Real Estate
Presented by
Sonali Sethna
OPEN SUNDAY 9/11 1-4
OPEN HOME GUIDE AND REAL ESTATE LISTINGS
Reverse mortgages aren’t for everyone BY JASON ALDERMAN
You can scarcely turn on the TV without seeing ads for reverse mortgages. They’re touted as a great tool for cash-strapped seniors to tap their home equity to pay off bills while remaining in their homes with no monthly mortgage payments. Although that may be true for some people, these complicated and costly loans aren’t right for everyone, so it pays to do your homework. Here’s a primer on reverse mortgages and Jason precautions you need to Alderman take. Reverse mortgages let homeowners age 62 or older borrow against their home equity without having to make monthly payments (as with refinance loans). The loan needn’t be repaid until you move out permanently, sell the property or die. In addition, seniors wishing to downsize or relocate may make a large down payment on a new home and then use a reverse mortgage to finance the rest. The vast majority of these mortgages are made through the Federal Housing Administration’s Home Equity Conversion Mortgage (HECM) program. Common features include: ■ All parties on the loan must be at least age 62. ■ The home (current or future) must be your principal residence. ■ You must own the home outright or be able to pay it off with proceeds from the loan. ■ The allowable loan amount is based on your home’s appraised value, your age, interest rate and type (fixed or variable), mortgage insurance and applicable fees. Generally, the older you are and the more valuable your home, the greater the available loan. ■ The repayment amount never exceeds the home’s final sale value, so you (or your heirs) are never liable for more than you
originally borrowed. ■ You can take the money as a lump sum, a line of credit, fixed monthly payments or any combination. Reverse mortgages can be very expensive. Lenders may charge a loan origination fee of up to $6,000. In addition, you must pay upfront and then ongoing mortgage insurance premiums (MIPs). HECM Standard loans have an upfront MIP of 2 percent of the home’s value. HECM Saver loans have a far lower 0.01 percent upfront MIP (although the allowable loan amount may be up to 18 percent less). Both versions also charge an additional 1.25 percent MIP of the outstanding balance annually, as well as a loan origination fee of up to $6,000 and various other charges. A few other potential downsides with reverse mortgages: ■ You are responsible for homeowner’s fees, property taxes, insurance and repairs for the life of the loan. If you don’t pay them, you risk cancellation or foreclosure. ■ They aren’t cost-effective if you plan to move in a few years. ■ Some couples put only the older spouse on the loan in order to secure a higher balance, but this can backfire: If that person dies first, the survivor could be bound to pay off the loan — a real problem if the home’s value is “underwater.” ■ The longer you carry a reverse mortgage, the more your home equity — and thus, your estate — will decrease. Because reverse mortgages are so complicated, potential borrowers are required to consult a Department of Housing and Urban Development (HUD)-approved counselor before being allowed to apply. Before you even get to that stage, do your research. Helpful sites include those sponsored by the HUD (www.hud.gov) and AARP (www.aarp.org).
1485 Trimingham Dr Sat 2-4 Alain Pinel Realtors
6 BEDROOMS 1311 Laverock Lane $2,999,000 Sun 1-4 Michael Hatfield Broker 984-1339
Danville 6 BEDROOMS 206 Monterosso Ct Sun 1-4 Coldwell Banker
$1,124,950 837-4100
Dublin 3 BEDROOMS 3717 Branding Iron Pl Sun 1-4 Alain Pinel Realtors
$440,000 251-1111
Livermore 5 BEDROOMS 1641 Vetta Dr Sun 1-4 Keller Williams Tri-valley
3 BEDROOMS 219 Birch Creek Dr Sun 1-4 Bhg Tri-valley Realty 1893 Cortez Ct Sat 1-4 Keller Williams Tri-valley
Features Include: Upgraded Carpet, Tile Flooring, Designer Paint, White Kitchen Cabinets, Surround Sound, Office Built-Ins and much more! Call 925.525.2569 For Details.
Sonali Sethna
REALTOR® Lic#01194792
925.525.2569
SonaliSells.com KELLER WILLIAMS® Tri-Valley Realty is Independently Owned and Operated.
g Soon Comin
5047 Forest Hill Dr, Pleasanton Forest Hill Estates — Built in 1996 Beautiful single story home featuring 4 bedrooms, 3 baths, approx 2,547 sqft. New interior paint, new carpet, hardwood floors, marble entry, remodeled master bath. Excellent Westside location with 3 car garage. Large approx. 9889 sqft. flat lot. Walk to schools, parks and shopping.
ED EDUC JUST R $510,000 251-1111
4 BEDROOMS 3038 Bersano Ct $1,450,000 Sat/Sun 1-4 Keller Williams Tri-valley 397-4200 2189 Pomezia Ct $1,175,000 Sun 1-4 Keller Williams Tri-valley 397-4200 2332 Via Espada $939,000 Sat 1-4 Keller Williams Tri-valley 397-4200 7538 Stonedale Dr $529,000 Sat 1-4 Alain Pinel Realtors 251-1111
San Ramon 2 BEDROOMS 4063 W Lakeshore Dr Sun 1-4 Coldwell Banker
$474,900 837-4100
$929,000 397-4200
4 BEDROOMS 101 Scarboro Pl Sat 1-4 Prudential Ca Realty
$549,000 463-9500 $501,610 397-4200
For marketing opportunities contact Andrea Heggelund at (925) 600-0840 x110 or e-mail aheggelund@pleasantonweekly.com.
Pleasanton
This 4bd/3ba home in the Valencia II development has the desirable 1 bedroom/1 full bath on the entry level and a loft/office/den upstairs. This 2321 sq. ft. home sits on a 3634 sq. ft. lot.
Jason Alderman directs Visa’s financial education programs.
OPEN HOMES THIS WEEKEND
Alamo
New to the Market! Desirable Floor plan in Valencia II
$549,900 249-1600
603 Blossom Ct, Pleasanton
4691 Finch Way, Dublin
4 bedrooms, 4 baths, approx 5000+ sqft, bonus room, separate office and spa room - premium location! Large and flat 31,080 sqft lot. Offered at $1,425,000
4 bedrooms, 2.5 baths, approx 2400+ sqft, separate office, loft (4th bedroom) and bonus room. Offered at $699,000
For photos and virtual tours visit www.deloresgragg.com If you are thinking of selling or buying a home, call me for information on current market conditions and options available to you.
925.989.6500
D elores Gragg
REALTOR® Lic#01206964 KELLER WILLIAMS® Tri-Valley Realty is Independently Owned and Operated.
www.DeloresGragg.com Pleasanton WeeklyÊUÊSeptember 2, 2011ÊU Page 19