Kurt's Blog

Seniors in Kansas City: Long Term Care the Unbearable Burden on Your Family.

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Tue, 22 Jul 2008 08:42:35 -0500

Do you have a clearly defined plan to handle any potential Long Term Care needs you may have? Have you been taking advice regarding long term care from your friends, neighbors, family, or financially based TV or radio shows? Well doing nothing about it is very irresponsible of you, maybe even childish, and listening to the advice of people that are not experts in something so important is likely unwise.

When you don't have a clearly defined plan for long term care, it will likely fall back onto your family, the government, or a combination of the two. If it falls onto your family there are some very disturbing things to know about the impact it will likely have on your family.

A 2000 study by the American Council of Life Insurers says that the family caregiver that is forced to give up work to care for a family member loses $109 per day in lost wages and benefits.
Family caregivers experience the highest levels of clinical depression.
Caregivers under stress die an average of 4 years younger than non-caregivers.
It gives your children a good reason to gain control over your finances.
Roles reverse and you become the dependent child of your own children.
Expensive outside care giving professionals are likely needed to help out.
It can cause more friction at home within their families, especially over financial issues.
It could put your kids in the "sandwich generation" caring for you and having their kids in college at the same time.
If you end up in a nursing home under the care of the government there is no guarantee that there will be a Medicaid bed nearby, your kids will have to drive a long way to see you, which will likely reduce the times they see you and increase the stress on their lives and yours as well.
Medicaid beds lose nursing homes between $16 and $40 per day so what type of care do you think you will receive in those situations?

Realizing that there's nearly a 50% chance a 65 year old will eventually require 24 hour skilled nursing care in a facility, today's semi-private room costs are more than $66,000 and growing at 6% per year it would be $149,219 in 15 years, are you willing to plan ahead now or risk disaster later? Mature planners realize that if care is needed, the emotional grief will be hard enough. There's no need to put your loved ones in a financial bind too.

It's sad that many fall into these situations, especially when so many could use their biggest asset to ease the burden off their loved ones while also getting them better treatment with more options, including staying in your own home. Too many seniors listen to well meaning yet ill-informed people that tell them you can't do that or it's too expensive or that's a rip off so they just turn a blind eye to a potential way to handle all those concerns and still deliver a sizeable inheritance to their children.

If you would like more information about how to protect your family and get the care you may need and how Reverse Mortgages can help contact Kurt Jackson he is a Certified Mortgage Planner with more than 17 years of industry experience and would be happy to answer your questions about Reverse Mortgages. He even conducts a Free Seminar "Insider Secrets Revealed! The Truth about Reverse Mortgages: Is a Reverse Mortgage Right for You?" They are held every Thursday at 1:30PM at 12 Westwoods Drive in Liberty. Seating is Limited. Call for reservations at 816-415-1737 or email kurt@stayinyourhomekc.com.

Seniors in Kansas City: Is the Medicare Medicaid Combo the Best Plan for Your Long Term Care?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Mon, 21 Jul 2008 09:14:47 -0500

The great unknown for all of us will we need to be cared for in our later years? A Gallup poll said 76% of Americans believe they will never need nursing home care, assisted living or any other long term care service.

Unfortunately, the reality of the situation paints a much different picture. Life expectancies are up. According to the Center for Disease Control in 2004 the life expectancy for a 65 year old male is 82.1 and a 65 year old female is 85. So if you make it to retirement age the chances of living a long life are very good.

A study done by Conning and Company estimate 6 in 10 of people who reach 65 will require some form of long term care. That is a 60% chance you will need some form of long-term care, yet at last check only 5% of those 65+ have long term care insurance. Well folks if you don't have long term care insurance then you are planning on paying for it out of pocket, or you are counting on your kids to take care of you or maybe you think Medicare and/or Medicaid will take care of you.

Nursing home costs today for a semi-private room runs $66,795 annually, if it grows at 5% per year in 15 years its $141,184 per year. Nursing home stays range from 16 months for cardiac events to 96 months for Alzheimer patients. That's a total cost of $1,348,000 if you self fund it. If your kids take care of you that type of care is pretty much 24/7. What toll will that take on them?

So many just think Medicare and Medicaid will take care of them. If you believe that do some research and see what you'll find. Medicare handles short term things, really nothing more than 90 days. It does NOT handle custodial care in a nursing home, non-medical in home care, adult day care or assisted living.

Medicaid is basically welfare. You have to spend down any significant assets before Medicaid kicks in. You can keep your house, but don't think you will get your equity out of it. Medicaid will put a lien on it if your spouse still lives there otherwise it may have to be sold to pay for your care. So don't think that your house is protected- it is NOT!

So if you are thinking about sacrificing your care to leave the house to the kids, planning on Medicaid is probably not the way to go. There are a lot more reasons to look at other options for your potential long term care, but it would be impossible to address all of them in one article. Please just realize that Medicaid is not the only way to go you could have more, better options.

If you would like more information about long term care options through Reverse Mortgages contact Kurt Jackson he is a Certified Mortgage Planner with more than 17 years of industry experience and would be happy to answer your questions about Reverse Mortgages. He even conducts a Free Seminar "Insider Secrets Revealed! The Truth about Reverse Mortgages: Is a Reverse Mortgage Right for You?" They are held every Thursday at 1:30PM at 12 Westwoods Drive in Liberty. Seating is Limited. Call for reservations at 816-415-1737 or email kurt@stayinyourhomekc.com.

Seniors in Kansas City: Would Having a Growing Nest Egg to Fall Back on Give you Additional Security and Peace of Mind?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Thu, 17 Jul 2008 09:21:02 -0500

One of the biggest concerns of seniors in Kansas City is having an emergency fund that they could easily tap if needed. Many feel it would give them additional security and more importantly peace of mind so they can sleep better at night.

What if there was a way to have an emergency fund or nest egg that is "GUARANTEED" to grow tax free every year? (The 20 year average growth rate is 6.54%) Would that give you the peace of mind to allow you to sleep better at night?

Imagine living your "Golden Years" without the stress of living with the "what if's" of life. What if I have a medical emergency? What if my car breaks down and needs major repairs? What if I need to make modifications to my house to allow me to continue living here? What if? I'm sure there are many more.

Assuming you had $100,000 currently available to you, if it grew at the 20 year average of 6.54% and you didn't need the money for 20 years you would have upwards of $368,000 available to you. Would that give you peace of mind?

The next question is where do I get the $100,000, right? Well chances are you are sitting on it. Your house! I know that's taboo to mess with the house, right?

So let's say you have a $180,000 house that appreciates at 3% a year and in 20 years you needed a bunch of money. The house would be worth $325,100 and who knows what the real estate market would be at that time so let's assume you would net 90% selling it. That's $292,590, but where would you live?

Where getting a $100,000 reverse mortgage letting it grow (assuming 6.54% 20 year average) you would have access to $368,000 vs. $292,590 or about $75,000 more money AND you could still live in your house for life with no payments.

Another option, if you could qualify for a loan, you could get maybe 80% of that $325,100 house that's $260,080, but you would have a HUGE payment to stay in the house (at 6% it would be $1,559.30). You could get a reverse mortgage at that time, but that amount would be less than any of the other options. Depending on guidelines at that time it wouldn't be any more than about 75% of the value minus closing costs.

So the "fall back" plan of using the equity in your house either through selling or getting a loan when you likely would have trouble qualifying and even more trouble making house payments gives you MUCH less than getting things set up right now. Bet you didn't know that did you?

