reverse mortgage industry experts to paint a broader picture of how the reverse mortgage product and industry have changed over the course of the past decade.


Wade Pfau is a financial professional who has openly discussed the utility of a reverse mortgage for senior clients.


“For decades the industry’s image was tainted by horror stories about borrowers who faced foreclosure, and surviving spouses who were evicted,” the article begins. “But today, these products — first introduced in 1961 — have evolved into tools that, with federal insurance and oversight, often do what was originally intended: ease financial burdens for retired homeowners with limited incomes who want to stay in their homes until death.”


This is evident in the number of borrower protections that reverse mortgages have as product features, including limits on loan amounts; the non-recourse feature in case the home being borrowed against accrues a higher loan balance than the value of the property; and a raft of new protections implemented to protect non-borrowing spouses (NBS) from being displaced should the primary borrower pass away or move out of the home.


“Reverse mortgages still represent just a small part of the financing options that senior homeowners choose to meet their needs in later life,” the article reads. “And there are still some downsides to HECMs, such as high upfront fees. The burden of paying off the loan, meanwhile, falls on your heirs, though they have the option of keeping the house if they do pay off the loan.”


The article enlists input from financial planners including Wade Pfau, well-known in reverse mortgage circles and who recently released an updated edition of his book on the topic which he previously spoke to RMD about.


The article also discusses the specifics of the product with Steve Irwin, president of the National Reverse Mortgage Lenders Association (NRMLA) and academic researcher John Salter, who has helped create highly influential literature on the topic of reverse mortgages.


The article also offers caveats that are similarly discussed openly by reverse mortgage professionals.


“It is wise to have a financial adviser guide you through the process of deciding whether an HECM is right for you, and choosing the best payment option if so,” it reads. “If you miscalculate on the payouts, you could outlive the proceeds.”



Monday, October 24, 2022

Existing-home sales continue to slide amid housing correction




Existing-home sales fell to another record low in September as the housing market continues to undergo an adjustment due to the continuous surge in interest rates, the National Association of REALTORS said Thursday.


Total existing-home sales in September declined for the eighth consecutive month, down 1.5% from August to a seasonally adjusted annual rate of 4.71 million – the slowest pace since September 2012. Sales were also lower by 23.8% compared to a year ago.



NAR chief economist Lawrence Yun said that higher mortgage rates, which eclipsed 6% for 30-year fixed mortgages in September and are now approaching 7%, have caused the slowdown in sales.


Despite weaker sales, Yun noted that some homes are still receiving multiple offers and selling above the list price due to limited supply. Total housing inventory decreased 2.3% month over month and 0.8% year over year to 1.25 million units in September. At the current sales rate, unsold inventory represents a 3.2-month supply – unchanged from August and up from 2.4 months in September 2021.


“The current lack of supply underscores the vast contrast with the previous major market downturn from 2008 to 2010 when inventory levels were four times higher than they are today,” Yun said.


Properties typically remained on the market for 19 days in September, three days longer than in the previous month. Around 70% of homes sold were on the market for less than a month.


The median existing-home price for all housing types was $384,800, an 8.4% increase from last year’s $335,100. While price appreciation continued in September, its pace decelerated for the third month in a row after hitting a record high of $413,800 in June.


“In addition to the greater affordability constraints for potential homebuyers, many existing homeowners likely feel ‘locked-in’ to their existing, lower-interest-rate mortgages,” said Doug Duncan, Fannie Mae’s chief economist. “This contributes to fewer homes being listed, as well as fewer potential buyers, and may lead to a growing share of listings having to cut prices to meet the reduced demand.


“Furthermore, the supply of completed, new single-family homes for sale has started to rise, suggesting that homebuilders may also need to begin offering greater price concessions to move inventory. We expect these trends to continue in the coming months.”



Reverse mortgages are hot, hot, hot




Rising rates may begin to be having their first effects on the activity of the reverse mortgage industry, based on the latest industry performance metrics for the prior month and according to leading industry analysts.


Home Equity Conversion Mortgage (HECM) endorsements fell in May 2022 by 7.7% to 5,783 loans, the second consecutive monthly volume reduction even though the figure remains high by recent historical standards. This is according to data compiled by Reverse Market Insight (RMI). While both March and April featured historic production of over 6,000 loans — a threshold that would’ve seemed highly unlikely just a couple of years ago — higher rates appear to have driven industry activity below that threshold.


The production of new HECM-backed securities (HMBS) in May reached $1.45 billion, a drop from the over $1.6 billion in HMBS issuance seen the prior month. May marked the 15th month after the London Interbank Offered Rate (LIBOR) “era.” As previously stated, a total of $13.2 billion in HMBS issued in 2021 easily overtook the previous industry record of $10.8 billion set in 2010, according to publicly available Ginnie Mae data and private sources compiled by New View Advisors.


Endorsements are down, but activity remains high


While a rise in 10-year Constant Maturity Treasury (CMT) rates may have impacted the reduction in volume somewhat, interestingly the number of HECM case numbers issued by the Federal Housing Administration (FHA) showed approximately a 10% increase, according to RMI.


When asked about what the industry should take away from this latest glimpse at industry activity, RMI Director of Client Relations Jon McCue adds more relevant historical context to these figures.


“Well, I don’t think we need to sound any alarms as an industry quite yet given this month still saw our third-highest volume total in the past 12 months, and the best May since 2009,” he says. “However, the endorsement volume is trending downward as the 10-year CMT trends up, and that is most likely because H2H is trending downward. We’ll know by how much exactly in a few weeks though.”


This could be a quickly-emerging sign of the dissipation of the so-called “refi boom,” where HECM-to-HECM refinances have been driving at or nearly half of industry activity for most of the past year, but it may also be a little too soon to make a full determination on that matter, McCue says.


“Until we get the actual refi numbers this may be a bit premature to answer definitively, but as with any ‘refi boom,’ they always end,” McCue says. “The good news for our industry, though, is that our lending environment is still much more favorable than it is in the forward space. Our clients already have homes, they have equity, and they can always use more cash especially given the current state of the economy.”


Even as rates rise, reverse mortgage product penetration remains at only 2.2% among the 27 million age-eligible households that could qualify for a HECM, McCue adds.


“That isn’t even counting the additional number that can qualify for any of these 55-plus [proprietary] products,” he says. “So, even with rates rising we still have a lot households that will qualify for these loans. That means that growing new business shouldn’t be too hard since most of our age-eligible population doesn’t have this product yet.”


In spite of changing dynamics, the fundamentals of the reverse mortgage industry remain strong based on what can currently be gleaned, McCue says. Echoing some of the conversation on a recent episode of the HousingWire Daily podcast, RMI is also hearing of additional interest among industry participants in proprietary products.


