Are Reverse Mortgages Worth the Hype?

Are Reverse Mortgages Worth the Hype?

Some end of the week thoughts on reverse mortgages; are they worth the hype? Reverse mortgages may seem great from a bird’s eye view. You see them and think, “Wow, no more payments for the rest of my life and money coming out to help pay for my expenses. I don’t even have to particularly qualify other than showing that I can pay for the annual taxes and insurance! What a great deal!” Unfortunately those promises are misleading. The problem lies within the fact that the loans only go up to a 40% of loan to value. Most of us have a loan close to that. The rate is 4% higher than conventional rates which actually may eat up your equity twice as fast.    A more practical alternative is to simply get an equity loan on your house that goes up to 90%. You can write yourself a monthly check and this will last much longer because of the higher loan to value that is available to you. Furthermore, there is no upfront costs to the equity loan option  (other than 3rd party costs such as title insurance). Brokers that sell reverse mortgages typically target senior citizens and they are getting rich doing so due to the many upfront costs. The typical rates for an equity line is about 3.75% and the interest rate on a reverse mortgage is about 7.5%. In my personal opinion, the only way one should take a reverse mortgage is if one they are in desperate need of monthly income, they have plenty of equity, cannot qualify for some type of conventional financing...
Four reasons to stay invested in US housing

Four reasons to stay invested in US housing

America’s housing market is undeniably a booming industry and after surviving the stock market roller coaster over recent years, there are several reasons to stay invested in US real estate. A climbing job market and the resurgence of bank lending are just two of the leading reasons as to why investing in the housing industry domestically could return a profitable investment. Strong job growth and consumer confidence The job market overall has rebuilt a solid foundation in the U.S. which will soon lead to a strengthening housing industry and a larger audience of consumers ready to own property. The US economy has added about 3 million private sector jobs over the last year. Of the 3 million, 750,000 new jobs fell among the 25 to 34 age range. As the job market continues to improve, the unemployment rate has seen a decline by an impressive 2.5% over the past two years. While considering these positive trends, the labor market is expected to evolve into a stage where there a higher income on average; which will ultimately result in a higher demand for homes because more individuals are financially capable.   Low inventories and rising pent-up demand The absolute level of inventory of new and existing homes are at decade lows (now 2.5 million units total). These housing inventories are at 15-year lows but as of 2015, the demand is quickly rising. Over 30% of 18 to 34-year-olds are said to be living at their childhood home, a perfectly capable audience for first time home buyers.  The expanding demand for credit leads to more lending Financial lending from banks is...
California Housing Market Forecast for 2016

California Housing Market Forecast for 2016

In October, 2015 California’s housing market softened as both statewide sales and average price contracted from the month prior are still on target to meet forecast projections, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).  However, a shortage of housing may put a limit on the potential for improvement. Still, the numbers are exciting; according the the C.A.R. there were 383,300 home sales in 2014 and approximately 407,500 in 2015- a 6.3% increase, and the C.A.R. expects it to continue to increase to 433,000 in 2016. While this news is certainly a large improvement, California housing prices are still continuing to rise. The average price of a home in 2015 went up 6.5% to $476,300 and is projected to rise another 3.2% to $491,300 in 2016. The good news for potential buyers is that while housing prices may still be on the rise,  2016 is still estimated to have the slowest rate of price appreciation in five years, houses are generally selling for less than asking price AND the unemployment rate is getting lower- it is forecasted to go down to just 5.5%, a very steep decrease from 7.5% in 2014! With job growth improving and mortgage lenders lessening credit restrictions it is safe to say that the California housing market is improving, but not without some challenges. Inland markets are set to see the most improvement in 2016 due to lower housing costs and better job markets, while markets such as central Los Angeles and the San Francisco Bay area may continue to struggle due to limited housing, increasing costs, and higher interest rates. According to C.A.R. San...