Silver Edition... News & Issues for the Mature Market

Seniors Real Estate Specialist

Real estate markets are humming along nicely in most parts of the country, thanks to the strong economy, favorable interest rates and the American ethic of home ownership. People in their senior years often have the bulk of their personal wealth invested in real estate. That's why it's so important to make wise decisions, whether you're selling your home, buying a replacement residence or making an investment. Helping seniors make wise real estate decisions is our forte. As a seniors real estate specialist, I have the necessary skills and experience to answer your questions.

Credit Scores:  Critical Criteria

    Credit scoring giant Fair Isaac and Co. recently revealed more information about how prospective borrowers’ credit histories are translated into the numerical results that most lenders use in evaluating the person’s creditworthiness.

     Thirty-five percent of the credit score is based on the mortgage applicant’s track record of paying prior loans accounts.  Late payments result in a lower score, while a no-late-payments history will net a higher score.  Fifteen percent of the score is based on the duration of the person’s credit history.  A long track record of using credit smartly is a favorable factor.  Recent efforts to obtain more credit and excessive high-interest consumer debt (both negative factors) each account for 10 percent of the score.

The Upside of Down-Sizing

    Many seniors struggle with the decision to sell their longtime family home and move to a smaller residence, but delaying sometimes can be unwise.  Waiting to make the move oftentimes means selling at an inopportune time, under pressure or in an unfavorable real estate market.  Also, neglected home maintenance can result in a lower sales price for the home.

     The better approach is to focus on the positive aspects of living in a smaller home.   A smaller home means fewer and less-costly maintenance responsibilities, and down-sizing can mean more disposable cash for hobbies, travel and other expenses.

     The U.S. tax code now permits home sellers to exclude $250,000 (single) or $500,000 (married couple) in capital gains from income tax if certain requirements are met.  The former requirement that the gain be “rolled over” into a subsequent residence is no longer part of the tax code.

Fannie Mae Drops Equity-Share Feature

    Secondary mortgage market purchaser Fannie Mae has stopped funding for reverse mortgages with an “equity-share” feature, which gave the lender a right to as much as 10 percent of the home’s value at the time of sale, in addition to interest on the reverse mortgage.

     Seniors obtained more money upfront from the lender in exchange for the equity-share component, but the feature could trigger excessively high loan fees in instances when the home appreciated substantially and the reverse mortgage was paid off within a few years.

     News sources reported that some people complained to AARP about the high fees, and that AARP pressured Fannie Mae to drop the feature, which was introduced in 1996.

     Fannie Mae’s loan portfolio reportedly contained fewer than 3,000 reverse mortgages with the equity-share feature, and fewer than 100 mortgages had been prepaid early on.

     For more information about the equity-share or reverse mortgages, call your senior’s real estate specialist.

 The Cost of Housing

    Comparing the total cost of different housing options can be simplified with a checklist of expenses and the cost for each under each option.  Here are some items to consider:

Moving?  Here are some tips from AARP to make the transition to your new home as stress-free as possible:

Find a reputable mover. Hire a moving company that belongs to the American Moving and Storage Association and has agreed to independent arbitration for damage or loss claims.  Ask the local Better Business Bureau and state consumer protection agency for information about the moving company’s complaints record.  If your state requires moving companies to be licensed, call the licensing authority to confirm your preferred company is in good standing.

Get three estimates.  Walk through your home with a representative from each moving company and show him or her exactly what is to be packed and transported.  Get an itemized written estimate.  A binding estimate is a guaranteed price.  A non-binding estimate can be adjusted after you’ve moved.

Understand the costs. Moving charges are based on the total weight of your household goods, the distance you’re moving and the services provided to you by the moving company. Ask whether each bid includes extra charges for person-hours, packing materials, travel time or waiting time. Ask whether the company will accept your preferred method of payment (e.g., personal check, credit card).

Purchase insurance.  Most moving companies include only minimal insurance based on weight, not value.  Consequently, you may wish to purchase additional coverage through the company.  Be sure to ask whether claims paid are based on depreciated value or replacement value.

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