“We have heard similar things around the industry,” McCue says. “Unfortunately, the data around those products are cloudy at best. We could see HECM drop, but some of that volume may be getting picked up under these other offerings. Until we see a huge drop in either case numbers or actual endorsements for HECM, the best thing we can recommend is to make sure you’re going after new clients.”


HMBS issuance down, but on track for record 2022


When asked about what first comes to mind regarding the HMBS issuance data for May, New View Partner Michael McCully still sees a lot of positive signs in the way things are moving, he explains.


“While PLFs are down, and the refi opportunity diminished, HPA is up materially, and proceeds remain generous for first-time borrowers looking to unlock equity in their homes,” McCully says. “From a proceeds perspective, the combined impact of HPA and increased lending limits may largely offset rising rates.”


New View’s HMBS issuance commentary notes that the industry is still on track to break a record once again at the end of the year. In spite of a general reduction in issuance this month, the general trajectory of issuance remains strong, he explains.


“As we noted, the industry remains on track for another record year in 2022,” he says. “However, the third quarter will be a better indicator for year-end trajectory.”


In terms of comparison, performance this year industry-wide will be challenged when looking directly at 2020 and 2021, McCully says. That challenge strikes the forward and reverse mortgage businesses indiscriminately.


“Rising rates will put downward pressure on earnings, forward and reverse,” he explains. “It will be very difficult to replicate the perfect lending conditions that existed during the second half of 2020 and 2021, even with the pandemic.”



Friday, October 21, 2022

ST. LUCIE HOUSING INVENTORY RISES, SUPPLY REACHES 2.8 MONTHS






Just in! September 2022 reports have been released from Florida Realtors® detailing recent real estate activity in St. Lucie County. The reports compare year-over-year data. Here are statistics on single-family homes.













The upward trend continued in September, with the year-over-year monthly supply of inventory reaching 2.8 months. The median home price also rose again, with an increase of 19 percent to $392,590.



“With inventory rising, Realtors® and their buyers have the opportunity to comb through more listings to find that perfect home that’s just right. Even with more competing listings, sellers are still receiving a median of 97.7 percent of their original listing price,” said Carlos A. Melendez, President of Broward, Palm Beaches & St. Lucie Realtors®.



The Broward Palm Beaches & St. Lucie Realtors® also reports that closed sales are down 18.7 percent in September. Contact a local Realtor® today — they are the market experts and will serve as your advocate in the home buying or selling process. Learn more on how Realtors® can serve your needs at OnlyARealtor.com.


View Reports: Single Family | Townhomes/Condos




 


 




Broward, Palm Beaches & St. Lucie Realtors® is the 3rd largest local Realtor® association in the nation, representing over 42,000 Realtors®. Their subsidiary, BeachesMLS, powers over 43,000 MLS subscribers across South Florida & the Treasure Coast. For more info, visit Rworld.com or contact Communications@rworld.com.





Reverse mortgage could be an option to pay for long-term care




Tapping home equity could make sense for some, but is a complicated decision that should be examined from all angles according to a new column.


Reverse mortgage loans available to homeowners aged 62 or older could be a viable consideration for those seeking to find a way to pay for long-term care (LTC). However, such a decision is a big and potentially complicated one, which should be discussed with trusted advisors or financial planners before a potential borrower decides to move forward.


This is according to a new column published by the Associated Press (AP), and widely distributed to a number of local and national news outlets across the United States. The column, written by Kate Ashford of personal finance website Nerd Wallet, aims to offer information that could assist a potential borrower in deciding whether or not a reverse mortgage is appropriate for their situation.


“If you have at least 50% to 55% equity in your home, you have a good chance of qualifying for a loan or line of credit for a portion of that equity,” the column reads. “How much you can access depends on your age and the home’s appraised value. You must keep paying taxes and insurance on the home, and the loan is repaid when the borrower dies or moves out. If there are two borrowers, the line of credit remains until the second borrower dies or moves out.”


While a reverse mortgage can assist in providing a cash stream to pay for LTC, there are shortcomings that should be considered, according to the column.


“For instance, a reverse mortgage requires that you live in the home,” the column reads. “If you’re the sole borrower of a reverse mortgage and you have to move to a care facility for a year or longer, you’ll be in violation of the loan requirements and must repay the loan. Because of the costs, reverse mortgages are also best suited for a situation where you plan to stay in your home long-term.”


Potential reverse mortgage advantages include the idea that a borrower is tapping an “up” asset — meaning that the home is appreciating in value — and that the loan proceeds themselves are not taxed, although borrowers must keep paying their associated property taxes and homeowner’s insurance to keep the loan in good standing, the column says.


Disadvantages of a reverse mortgage includes a high upfront expense, interest accrues on any used proceeds, and that heirs will potentially have less after the borrower dies or leaves the home, the column says.


“The question of whether to use your home equity as a stream of income can be complicated and depends on your other assets and plans for the future,” the column reads. “A financial planner can help you run the numbers and point you toward a vetted reverse mortgage specialist if the product makes sense for you.”


The LTC needs of seniors can vary greatly depending on a number of individual factors, according to research from the Boston College Center for Retirement Research (CRR) and reported on late last year by CNBC.



Thursday, October 20, 2022

Iraq and Afghanistan War Memorial coming to PSL’s Veterans Memorial Park




After surveying more than 50 potential locations across the state, the Iraq and Afghanistan War Memorial Foundation has chosen Port St. Lucie’s Veterans Memorial Park as the home for its new monument.


This monument will honor Floridians who served in our nation’s wars in Iraq and Afghanistan.  Made from India Black Granite (like the Vietnam War Memorial), this impressive monument will serve as an enduring reminder of the sacrifices made on behalf of our nation. When dedicated, it will be the only monument of its kind in Florida.


“There are some monuments in the state in honor of those who served in Iraq and Afghanistan, but ours will be unique because it will list Floridians who were killed in each war. There’s no other monument like it in Florida and possibly the United States,” said Steve Udovich, the foundation’s founder. “We believe Port St. Lucie’s beautiful Veterans Memorial Park is the best location in the entire state of Florida for this monument to honor these service members who made the ultimate sacrifice.”


Iraq and Afghanistan War Memorial of Florida rendering


Port St. Lucie prides itself on being a hometown for heroes. Veterans Memorial Park includes the Vietnam Veterans wall, World War II Memorial, and Korean War Memorial, Purple Heart Memorial and Gold Star Families Memorial.


“Port St. Lucie is a veterans’ community. Our citizens truly appreciate and honor our veterans and those who gave their lives for our freedom,” said Veteran and Port St. Lucie Councilman David Pickett. “We look forward to working with the Iraq and Afghanistan War Memorial Foundation to bring this important memorial to our City.”


