The following is a guest post from Brandon Laughridge of Mortgage Loan Place, who provides some great information about reverse mortgages.

Reverse Mortgage Considerations

Like any loan, reverse mortgages have their pros and cons.  Unfortunately, the decision to get a reverse mortgage isn’t simply a black and white one.  One must take a look at both the benefits and drawbacks of choosing to fund retirement expenses out of home equity via a reverse mortgage.  I always prefer the bad news first so we’ll start there.

The Bad

Fees can be high. The upfront cost of a reverse mortgage can often seem like a bear when it’s printed as one lump sum.  However, when broken down, these costs are in line with conventional financing.  Borrowers must pay an upfront mortgage insurance fee of 2% of the lending limit which is generally pretty hefty.  Add in all the normal costs of appraisals, escrow services, titling, and so on and you can begin to see how it gets pricey.

There are many snake oil reverse mortgage salesman. Unfortunately, many unscrupulous mortgage brokers are trying to make reverse mortgages the next subprime mess.  Fortunately, this has been combatted with a law that requires prospective borrowers to go through counseling with a person that is HUD/FHA approved.

The Good

Fixes monthly cash flow issues. Obviously this is the only reason borrowers would seek a reverse mortgage, but it’s an easy way for seniors with equity to cash it out slowly over time.  Living on a fixed income can be hard and reverse mortgages allow you to get a “raise” from your own pocket more or less.

It’s better than other debt. With a reverse mortgage, your debt is never going to transfer to a relative and it will never be more than your home is worth. Therefore you cannot ever owe more money than liquidating your home would provide to pay off that debt.

Do You Qualify?

In order to qualify for a reverse mortgage you must:

• Be at least 62 years of age or older.
• Own property outright or have a small mortgage balance.
• Ocucpy the property full time.
• Participate in counseling with HUD.
• Have no debt to the Federal Government.

Should You Get a Reverse Mortgage?

As you can see, reverse mortgages aren’t for everyone.  They are, however, a great opportunity if you find yourself short on cash at the end of every month and have a large amount of home equity.  Be sure to discuss this serious financial decision with family members and a nonbiased financial counselor before engaging in talks with a mortgage broker.

You’ll surely find that the real estate taxes that you pay on a home can vary widely depending on what state, what city, and what county you are buying the home in.

Why the difference? Well, several factors are at work here, but the main thing is that the taxes will usually be higher in areas that are experiencing rapid population and housing growth. When rapid growth happens some local governments cannot provide the level of services expected of them without raising taxes. This usually happens because city governments didn’t anticipate the rapid growth and must then play catch-up.

Here are links to property tax information for each state we cover. In addition to links to each states local property appraiser’s websites, these sites do a good job of explaining the property tax situation specific to each state.

State Property Tax Websites
Arizona - http://www.azdor.gov/property/manuals.asp
California - http://www.boe.ca.gov/proptaxes/proptax.htm
Florida - http://dor.myflorida.com/dor/property/
Georgia - http://www.etax.dor.ga.gov/IndTax_PropTax.aspx
Nevada - http://tax.state.nv.us/property_tax.htm
New Mexico - http://www.tax.state.nm.us/ptd/ptd_hom1a.htm
North Carolina - http://www.dornc.com/taxes/property/index.html
South Carolina - http://www.sc.gov/Portal/Category/TAXESRESIDENTS
Tennessee – http://www.comptroller.state.tn.us/cpdivpa.htm
Texas - http://www.window.state.tx.us/taxinfo/proptax/

Property Appraisal
In most states the property appraiser’s office has the task of putting a value on your home. This will help determine the amount of tax you will be required to pay. The property appraiser is not, however, the person who determines what your taxes will be. The local government usually does that when they set the millage rate.

Some property appraisers are even taking into account the recent run-up of home prices in 2004 and 2005. Most realize it was a high percentage of investor demand that was driving the increase in values, as opposed to “real” demand, and to compensate they are now assessing some homes in the 70 to 85 percent range.

While the above information is good to know, in order to get the possible “worst-case scenario” idea of what your taxes will be, use the 100 percent value for your financial planning. Then when you get your tax bill, if it happens to be lower, you will hopefully be pleasantly surprised.

