TAKING ANOTHER LOOK AT REVERSE MORTGAGES

Of all the concerns impacting Americans’ retirement today, running out of money, maintaining their lifestyle and rising healthcare expenses continue to top the list, according to a financial  planning survey published recently by the American Institute of CPAs.

Nearly half (48%) of people surveyed have expressed concerns about outliving their money. When asked about the top three sources of financial and emotional stress concerning outliving their money, healthcare costs (77 %), market fluctuations (53%) and unexpected costs (50%) were cited as the top issues. Additional causes for financial stress include lifestyle expenses (42%), the possibility of being a financial burden on their relatives (22%) and the desire to leave an inheritance for their children (21%).

  

For so many people, their biggest asset is their home and that asset factors into their retirement planning.  Yet many are reluctant to cash in on the equity in their home by selling it.  Not everyone wants to retire to Florida, some may prefer to stay in their home.  For these people, it may be appropriate to take another look at reverse mortgages. A lot has happened over the last 30 years since these loans have been introduced. These government -insured loans have been updated to become safer, and more flexible.

A reverse mortgage is a loan secured by the equity in your home.  There are no monthly mortgage payments, in fact you will receive payment from the lending organization either monthly or as a line of credit for unplanned emergencies, expenditures for home repairs, health care or to support your “aging-in-place” including care-giving and home modifications.  Your costs will continue to include property taxes, homeowners insurance and property maintenance. 

With a reverse mortgage (also known as a HECM – Home Equity Conversion Mortgage), you are not required to make monthly payments, your loan proceeds are tax-free, you remain the owner of your home, the loan is insured by the federal government and the loan is a non-recourse loan, which means you will never owe more than your home is worth.

What’s the catch, there really isn’t any – you just have to make the transition to the fact that, the HECM lender acquires an interest in your home. 

This may make sense for you, if you are looking for a way to stay in your home and supplement your retirement income with the equity in your home.   if you think this may be a possible retirement tool,  be sure you get advice from your financial planner and your attorney, and research the different  lenders and terms, before you make a move.  

  

Sources:

Personal Financial Planning Trends Survey,  American Institute of CPAs (AICPA), February 14, 2019;

Understanding Reverse Mortgage Loans, Your Guide to a Better Retirement, AAG, 2019.

PROTECTING OUR WATERFRONT...

There’s lots of rhetoric and politics surround the issue of climate change. But here we are on the North Fork, surrounded by the bay and the sound, blessed with beautiful vistas, and the ability to enjoy the waterfront. We can see the water levels changing, especially during storms.  We can see that there are more storms.  And we can see erosion of our natural shoreline.  It’s important to do something now to counter this trend – solutions will take time and the sooner we start the greater the impact.  The economic implications touch each and every one of us. 

          What we need now is a pragmatic approach to protecting our coastline from the rising sea levels and changing climate.  We have to look to our best scientific minds for solutions; and together with our town trustees put forward practical action steps that adapt to our environment and mitigate further loss.

On March 30, 2019, SoutholdVOICE will host an Information Session with Cornell Cooperative Extension to start a conversation about pragmatic approaches to how we can protect our shorelines from further erosion.  It’s important – hope you’ll mark your calendar and add your voice and support to this vital initiative!

HAPPY ST. VALENTINE'S DAY

Valentine’s Day is a lovely holiday that reminds us to express our love and appreciation to the people in our lives near and far.  Although the origin of this holiday of valentine hearts and roses and chocolates is a bit cloudy, here is the most popular legend. When Emperor Claudius II decided that single men made better soldiers, he outlawed marriage for young men. Valentino, a priest who served during the third century in Rome, realized the injustice of the decree, and continued to perform marriages for young lovers in secret. Valentino was put to death for his defiance of Claudius, and became a saint and champion of love.

Through the years, the holiday has grown to what we know today, with all the sweet sentiments and gifts of chocolates, flowers and cards.  In fact, the number of cards sent for Valentine’s Day is only surpassed by Christmas!

I want to share two letters about love with you. One has been deemed one of the most romantic love letters of all time, by Johnny Cash, and another has been memorialized in the Bible, by Saint Paul:

"We get old and get used to each other. We think alike. We read each other’s minds. We know what the other wants without asking.  Sometimes we irritate each other a little bit. Maybe sometimes take each other for granted.  But once in a while, like today, I meditate on it and realize how lucky I am to share my life with the greatest woman I ever met.  You still fascinate and inspire me.  You influence me for the better.  You’re the object of my desire, the #1 Earthly reason for my existence. I love you very much." 

Johnny Cash to June Carter Cash

“Love is patient, love is kind.  It does not envy, it does not boast, it is not proud.  It is not rude, it is not self-seeking, it is not easily angered.  It keeps no record of wrongs.  Love does not delight in evil but rejoices with the truth.  It always protects, always trusts, always hopes, always perseveres.  Love never fails.”