The front of the monument will include campaign ribbons, outlines of each country, and service emblems. The back will list 355 names of Floridians who were killed in each war. The Iraq and Afghanistan War Memorial Foundation takes pride in honoring the memory of Floridians who served, and those who made the ultimate sacrifice.  The Foundation intends this to be the first effort, then plans to duplicate it in other states, same design with state specific names.


Now that a location has been identified, the Foundation will start raising  funds in January to pay for the Florida monument. Those interested can find more information at www.IAWMF.org. The Foundation and City expect to dedicate the memorial in December 2023.











Reverse mortgages have a ‘strong following’ among financial planners




The new column describes a climate of interest among financial planners for reverse mortgages, as they advise clients through a turbulent economy


In a climate of general market volatility and high inflation, reverse mortgages may have become a more attractive option for seniors of qualifying age. Financial planners have begun taking more interest in the potential a reverse mortgage could have to provide certain clients with additional cash flow, however the ease with which that additional cash could come leads to a possibility of fostering bad habits among borrowers.


This is according to a column published this week by CNBC. Citing March and April 2022 Home Equity Conversion Mortgage (HECM) origination data from the U.S. Department of Housing and each — indicates more specific product interest, the column describes.


“The economics of reverse mortgages are not as good as they used to be,” the column reads. “In 2017, rule changes made by [HUD], which administers the HECM program, increased the mortgage insurance premium on the loans to 2%, from 0.5%, with the aim of reducing potential losses to taxpayers. That increased the upfront costs of reverse mortgages by $1,500 per $100,000 mortgage face value.”


However, the market conditions for reverse mortgages are more favorable now than they have been over the past few years, according to conversations CNBC had with Wade Pfau of McLean Asset Management and RetirementResearcher.com.


“Reverse mortgages have developed a strong following in the financial planning profession, with advisors like Pfau recommending them as a potentially useful option in retirement distribution management,” the column reads. “Home equity represents about 66% of the average retired American’s wealth, so using it as a potential source of funds if you’re strapped for cash makes sense — even if costs are higher now,” it says based on Pfau’s input.


The praise is not universal, however, with one financial advisor describing for CNBC how he has had only two conversations with clients about the loans with only one having chosen to move forward.


“I know a lot of reputable people like reverse mortgages, but I’m still hesitant to advise clients to consider them,” said Howard Hook, senior wealth advisor with EKS Associates in Princeton,


N.J. “You have to be careful using debt to finance living expenses or to bridge a fall in the [stock] market. It’s easy money and it can foster bad habits.”



Wednesday, October 19, 2022

Kitchen Islands: The Life of the Party




You may remember when the kitchen’s status symbol was a hulking appliance like a six-burner range or a smaller but still chichi wine refrigerator. These statement pieces enhanced a kitchen and set it apart from others.


Nowadays, though, islands are taking the place as the kitchen must-have. Buyers might not consider it a deal killer if a kitchen has no island, but the house may not get the same attention, says salesperson Barb St. Amant with Atlanta Fine Homes, Sotheby’s International.


“It’s the number one design feature our clients ask for in a kitchen,” says John Potter, architect and partner at Morgante Wilson Architects in Chicago.



They might be trending now, but islands are hardly new. The difference today is that islands have evolved into an aesthetic touch and a space for gathering, rather than an area dedicated solely to kitchen tasks like chopping and prepping. “Kitchen islands can be gathering spots for the family for breakfast or the cocktail hangout spot when entertaining,” says Rozit Arditi, principal of New York City–based Arditi Design. “It’s also the main conversation area where everyone gathers while cooking,” she says.


Add to that a homework center, a space for gift wrapping, and a dinner spot as families become more casual, Potter says.





Modern Kitchen With Large Island and Dark Cabinets

© de Giulio Kitchen Design. Photo: Dave Burk






Such versatility means islands are now larger, which is in step with kitchens themselves getting bigger. Many kitchens today function as part of an open-plan layout and a bridge between the workspace and entertainment areas, says designer John Hall of JH Design International in Chagrin Falls, Ohio.


Sleek is in, which means many kitchens now lack upper cabinets. Still, a longer and wider kitchen island makes up the storage difference, says designer Jodi Swartz of KitchenVisions in Boston.


Bigger islands can also fit more seating. Although the pandemic didn’t initiate any changes in the island, it’s thought to have increased how often people congregate around it, says kitchen designer Mick De Giulio of de Giulio Kitchen Design in Chicago.


More than just the workhorse of the past, the kitchen island offers homeowners all kinds of new options, styles and uses, so long as it is designed functionally. Here are some considerations.


Size


The size should be based partly on the room’s dimensions so that the island is proportional to the space. How it’s used should also influence its size. Visually, there should be enough open space in the room, too. “Open space and flow are more important than having one more cabinet for storage,” says designer JT Norman of Kitchen Magic in Nazareth, Penn.





White Kitchen With Blue Backsplash and Marbled Island

© Morgante Wilson






Suppose the kitchen space isn’t large enough. In that case, an alternative may be a peninsula, once popular and still a viable option, says designer Fabrice Garson of Bilotta Kitchen & Home in Mamaroneck, N.Y.


Placement


Where an island can fit in the room will also affect its size, says De Giulio. It shouldn’t be in the way of traffic to other rooms or other parts of the kitchen.


“If you have to walk around an island to get from a sink to a refrigerator each time, that doesn’t make sense,” De Giulio says. “I still believe in the principles of the work triangle,” he says, a concept formulated by the National Kitchen and Bath Association.


The amount of aisle space between the island and perimeter countertops and cabinetry is important, too. De Giulio advises 48 inches—enough space so that, with a dishwasher’s door open all the way, two people can pass easily.


Main Functions


When designers at Bilotta Kitchen & Home first meet with a client, they ask about the homeowner’s lifestyle and preferences and design around the answers, Garson says. Some islands may include more than one level to separate functions such as mixing drinks at a bar sink on an upper level or comfortably rolling out a pastry on a lower level. Appliances like a dishwasher or beverage cooler are also popular island options, says Michael Cox, principal with Foley & Cox in New York City.


Double Islands


Superlarge kitchens are increasingly designed with two smaller islands, rather than one enormous unit that is unwieldy to get around. Another selling point for two islands is that functions can be divided between them.





Bright White Kitchen With Two Islands

© Bilotta Kitchen & Home






For example, De Giulio has designed one island for working and congregating and the other for setting out a buffet and serving, he says. Garson has designed one island for sitting and gathering, homework, and eating and a second with a sink and appliances—“a real workstation,” he says.