Millage Rate
An essential element to figuring out how much your taxes will be is the millage rate, commonly referred to as “mil rate.” The millage rate is expresses as “mils per thousand.” For example if the millage rate is “22.55”, then you will pay $22.55 per $1,000 of assessed value.

Each taxing district will set its own millage rate which can be determined by dividing the total proposed budget of the taxing district (city, county, school district, etc.) by the total taxable value of all real estate in the district after exemptions are deducted for.

You will likely be taxed by your city, county, school district, water management district if there is one, and others. It’s important to get a whole tax picture view before deciding on an area. The local property appraiser’s office will usually be your best resource for this.

It is also important to note that in some states real estate taxes are paid in arrears, and in many cases you will have an opportunity to get a small discount for paying them early.

Homestead Exemptions
Some states provide some much needed tax relief in the form of homestead and other exemptions. Here are some of the possible exemptions that can save you money:

• Homestead Exemption
• Additional Homestead Exemption for Persons 65 and Older
• Widow’s and Widower’s Exemption
• Disability Exemption
• Disability Exemption for Ex -Service Members
• Exemption for Blind Persons

The best resource for calculating what your taxes will be on a particular property is, again, the local Property Appraiser’s office. They are there to help you. Some even have calculators on their website that you can use to get an idea of what your taxes will be.

Over the next several days and weeks I’ll be posting chapters from “The Ultimate Retirement Community Buyer’s Guide“. This is the entire text of the book (excluding the many buyer worksheets and checklists that are in there) completely free for you to read. In a few short weeks I plan to make available a printed version for those who wish to have it. Hope you enjoy it, and as always love your feeedback so let me know how you like it by leaving a comment.

Chapter 1: Introduction
If you are thinking of buying a new home and retiring, or at least considering buying a second home in the next couple of years, this book is for you. The idea for this book was born out of frustration. For the past several years, as a real estate broker and more specifically a new home salesperson, I have worked primarily with baby boomers who were either purchasing their future retirement homes, or buying second homes to visit and enjoy with friends and family.

No matter how successful, well-educated, or bright these baby boomers were, each had their own set of questions that they needed answered. Some had basic questions such as where to retire, what each region offers, and what the weather would be like at different times of the year. Others pondered what they might do to fill their days, wondering whether they would continue to work in retirement, start new businesses, or split their days between the golf course and the beach.

Invariably, their questions would eventually turn to real estate. They needed to know things like where could they find the best values in home prices, how much would their taxes be, would they be able to get insurance and how much would the insurance cost. Others wondered what type of community would be best for them, for example, would they want to live somewhere that has a Homeowners’ Association? Many other boomers were interested in learning more about the process of having a new home built.

What was frustrating for me was seeing so many of them receive and act on misinformation that they found on an unreliable website, or that they received from well-intentioned but misinformed friends or family, and in a few rare cases, from agents or builders with only their own interests in mind. My goal for this book is to answer the questions that you have about buying or building a new home and eventually moving to enjoy their retirement.

Best wishes for your retirement!

Chapter 2: Deciding Where to Retire

Chapter 3: How to Find a Realtor

Chapter 4: Types of Homes

Chapter 5: Kinds of Retirement Communities

Chapter 6: Retirement Community Homeowners’ Associations

Chapter 7: Real Estate Tax Information

Chapter 8: Homeowner’s Insurance Basics

Chapter 9: Home Inspections and Warranties

Chapter 10: Negotiating With Builders and Developers

Chapter 11: Real Estate Financing

Chapter 12: New Home Construction

Chapter 13: New Home Walkthrough

Chapter 14: Real Estate Closings

Chapter 15: Maintaining Your New Home

55-plus communities are communities where the majority of the homeowners are over the age of 55. In most states, for a community to qualify for the 55-plus designation and to be marketed as such, at least 80 percent of the units have to be occupied by at least one person over 55. A common misconception is that everyone must be over 55 but that simply isn’t true. On the other hand, this does not mean that someone under 55 must be allowed to purchase a home. A community– through its deed restrictions– can legally deny someone the ability to purchase a home if they are not yet 55 years old.

Some 55-plus communities have limits on how long relatives such as kids or grandkids can visit, but those instances are usually limited to mobile home parks. While there are still many 55-plus communities being built throughout the country, research suggests that some boomers do not want to move into a 55-plus community due to some of the restrictions involved and because they associate it with being “old.” If you fall into this category, you may want to seriously consider a maintenance-free lifestyle community as an alternative. But even still, the business of developing and building 55-plus communities is… excuse me… booming, and those who do it right are experiencing amazing successes.