Well, if you would like more information about the options involving Reverse Mortgages contact Kurt Jackson he is a Certified Mortgage Planner with more than 17 years of industry experience and would be happy to answer your questions about Reverse Mortgages. He even conducts a Free Seminar "Insider Secrets Revealed! The Truth about Reverse Mortgages: Is a Reverse Mortgage Right for You?" They are held every Thursday at 1:30PM at 12 Westwoods Drive in Liberty. Seating is Limited. Call for reservations at 816-415-1737 or email kurt@stayinyourhomekc.com.

Seniors in Kansas City: Is Staying in Your Home for Life Still Important?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Wed, 16 Jul 2008 13:02:56 -0500

One survey said 80% of seniors want to stay in their home for the rest of their life. Really, only 80%, I would have thought it would be 100%. Is staying in your home for the rest of your life important to you?

If it is then continue reading.

Staying in your home for life is much tougher to do now that it was for your parents or grandparents. Life expectancies are up- a 65 year old woman has a life expectancy of 83 and a 90 year old today is expected to live almost another 8 years. With that longer life expectancy comes a much better chance we will need some type of long-term care.

Historically the term "long-term care" (LTC) meant nursing home care. That is not the case today with the advent of in-home care and assisted living. So when you hear "long-term care" it includes all of the above. One study showed that there's a 60% chance we will require some type of LTC, and if we are going to live longer it makes sense that the length of time we might need LTC could be extended.

There are different schools of thought regarding LTC. One is to self-insure which means you feel you have enough assets to pay for it as long as you need it. The next is to buy LTC insurance, but so many feel the premiums are too expensive to afford in retirement. The last school of thought is to depend on the government- Medicare and Medicaid.

If you are looking at the last one, please rethink that plan. If you think that's the only way you can go talk to someone that knows more about other options. When was the last time you heard someone say how good their experience was with the care they received thru Medicare or Medicaid?

What if there was a way for you to prepare yourself for the possibility of LTC that would allow you to stay in your home for as long as possible, have no mortgage payments for as long as you are in the house, while you are in the house you never give up ownership, and it didn't impact your monthly expenses at all, would that interest you?

If you think that sounds pretty good to you then you need to look into some of the advanced strategies involved with Reverse Mortgages. These are strategies that very few even know about.

If you would like more information about Reverse Mortgages contact Kurt Jackson he is a Certified Mortgage Planner with more than 17 years of industry experience and would be happy to answer your questions about Reverse Mortgages. He even conducts a Free Seminar "Insider Secrets Revealed! The Truth about Reverse Mortgages: Is a Reverse Mortgage Right for You?" They are held every Thursday at 1:30PM at 12 Westwoods Drive in Liberty. Seating is Limited. Call for reservations at 816-415-1737 or email kurt@stayinyourhomekc.com.

Seniors in Kansas City: Do You Find Yourself Dipping into Savings to Make Ends Meet?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Tue, 15 Jul 2008 09:00:16 -0500

The stock market is in Bear territory and the cost of just about everything is up. Are you like millions of seniors that are finding themselves dipping into their savings more than they planned to at the worst possible time- when their accounts are taking a beating?

What is it doing to your retirement plan? Are you now even more concerned that you could run out of money before you die? Will you have to cut back on your spending and thus your lifestyle or worse yet go back to work? I know, I know you already know that and I'm just throwing salt in the wound, but before you stop reading there may be a way to help you weather this storm.

For many seniors there is one big asset that tends to be overlooked due mainly to a lot of misconceptions, incorrect information and outdated thinking. That asset is the house. Whoa, I know, "hands off," "don't touch my house," "that's off limits!" That's what I mean by misconceptions, incorrect information and outdated thinking.

So many cling to outdated information that was created 50, 60 even 70 years ago and folks I don't know if you've realized this or not, but the times are much different in 2008 than they were in the 1950's, 60's, 70's etc. Different times calls for different measures!

Would the ability to access "tax free" income when you needed it be a benefit to you? If you didn't need the money the amount available could grow each month (the 20 year average annual growth rate is 6.54%), the growth is tax free and not directly tied to the stock market. Does that sound intriguing?

Would it be smarter to pull "tax free" money out of an investment that is not declining in value, but is guaranteed to grow every year when your taxable accounts are getting hammered by a poor stock market environment? Would it be better to leave those accounts alone rather than depleting them as the market is depleting them already?

If you answered "yes" to any of those questions then you need to look into the merits of a Reverse Mortgage. Yes that's right I said "Reverse Mortgage," it's not a four letter word. It's actually what I would call the MOST overlooked financial tool in all of retirement planning.

Seniors in Kansas City: Do You Still Have a Mortgage Payment?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Mon, 14 Jul 2008 07:35:11 -0500

Even though so many seniors in Kansas City struggled their working years trying to pay off their homes, many failed to accomplish that goal. To compound the problem these same folks didn't have a clearly defined savings plan for their retirement years. So now they are in their "Golden Years" and aren't able to enjoy retirement.

Too many seniors are struggling financially because they still have a mortgage payment. Making matters worse is the fact that inflation has been making living much more expensive. All you have to do is look at the pump, the prices at the grocery store, your utility bills and the costs of your prescription drugs to know where their dollars are going.

Many are having to stay on their jobs longer or go back to work. They are dreading the beginning of the month because they know all those bills will come due again and they just can't make ends meet.

What if you could eliminate the mortgage payment while having the ability to stay in your house for as long as possible? What if you could pay off the mortgage and have an emergency account to give you Financial Peace of Mind? What if you could pay off the mortgage, have that emergency account AND have some additional income to help you not only pay your bills but have some additional spending money? Would any or all of those things make your life more enjoyable?

If your answer to any of those questions is "Yes" then you need to check out the merits of Reverse Mortgages. Contrary to what the media and so called "experts" would have you believe about them a recent study revealed that 93% of seniors that have gotten Reverse Mortgages are happy with them. That's quite an approval rating, don't you think?

Seniors in Kansas City: Is Paying Off Your Home Still a Sign of Success?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Thu, 10 Jul 2008 08:42:07 -0500

Ever since the Great Depression the goal of just about every homeowner was to pay off their house as fast as possible. It was thought to be a sign of success because it kept the house safe from foreclosure, having no payment is really the only way to live in retirement and the goal of leaving something to the kids.

All are fine goals, but why then do so many seniors in Kansas City with paid off houses struggle monthly to pay their bills, eat and buy their prescription drugs? You see it all the time and thanks to the recent spikes in food costs, fuel costs, electricity costs, property taxes, and skyrocketing drug prices it has become even more prevalent.

Research shows that so many that focused on paying off their homes early failed to implement a clearly defined savings plan. It also appears that many felt between pensions and social security they could make it easily in retirement. The problem there is that pensions are dwindling quickly, healthcare coverage even faster and social security which was designed for a third of one's retirement is now the ONLY retirement for many.

To recap, many seniors struggled for years putting any extra money they had towards paying off their house. So much so, they didn't have much if any other money saved and now what they thought the government and their employers would provide in retirement haven't come to fruition. Therefore, they are living their "Golden Years" struggling to survive having to decide between eating and buying their prescription drugs. All the while they are sitting on their largest asset and not utilizing its power.

If you had a $100,000 in a mutual fund and you couldn't afford groceries and your prescription drugs each month would you just leave that money in the account? Or would you tap into it to get by each month?

Why should your house be any different? I mean if there was a way to access a majority of that money WITHOUT the fear of losing your home or ever having to make a mortgage payment why wouldn't you?