Seating


For comfortable seating, De Giulio prefers a standard 36-inch counter height rather than higher 42-inch bar height. “Many children find it hard to sit on a stool at that height,” he says. Norman advises leaving 24 inches between stools for elbow room.





White Kitchen With Island That Has Dining Table Attached

© Morgante Wilson






One option that Hall is incorporating in some islands is to have a second seating area. A table can extend from the island at a lower 30-inch height for a comfortable option.


Cabinet Construction


For storage, De Giulio favors drawers. Heights within should vary to fit what’s stored. Deep drawers work for a large pot or blender, while shallow ones work for towels and silverware. Arditi suggests adding shelves to cabinets for cookbooks and staggered storage.


Countertop Materials


Swartz’s first rule of thumb is that homeowners understand that no material is 100% indestructible. That means they should not take anything hot off a range or from an oven and place it directly on any surface, including the island.


What’s popular now are manmade surfaces that look good and can be used with less worry, Garson says. Cox favors stress-free surfaces like absolute black granite and pure white Caesarstone. Some homeowners like to integrate a butcher block or live-edge, Garson says, while others may favor a marble space.





White kitchen with blue island and white countertops

© Morgante Wilson






Multiple types of edges can complete the countertop. De Giulio thinks square edges look crisp and clean in a modern kitchen while an ogee or furniture edge appears more traditional. Other popular styles include eased, pencil, and bullnose.


Permanent or Removable


Some designers and homeowners prefer a table or other piece of furniture for a less utilitarian look. A movable trolley, for instance, can be wheeled about the room. “It makes the space flexible and accommodating,” Swartz says.


The downside of a table is that the island aspect becomes less practical, since it usually won’t have storage or be at the best height for multiple tasks. The problem with a mobile design is that islands tend to get heavy with stuff piled atop them, and then aren’t easy to move, De Giulio says.


Lighting


The familiar style of three pendant lights above an island has become almost a cliché. De Giulio now favors more linear, longer fixtures in metal or metal and wood that match the scale of the island. “They appear to float above the space,” he says. Cox likes to balance quality task lighting with a “killer decorative fixture for a central focal point,” he says.


BONUS: Mix and Match?


White kitchens still rank number one in popularity, according to surveys from online design and remodeling source Houzz(link is external). However, introducing another color or material differentiates an island and adds punch.


Garson finds that more than half of his clients now want a different material or color for the island than what they use around the perimeter.


Sandya Dandamudi, president of Chicago-based GI Stone, a supplier, fabricator and installer of custom stone, sees the mix-and-match look exploding. “Several of our clients select quartz counters for the perimeter, which includes around the sink and cooktop, and opt for an exotic natural stone for the island and backsplashes. This is a great way to combine practical needs and aesthetic tastes,” she says.





Large white kitchen with navy island and white countertops

© Foley & Cox. Photo: Tim Lenz






Will this multicolor look remain in vogue? “Short of white or cream, what isn’t trendy?” Swartz asks. “Cabinets are fashion. Some elements go out of style every 10 to 15 years. People should choose wisely and best match the feel of their home’s architecture,” she says.


De Giulio advises that homeowners base color choices on what looks best to their eye. “It depends on a room’s whole artistry,” he says.



Accessing equity to help 'retirees live a better life'




Karen Surca, of MPA, sat down with Christian Mills, head of financial advisor relations with RMF, to discuss the growing popularity of reverse mortgage options for the older American demographic, and why this mortgage option should be viewed as a key retirement tool.


Once viewed with skepticism, reverse mortgage options are now receiving the attention they deserve. Brokers are also waking up to the realization that among older homeowners reverse mortgages can help to provide ‘another leg’ to the best retirement stool.


This specialized mortgage option has become an attractive option for a demographic that can benefit from looking to other sources of retirement income by tapping into what is often their biggest asset.


While the thought of taking out prized equity from the home may concern some homeowners, access to a reverse mortgage can represent a potential steady stream of income for homeowners who may not want to dip into other retirement fund avenues.


For Mills, head of financial advisor relations with RMF, the desire to utilize equity has always been there. However, the lack of understanding surrounding the reverse mortgage product has served to discourage interested borrowers from pursuing this loan option.


“Our focus is working with seniors to help them have a better retirement, and the Home Equity Conversion Mortgage (HECM) is still the lion’s share of reverse mortgages for those 62 years and above,” Mills explained.


“Products starts at 55 years of age,” he added.


Mills pointed out that with a reverse mortgage “older homeowners can afford to do more things that they wanted to do in retirement.”


“It could be letting them sleep better at night because they are not worried about their portfolio and it may help them keep their home or pay for health care costs,” Mills stated.


Reverse mortgages are part of the secondary loan market which is growing in the US. Mills pointed out.


“Being able to use home equity is something that a lot of people actually are doing such as cash-out refinances and things like that. There is no age limit for these secondary mortgages,” Mills said.


“So, it is not a new concept. Introducing older homeowners to an asset that they may have not thought of,” he added.


“Our philosophy is to do good by doing good.”


Every lender in the US that provides for the HECM product uses the exact same formula when calculating the basis of the loan, Mills highlighted.


“A HECM is designed for the older American homeowner, you have to live in your home as your primary residence, you have to be at least 62 and you have to maintain property taxes, general maintenance, and insurance on the home,” Mills summarized.


“Most importantly you have to have sufficient equity. Typically for someone in their 60s, this is going to be about 60% or so equity. [To qualify] you need to demonstrate a bare minimum of 40% equity.”


“You can compare the principal limit to a Loan-to Ratio (LTV). They actually lowered the amount of home equity you can tap into, and this made the program more sustainable because we’re much less likely to have people owe more on a reverse mortgage than the home is worth,” Mills detailed.


Along with the change to the principal loan limit, Mills felt that Lenders were now more open to the idea of floating the reverse mortgage loan option among their older clients.


“I think it opened up for a lot more people in the financial advisory space to look at the loan option because this is something [viable] they could see in conjunction with a legacy plan,” Mills said.


“Another big thing that has changed is now the max claim amount, which is the amount that we consider the home to be worth, is $970,800. So, it has opened the eyes of a lot of other financial professionals to say, ‘hey, this is not a loan of last resort’ because we are talking about million-dollar homes here.”


Just like any other type of investment option, a reverse mortgage is viewed favorably because of the asset that it is directly tied to: the home, which is considered in fnancial circles to be a ‘buffer asset’.


“A buffer asset means that you are not drawing from the same source of funds,” Mills stated.


Mills explained that by adding a reliable income stream, other sources of retirement income can be protected.


“Typically, a third of your income should come from some sort of employer-sponsored savings plan, a third from Social Security, and a third from personal savings. If you introduce home equity, you are adding a fourth leg to the stool and if you think about a stool that has three legs versus four legs, four legs are more stable,” Mills detailed.


