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Old 10-14-2009, 08:19 AM
 
29,819 posts, read 34,912,438 times
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house-of-tomorrow.html: Personal Finance News from Yahoo! Finance

Great article on a topic not discussed much. What to do with the equity in your home while in retirement. Often becomes a part of thread discussion especially about leaving wealth to your children etc etc. Now a good article with good food for thought.

A brief part of for your reading:
The equity in your home represents a big part of your wealth. If you're married, your non-financial assets -- mostly the equity in your house -- represent about 70% of your total assets, according to a 2009 Society of Actuaries report "Segmenting the Middle Market: Retirement Risks and Solutions."

What's more, the report noted the median value of financial assets is less than 1.5 times median income -- $75,000 -- for the majority of middle-class households and that the median value of financial assets is just three times median income -- $132,000 -- for the vast majority of affluent households. Read that report at this Web site.
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Old 10-14-2009, 08:31 AM
 
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lets see, we can get ripped off on a reverse mortgage, rent our rooms out and live with total strangers in our house... put ourselves in debt with an equity loan....., bet the rent money in the markets if you sell your house and invest whats left based on your own devices , we know what that means ha ha ha . maybe ill just sell off my kitchen since we eat out a lot , lol .... just chock full of great ideas. truth is most make better reading in that article then practical ideas we would want to do unless we were in financial trouble

the only real practical idea is down size or move to a cheaper area
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Old 10-14-2009, 08:36 AM
 
29,819 posts, read 34,912,438 times
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Quote:
Originally Posted by mathjak107 View Post
lets see, we can get ripped off on a reverse mortgage, rent our rooms out and live with total strangers in our house... put ourselves in debt with an equity loan....., bet the rent money in the markets if you sell your house and invest whats left based on your own devices , we know what that means ha ha ha . maybe ill just sell off my kitchen since we eat out a lot , lol .... just chock full of great ideas. truth is most make better reading in that article then practical ideas we would want to do unless we were in financial trouble
They leave out the alternative a number of us would prefer and that is to leave it as inheritance for our kids. We know however from another thread that their is a sizable segment who are not interested in that. Unless they do something they will be doing that by default. Also not all seniors are well off and not needing additional sources of revenue.
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Old 10-14-2009, 08:38 AM
 
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the problem is unlike selling a stock , a bond or investment property which you can sell and harvest your gains ,your still faced with needing a place to live when it comes to your house.

Even moving to a cheaper area dosnt always help. we are giving up a 2 bedroom apartment in nyc and got a 3 bedroom house in pa. while none of the kids stay with us in nyc, all of the kids will stay with us when they visit in pa.

the 2 bedroom apartment cost as much as the 3 bedroom house so in our case its a wash, we are just getting alot more for the same money in pa.

Last edited by mathjak107; 10-14-2009 at 09:02 AM..
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Old 10-14-2009, 08:51 AM
 
4,182 posts, read 5,804,547 times
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Sell the house, use the proceeds to check yourself into a nursing home.
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Old 10-14-2009, 09:16 AM
 
357 posts, read 878,702 times
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I wonder how many people make a clear decision to check themself into a nursing home.

Quote:
Originally Posted by ndfmnlf View Post
Sell the house, use the proceeds to check yourself into a nursing home.
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Old 10-14-2009, 10:47 AM
 
Location: WA
5,398 posts, read 21,420,026 times
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The value of my home has dropped over 25% practically wiping out any equity so even if I was planning to account for it (I was not) there is little to worry about now.
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Old 10-14-2009, 11:23 AM
 
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i cant say it enough. the home you live in is NOT AN INVESTMENT.
the interest, taxes and expenses of a home are usually more then even the house appreciates to by the time the mortgage is payed off. the fact it has any value at the end merely offsets the load of money you spent on housing costs over a lifetime. rarely if ever are you ahead of what you spent.. yes you may be ahead or behind compared to renting but overall your cost of housing is an expense like food and eating. if you could sell your refrigerator at the end it would be the same thing. it merely offsets some of an expense.

anyone ever notice typically the un-reimbursed interest alone on a 30 year mortgage can be 2 to 3x what you borrowed .


http://www.realestatejournal.com/buy...-clements.html

Last edited by mathjak107; 10-14-2009 at 11:34 AM..
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Old 10-14-2009, 12:48 PM
 
8,215 posts, read 11,935,652 times
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Quote:
Originally Posted by mathjak107 View Post
rarely if ever are you ahead of what you spent..
I must be one of those rare people then.

For the last 11 years, I've lived in a 4000 square foot house with a mortgage payment of less than what a 2br apartment rents for in Bethesda.

Over the 11 year period, my mortgage was roughly $2000/month, of which $1000 was interest, $500 property tax, and $500 principal. The $500 principal will be returned to me at settlement, so my initial out-of-pocket monthly expense was $1500 for taxes and interest. However, I received $500 back in income tax deductions out of that $1500, so my actual expense was only $1000/month. Over an 11 year period that adds up to a total of $132,000. Now in all fairness, we spent a little over $100,000 in capital improvements over that time, so our actual housing cost for the 11 years was about $232,000.

We just sold the house two weeks ago for $435,000 more than we paid for it.

Not bad for a non-investment.
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Old 10-14-2009, 01:09 PM
 
71,867 posts, read 71,942,576 times
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that was only for 11 years thats why, we are talking a lifetime of housing costs so you really have to check back in 30 years or so, add up every expense and repair , every renovation and all maintaince , taxes , insurance etc. and then see if your ahead. housing costs dont stop when we move or sell. they are lifetime expenses that are forever on going and as such just keep adding them up no matter where your living.

you get the idea im trying to convey , a home is a consumption item. and its a lifetime of expenses as you always need a place to live..

I think 30 years of just real estate taxes at todays level and interest alone would add up to more then a house could be sold for here in long island ny not even figuring the house price and all the expenses. IF YOU SELL DONT FORGET THE COST OF MOVING, CLOSING COSTS EACH TIME AND RE-FURNISHING IF YOU START OVER AGAIN as well as all new renovations. they all get lumped into our housing costs.

when all is said and done the amount related to our housing costs over a lifetime is staggering. figuring a long term average gain for residential housing of 5% or so you want to vomit when you see the total costs vs appreciation at the end of 30-40 years or so ... ha ha (BARF)

Last edited by mathjak107; 10-14-2009 at 01:37 PM..
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