Bill Ness is a retired executive of Del-Webb, creators of the Sun City retirement community concept and pioneers of retirement community lifestyle design. Bill knows a thing or two about active adult and age restricted communities, and he’s got a website called 55Places.com where he reviews a whole bunch of 55-plus communities across the country. Be sure to check it out if you are considering that option for retirement.

(Photo by Christopher Dick on Flickr)

There’s a post on the Zillow blog that highlights some of the drawbacks of living on the golf course. Among them are colorful language (especially on Men’s day) and the possibility of broken windows (especially if I’m around).

Just some things to keep in mind when you’re looking for a home on the golf course. I’ve lived on the golf course a couple times, and a drive hitting the roof at 7:30 Saturday morning will definitely wake you up and jolt the senses.

So what about you? Do you plan on buying a home on the golf course, or possibly live on one now?

The rumblings on this have been around for a while and with the depressed housing market, there’s only so much a company like WCI can do.

WCI is majority owned by Carl Icahn’s investor group. Too early to tell how this will all shake out. The bankruptcy hearing is not shceduled until October. WCI owns lots of undeveloped land which they may be forced to sell at a steep discount to free up some cash.

Nextville: Amazing Places to Live the Rest of Your Life

Nextville is less “how-to” guide and more of a “find yourself” or “figure out whats right for you” guide. Barbara basically breaks boomers down into eight possible different lifestyle categories such as “following your passions”, “living green“, “losing yourself” for the soon to be ex-pat, as well as those who will choose to “stay put”.

While actual “how-to buy” advice isn’t as meaty as you might have hoped, there are plenty of checklists and quizzes to help guide the boomer who isn’t quite sure where they want to end up or what they want to do with the next quarter century. The main strength and value of the book is that it does a great job of exploring several out of the ordinary places to think about spending your time.

Which leads me to my only bone to pick with the book. In Chapter 1, “Forget Florida” Barbara is clearly highlighting what the media is making everyone “think” is the trend, that nobody is moving to Florida anymore. The media wants everyone to believe that Florida is dead as a destination. Forget it, it fell off the map!

However, and believe me, I hear it from people everyday, folks are still researching and moving to Florida more so than any other state. There’s even a book reviewed by the Wall Street Journal this weekend which chronicles the lives of folks who have moved to The Villages, located in, yup, you guessed it…Florida. (This book is called Leisureville…Leaving me wondering what’s with all the “villes”?)

For good measure how about some search engine stats to back me up (Data is from Wordtracker):

Estimated Daily Searches:

Florida retirement communities: 51
Georgia retirement communities: 12
South Carolina retirement communities: 9
North Carolina retirement communities: 11
Tennessee retirement communities: 4
Virginia retirement communities: 12
Texas retirement communities: 23
Arizona retirement communities: 26
Nevada retirement communities: 4
New Mexico retirement communities: 7

You can clearly see above that interest in Florida still out paces most other states by quite a wide margin.

Lastly, and then I’m done picking on this fantastic book (I promise), is that someone needs to tell the publisher that postcard book covers are sooooo 2007

A compilation of input gathered from boomers who have lived the community experience, the article does not try to scare you from exploring the active adult retirement options available to you, but it does give you some things to think about before making a decision.

As with anything there are good things and bad, and what is good for you may not be good for someone else. So when reading the article, don’t just rely on what someone else experienced, think about how the experience fits your ‘ideal’ lifestyle.

image credit: nickgraywfu at flickr

Mainstream media is finally catching up to us bloggers in describing the topic.

It’s not only a nightmare scenario for buyers whose dream homes are not being completed, but what about the folks who’ve already moved in and have unfinished home sitting on either side of them?

Be smart out there.

image credit: dospaz on flickr

But, this is only after their specific lifestyle and convenience needs are met. The article compares the choice to “buying a Lexus Hybrid instead of a Toyota Prius”.

I’ve written about Boomers exploring different ways of going green here before, and no doubt it will be a noteworthy trend in years to come. Developers interested in the boomer market better get their green home plans and designs together!