“It creates a pool of cash; it is a separate bucket.”


Mills also illustrated that reverse mortgages are not tied to the whims of the stock market or other types of investments. Property, in this market, also tends to appreciate.


“People do not have to worry about selling assets at a tremendous loss. If you don’t have to sell those when prices are depressed, because there is a market swing, you can pull the money from the home,” Mills stated.


As Mills pinpointed, now is the time to grab the financial opportunity that reverse mortgage options afford.


“Homes are appreciating much faster than the loan balance itself, so you are growing ‘equity positive’ even with a reverse in there,” he said.



Tuesday, October 18, 2022

New stand-up comedy series debuts at MIDFLORIDA Event Center




The hottest spot in Port St. Lucie for stand-up comedians and improvisers is the MIDFLORIDA Event Center. Its inaugural Comedy Zone series begins Nov. 18, sponsored by Budweiser, with three shows featuring six nationally renowned comedians.


No matter which comedy style makes you laugh hardest, the wide range of comedians featured in Comedy Zone should appeal to a variety of audiences.  Tickets are now on sale. Individual tickets start at $35 per show plus tax and fees. A cash bar will be available. Parking is free. A direct link to purchase tickets is at www.etix.com or in person at the MIDFLORIDA Event Center Box Office, 9221 SE Event Center Place, Monday through Friday, 9 a.m. to 4:30 p.m. They may also be purchased by calling 800-514-3849.


The lineup for PSL’s Comedy Zone series


Friday, Nov. 18


Headliner Dean Napolitano

A throwback to the great comedians of yesteryear with a modern twist makes Dean one of the most prevalent comedians working today. Dean is also a favorite among Hollywood’s elites, opening for the likes of Don Rickles and Joan Rivers.


Feature Act Richy Leis

As seen on MTV, VH1, TMZ and more, Richy has worked with some of the biggest names in the business, such as Dana Carvey (SNL), David Koechner (Anchorman: The Legend of Ron Burgundy) and more.


Friday, Jan. 13


Headliner Julie Scoggins

A Southern girl with universal appeal, Julie’s shows sell out from Florida to Oregon. Folks actually want to sit in the front! Julie is regularly heard on XM/Sirius Blue Collar Radio, and many syndicated stations, including the John Boy & Billy Show and the Bob & Sheri Show.


Feature Act Paul Jensen

Paul has performed at top comedy clubs in the country and is a regular at the Atlantis Casino and Resort in the Bahamas. By its cover, his intimidating presence will subside when you realize his only goal is to make you laugh.


Friday, Feb. 24


Headliner Steve White

Think Morgan Freeman, Robin Williams, Chris Rock, Jim Carrey and Denzel Washington all rolled into one! Steve has guest-hosted the legendary Soul Train, appeared on the Oprah Winfrey Show and stand-up shows, including Comedy Central, Def Comedy Jam and more.


Feature Act John Charles

John has a penchant for big ideas and brings his own signature brand of slacker mentality to every performance, whether on stages across the country or heard “On Air with Ryan Seacrest.” You don’t want to miss this comedy all-star!


A complete lineup of events is available at www.midfloridaeventcenter.com, call 772-807-4488 or email contact@midfloridaeventcenter.com.



The Pros and Cons of Reverse Mortgage Loans




What is a reverse mortgage?


reverse mortgage loan is a home equity product designed for older homeowners. Unlike other mortgages, these don’t require monthly payments. Instead, the lender pays the homeowner.


Here are some other important things to know about reverse mortgages:



  • They’re for seniors. Government-backed reverse mortgages require borrowers to be at least 62 years of age to qualify. Private reverse mortgages sometimes have lower age thresholds (down to 55 in some cases).

  • There are several payment options. With reverse mortgages, you can choose to get a lump sum payment upfront, monthly payments across a certain time period, a line of credit or some combination of these.

  • The loan amount depends on many factors. Lenders base loan amounts on the borrower’s age, the value of the home and the interest rate. For government-backed reverse mortgages, the maximum loan amount is $970,800 as of 2022.

  • Most don’t have minimum credit scores. Unlike other loan programs, most reverse mortgages — at least the government-insured kind — don’t have minimum credit score requirements. Instead, lenders look at your income, debts and payment history to get a pulse on your full financial picture.

  • You never make a payment. The balance on a reverse mortgage — plus interest — comes due when you sell the house, move away for at least one year, or pass away.


Though these loans don’t involve monthly mortgage payments, reverse mortgage borrowers still need to stay current on their homeowners insurance, property taxes and homeowner’s association (HOA) dues. Failing to do so could mean losing their house.


Reverse mortgage requirements


The exact requirements of a reverse mortgage depend on whether it’s a government-backed mortgage (called a Home Equity Conversion Mortgage or HECM) or a proprietary reverse mortgage from a private company.


With HECMs, you work with a private lender, but the Department of Housing of Urban Development insures the loan — meaning they’ll cover some of the loss if you default. This protection often results in a lower interest rate than proprietary loans can offer.


You’ll need to be at least 62 for a HECM, and you also must participate in HUD-approved HECM counseling before your application can be approved. Additionally, the mortgaged property must be:



  • Your primary residence

  • Meet the Federal Housing Administration’s minimum property standards

  • A single-family, one- to four-unit property or FHA-approved condo

  • Have no mortgage attached to it or a low loan balance


If you’re considering loans from private reverse mortgage lenders, the qualifying requirements will vary. Just keep in mind: HECMs come with a number of federal protections that private mortgages may not. First, they’re non-recourse, which means you’ll never owe more than your home is worth — even if your home’s value drops after you take out the loan. You’re also protected if your lender goes out of business, and interest rates tend to be lower than other options too.


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How does a reverse mortgage work?


Reverse mortgages pay you out of your home equity. Think of it like an advance on the eventual sale of your house. The lender will advance you cash, either upfront or spread out over time. Then, when you eventually move or pass on, the proceeds from your home sale will be used to pay off the amount you borrowed — plus interest.


There are several payout options with a reverse mortgage. You can opt for:



  • An upfront lump sum payment: After closing on your loan, you’d get your loan amount in full. This is the only payment option if you choose a fixed-rate loan.

  • A line of credit: This turns your equity into a credit line you can withdraw from as needed. It functions like a credit card in that you only borrow what you need. This is only an option if you choose an adjustable-rate HECM, which means your interest rate can rise and fall over time.

  • Monthly payments: With this type of reverse mortgage, you can take equal monthly payments for as long as you live in the home or over a set time period (say 15 years). You can also combine one of these options with a line of credit. This would give you consistent monthly income, plus access to extra cash should you need it. Again, this option is only available on adjustable-rate HECMs.