Is having a paid off house while you are struggling every month to eat and pay bills, much less do anything enjoyable your definition of "Success?"

If you would like to explore a different way that could help you pay your bills, eat, get your prescription drugs AND do some of the things that you enjoy then you should look into the merits of a Reverse Mortgage.

Seniors in Kansas City: Should I sell my home and rent something smaller?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Wed, 09 Jul 2008 10:18:40 -0500

Another option given by the media and other financial advisors to the question of how can seniors in Kansas City make ends meet in retirement is to sell their house and rent something smaller.

Assuming you have an $180,000 house if sold would net 90% after selling costs and seller concessions that would leave you with $162,000. If that was invested into a conservative investment that earned 5% after taxes and the strategy is to use that money to pay the rent every month plus pull out the amount the taxes and insurance would have been on the house.

If you rented a place at $800 per month it would likely be much smaller than the house that you had and you would have missed out on any appreciation on the house. The idea behind this is that you can't afford your house which would have about $260 in taxes and insurance each month. If we assumed that rent and house costs go up the same 4% annually how long would that $162,000 last?

Since you would only do this to pull extra money out, let's assume the amount you were paying on the house each month $260 is taken in additional income adjusting for inflation. In 5 years that amount would be $304.16, 10 years $370.06, and in 20 years $547.78.

The question we ask is how long could you pay rent and pay yourself the equivalent of what your house would have cost? The answer is 19 years and 1 month. So selling and renting in this situation would give you 19 years and one month before you ran out of money. Granted you had income too, but isn't that the only reason you would do this plan and would $260 to $547.78 a month make that big of a difference in your life?

What is the media's plan or the financial advisors plan on where you would live if you live longer than 19 years and 1 month? They didn't think about that did they?

Comparing a reverse mortgage at the age of 62 you could take a life time income of $559 and never have to make another payment on your house for life. That is $559 beginning right away which pays your taxes and insurance on the house for more than 20 years if you spent the amount over those costs.

Or if you took a lump sum of $100,127 and invested it at 5% took enough money out to pay your housing costs and the same amount in income it lasts for 25 years. That's almost another 6 years and you can still live in your house after that because there are no payments.

Please realize these are simplistic examples and there are other factors to consider. The goal here is to open your eyes to other possibilities and to let you know that the media and even financial advisors can be way off base on their blanket recommendations. The best way to decide what is best for you is to consult with professionals that have taken the time to thoroughly analyze options.

Seniors in Kansas City: Should I sell my home and buy something cheaper?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Tue, 08 Jul 2008 11:17:50 -0500

There are many options to consider when seniors in Kansas City are trying to make ends meet in retirement. Selling and buying something cheaper is one of the options that many including The Financial Industry Regulatory Authority (FINRA) tells you to consider.

Let's see if this is a "good" option. Let's assume you have a $180,000 house, you want to sell and buy a $90,000 maintenance provided townhome. Your costs to sell are likely to be at least 6% for real estate commissions, plus typical seller's costs, plus any closing costs the buyer may request paid and do you think you will get full asking price? Let's say you get 90% or $162,000.

You pay $90,000 for the townhome, plus $3,000 for closing costs, $2,000 in moving costs so the net is $67,000. The taxes and insurance on the townhome are $170 per month and the association fees are $250 for a total of $420 per month.

So you have paid $18,000 to sell the property, plus another $3,000 in closing costs and $2,000 to move you- that's a total cost of $23,000. That doesn't take into account the lost opportunity cost of investing that $90,000 and $23,000 ($113,000). Investing $113,000 at a 5% after tax for 5 years is a total of $145,000, 7 years $160,238, 10 years $186,112, 15 years $238,848, 20 years $306,528, and 30 years $504,855.

Investing the $67,000 at an after tax 5% would pay that $420 for 263 months (22 yrs 11 months). Or you could take $500 per month for 196 months-16 yrs 4 months, $750 for 112 months- 9 yrs 4 months, $1,000 for 79 months-6 yrs 7 months.

What if instead at the age of 62 you took out a reverse mortgage with closing costs around $10,000 your line of credit (LOC) would be $100,172. You wouldn't have to move, you have no mortgage payment, but you would have to pay about $260 for taxes and insurance let's say another $150 a month to have the yard cared for so the total is $410. (Comparable to the townhome). The costs are only $10,000 vs. $23,000 to move plus you have to move and you are in a much smaller place.

The LOC has a growth function on the open amount and the 20 year average growth rate is 6.54%. So the LOC would have $138,795 available in 5 years, $158,134 in 7 years, $192,310 in 10 years, $266,460 in 15 years, $369,199 in 20 years, and $708,791 in 30 years.

If you assumed the $180,000 house grows at 3% each year, and the net from the house would be 90% when it sold; in just 15 years the amount available in the LOC is $259,081 while the net from the house is $252,390. That is $6,691 MORE from the LOC. So getting a reverse mortgage with a LOC and letting it grow assuming the 20 year average you could cash it out at that time and give the kids more than they would have gotten if they went through the hassle of selling the house. Interesting isn't it?

Funny the media and FINRA didn't mention that when they tell you to sell and buy something cheaper. Before you dismiss something because the media or a "so called" expert tells you something you should get with a true professional and discover for yourself what is the best and cheapest way to go.

Kurt Jackson is a Certified Mortgage Planner with more than 17 years in the industry with an office in Liberty. If you would like to find out more about other options to your retirement years call him at 816-415-1737 or email kurt@kcmortgageplanning.com.

Seniors in Kansas City Are Reverse Mortgages Too Good To Be True?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Sun, 06 Jul 2008 13:40:24 -0500

Advertisers attempt to make you think they are all that and then some while the media and some financial advisors make them sound like they are a horrible way to go. Let's see if we can help you decide for yourself.

Reverse mortgages are for homeowners 62 years or older that either have their home paid for or have a mortgage balance 50% or less of the value of the house. Reverse mortgages work opposite of traditional loans. On traditional loans you make payments every month on reverse mortgages the bank pays you monthly, or in a lump sum, or a line of credit or a combination of those options. The bank does NOT own the house you maintain title just like any other loan.

As long as you keep your property taxes and home insurance paid, keep the house maintained, don't change who is on title, rent out the house, or try to get another loan on the house the reverse mortgage requires no repayment until you either die or move out of your house for more than 12 months. The loan can be paid off by selling the house or liquidating other resources to pay it off and if the loan exceeds the value of the home you can just let the bank take the home. You or your heirs are never obligated to pay back more than the house sells for.

The costs to do a reverse mortgage include your typical mortgage costs including appraisal, title, lender fees, recording fees, closing fees. The lender is generally compensated through the paying of points which are capped at two. Lenders can also be compensated through a higher interest rate via a higher margin on the adjustable rate mortgage. So you can lower your upfront costs by accepting a higher rate just like in traditional mortgages. The last cost is a 2% mortgage insurance premium.

The mortgage insurance premium pays for all the features this loan has that a traditional mortgage does not have. When that is taken into consideration that fee insures the very things that make a reverse mortgage so attractive. The interest rate you pay includes a .5% annual mortgage insurance premium.

One of the biggest issues many have with reverse mortgages is that the interest accrues daily and does compound. Which makes perfect sense since one is not paying interest payments. If you stay in the house for a long period of time and house values don't appreciate much or at all then there is a very good chance you will owe more than your house is worth, which would mean your heirs would likely let the house go back to the bank. If appreciation keeps up then when the house would be sold, the loan is paid off and the remainder would go to you or your heirs.

