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If you’re retired, own your own home and have trouble making ends meet, a reverse mortgage may seem like the answer to prayers. You get to stay in your house and you’ll have some extra cash to see you through. Before you run to the nearest lender, however, consider the downside as well as upside to these instruments.
A financial institution lends you money, either a lump sum, a stream of payments or a line of credit, against the equity in your home. Unlike most loans, however, you’re not required to pay it back on a regular basis. You can let the loan ride until you die, move or sell the home, at which your home is sold and the proceeds pay off the loan.
While there are several flavors of reverse mortgage, most are insured by the Federal Housing Administration (FHA) under a program called the Home Equity Conversion Mortgage (HECM).
Everyone on the title must be 62 or older. The home must be your primary residence, and your equity needs to be at least around 50 percent. Also, you have to attend consumer counseling before signing up.
You stay in your home. You keep the title until you sell, move or die.
There are no required monthly payments. Any previous home loans are paid before you receive your proceeds.
If you choose to make payments, there’s no prepayment penalty.
The money you receive is not taxable, nor does it affect your Social Security or Medicare eligibility.
The loan is non-recourse. Regardless of your loan balance, you'll never have to pay back more than the house is worth.
Unless you make payments, the loan amount will continue to increase. It’s unlikely you’ll pass the home on to your heirs.
You must continue to pay taxes, insurance and necessary maintenance and repairs. Failure to do so can lead to foreclosure.
There are upfront and ongoing mortgage insurance premiums as well as a loan origination fee. These (and interest rates) trend higher than for other mortgage loans.
Your favorite bank may not offer reverse mortgages. Most issuers are small banks, credit unions and online lenders. Some lenders have made misleading claims that understate the risk.
If you go into a nursing home you will have to sell the home and pay off the loan.
While Social Security and Medicare are not an issue, reverse mortgage income can affect your eligibility for Medicaid and Supplemental Security Income.
If you plan to stay in your home well into retirement and are having trouble with ongoing expenses, it may be right for you. However, if you aren’t cautious about what you’re getting into, or if you’ll have trouble paying taxes, insurance and upkeep even with the extra money, it isn’t a wise choice.
Moving to a new home can definitely be labor intensive, but there are plenty of ways to make it easier and less stressful. Creating a priority list of things to do before the moving truck arrives can help ensure that you won't forget important details.
If you've chosen a service-oriented moving company, they should provide you with information -- possibly even a checklist -- on how to efficiently work with them and prepare.
Having the movers do the actual packing for you is often an option, but not everyone feels comfortable turning over that task to people they don't know. If you decide that it's worth it to pay the extra fee, you can always prepack and take with you any personal, fragile, or valuable items you don't want to entrust to others.
Moving companies are in a competitive business and are usually willing to negotiate the price of their services. By getting cost estimates from three different movers, you can often save hundreds of dollars and choose the company that provides the best value and customer service. Reading online reviews, checking Better Business Bureau ratings, asking a lot of questions, and taking notes are a few of the methods you can use to make an informed decision. Once you've done your research and picked a reputable moving company to transport your belongings, you've cleared one of the biggest hurdles. Packing, of course, can also be a rather immense part of the process. Here are a few tips to help make it a bit easier.
Downsizing helps: Depending on your age, the size of your family, and how long you've lived in your current home, you may want to "lighten your load" as much as possible! Transporting things you no longer use or need can make moving more tiring, complicated, and expensive. Taking the time to have a garage sale, contact the Salvation Army for a truck pickup, or even find a cost-effective junk removal service to haul away your unwanted stuff can simplify your moving experience.
Boxes and packing materials: Although there's a good possibility of being able to negotiate some wardrobe boxes and other supplies into your service contract, more boxes, heavy-duty tape, and packing material will be needed! Inquiring at your local supermarket about any surplus boxes is one way to save money on supplies. However, if the boxes they give you are flimsy or damaged, the monetary savings may not be worth the hassle of having them split open in transit. Overpacking boxes with heavy objects can also result in that same problem -- not to mention the probability of muscle strains and back injuries! Clearly labeling boxes and avoiding using nondescript categories, such as "miscellaneous," is yet another way to reduce the potential stress and frustration of moving all your belongings to a new home.