Interest on a reverse mortgage is calculated on a monthly basis and then added to your loan balance. As with traditional mortgages, you can opt for either a fixed-rate or an adjustable-rate loan — though to get a fixed rate, you’ll need to choose the lump-sum payment option noted above. Fixed rates also tend to be higher.


Reverse mortgages do come with closing costs, mortgage insurance and other upfront expenses, but you won’t have to make any interest payments to your lender as long as you still live in the home. The balance won’t come due until you move out of the property, sell the house or pass away.


Pros and Cons of Reverse Mortgages


Taking out a reverse mortgage is a big financial decision, so it’s important to consider both the pros and cons before moving forward. Your unique financial situation and long-term goals should factor in.


See below to learn more about the pros and cons of a reverse mortgage.


Pros of reverse mortgages


There are many advantages to reverse mortgages. In the right situation, they can help support you in retirement, allow you to stay in your home longer, help you pay off your existing mortgage and even cut down on your tax bill.


That’s only when these loans are used properly, though. Here’s a look at when a reverse mortgage offers the most benefit. (We’ll go into when reverse mortgages don’t make sense further down.)


You want a tax-free way to increase cash flow.


A reverse mortgage may cut down on your tax burden in retirement. While it might feel like you’re earning “income” from the mortgage, that’s not how the IRS sees it. Instead, reverse mortgage payments are considered loan proceeds — not taxable income, so you won’t owe extra taxes come April 15.


This is different from other distributions you might take in retirement, like those from 401(k)s and traditional IRAs. With these, you’ll owe income taxes on any funds received across the year.


You plan to stay in the home for a while.


Reverse mortgages are best for homeowners who want to stay in their homes for the long haul. It gives them the chance to put their hard-earned equity to work, and it allows them to keep living in the home they love (payment-free) for an extended period of time.


Additionally, there are lots of upfront costs that come with a reverse mortgage. Staying in the property longer ensures those investments pay off — and that you stand to gain more than you spend.


You have a good amount of equity.


The more equity you have in your home, the more cash you can access via a reverse mortgage. Though you can qualify for a reverse mortgage if you are carrying a regular mortgage balance, it will significantly cut into your payments. You will be required to use your proceeds to pay the remaining loan off before you can start accessing your funds.


To truly get the most from a reverse mortgage, you’d want to own the home outright or have a very low balance on your current mortgage loan.


You’re worried the home’s value might fall.


With a HECM loan, you’ll never owe more than your home is worth. So if you think your home’s appraised value may fall in the future (all HECMs require at least one or two appraisals), a reverse mortgage could be a way to cash in on your home equity now. In some cases, proprietary reverse mortgages may offer this benefit, too, so make sure to ask your lender if you’re considering one of these.


You don’t plan to leave your house to an heir.


If your home is just a real estate asset (and you don’t have big dreams of passing it down from generation to generation), a reverse mortgage could be a good way to support your retirement.


Though loved ones can inherit properties with reverse mortgages attached to them, it complicates things. They’ll either need to pay off the lender or sell the home — not an ideal option if you want to keep the property in the family. If the home is simply an investment, though, it will be used to pay off your loan once you pass or sell the home.


You have consistent income to cover taxes, homeowners insurance and HOA costs.


Reverse mortgages are best for those with enough consistent income to cover the regular costs of homeownership. That’s because homeowners are legally required to stay current on their property taxes, home insurance and HOA dues. They also must take care of regular maintenance and upkeep, as this protects the lender’s investment. If you don’t keep up with any of the aforementioned tasks, your lender could require full repayment immediately.


Cons of reverse mortgages


Reverse mortgages aren’t perfect. They come with significant risk, and when used improperly, a reverse mortgage could lead to losing your home to foreclosure or your heirs being left with very little when you pass on. They also come with fees and could impact your ability to earn other retirement income and benefits.


When do these drawbacks come into play, exactly? Here are five scenarios when you wouldn’t want to use a reverse mortgage.


You or your heirs want to keep the property in the family.


Reverse mortgages aren’t ideal for your loved ones to inherit. While your heirs can pay off the loan out of pocket if they don’t want to sell the house, that’s probably not a decision you want to leave behind for those you loved the most.


So, if your home is one you’ve had for decades or your ancestors poured their blood, sweat and tears into, a reverse mortgage may not be the best solution.


You think you’ll move out of the home in the next few years.


Reverse mortgages come with many upfront costs. There are closing costs, origination fees, upfront mortgage insurance premiums, appraisal costs and servicing fees. The origination fee itself can go as high as $6,000 for HECMs. Altogether, it can add up to tens of thousands of dollars in some cases.


While you can use your loan proceeds to cover these costs, you want to make sure doing that is worth it — and that you’ll be around to reap the benefits. For these reasons, reverse mortgages are typically best for homeowners who are in decent health and plan to stay put for a while.


You rely on SSI or Medicaid.


Having a reverse mortgage won’t impact your Social Security payments or Medicare, but if you’re on Medicaid or Supplemental Security Income, it could reduce your benefits or even make you ineligible. That’s because these programs are means-tested — meaning your income and assets play a role in what you qualify for.


If you rely on either of these programs, you’ll want to talk to a benefits counselor or bring it up in your HECM counseling session, as every state has different rules. They can let you know if taking out a reverse mortgage would impact your SSI or Medicaid eligibility where you live.


You’re already struggling financially.


A reverse mortgage comes with both upfront and ongoing costs. If you start off the loan already struggling financially, taking on these extra costs will only exacerbate your money troubles and could even lead to foreclosure down the line.


If you’re having a hard time paying the bills, downsizing — rather than leveraging your home equity — is probably a safer bet.


You have a large balance left on your existing mortgage.


The amount of equity you have in your home plays a big role in how much money you can access through a reverse mortgage. If you have a balance left on your original mortgage loan, you’ll need to use your reverse mortgage proceeds to pay that off first, and the amount you can actually use declines.


Though it’s possible to take out a reverse mortgage when you still have a loan balance remaining, you’re better off waiting until you have more equity (ideally at least 50%). This will allow you to get the most use from your new loan.


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FAQ


How do you pay back a reverse mortgage?


You need to pay back a reverse mortgage when you move out of the house (including into a care facility/nursing home for at least 12 months) or sell the house. A reverse mortgage also needs to be paid when you pass away. In the latter scenario, your estate or the person you bequeathed the property will be responsible for repaying the lender.


In the event you leave behind a non-borrowing spouse when you pass away, the loan may or may not come due. This will depend on the type of reverse mortgage you have, when you took out the loan and whether the spouse meets the eligibility requirements of the loan.


Who owns the house in a reverse mortgage?


