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Read what i wrote , i said in effect he presold the house and i stand by that. If they pay it back it was a loan if they opt to let them keep the title they presold it. They just keep certain benefits of still owning .
I am done with this game of semantics , the point still stands ,equity is trapped
It is not semantics. The problem is you keep changing your point. Now you say the "equity is trapped"?
What does that mean "trapped"? What equity? The equity in the property or the equity that is collateral for the reverse MORTGAGE? Do you realize there are reverse mortgages where there is NO equity? How can THAT be trapped?
You keep weaseling around your earlier statement with statements that don't make sense.
Meh...not sure a paid off mortgage equates to living the high life.
My parents are 80, still paying $887 per month (that includes taxes and insurance). We have been begging mom for 5 years to pay off the house to save that bit of interest. She could well afford to do it, and we need to get dad off the paperwork (he has Alz). But she just won't do it.
When it is finally paid off (in the next 2 or so years) her lifestyle won't change one bit. She is going to have to dip into her investments to pay for dad's nursing home anyway.
No you are correct. As I have been saying, if you need to tap into tax deferred accounts to pay it off as a lump sum than no it is not living the high life. I agree with your mom in her case as well. She is making those payments easy enough and in two years the mortgage will be paid off so little needs to change.
anyway my prayers to your dad and mom. ALZ is a tough road.
You are not correct. Dividends are paid from the company bank accounts and comes right off the share price. The amount is voted on by the board and whether their are profits or losses that dividend is paid.
Exchanges automatically reduce you investment value by the dividend amount every time it is paid.
The bluest of blue chips have paid dividends out right in to the grave.
When the openng bell rings for the next quarter your opening amount that gets compounded on by the markets is reduced and all dollars gained are on that opening lower balance.
A company can't suddenly give away millions and not have that refleced in the share price so exchange computers do it automatically.
A down year share price wise is a down year if total return is negative and it makes no difference if you are drawing the 2% dividend from the stock oryour total portfolio, down is down and next year you have less compounding.
In order to sustain a 4% safe withdrawal rate you need to maintain a 2% real return average over the first 15 years of a 30 year retirement .
If you were a y2k retiree your equity portion has not even seen that much including dividends. The bond portion did better so they are on the fence as far as whether there money will even last 30 years .
You have it backwards. Exchanges add the declared dividend to the share price in advance of the distribution. After the dividend date, the share price returns to normal. Normally a dividend is declared about 30 days in advance of distribution.
If you look at your shareholder statement, there are line items for earnings, retained earnings, cash reserves, and dividends. It's not like these things are a secret. If dividends exceed earnings, you are right to be concerned. Typically a company will retain some earnings for retooling, modernization and expansion, or to service debt taken on to accomplish those things.
The world is full of vulture capitalists who will try to suck the equity out of a firm, leaving shareholders holding the bag. You can't be oblivious to the quarterly and annual reports. One of the shuck and jive routines is how they are going to make a fortune by borrowing to the hilt, the same shuck and jive some people are posting here. It rarely works out.
A y2k retiree who hasn't seen much better than 2% annual earnings is not a very good investor. Even with our current overheated stock market, value stock dividends are running around 2%. Rental units and farm ground are doing much better than that. 30 year old timber puts on about 4% in volume a year. The whole point of diversification is that some investments will do better than others, depending on conditions. My offshore investments have not done much because of the strong dollar, but what goes up will eventually come down. In another decade my offshore money may be the shining star. My timber did well between 1994 and 2013, both in growth and in commodity fluctuation. When the price spiked, I logged, so that was pretty much a one time return of 35% of the purchase price of my home, which had already been paid for at the time. I have never figured it out, but at a guess, between 2000 and today my investments have earned about 400%, including a couple of years when they returned 100% in one year, thanks to massive crashes. I don't see much opportunity in current investments, but the next time the economy takes a dump things will look up. A year ago, offshore investments were good, but the dollar is currently trading at an 11 month low, so the deals have moderated as returns have risen.
I have never figured it out, but at a guess, between 2000 and today my investments have earned about 400%, including a couple of years when they returned 100% in one year, thanks to massive crashes. I don't see much opportunity in current investments, but the next time the economy takes a dump things will look up. A year ago, offshore investments were good, but the dollar is currently trading at an 11 month low, so the deals have moderated as returns have risen.
You should start a hedge fund. Most investors have not beaten the market, but a few have, and those are mainly hedge funds and private equity funds that have made their founders into billionaires. (My former employer - I am now retired - invests in hedge funds as well as ordinary stock and bond funds, so I am aware of their successes and failures.) Still, I'm not sure any of them is up 400% since 2000 so your fund will be a sure winner. <irony>
You have it backwards. Exchanges add the declared dividend to the share price in advance of the distribution. After the dividend date, the share price returns to normal. Normally a dividend is declared about 30 days in advance of distribution.
If you look at your shareholder statement, there are line items for earnings, retained earnings, cash reserves, and dividends. It's not like these things are a secret. If dividends exceed earnings, you are right to be concerned. Typically a company will retain some earnings for retooling, modernization and expansion, or to service debt taken on to accomplish those things.
The world is full of vulture capitalists who will try to suck the equity out of a firm, leaving shareholders holding the bag. You can't be oblivious to the quarterly and annual reports. One of the shuck and jive routines is how they are going to make a fortune by borrowing to the hilt, the same shuck and jive some people are posting here. It rarely works out.
