Real Estate

Archive for December, 2009

How A Reverse Mortgage Can Work For You

You may have seen the recent television commercials with “The Golden Girls” star Rue McClanahan which advertises reverse mortgages. What are these loans? Who is eligible? And what are the risks involved?

A reverse mortgage is a type of loan that is available to senior citizens who have a lot of equity in their homes but little cash on hand. It is literally a mortgage in reverse where a homeowner is able to access equity locked in their home through a special loan from the bank. This money is paid out either in monthly installments or all at once. There are no monthly costs for the borrower to pay and the loan becomes mature only when the property is sold or when the homeowner dies. At that time all interest and fees associated with the loan are due in one lump sum.

For seniors who need money for daytoday expenses like medications bills or travel funds a reverse mortgage can be a great option.

Other home loans are available but they require monthly payments which can be difficult for some seniors to afford. This is one of the reasons that a reverse mortgage can be a good fit for some people; not only can they free up some cash from their home equity but they can do so without adding to their monthly expenses.

On the downside because the money for this type of loan comes out of the home equity a reverse mortgage can affect the amount of inheritance that beneficiaries will receive. When the property is sold or at the time of the owner’s death the bank takes back all monies owed to them leaving what’s left over to the borrower. The more money taken out on a reverse mortgage the less money will be left for the heirs of the estate. Fortunately there is a limit to how much can be owed. When the property is sold if the proceeds from the sale are lower than the amount still due on the loan the bank will eat the difference.

In order to qualify for a reverse mortgage the borrower must be 62 years of age or older use the property as their primary residence keep their home in good repair and must have paid off all or most of their mortgage. If there is an outstanding balance on the mortgage it must be paid in full with funds from the new loan.

If possible a better solution is to sell the property and downsize to a smaller home or apartment. This would allow the homeowner to live off the profits from the sale without owing anybody anything. However this is not a viable option for everyone especially in a slow real estate market.

A reverse mortgage can bring great relief to seniors but this type of financing is not the answer for everyone. The costs involved with this type of loan are quite high in the beginning although the borrower won’t be impacted by it on a monthtomonth basis. If the homeowner doesn’t plan on staying in the house for very long the costs of taking out this type of loan can be too great for it to be practical. Some fees must be paid for upfront using money from the loan and closing fees can be higher than with other types of financing. A homeowner should only consider this type of loan if she is planning to stay in the house for a long time. If she’s at all unsure about her plans it may be a better idea to take out a different type of home loan or to look into the option of selling the property.

Because predatory lenders often target seniors the government has made it mandatory for all those interested in acquiring a reverse mortgage to speak with a qualified third party advisor. This will ensure that the borrower is doing what is in his best interest including choosing a reputable lender with which to do business.

About the writer:nbsp;nbsp;For great information on the Atlanta real estate market and for incredible Decatur real estate listings and to browse homes and properties for sale visit RealSourceBrokers.com. This site is easily the most developed and useful Intown Atlanta real estate resource online.

Home Theater – Realty Plus Or Minus?

Certain home improvements will increase the value of your home by more than the original investment. We know this is often the case with new bathrooms and new kitchens but what if you would like a home theater? How do you know what other improvements add value?

In certain areas and for certain people going out to public places in the evening presents hazards. This may be one reason why home entertainment centers are becoming more popular. A harsh winter climate is another and an avid sports fan in the family is a third! Another factor to add in nowadays is that a large percentage of the realty buying population are baby boomers who may be more inclined to sit indoors and watch a large screen TV!

In choosing to have a home theater one of your rooms will be literally given up. The decor in an average sized room will be unnoticed once you have a giant screen and speakers dominating the space. Also the extra amount of seating usually detracts from the room’s appeal from a realty point of view.

For these reasons you will need to have a room dedicated only to the home theater and hopefully still have a rec room or den available. If this can be accommodated then the home theater could well increase your real estate value.

Of course not all homes can spare this much room. If this is the scenario then there is the possibility of concealing the home theater unless it is in use.