As with other mortgage products, a reverse mortgage doesn’t impact your title; it’s simply a loan secured by the home. You still own the property, and your name is on the title and deed. The lender won’t take ownership of your home unless you fail to meet the loan’s requirements (like not paying your property taxes) or you pass away, and your heirs or estate cannot repay the balance.


Can heirs walk away from a reverse mortgage?


An heir can certainly walk away from a home that has a reverse mortgage against it. If they do, the lender will simply sell the property to pay off the balance. In the event the proceeds are not enough to repay the lender, the heir will not be responsible for the difference.


What happens to your existing mortgage with a reverse mortgage?


When you take out a reverse mortgage, your lender will require you to pay off any mortgage on the property (including your primary mortgage and any home equity loan or home equity line of credit). You can use your reverse mortgage proceeds to pay the debt off, or you can pull from savings or other assets.


What are the alternatives to a reverse mortgage?


A cash-out refinance, a home equity loan or a home equity line of credit (HELOC) can all be good options to explore if you want to tap your home equity. Cash-out refinancing replaces your existing loan with a new, larger one and gives you a lump sum of cash in return. (If you want to explore this option, check out Money’s picks for the best mortgage refinance lenders.) Home equity loans are a second mortgage, while HELOCs function like credit cards, which you can withdraw from as needed.


Summary of Money’s Reverse Mortgage Pros and Cons


Reverse mortgages can be a useful financial tool when utilized at the right time and in the right scenario. When used improperly, though, they can mean risking your house, certain government benefits and the inheritance you leave for loved ones. They can also exacerbate financial struggles for some homeowners.


If you’re considering a reverse mortgage, weigh the pros and cons carefully and consult a HECM counselor or financial advisor before moving forward.


 



Monday, October 17, 2022

OUT-OF-AREA BUYERS CONTINUE TO SEARCH FOR REAL ESTATE IN SOUTH FLORIDA




It’s no secret that South Florida remains the hotspot for relocation. Buyers from the Northeast & Canada continue to flock to South Florida. The Broward, Palm Beaches & St. Lucie Realtors® launched a consumer ad campaign in May 2022.


 


The campaign connects the relationship between consumers and REALTORS® and portrays why REALTORS® are the trusted source when buying or selling a home. The Broward, Palm Beaches & St. Lucie Realtors® have been driving interested consumers back to their website OnlyARealtor.com, where potential customers have been learning more about REALTORS® and South Florida.


Website statistics from OnlyARealtor.com in September 2022


Top 5 Countries outside of the U.S.




  • Canada – 11%




  • United Kingdom – 4%




  • India – 2%




  • Germany – 2%




  • Brazil – 1%




 


Top 5 U.S. States outside of Florida




  • New York




  • Virginia




  • Ohio




  • Washington




  • California




 


Top 5 U.S. Metro Areas excluding South Florida




  • Columbus, OH




  • The Bronx, NY




  • Tampa, FL




  • Alexandria, VA




  • Orlando, FL




 



“Our state continues to grow, and we are witnessing that growth right here in South Florida. Our REALTOR® members are working with out-of-state and international buyers frequently. It’s no shock when you live in absolute paradise,” said Carlos A. Melendez, President of the Broward, Palm Beaches & St. Lucie Realtors®.



According to the National Association of Realtors® 2022 international transactions in real estate survey, Foreign buyers purchased over $14.1 billion worth in Florida. Canada ranked as the top country moving to the United States from April 2021 through March 2022. Within the U.S., Florida seemed to be the top destination for most international transactions from Canada, Mexico, China, India, Brazil, and Columbia. Since 2021 BeachesMLS reports that over 1,700 Canadian Buyers purchased residential property in South Florida.


Broward, Palm Beaches & St. Lucie Realtors® is the 3rd largest local Realtor® association in the nation, representing over 42,000 Realtors®. Their subsidiary, BeachesMLS powers over 43,000 MLS subscribers across South Florida & the Treasure Coast. For more info, visit Rworld.com or contact Communications@rworld.com.



How retirees are getting hit by inflation




‘This is not the retirement I envisioned.’


 


Managing one’s finances in retirement is always tricky. But with inflation pushing up the price of everything from gas to housing to eggs, many retirees are cutting back or eliminating certain costs altogether.


CNN Business spoke with several retirees about how they have been managing their spending as prices have risen. One common refrain was the shock of dealing with the huge jump in food prices – especially on meat, fruits and vegetables.


Food prices have seen their largest annual increase in 41 years. And the cost of groceries jumped 10.8% between April 2021 and April 2022.


But of course, inflation’s reach goes far beyond the supermarket. Here’s how these retirees say they are coping.


Scraping by and facing a rent hike


If it weren’t for a local food bank truck that comes to her apartment building every two weeks, retiree Donna Lyons of Fort Collins, Colorado, said she might not have sufficient food for the month.


“I’m very, very reliant on [the food bank]. … It is a true blessing,” said Lyons, 67, who moved to Colorado from Pennsylvania in 2020 to be closer to her two children and grandchildren.


She gets by for now on her Social Security checks and the pension she receives for decades of work in secretarial and event-security roles in Pennsylvania’s education system.


But come September, her rent will be increased by $200 a month – a 14% jump over what she pays now. And Lyons estimates that at that point, after paying for rent, taxes, insurance, medications and utilities, she’ll only have $150 a month left over to pay for groceries and incidentals.


The Fed’s favorite inflation measure fell in April, but prices are still uncomfortably high Given that her most recent monthly grocery bill alone was $187, she’s not sure how she’ll be able to stay in her apartment, since her savings are almost depleted. She’s been looking for less expensive housing in the area, she said, p,gp gpg,, but hasn’t had any luck so far.


“I’ve thought about selling everything and going back to Pennsylvania, but I don’t want to leave my family,” Lyons said, adding that she’d been in the hospital recently and doesn’t know what she would have done without her kids’ help during that time.


Her expectations for retirement were very different than her present reality. “I didn’t expect the level of stress financially. I truly didn’t. I worked for 50 years. And I was a single parent, so savings weren’t exactly easy. I’m slowly eating through them just to survive.”


Cutting back, resuming part-time work


Retired teacher Marisa Flynn, 73, lives in a resident-owned mobile home park in Morgan Hill, California, in the southern part of Silicon Valley. She had run her own electrolysis business for years before starting a second career as a public school teacher. She receives both a pension and half of her ex-husband’s Social Security.


Flynn had thought she’d be okay financially in retirement but hadn’t realized her Social Security payments would be reduced by about $400 a month because of her teacher’s pension. And every time she gets a cost-of-living adjustment to her Social Security benefits a bigger chunk is deducted for Medicare, she said.