All in all reverse mortgages are NOT too good to be true. They do exactly what they say they do, but there are some downfalls to them, which we have begun pointing out. Reverse mortgages can help seniors in Kansas City and it is up to you to find out if one would be prudent for you in your situation.

There are many more advanced strategies utilizing reverse mortgages for retirement living, if you would like to get more information contact Kurt Jackson, he is a Certified Mortgage Planner with more than 17 years experience and can be reached at 816-415-1737 or email him at kurt@stayinyourhomekc.com.

Seniors in Kansas City Struggling to Make Ends Meet: Could a Reverse Mortgage Help?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Fri, 04 Jul 2008 11:05:16 -0500

Prices in Kansas City keep going up. Investment accounts keep dropping. When will it stop?

For most seniors/retirees the options to overcome this financial problem are limited.

• Turn to family: Families are struggling financially. So is that a viable option?

• Get a job to make ends meet. Is that the way live their retirement years?

• Look to an asset that has been off limits. The house.

Traditionally, the focus was to leave it to the kids. A noble sentiment, but in today's world where pensions are dwindling, social security benefits are not what many expected and so many put off savings to pay off their home we may need to change our thoughts on how our house is treated in retirement, especially when prices are skyrocketing.

Let's review the options with the house.

• You could sell and move into a smaller home, rental or with family and live off the money.

• The costs to sell are significant, you need to see how much you would be able to keep if you buy something smaller.

• If you rent, how long could you live, pay rent and tap that money as costs go up is the key question to that strategy.

• Moving in with family- many look at this as a last resort.

Another potential option that many have stayed away from, mainly due to a lot of misinformation, is the possibility of a Reverse Mortgage.

• A reverse mortgage could give you a lump sum of money, income for life, income for a certain period of time, a line of credit (that can grow every year) to draw money when needed or a combination of all of these options.

• They are for people 62 and older,

• Will eliminate a mortgage payment for as long as you live in your home,

• You do NOT give ownership to the bank,

• Maintain the home, pay taxes and insurance- the bank can't kick you out,

• You or your heirs don't have to pay back more than the house is worth, etc.

• The costs of a reverse mortgage are higher than a traditional loan and are painted in the media to be "high." Compared to what? The media seldom offers other more cost effective options other than doing nothing.

Don't discount the possibility of a reverse mortgage just because the media paints an "incorrect" picture of reverse mortgages. Get with a qualified mortgage professional that is well versed in reverse mortgages to find out if one could benefit you.

Kurt Jackson is a Certified Mortgage Planner with more than 17 years experience with an office in Liberty, Missouri. If you would like more information about reverse mortgages go to www.stayinyourhomekc.com or call him at 816-415-1737

The Costs of Reverse Mortgages for Seniors in Kansas City, Missouri too High? (Part 2)

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Tue, 24 Jun 2008 08:27:20 -0500

It has been said that the cost of Reverse Mortgages can be too high, even here in Kansas City, Missouri.

Really? The costs are high? Compared to what?

Remember our first installment was a sixty-two year old with a $250,000 house would qualify for an $118,033 Line of Credit (LOC). Their closing costs would be about $10,180 so their available LOC is $107,853.

She needed $100,000 for something very important. She has many other assets she could access. (I'm not a Tax advisor always consult a tax advisor). If she pulled a net $100,000 out of a Mutual Fund and she had held the mutual fund more than 12 months it would likely be taxed at the long term capital gains rate of 15% if we assumed the state would want 5% she would have to pull out approximately $125,000 to cover the Federal & State Taxes. That's $14,820 more than the closing costs on the Reverse Mortgage.

More importantly, they will lose the earning power on that $125,000. Now in a mutual fund the 20 year average return is more likely to be closer to 10% so after the fees and all let's say 8.5%, so in 20 years it's worth $680,155. Where the amount owed on the Reverse Mortgage with the 20 year average rate of 6.54% and a $25 monthly fee would be $418,405.

Which one cost her more?

In this case the Reverse Mortgage SAVED her an estimated $261,750. There would be taxes due on that money. While true, the estate could possibly use the $296,142.80 in interest/fees to help offset the taxes when the estate is sold.

So are the costs of Reverse Mortgages in Kansas City, Missouri too high?

The easy answer is; it depends on your situation and what you want to do.

Don't believe the blanket statements the media puts out there. You should seek out a true professional that can accurately answer your questions.

Consult with a Reverse Mortgage professional that will share with you all this information. For more information go to www.stayinyourhomekc.com or call Kurt Jackson at 816-415-1737.

Reverse Mortgages Cost Seniors too Much in Kansas City, Missouri (Part 1)

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Tue, 24 Jun 2008 08:23:35 -0500

"Reverse Mortgages cost too much."
"Don't get a Reverse Mortgage because they cost too much."

That's the message the media pundits want you to believe.

So when someone says that Reverse Mortgages for seniors cost too much in Kansas City, Missouri. I ask them "compared to what?"

Let's do what the media hasn't taken the time to do, let's examine this more thoroughly. In our example a 62 year old with a $250,000 house would qualify for an $118,033 Line of Credit (LOC). Their closing costs would be about $10,180 so their available LOC is $107,853.

Let's say this person needed $100,000 for something very important. She has many other assets she could access. (I'm not a Tax advisor always consult a tax advisor). If she pulled $100,000 out of an IRA it would be taxed as ordinary income. IN 2007 a single tax payer making $100,000 would be in the 28% marginal tax bracket, so without ANY other income she would have to pull out approximately $128,369 just to cover the Federal Taxes. That's $28,369 in taxes JUST for Federal Taxes. Now according to my math $28,369 is $18,189 more than the closing costs on the Reverse Mortgage.

More importantly, they will lose the earning power on that $128,189, which at 6% in 20 years is worth $424,331.80. Compare that to the amount owed on the Reverse Mortgage with the assumptions that the interest rate would be the 20 year average rate of 6.54% and the monthly fee is $25 would make the total amount owed $418,405.

Which one cost her more?

What if that $128,189 had earned 7% over 20 years (not a crazy assumption) then it would have been worth $517,721. That's a SAVINGS of almost $100,000 from the Reverse Mortgage. Some would point out there are taxes on that money. While true, the estate could possibly use the $296,142.80 in interest/fees to offset that money when the estate is sold.

So do Reverse Mortgages cost too much in Kansas City, Missouri?

It depends on your situation and what you want to do.

Any time you hear blanket statements, especially in the media, take it with a grain of salt and seek out a true professional that can accurately answer your questions.

Consult with a Reverse Mortgage professional that will share with you all this information. For more information go to www.stayinyourhomekc.com or call Kurt Jackson at 816-415-1737.

The 12 Biggest Questions about Reverse Mortgages Answered!

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Mon, 23 Jun 2008 11:47:55 -0500

•1. They can be complicated and confusing.

True. Reverse Mortgages are complicated and can be confusing, but they don't have to be. There are plenty of publications, web sites and mortgage professionals that can be valuable resources for you to better understand them. I know this because as a long time mortgage veteran I didn't fully understand them until I completely researched them. Important Tip: Find a credible source that you can trust to help educate you about them so they will lose their complexity and will not be confusing.

•2. If the homeowner leaves the house, or dies, soon after obtaining the mortgage, the cost of the loan will have been very high.

True. This is one of the great unknowns. If you think you will be moving out of your house in 3 to 5 years, it could be that a Reverse Mortgage isn't for you. If your health is at a level that you may not live that long then a Reverse Mortgage may not be for you. Important Tip: If you need the money for something extremely important to you then the cost may not be a very important factor in your decision making process.