A y2k retiree who hasn't seen much better than 2% annual earnings is not a very good investor. Even with our current overheated stock market, value stock dividends are running around 2%. Rental units and farm ground are doing much better than that. 30 year old timber puts on about 4% in volume a year. The whole point of diversification is that some investments will do better than others, depending on conditions. My offshore investments have not done much because of the strong dollar, but what goes up will eventually come down. In another decade my offshore money may be the shining star. My timber did well between 1994 and 2013, both in growth and in commodity fluctuation. When the price spiked, I logged, so that was pretty much a one time return of 35% of the purchase price of my home, which had already been paid for at the time. I have never figured it out, but at a guess, between 2000 and today my investments have earned about 400%, including a couple of years when they returned 100% in one year, thanks to massive crashes. I don't see much opportunity in current investments, but the next time the economy takes a dump things will look up. A year ago, offshore investments were good, but the dollar is currently trading at an 11 month low, so the deals have moderated as returns have risen.
no you are wrong . there is nothing added to the share price by the exchanges prior , your dreaming .
the only thing you have is where markets take the stock over the quarter . it could be up , it could be down . there is no such thing happening . you are telling us the exchange pads a stock with millions of dollars out of the sky ? ha ha ha , that is just ridiculous .
if it did no one would own the stock , they would just buy it the day before the addition , but that is just nonsense
the s&p has not seen a 2% real return for the y2k retiree . it is only in the 1.80% range .
i said they need a 2% real return , that is after inflation .
this is the only exchange rule on dividends
FINRA MANUAL :
5330. Adjustment of Orders
(a) A member holding an open order from a customer or another broker-dealer shall, prior to executing or permitting the order to be executed, reduce, or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment, or distribution on the day that the security is quoted ex-dividend, ex-rights, ex-distribution, or ex-interest, except where a cash dividend or distribution is less than one cent ($0.01), as follows:
(1) Cash Dividends: Unless marked "Do Not Reduce," open order prices shall be first reduced by the dollar amount of the dividend, and the resulting price will then be rounded down to the next lower minimum quotation variation
I saw a banker about a reverse mortgage.
I understood what he told me.
I hold the title to my house, he does not.
And I will never owe more than the house is worth, based on approved appraisal.
I agree with honobob. It's not a word problem. It is an understanding of how reverse mortgages work.
Here's how I see it...
Pay off the mortgage as you near retirement.
Then when you reach 65 get a reverse mortgage to extract the equity... or 'sell' the equity - I don't care what you call it.
You will never again have a mortgage payment, will leave little to nothing on the table, live in the home as long as you can, and have money available to pay taxes, insurance, maintenance, invest, buy a single premium immediate annuity, wine, women, song, i.e. use it however you like.
Your heirs will never be required to pay back the lender more than the house is worth as the loan is FHA insured.
So you'll live mortgage-free AND have cash to spend.
It's a sweet deal as long as you plan to leave feet first.
the problem is you only get about 1/2 the value of the house as the rest is eaten up by fees , reverse compounding and insurance . it may not give you enough to make ends meet as inflation does its thing and if you have to move you may have no money and no house .
remember these payments are not inflation adjusted .
imagine being locked in with little equity left or none and you find you can't drive and you are in an area with no public transportation . what if you need care and want to be near family ?
there are just to many variables in life . most folks who take the reverse mortgages do so because they have little other cash flow so they really have to see if the cash flow is enough from these mortgages .
lump sum to throw in to an annuity can be brutal as all that reverse compounding interest you eat you up in now time .
even here in long island with the typical home worth more than 500k it can be quite painful.
On a $250,000 lump-sum in ten years the balance will climb to $465,841. Assuming 3% home price appreciation, that would leave about $72,000 in equity based on a home's $537,566 value. In 20 years, the loan balance would reach $868,031, exceeding the home's $722,444 value.
Sure would be nice, wouldn't it? Not happening here. I bought a house a year ago...I'll be 74 this year...and I'm not regretting it a bit. I plan to live here till I 'expire' or, if need be, sell it if I need to for long term care, etc.. So far I am healthy, work full time and doing fine. My mortgage is small enough to not be a pain, even with PMI included. I looked at some of our nice 55+ communities and could have bought in any of them. Cheaper, smaller home/yard etc. AND over $500 month lot rent. Never ending payment and you never own the land your home sits on. It was buy my own home or pay rent to someone for the rest of my life so I bought. It's a fairly good sized home on a 1/4 acre lot in a decent neighborhood. I like being able to do whatever I want with my own home, not pay 'extra' for my two cats and have anyone telling me what I can and can't do. If I were renting right now it would cost me over $1,000 mo. just for rent and utilities. Nope, not going there. My house will never be paid off but, like I said, I'd be paying rent somewhere so I think I'll keep it. Oh yeah, and I can still afford vacations and most anything else I want too.
Are you comparing a house with a trailer park? Lot Rent?
Are you comparing a house with a trailer park? Lot Rent?
Not a "trailer park", no. An established 55+ community of manufactured homes, yes. I wouldn't have minded living in one but didn't see any sense in paying $500+ mo. lot rent for the rest of my life and not owning the property. Even if the home is paid off. We have some really nice ones here and they have nice amenities but that's not enough to convince me either.
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Oh yeah, and I can still afford vacations and most anything else I want too.
