If you’ve been entrusted to assist an elderly relative with scheduling preventive exams and putting a health care plan in place, you may struggle with knowing when it’s time to take on a greater role in other aspects of their life. That’s why now is the perfect time to look for warning signs that your loved ones might be suffering from a decline in financial ability. Learn more by reading the full article here.
(BPT) - Your most valuable asset is around you all the time. It’s above you, it’s below you and in many cases you don’t realize how much it can do for you.
According to the Urban Institute in Washington, D.C., “Americans have a staggering amount of untapped equity in their homes.” How much? Altogether, $11,030,000,000,000. That’s 11 trillion, 30 billion dollars.
Yet despite this huge wealth possessed by homeowners, using it isn’t as simple as writing a check. You have to capitalize on your home’s equity.
What Is Home Equity?
Your home’s equity represents the difference between its current market value and the money that you owe on it.
Let’s say, for example, your home has a market value of $200,000, you made a down payment of $40,000 and you took out a $160,000 mortgage. At that point your equity is $40,000. You can always calculate this number by taking your home’s initial price and subtracting the amount you still owe.
Now, let’s say 10 years later you have paid off $60,000 of your $160,000 mortgage. At this point you still owe $100,000 on your home’s initial price of $200,000 so your equity is $100,000, assuming the home's value has remained the same.
A little at a time
Each month when you make a mortgage payment, some of your money goes toward interest, some goes toward real estate taxes and homeowner’s insurance (if the lender is collecting for these and making the payments on your behalf), and some goes toward paying off the mortgage itself. This last portion grows your equity because it subtracts from the amount you still owe.
Your home equity can also grow if your home increases in value because the amount you still owe has not changed. A rise in value may be due to increased home prices in your area and/or improvements you make to the home.
Market home prices may rise and fall from one year to the next but given enough time, most real estate tends to increase in value. For example, current economic forecasts from CoreLogic project a 4.8 percent increase in home prices year over year in 2017.
Gaining access to your equity
Now that you understand what equity is and how much equity you have, your next question may be “How do I use it?”
Your first step is to contact a knowledgeable mortgage professional. They will be able to answer your questions as well as show you loans that use your home as collateral. You’ll want to do your research to determine which type of loan is best for you. You should also take the time to compare interest rates, offers and loan features.
And if you are age 62 or older, you are also eligible for additional home equity options such as a Home Equity Conversion Mortgage (HECM), which is an FHA-insured Reverse Mortgage loan. This loan may be taken as a lump sum, a line of credit, through fixed monthly payments or a combination and the loan can never be frozen or reduced.
The equity in your home empowers you with several financing options and the specifics of each loan may vary from lender to lender, so ask questions and do your own research. Once you understand all your options you’ll be able to determine which loan offering allows you to make the most of your most valuable asset.
To learn about HECM Reverse Mortgage loans and other special home-equity options available to homeowners 62 and older, visit www.reversemortgage.org/HomeEquity.
Although retirement is a milestone for all working adults, decades of hard work may not pay off if you haven’t planned for your financial needs once a regular paycheck stops coming. Experts generally concur that it’s never too early to begin planning for retirement, but depending on your stage of life, your approach may vary. Consider this advice to get on a path toward financially secure retirement.
Take a Holistic Approach to Retirement Planning
(Family Features) Although retirement is a milestone for all working adults, decades of hard work may not pay off if you haven’t planned for your financial needs once a regular paycheck stops coming.
According to research by the Insured Retirement Institute (IRI), millions of Baby Boomers stepping into their retirement years have unrealistic expectations and lack a full understanding of the danger of running out of money during retirement. However, the challenges do not stop with Baby Boomers. A recent study indicated 47 percent of Gen-Xers and more than half of Millennials believe a secure retirement is beyond their reach.
“Most people recognize the need to grow their wealth before retirement, but getting there isn’t always a clear path,” said Cathy Weatherford, IRI president and CEO. “Starting early and taking a holistic approach to financial planning is truly essential for a safe and dignified retirement.”
Experts generally concur that it’s never too early to begin planning for retirement, but depending on your stage of life, your approach may vary. Consider this advice from the experts at IRI to get on a path toward financially secure retirement.
Building a career
A professional can help you explore less understood but worthwhile approaches to holistic retirement planning such as annuities. Annuities are essentially insurance contracts that come in different types and offer several options to meet a variety of financial objectives. They are a guarantee of income as you age.
Ready for retirement
Explore more resources and tools to aid your retirement planning at retireonyourterms.org.
Photo courtesy of Getty ImagesSOURCE:
Insured Retirement Institute
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