•3. The homeowner's heirs will probably wind up with less of an inheritance.

Maybe. There are several strategies that can be implemented along with a Reverse Mortgage that can actually leave your heirs with MORE of an inheritance and an inheritance that is much easier on your heirs because it could allow them to avoid having to deal with the house at all. Important Tip: Work with a qualified team of financial advisors that are well versed in comprehensive planning for your golden years, otherwise your heirs could end up with less of an inheritance.

•4. Cash payments from a reverse mortgage are usually lower than the payments you might receive if you sold your house and invested the money in an income or immediate annuity.

True. This is true, but it is also not a good comparison. If you get a Reverse Mortgage you don't get access to the entire amount your house is worth, but you can stay in your house with no payments for the rest of your life or as long as you can function in the house.

If you sell the house you get access to the entire amount of equity you had in it, (less selling costs) so you could invest it for income and that income would likely be higher than what you could get from a Reverse Mortgage, but where will you live? Will you rent or buy? Either way it will take money to live either monthly or a lump sum. Important Tip: Answer the question "would the additional income from selling have a bottom line higher than the income from a Reverse Mortgage when you factor in the new cost of housing?"

•5. Three days after signing a contract, you no longer can change your mind.

True. This is absolutely true. What is being left out is that before you even get to the point of signing the contract you will have an initial meeting with a Reverse Mortgage provider to determine which type of Reverse Mortgage pay out best suits you and your situation, then you have to go through a Government mandated counseling session with a non-interested party like the AARP, and then it takes about 30 days to get the Reverse Mortgage processed for you to sign the contract.

Important Tip: It will take upwards of 60 days to accomplish all this so you will not be rushed into a bad decision and the counselor will try to make sure you understand what you are doing with the Reverse Mortgage. All of this is done BEFORE you even sign the contract, but it is true once you sign the contract you have an additional 3 business days to change your mind and if you don't then you are obligated and you can't get out of it.

•6. Homeowners receiving so much money to spend any way they wish may go haywire-and some have.

Possibly. Feeling "rich" when you have access to all that money is a natural feeling and some have gone crazy with it. That is why it is important to work with your family and a properly trained financial team of advisors to help you with a comprehensive plan for the money even if that plan includes not spending any of it yet. Important Tip: If you are the type of person that would just blow the cash then don't do a Reverse Mortgage without having a clearly defined plan for ALL of the money.

•7. For a variety of reasons, seniors are the favorite targets of crooks and scam artists, and those with ready money from reverse mortgages may be especially vulnerable.

True. Anyone with money, especially seniors are potential targets for scam artists which leads to our premise of having a team of trusted advisors to help you with ALL your decisions surrounding money. With that team of advisors you can call them for advice when one of these scam artists attempts to run their scams on you. Important Tip: Experience shows if you tell a scam artist that you "have to run this by your team of financial advisors" chances are that scammer will run with their tail between their legs. They know their scam will never stand up to the scrutiny of a team of financial advisors.

•8. A senior may have better alternatives than a reverse mortgage, such as selling the house to a family member and then leasing it back, or selling the house to the family member in return for an annuity. Or selling the house and moving to a smaller one.

True. Anytime a senior is exploring their long term planning they should consider all possibilities and if their heirs have the ability to help them out then that may be the best way to handle it. Important Tip: If one decides to sell and move into a smaller house then a Reverse Mortgage should be under consideration to help from having to invest all that cash into a new property. For example if you sold your house and got $300,000, you decide to buy a new smaller $180,000 house instead of paying the $180,000 in cash thus leaving you with $120,000 you might get a reverse mortgage for say $117,000 you have just about doubled your available cash from $120,000 to $237,000.

•9. Unless the seniors are careful not to have much money in their accounts at the end of the month, the payments they receive might disqualify them for Social Security or Medicaid.

True. Social Security and Medicaid are very important considerations in determining how to take the pay out from a Reverse Mortgage. If one keeps too much money in their account at the end of the month they could lose those benefits. Important Tip: This is where the team of financial advisors and the clearly defined plan come into play. They help you to make sure this doesn't happen.

•10. The closing costs are high.

Compared to what? The costs are higher than what you would find on a traditional loan, but a traditional loan doesn't allow you to live in your home for life with NO PAYMENTS, get a regular TAX FREE income, and a guarantee that you or your heirs will NEVER have to pay back more than the house is worth.

Or if someone needed $100,000 they could get a Reverse Mortgage and pay approximately $10,000 or they could pull the money out of their accounts and pay anywhere from $15,000 to $41,000 in taxes and likely more depending on the type of account. "Sure Kurt, but what about the interest that accrues?" Well what about the loss or interest compounding on the $115,000 (or more) you pulled out of the investment account?

Important Tip: When you compare the "costs" of a Reverse Mortgage with the "costs" from the alternatives you may find that the costs are lower or aren't that important.

•11. If you have an unusually valuable house, you cannot get a HECM or Home Keeper reverse mortgage reflecting the house's true value. Your borrowing capacity is limited because reverse mortgages are targeted at the less well-to-do.

True. There are some limits if your house is worth more than $205,000 in our area. (That may be changing to a higher amount in 2008.) Important Tip: If you need cash or have other financial needs even if you have a high dollar house a Reverse Mortgage could give you access to that money and if your house is worth so much more then the chances are when it comes time to sell the house your heirs will still have a sizeable inheritance from the sale of the house.

•12. The interest rate is adjustable, so your debt could climb if rates in general go up.

True. You know the beautiful thing about adjustable rate mortgages is they can go down too. The way Reverse Mortgages are set up they are one of the cheapest sources of money. The margins are 1.25% to 1.75% so you aren't much higher than either the one year treasury or the one month LIBOR (London Interbank Offered Rate). Important Tip: You are basically borrowing money at a little higher rate than the government is and much lower than comparable rates at any time they adjust. Plus if one is pulling Reverse Mortgage money out to invest it becomes much easier to out earn the lower rate you are paying.

Another huge benefit to a Reverse Mortgage Line of Credit (LOC) that is almost always left out is that your LOC that is still available "GROWS" by the interest rate that you are paying. So if you had $108,000 open on your LOC and the rate was 7.25% for the year your LOC would have $115,830 available on it and if your rate was 11.50% then your LOC would have $120,420 available. If your mortgage balance was say $22,000 your interest for the year at 7.25% would be $1,595 while your LOC grew by $7,830 and at 11.5% the interest would be $2,530 while your LOC grew by $12,420. Hmm, which is better in that situation?

Reverse Mortgages have gotten a bad name in the media and the financial services arena. I know that for a fact because since the mid 1990's I thought they were horrible loans that nobody should use. Well I was flat out wrong. To be fair, I was correct in the 1990's when they came out, but Reverse Mortgages are nothing like they were in the 1990's. The Reverse Mortgages of the new Millennium are excellent financial planning tools for the struggling senior to the most well off. They just use them for different reasons.

The struggling senior may use one to be able to eat and pay their bills where the well-to-do may use it to maximize the amount they leave their heirs, or lower their estate taxes, or to pay their estate taxes, or pay for long term care, essentially they just use them for much more advanced planning strategies.

If you would like to learn more about Reverse Mortgages please call Kurt Jackson at 816-415-1737 or visit www.stayinyourhomekc.com.

Home Equity Growth Guaranteed with Reverse Mortgages in Kansas City, Missouri

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Mon, 23 Jun 2008 10:34:02 -0500

Millions of Americans are afraid the value of their homes will stagnate or even drop. Many are predicting much slower appreciation rates in the future as this whole housing crisis shakes out.