St. Paul to the Corinthians, 13:4-8.

Happy Valentine’s Day...celebrate!!!!

P.S. If you’re thinking of doing something really special for your Valentine, we have the perfect North Fork home for you to consider!!!

HOW TO SAVE YOUR PIPES IN THE WINTER!

Colder winter months are tough on plumbing. This has been especially true lately where temperatures have dipped below zero with wind chill factors.  We often hear from clients about broken pipes and unfortunately water damage.  One good thing, with our frequent open houses and showings that we do for our clients we know if the heat is working in a home and have helped avoid larger problems.

It doesn’t take much for pipes to burst if they are exposed to the elements, or if they are in a cold house where the thermostat is too low or possibly broken.  To protect against costly repairs from broken water pipes, there are steps you should take to ensure that your plumbing stays operational especially if you are away for the winter or even for a few days. Here are some important things to consider to save your pipes from bursting:

Insulate pipes where possible

Cracked pipes caused by water freezing inside the pipes, is particularly likely if they are outside or in exterior walls that are not insulated. One of the best measures to prevent pipes from bursting is to insulate them with foam covers, or spiral-wrap or fiberglass insulation. You can do it yourself, or call a plumbing service to perform the installation.  If you have an older home that has poor insulation, look into home insulation alternatives – it will not only protect your pipes, but also reduces your fuel consumption. 

A slow drip in a faucet also may help pipes from freezing

Letting a faucet drip can help relieve some of the pressure on your pipes during the winter months because water running slowly through the pipes isn't likely to freeze.  This is a good idea for older homes that have pipes in exterior walls and poor insulation.  Leaving a faucet dripping may sound wasteful, but considering how much damage a burst pipe can cause, a slight increase in the use of water is a prudent option.  Remember to check that the drain is unstopped if you go away for more than a few hours.  Some people use the bath tub faucet as an added precaution.

Drain outside faucets and put hoses in storage

Never leave your garden hose connected to a faucet during the winter and drain outside faucets.  The cold will freeze not only the water remaining inside the hose, but also every single drop left inside the faucet. Disconnect the hose, empty it and put it away until spring.

Keep your outside drains clear

All your drains should be kept clear during the colder months, because the debris inside them can freeze, as well. Be sure that your drains aren't clogged—any amount of standing water inside your drain pipes will likely freeze and cause problems.

 Keep the heat running even when you're away for a day or on vacation

When no one will be home for several days, or even weeks, you can prevent your plumbing from freezing by keeping your heat on low while you're away.  Again, the extra cost for heating will be a mere fraction of the cost to repair damage caused by running water in your  house if a pipe bursts.

Consult with your plumber and determine whether you can close the water main inside your home if you are going to be away. This will minimize any damage from a pipe burst.  Also I had a plumber tell me that the water to the washer should always be closed when you leave the house because the rubber water connectors dry out and crack and most of us don’t think about replacing them until something happens!  Winter plumbing issues can quickly become major problems. Taking the necessary precautions and your chances of cracked or burst pipes this winter will be considerably diminished. 

 Source: Housecall, Winter Plumbing Tips, Victoria Brown, January 29, 2019

SELF-DIRECTED IRA – FOR THE CONTROL FREAK IN YOU!

There are so many situations in life where we have little or no control – new regulations enacted by government that take away individual control albeit for the greater good, giant online portals like Zillow, that take control of individual home owners and realtors online listings and information. But you can have control over where you invest your retirement funds through a SELF-DIRECTED IRA.

With the recent stock market volatility, which seemed to come out of nowhere, one begins to wonder whether to diversify retirement money outside the stock market.  There is very little choice, banks are paying so little interest, “putting it under the mattress” seems like the only alternative! The good news, is you can set up a self-directed IRA and have more control over your assets.  You will be able to manage where your retirement funds or invested, as long as it is in the hands of a custodian and it follows IRS rules.  

You can invest in alternatives to securities such as: single and multi-family homes, condos, commercial property, undeveloped land; foreclosures, rehabs, in addition to equipment leasing, precious metals, livestock, and many other types of investments.

One of the most important IRS guidelines requires the investment be an arm’s length transaction. For example, you cannot personally use or benefit from the real estate in your self-directed IRA.  All expenses and revenues must come from and go directly to the IRA.  Also, you cannot buy from or sell an asset to a “disqualified person” - a close relative or the custodian or advisor of the IRA.

If you are thinking about diversifying, you may want to look into the creation of a self-directed IRA  to invest in real estate or other qualified types of investments.  Consult with your tax professional and retirement advisor.

 If you’d like help finding investment property for your self-directed IRA call  us at 631-765-5333, email me at Marie@BeninatiAssociates.com, or visit our office at the corner of Main Road and Horton’s Lane in Southold.  It’s a good time to explore alternatives and we’re here to help you!

Source: Equity Trust, Self-Directed Real Estate 101, www.TrustETC.com.