This can be done by use of cleverly designed cabinets. For some systems the cabinets would have to be very big. This may require screening off one end of the room with large door fronts that appear to be room dividers. Another way would be to build a large closeteffect cabinet. This will reduce clutter when the large screen is not in use. However sufficient room must be allowed so that the air can circulate around the equipment when not in use.

Several factors must be taken into account when choosing a system and evaluating a room for it. If your room is fairly large you may require acoustic enhancement which could mean redecorating the ceiling walls and floor. Acoustics and sight lines for that matter must be considered not only for the back of the room but also out to the sides.

Along with this comes choosing the speaker size and the location for instance do you want free standing speakers or built in ones? You may also want to consider heavy duty wiring.

You will want to choose the size of the screen remembering that too big is as bad as too small. Calculate how far you will be sitting from the screen and take the manufacturer’s advice. If you are too close to a large screen you will always see certain distortions that are missed at a distance further away. This is also the time to decide if you want to consider buying a wall mounted swivel for your screen.

Part of the professionalism of a home theater is the lighting and this includes lightproof drapes. Remote control lighting is great so that the whole audience including you can be seated as the lights go down!

Finally you will have to think about decor shelving for all your DVD’s some sort of end table/coffee table placement and of course lots of seats. The norm is for two large sofas on each side wall and three or four armchairs at the end of the room. This will allow for ten people.

With regard to increasing the property home theaters is a pull that may increase the numbers of home viewers but may only add value to your home for the right buyer unlike say a garage which increases the value for almost every buyer.

One of the obvious ways to hedge your bets here is to choose home theater equipment that is easy to dismantle and therefore can be moved into your next home. If you do plan to do this you will need to ensure that the technology is adaptable. You will also be well advised not to buy your equipment too big as the next home is an unknown factor.

About the writer:  This article was written on behalf of Stacy Neir. Stacy is dedicated to matching clients with their perfect home in the Denver real estate market. Contact Stacy now to find your dream home in the Country Club real estate area!

Home Loan Modifications And Your Credit Score

A Home Loan Modification can help you stop foreclosure and stay in your home. But if youre like most homeowners youre probably wondering how it will affect your credit and whether in a good or bad way. Unfortunately theres no single answerit all depends on how far behind you are and the kind of mortgage loan modification youll be granted.

Bestcase scenarios

Technically since youre not borrowing any money a home loan modification wont hurt your credit score. If youre paying less in interest you have a smaller debt burden. And since most lenders prefer an interest rate reduction theres a pretty good chance that a Home loan modification will improve your credit score.

The implications are even better if your lender forgives part of the principal although this is less common. If they write off 50000 from your loan amount it will show up on your report as a smaller loan which can increase your credit score.

The lender factor

Unfortunately it doesnt always happen that way. It also depends on how your lender reports the home loan modification to the credit bureaus. Many of them will consider it paid for less than the original amount owed which will count against your score. If youre already in foreclosure the impact on your credit can be substantial. Of course compared to a short sale or a foreclosure a Mortgage Loan Modification is still the best way to maintain your credit standing.

Tax implications

One of the early problems with Loan modification is that the amount forgiven is usually taxable. That means if your debt is reduced by 50000 the IRS views it as income and imposes the corresponding tax. This can catch homeowners off guard during tax season as many of them dont know the tax implications at the time of the modification.

To avoid such incidents the IRS announced in 2007 that Loan modification would no longer be classified as prohibited transactions. This applied to all loans originated from January 2004 to July 2007 the peak of the subprime boom and those due to adjust from January 2009 to July 2012. If your mortgage falls under these categories you wont have to file a 1099 declaring the change as taxable.

A loan modification is much like going to court: you can save your money and get a courtappointed lawyer or you can invest in professional representation and get the best mortgage assistance. Your loss mitigation wont happen overnight but if with a capable Loan Modification Attorney you can be sure youre in good hands.

About the writer:  Loan modification Department helps you legally change the terms of your mortgage so that you can pay it off better But you can’t expect lenders to make it easy. In fact many homeowners fail to reach a reasonable settlement with their lenders and even those who do have to settle for lessthansatisfactory setups.That’s where your loan modification attorney comes in.