If you are 62 or older there is a way to guarantee your home equity will grow. That's right, there is a way to GUARANTEE that your home equity will grow.

While so many pundits are out there telling the horrors of Reverse Mortgages very few have really taken the time to fully understand them. With a Reverse Mortgage in Kansas City, Missouri (and the rest of the country) you can get a guaranteed growth in the equity in your home each and every year. Our research shows that the 20 year average growth rate is about 6.54%.

One of the best features of the Reverse Mortgage is the Line of Credit (LOC) guaranteed growth rate. The amount of your LOC that is open grows by your interest rate each year. So if you had $100,000 still available on your LOC and the rate was 6.5% your LOC would be worth $106,500 after a year. If you didn't take any withdrawals from the LOC and the next year the interest rate was 7% your LOC would be $113,955.

We ran an example assuming a couple both 62 with a $250,000 house, a 2.5% appreciation rate and an average rate of 6.54%. Their initial line after paying their closing costs would be $107,853. By the time they were 82 (just 20 years) if they hadn't touched their LOC it would have $382,901 available on it where assuming a 90% net if they sold the house at that time would give them just $377,906. If they lived 30 years the LOC exceeds the estimated net of the house by $237,709.

The pundits would argue about the costs being too high. Well at 20 years after financing the closing costs and letting the interest accrue your balance would be $53,508 ($222.95 per month) is that too much to pay for the insurance of having guaranteed home equity to leave your heirs or access for needed care, bills, home modifications, etc?

Consult with a Reverse Mortgage professional that will share with you all this information. For more information go to www.stayinyourhomekc.com or call Kurt Jackson at 816-415-1737.

Keeping Reverse Mortgage Costs down in Kansas City Missouri.

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Mon, 23 Jun 2008 10:31:46 -0500

One of the biggest criticisms of a Reverse Mortgage in Kansas City Missouri is the perception that the costs are high. While they are higher than traditional mortgages they also provide features that traditional mortgages don't. We'll leave that argument for another today.

The costs involved in a Reverse Mortgage in Kansas City Missouri include traditional mortgage costs like appraisal, title, closing fees, and recording fees. These fees are largely fixed and very difficult to achieve much in savings.

One area that gets a lot of negative press is the origination fees. These are common in many areas on traditional loans not so much in the Kansas City Missouri market. Many times they are referred to as points (a point is 1% of the loan amount) and they are capped on FHA Reverse Mortgages at 2%. Basically, you can pre-pay a chunk of your interest (points) and get a lower rate or don't pay them upfront and get a higher rate.

This fee can be negotiated but will likely be set off by having a higher margin. For instance, a loan with a 1.25% margin may not pay any yield spread premium where a loan with a 1.75% margin may pay 1.5% in yield spread premium.

You could possibly get your origination fees lowered by 1.5% if you agreed to take a .5% higher margin, but you would be paying .5% more every year on your loan. On a $100,000 that is $500 per year. So pre-paying 2% on a $200,000 appraised value ($4,000) is only 8 years at $500 per year.

There is also a 2% Mortgage Insurance Premium that is not negotiable either. It is a fee paid to FHA to guarantee that you won't be kicked out of your house and that you will never owe more than the house is worth. (A pretty reasonable amount considering what it gives you.)

Another way to cut your costs is to negotiate the lower monthly service fee. They can be $35, $30 or $25. The $25 dollar one saves you $120 per year and the higher monthly service fee allows the lender to make more money in yield spread.

Consult with a Reverse Mortgage professional that will share with you all this information. For more information go to www.stayinyourhomekc.com or call Kurt Jackson at 816-415-1737.

Is your market suffering from "Guilt by Association?"

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Wed, 31 Oct 2007 08:28:03 -0500

As I look at our local market and see inventories rising and sales dropping I wonder why.

Does my market believe the media about the housing bubble?
Are a lot of the people with their homes on the market thinking they have to sell now to hit the top of the market?
Or are they worried that values have peaked and values are going to drop dramatically?
Maybe they are all afraid of losing their jobs and are selling to get out before the ax falls?
Do they think they can't get a mortgage?

See I don't know quite what the consumer is thinking. During the greatest boom in real estate our home values went up a whopping 25%. That's not in a year that is from 2002 through 2006. That's less than the historical average of a little more than 6%

While job creation isn't huge our local unemployment rate has hovered at 5.3% which is higher than the country, but not out of whack by any means and there is still positive job creation.

How about affordability? Our median house price is less than $160,000 and the most recent stat I saw showed it takes about 15% of the median income to afford the median house price. Not the most affordable market in the country, but for a top 40 sized market that is darn good.

What about area economic growth? In several areas of the city including downtown and many of the suburbs there are new businesses going in everywhere with more new commercial areas being developed in many places. Do business go into areas of decline?

Are we seeing the value drops as shown by the "Shiller Index"? Well according to the Office of Federal Housing Enterprise and Oversight who actually look at all 50 states (not just 29 like the Shiller Index) and they also look at loans under $417,000 (which is more than 90% of our market) and they said home values were actually up 3.4% from June 30, 2006 through June 1, 2007. That is UP 3.4% not down 3.4%.

Well maybe it's high interest rates? Oh, wait rates are more than 2% lower than the average rate since 1963 so that can't be it.

Maybe it is the credit crunch? Let's see, that is happening for people with bad credit (you know the ones that couldn't have qualified for a loan before 2002), people with no money, bad credit and can't prove income and for many folks looking for loans over $417,000. Yet our market is 90%+ loans UNDER $417,000 and the real estate market was pretty good before 2002 so that can't be it.

If it's the fear of dropping values then the mortgage business should be booming. If you fear your home value is going to drop then you need to go in and get all your equity out right now, because if you have equity and you don't separate that equity and values drop then who's money will you lose if values drop?

I am no economics professor or a member of the local or national media, but according to my estimation that is a pretty strong real estate market or at least it should be. Yet inventories are heading towards 15 or 20 year highs and the number of buyers is dropping quickly. So let me pose the question again: "Is my market suffering from guilt by association?" Is yours?

Just because the headlines say real estate is horrible and nobody can get a loan doesn't mean that is the case. So I want to propose an idea. Gather the actual information for YOUR area and share that information with everybody you know. Share it with the local media, share it with your fellow Realtors®, share it with your lenders, share it with your previous clients, sing it from the roof tops- just get the message out there.

Now before you do that, with your analysis you need to identify the opportunities to share with your clients and prospects. If you are telling them something different than what they have been hearing you need to be able show them what to do to take advantage of the situation.

The Blame for the Subprime Mess: The Next Target- Real Estate Agents

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Thu, 18 Oct 2007 23:55:27 -0500

The blame for the Subprime mess has been spread across many different players- the greed of the end investor, that greed and demand being pushed to the lender, the pressure and desire for more loans and loan products by the lender being pushed to their originators or mortgage brokers, then the loan originator working either in conjunction with the borrower or working around the ignorance of the borrower. It seems that the blame game goes down hill.

Until now though I hadn't seen much in the media along the lines of real estate agents getting some of the blame too. I am sure this won't be a very popular position on AR, but sometimes the truth hurts. Real Estate agents do market themselves as the expert resource for buying and selling homes and since financing is a HUGE part of buying and selling real estate shouldn't a group of highly paid experts also be responsible for making sure that the type of financing being used by the client be something 1) the client fully understands, and 2) the client can handle now and should be able to handle in the future barring some financial disaster- (that doesn't include a 50% jump in payments due to an ARM adjusting after just 2 years).