That wasn’t easy to manage before the pandemic and then inflation hit. But now she is feeling the strain like never before.  Her utility and gas costs have jumped significantly in the past year.


US gas prices recently reached an average of $4.60 a gallon, the highest on record. For April, the Bureau of Labor Statistics reported that energy prices, which include electricity and natural gas commonly used for heating and cooling homes, was up 30.3% year-over-year.


As a result, Flynn said she uses less heat and air conditioning. She also drives less, even to see her daughter and grandchildren who live 40 minutes away. “Before, I would just get in my car and not think about it.”


Getting her car washed for $20 is also out of the question – and it’s hard to do it herself because of California’s water use restrictions. She doesn’t eat out, has no internet and can’t afford the repairs her home needs, she said.


To help make ends meet, Flynn is substitute teaching two half-days a week, something she had done before the pandemic, but has now resumed even though it poses an increased health risk to her due to Covid.


She said she also receives Meals on Wheels and will occasionally go to a local senior center for a free lunch.


“This is not the retirement I envisioned. It is disheartening. The government always talks about helping families with children. Middle class elders feel forgotten and invisible,” Flynn said.


Like Lyons, Flynn has considered moving to a less expensive area, but she isn’t likely to do it because it would mean being farther from her daughter and grandchildren. “That would be sad for me.”


Watching their Financial cushion shrink


Not all retirees, of course, are struggling financially as a result of inflation, but it is nevertheless altering their behavior.


Richard and Peggy Thomas have seen the padding in their financial cushion start to thin because of higher prices.


Arkansas City, Kansas, resident Richard Thomas, 73, prepared carefully for retirement during his career as a mechanic fabricating composite jet engine parts at Boeing. That preparation paid off, despite his getting a smaller-than-expected pension after the plant where he worked was bought out in 2005 and he was forced to retire earlier than he had anticipated.


Thomas said he owns his home outright and doesn’t carry credit card debt. “After my home was paid off I put a lot into savings and my 401(k). When I retired, I was in a fairly good place financially. It’s remarkable how far your money goes when you don’t owe anyone money,” he said.


Between their Social Security checks, his pension and an annuity they purchased, Thomas said he and his wife, Peggy, can cover all their monthly expenses with some left over. But that surplus is shrinking.


Thanks to inflation, “the padding in the financial ‘cushion’ I worked so hard to build up is starting to thin,” Thomas said. “It has forced us to make some changes.”


While the couple was never big on traveling, they now take even fewer trips. They also drive less – and more slowly – to conserve gas. That means fewer spontaneous drives to Wichita an hour away or dinners out in a town 30 miles away, he said.


Plans to buy a new car are also tabled. “The starting price for a new Jeep is $15,000 more than my house cost,” Thomas joked. (Technically, on an inflation-adjusted basis, the new Jeep still costs less, but not wildly less, than the 1997 purchase price Thomas said he paid for his home.)


While Thomas said he wishes the annual cost-of-living adjustments for Social Security were more in line with the actual price increases he sees, he recognizes the couple’s frugality and financial planning are helping him and his wife weather this inflationary chapter more easily than others.


“So far inflation isn’t a huge burden, but it is becoming cumbersome,” Thomas said.


Better off than most, but still cutting back


Jane Tanaka, 60, and her husband, Greg Chick, 67, retired a year ago and are enjoying their free time after working 12­hour days for years as a psychiatrist and plumber, respectively.


The couple, who live in Tehachapi, California, paid off their mortgage earlier in their careers, Tanaka said. And once that was taken care of, they socked away 40% of their incomes for retirement, she added. So they were financially well-prepared.


But in light of rising prices and the stock market downturn, Tanaka said they are choosing for now to live on $2,000 less per month than they had planned, drawing income only from her husband’s Social Security benefits and their annuities. “We are not touching our retirement savings because we don’t want to sell our investments at a loss.”


Instead they’re doing a lot of home cooking, rather than buying prepared foods or eating out. Her husband is taking care of the property around their house. She is mending their clothes. Plans for travel have been curtailed, even for road trips in their RV due to gas prices. And instead of donating money to favorite causes like they used to, they’re donating their time instead. “Now I spend all day baking for a dog rescue club [fundraiser],” Tanaka said.


She’s very aware that the financial choices they’re making now are “first-world-type delayed gratification choices” as she put it. “There are far worse problems we could be facing.”


But Tanaka said she hopes her story might encourage young people to save money if they can during their working years to fund their future. “It’s about preparing for a rainy day … and trying to adapt.”



Friday, October 14, 2022

Inflation has made the ‘4% rule’ in retirement ‘too aggressive’




The difficult economic situation has hammered the 4% rule – a longstanding guide for retirees looking to sustainably spend down their assets – according to the rule’s creator


High levels of inflation and high stock valuations mean that any retiree following the longstanding “4% rule” – in which a retiree withdraws 4% of their total investments in the first year of retirement before adjusting the rate in following years – could be too aggressive for retirees in today’s economy. This is according to Bill Bengen, a retired financial advisor who devised the 4% rule in a paper published in 1994.


“Based on Bengen’s original paper, this approach would have protected retirees from running out of money during every 30-year period since 1926, even when considering the Great Depression, the tech bubble, and the 2008 financial crisis,” writes financial planner David Chang in a new piece at the Motley Fool. “However, due to the combination of high inflation and high stock and bond market valuations, Bengen believes retirees will need to make some adjustments to their spending.”


Bengen himself described his newly-emerged unease with his own rule in the context of the modern economy for the Wall Street Journal in April.


“The problem is that there’s no precedent for today’s conditions,” he told the Journal, describing how he has cut his own spending. “I won’t eat in restaurants as much. I live a fairly simple life. I don’t take a lot of trips and I’m happy with a deck of cards and three other bridge players.”


According to a recent study by Morningstar published in November 2021 (and picked up soon afterward by CNBC), a withdrawal rate of 3.3% in the first year of retirement is recommended in light of the current economic situation.


“This assumes a 50/50 stock and bond portfolio and a 90% degree of certainty of not running out of funds over a 30-year timespan,” Chang explains of the new proposed withdrawal rate. “The key thing it found was that the more flexible retirees are with their spending, the greater the chance they can raise the withdrawal rate over time.”


Stock valuations are now much higher, as well, trading at roughly 36 times corporate earnings over the past 10 years, Chang says.


“This is double the historical average,” Bengen said according to Chang. “While low interest rates justify higher stock valuations to some extent, I think the market is expensive.”


Spending is likely the first thing retirees should deal with. From there, reducing exposure to stocks and bonds is advised, according to Chang based on Bengen’s writings.


“By having more cash or other assets such as income-producing real estate, when the market drops, there may be an opportunity to purchase