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It’s easy for a home to get out of hand with all the things that come through the door every week. Here are a few tips for keeping up with the never-ending clutter that enters your home.
Set up a location at each entry door for family members and guests to remove shoes and boots. Keeping dirt and debris at the entry and not trekked into the house reduces how often you must clean. It also keeps allergens, toxins and grime off your carpet and away from your family.
While newspapers are a thing of the past for most households, junk-mail, circulars and bills seem to keep coming. First, unsubscribe from any magazines and catalogs that you don’t want or use. Then, set up a table or shelf near the door to sort your mail. Toss the circulars and shred the junk mail before it gets further into the room. Sign up for electronic versions of your bills to reduce those as well.
Everyone has at least one, and many folks have one in every room … it’s those pesky drawers, baskets or bins that fill up with pens, buttons, receipts, tape, scissors, batteries and random indeterminate objects you think might be important. They take up space but don’t contribute to organization. Start with the smallest one. Remove any receipts and take a picture of them with your phone. Then toss the receipt. If it’s important, you have the details and won’t worry if the thermal paper fades to an unreadable blur.
Next, test all the pens and pencils. If they’re broken or inkless, toss them. Find a small box to store all the batteries in one place. As you move from room to room, collect the batteries and organize them in the box to store on a shelf. Electronic items such as charger cords and blocks belong in another box.
These three simple hacks go a long way toward helping you keep your home in order. That way, when it comes time to sell, you’re ready for the surprise visit from a buyer or the call from your agent when you’re far from home. Ask your real estate professional about other ideas to keep your home show-ready.
In a not-so-distant future, American homeowners may not have to worry about blackouts any longer. Tesla’s giant battery recently powered up Australia’s grid after a power outage in just milliseconds. And, with new, green technologies, constantly being pursued, it could be within reach to say goodbye to blackouts once and for all.
However, we’re not quite there yet. And, if you live in the colder areas of the country, you’re also at the beginning of the worst season for snow and ice that can wreak havoc on power lines.
So, to help get you prepared, I’ve written this list of things you can do to start preparing yourself, your family, and your home for your next power outage.
Read on for the list.
It’s vital to have the supplies on hand before a power outage hits so that you don’t have to be wandering around your home in the dark fishing for things you might not even have.
To avoid this, it’s a good idea to keep a supplies bag packed and tucked away somewhere safe. It’s also important that your family knows where this bag is located in case you’re away when the power goes out.
Now, let’s make your list:
Flashlights and batteries - Two quality flashlights with batteries should be on everyone’s emergency list. Make sure your batteries were recently bought and that they are of high quality that won’t run out of juice in just a few minutes. Also, consider including a wind-up flashlight that doesn’t require batteries for use in case you forget to replace your old batteries.
Radio - Most of us keep our cell phones charged up, but we’ve all been guilty of letting them get too low on charge. In these situations, it’s good to have a battery-powered radio to listen to the news.
Power bank - Speaking of cell phones and their poor battery life, consider buying a power bank and keeping an extra charging cord in your bag. Make a note to charge up your power bank every few weeks to ensure it will be charged when you need it most.
Cash - If the blackout effects more than just your neighborhood, many stores’ ATM and credit card machines may be down. It’s a good idea to have a stash of cash for emergencies.
Optional: generator - while you don’t need to buy a generator for your average power outage, it can help if you live in an area that experiences them frequently.
Find out where the shutoff valves for water are, learn the layout of your circuit breaker, and learn how to use the manual release on your garage door.
If you have an electric stove, consider purchasing and learning how to use a small propane grill for emergencies.
If you have children, make sure they know what to do if the power goes out when you’re not home. Especially during the winter months, it gets dark out early enough that many parents haven’t even arrived home from work yet. So, be sure your kids know not to start lighting candles in dangerous places and keeping the refrigerator open for extended periods.
Finally, it’s a good idea to turn off power strips and unplug appliances that were turned on when the power went out. This can stop surges from damaging your appliances and save you money.