I have spoken with several agents in my market and none of them want that responsibility, many have said they would get out of the business if this added responsibility was put on to them. Those that had in house lenders said they don't need to worry about the loans because they trust their in house lender. So if there is no oversight over this lender and real estate companies are driven by profit (just like mortgage companies, title companies, appraisal firms, etc.) then is the client really getting proper representation they should from a "real estate expert"?

Click on this link http://knowledge.wharton.upenn.edu/article.cfm?articleid=1824 to read an article put out by the Wharton School Business to see the direction of the next level of blame for this subprime mess may be heading.

I am not sure how much responsibility the real estate agent should have. If they are acting as a buyer's agent they should have a lot of responsibility in making sure the client fully understands what they are getting into, IMO they shouldn't be helping to get people in over their heads and if they aren't acting in a buyer's agency capacity then is the buyer really being represented?

Is the agent that is acting in a dual capacity really helping the buyer make sure they fully understand what they are getting into? I don't claim to know all the answers and this wasn't meant to just hammer on real estate agents because those that live in glass houses shouldn't throw stones, I guess that now all my windows are already broken out so it doesn't matter much if I throw stones or not. :) I really want to get a sense of how the real estate community feels on this topic.

What are your thoughts on this subject? What do you think about what is said in the article? Are Real Estate Agents to blame in this fiasco too?

When responding please provide two answers one from your personal perspective and how you do it, but I would also like for you to examine the entire real estate industry and see if your thoughts are the same. I know that when I look at how I do business I shouldn't be getting all the flack that the mortgage industry is getting because I didn't do these things to my clients, but I also know that a lot of folks in the mortgage business did and therefore significant changes need to be made to the mortgage industry.

We're all in this thing together so I thought it would be good to get the opinion of real estate agents and how they see what happened and what should be done going forward.

Trade up Now or Wait? Why a soft market might be ideal!

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Mon, 08 Oct 2007 11:53:42 -0500

Trade Up Now or Wait?

Why a Soft Market Might Be Ideal!

The general media has invested so much into perpetuating the idea of a "housing bubble" that it may be just the right time to turn that to your potential advantage.

Just a couple years ago just about any buyer had to brave the auction style feeding frenzy, submit their bid, cross their fingers and hope that their over asking price offer was enough to do it against the dozen or so other interested parties.

It is no doubt that home sellers were extremely happy. The problem was that since we all need a place to live, didn't almost every seller turn right around and immediately become buyers? Didn't most of those sellers that now were buyers end up trading up to a larger home? Wouldn't that mean that they were going to pay a premium on a higher valued home?

So in the first half of this decade you likely got a premium on your $140,000 house let's say a 5% premium or $7,000 then didn't you likely pay that same 5% premium on the $250,000 house or $12,500?

Well then if houses are selling for less today let's say your $160,000 house sells at a 5% discount or $8,000 wouldn't it then make sense that the $275,000 house you would like to buy today would have a similar 5% discount or $13,750? Now I don't know about you, but I would think now is a better time to be selling and buying unless you are down sizing. Wouldn't you agree?

I realize this is a simple example and will vary depending on the market, but doesn't the premise remain? I mean if you are looking to move up aren't the cheaper homes moving faster than the higher end homes? Couldn't that add up to more discounts on the higher priced homes?

Just something to think about and share with anyone looking to sell or buy, especially when a seller has an offer that might be a little less than what they want to accept.

I Received an Inheritance (or Net Proceeds) Should I pay Down My Mortgage?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Fri, 24 Aug 2007 14:26:03 -0500

When people get an inheritance one of the first things they want to do is to plunk it down on their mortgage. Now that may be the best place to put that money, but it may not be too. They need to have a consistent way to show them the smartest thing to do financially. (Note: for Real Estate Professionals you could easily replace "Inheritance" with "Net Proceeds" and come to similar conclusions.

That is where the Effective Percentage Rate (EPR^TM) calculation comes in. Thanks to our friends over at Kendall Todd we now have a consistent way to calculate the smartest financial way to allocate ANY cash windfall.

Here's the scenario:

These folks have a $300,000 house that they owe $200,000 on their mortgage at 6.25%, they have 25 years left on their mortgage and they are in the 31% marginal tax bracket (25% Federal and 6% State). They have $50,000 invested with a planner that has earned a 10 year average after tax annual return of 8%, they have two auto loans that they owe $27,000 on them they are paying $662 per month at an 8.25% interest rate, and they have 2 credit cards paying $380 per month on $9,500 and an interest rate of 14%.

They just got an $80,000 inheritance (or net proceeds from their previous house), they want to pay down their mortgage (put it all down on their new house) this would allow them to pay off their mortgage in 10 years 4 months instead of the 25 years now thus cutting off 14 years 8 months and saving them ($1,319.34 * 176 months = $232,203).

Is that the smartest thing for them to do from a financial standpoint? You need to have a way to calculate whether this is the smartest way of doing it or not. What we do is focus on breaking everything down to an Effective Percentage Rate (EPR^TM). This is the after tax cost of each debt. Luckily the only real debt we can deduct is the mortgage so let's see how to calculate the EPR^TM. (Some student loans have tax deductibility.)

The tax savings come at your marginal tax bracket which in our scenario is 31%. So you would be able to deduct 31% of the 6.25% so multiply 6.25% by 31% you would save 1.94% so to calculate your EPR^TM it is 6.25% minus 1.94% or 4.31%. Your actual cost to borrow money is 4.31% so if you paid down your mortgage it saves you a guaranteed 4.31%. How long would you stay with a financial planner that earned you 4.31% every year and it wasn't compounding?

What we do to decide the best allocation of our money is to compare the EPR^TM of each debt and investment:

The mortgage has an EPR^TM of 4.31% paying $1,319.34
The investment account has an EPR^TM of 8%
The $27,000 of auto loans have an EPR^TM of 8.25%
The $9,500 credit card EPR^TM of 14%.

So the highest EPR^TM is 14% for credit cards- so the first place we allocate the inheritance to is paying off the $9,500 leaving us $70,500 and freeing up $380 in cash flow.

Next highest EPR^TM is the auto loans at 8.25% so we pay off $27,000 leaving us $43,500 and freeing up $662 in cash flow.

Next highest EPR^TM is the investment account earning 8% so according to our formula we take the remaining $43,500 and put it into the investment account. Plus we have freed up $1,042 in cash flow. Where should that cash flow go to- the 8% investment or the 4.31% mortgage?

According to our optimization formula it goes to thehigher 8% investment so we have $43,000 and $1,042 a month going into the investment account and NOT the lower EPR^TM mortgage.

Let's see where that leaves us. In 3 years there is $96,858 in the new investment account, in 5 years there is $140,626, in 10 years there is $286,074. We have enough to pay off the house in 6 years 4 months vs. 10 years 4 months when applying the entire inheritance towards the mortgage.

So at 10 years 4 months if we left the mortgage and kept investing where our EPR^TM formula would tell us to invest. The mortgage balance is $150,724 and the investment account is at $298,989 so following the EPR^TM formula they are $147,265 ahead of plowing the inheritance into the house.

What if we kept following the formula out to 300 months, the remaining term on the mortgage, the investment balance would be $1,306,597?

To be fair let's say when they paid off the mortgage at 10 years 4 months they invested the $1,319.34 at 8% for 176 months that investment account would have $439,377.

That is actually $867,220 less than using the EPR^TM to make their financial decisions. Which way is the smarter choice?

I know the argument would be that the auto loans and credit cards would be paid off so they could invest those dollars. Experience tells a different story. Until people realize how money works for and against them they will continue to go through life buying and financing new cars and will continue to keep a balance on their credit cards and they certainly wouldn't have the discipline to invest those dollars without the help of someone that understands money.

It pays for mortgage and real estate professionals to understand this when talking with our clients. Don't our clients deserve it?

American Home Mortgage: The Story Behind the Story

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Sun, 05 Aug 2007 19:45:14 -0500

I was reading Bryant Tutas blog http://../../blogsview/165445/American-Home-Mortgage-what so there has been quite a bit of discussion on what happened to AHM and I haven't seen a description here of what actually happened. So I thought I would try. This is pretty much how Barry Habib described it in his MMG minutes on Friday.

Investor means Wall Street, Lender is the funding source (my relationship with AHM was a wholesale lender so they were funding my loans and paying me the originator).

The way a mortgage lender gets paid is like this. To keep this easy lets assume we have a client that needs a $100,000 loan. If we deliver it at a rate of 6.75% the investor (remember wall street) will pay $101,000 for that loan at that rate. So what that says is that 6.75% is a little better return than the investors were expecting and since they know they will receive payments on that $100,000 at 6.75% for a long enough period of time that the investor will make enough money to pay the $101,000.

This also allows the originator to maybe give that loan to the client without the client having to pay extra fees to compensate the originator. The originator has to make a profit right? So in this scenario the originator makes $1,000. Just to better understand the market typically then that same $100,000 at a 6.625% rate would get $100,500 from the investor, at 6.5% it would be $100,000.

So if we as an originator wanted to actually make a profit we would have to charge the client an origination fee or POINT which is 1% of the loan amount or $1,000. Now let's say the client wanted an even lower rate say they had a goal of having a 6.25% rate well the investor would only pay the lender $99,000 for that $100,000 loan so the originator would definitely have to have the client pay $1,000 just to have the $100,000 they needed for a loan those are called "Discount Points" and then if the originator needed to make money they would need to charge that origination fee. So in this situation the client would have paid an additional $2,000 to get that 6.25% rate rather than not having to pay anything extra and get that 6.75% rate.

Well here's what happened last week. See all the loans outside of the conforming loan market which are loans that are funded by Fannie, Freddie & Ginnie are in trouble. So loans over $417,000, Option ARMs, Sub Prime, etc. are in trouble. I am not saying they are all going away they are going through a repricing.

See when an investor decides what type of return they want for a particular investment the return they want largely depends on the risk they deem. They deem the risk based on historical analysis, so when history changes as it has in the last year or more with the number of foreclosures going up due to the overuse and improper use of these loan programs then the reward they want for risk they are assuming changes.

That is what is happening right now. The end investor, the one with the gold is now saying that if they were paying $101,000 for a 6.75% loan the risk parameters have changed so maybe now for the investor to honor a 6.75% rate they are only going to pay $95,000. Wow, that hurts.

See the end investor doesn't care that the lender told me the originator that told you the client that we could do that loan at 6.75% with no points, they don't care that I locked that rate with the lender and the lender was expecting to deliver it to the market (wall street) at that price so everyone thought we'd be able to deliver that loan to you the consumer at 6.75% without charging points.

The investor says "I am the one with the gold and we are not going to fund $101,000 for a 6.75% yield we are now going to fund $95,000 do you want it or not?" Now, as the lender (the Mortgage Bank ABC for instance) now says ok, Kurt I know I told you I would deliver 6.75% to you and pay you $1,000, but now I can't. Because if I do that it will cost me $6,000 to do that. Now I know Kurt that doesn't sound so bad but we are funding $100,000,000 per day and we have 60 days of those promises made. So Kurt we are going to lose 6 Million a day for 60 days that is $360,000,000 in losses over two months. We either don't have the resources to absorb that loss or we don't want to absorb those losses so we'll just file bankruptcy and walk away. (Very simplified example.)

And to compound matters we have a billion dollars of loans that we haven't sold off on the market and our bank that lent us the billion dollars has given us that money on margin. Very similar to the stock market. Let me see if I can put this into laymen's terms.

Pretend you have a $100,000 house and you want to take out a margin loan on it and the bank will only lend you say 50% of the value of the house so if the house declines in value then you will have to readjust your margin account to 50% of the new value. So you took out the $50,000 loan and all of a sudden the value of your asset the house drops 50% to $50,000 well the bank said you can only take out 50% of the value which is now $25,000 so you have a $25,000 margin call. You either have to come up with the $25,000 or sell the asset-house.

So that billion dollars of borrowed money ABC has lent out that hasn't been sold to the investors is now getting a margin call that could be another $200 or $300 million or more so now they are talking about losing up to $600 million or more. They can't afford to do that so they go under. That is what has happened and been happening over the last 9 months to lenders.

People have asked about CW and other lenders going under. Well they could. Maybe their business decision is to eat these losses, maybe they say I know I promised you 6.75%, but now we can't deliver it if you want to close it will be 7.75% (a number arbitrarily chosen). I don't know enough about those other companies, but the bigger they are the more money they are obligated on so I would think that would increase their risk.

It is estimated that as the credit market settles down we could likely see many products come back, but at MUCH higher rates. For now this is impacting the non-conforming market only the conforming market is not being greatly impacted. It was suggested that conforming 80/20's could see some impact in the conforming market so lenders should reacquaint themselves with their MI company reps. I have seen some of the biggies taking away stand alone seconds so it makes sense that these 2nds could see some pull back.

One thing I am concerned with is Fannie's Flex 100 program they allow some ridiculous back end debt ratios if those start to under perform it could get ugly very fast. For those of you in markets that have values within the FHA realm it is expected that FHA will become a very viable alternative for many loans that may be going away now. It is also rumored that Congress is contemplating raising the FHA loan limits up closer to the conforming loan limit of $417,000.

I am by no means an expert on this subject, but I do think that Barry Habib is very knowledgeable on this stuff. I hope this can shed some light on what is going on.

Is 100% Financing a "Sin"?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Wed, 01 Aug 2007 13:09:08 -0500

I was reading another blog here on AR and one of the posters said they thought it was a sin to offer 100% financing. I purposely left the persons blog off because I didn't want it to appear I was calling them out. That is not my intention. I felt it was something that was worth addressing.

IMO your position on this topic depends on who you are trying to most protect. As a lender I feel I have a responsibility to deliver good quality loans to my investors. I also have a responsibility to my client to get them into the loan that is best for them in their particular situation.

From a lender's standpoint 100% financing is very risky. The borrower doesn't have any skin in the game and there is little to no margin for error to the lender. That is why normally they want pretty good credit, they charge a higher rate, they either defer their risk with Private Mortgage Insurance or by having a 2^nd mortgage. Now since I am not the one with the gold I will let them make the business decision to do this or not, they wouldn't offer these loans if they didn't think they were profitable. So as long as I am delivering what they ask for I have no problem delivering 100% loans.

The client on the other hand is being sold a bill of goods thinking that the best way- the cheapest, safest, most efficient way to buy a house is to put as much money down as possible, get the shortest term loan they can (since that loan normally has the lowest rate) and then if at all possible pay extra principal payments to get that house paid off as fast as possible.

See for a majority of people it will take 15 years or more to pay off their mortgage so for that 15+ year period they are at more risk of losing the money they have tied up in their investment (equity in the house). Since statistically they will be in their loan for 5 years or less (80% chance) they will probably move in 7.1 years (NAR says) then they won't be in the house when it is paid off anyway.

Think about the family that has very little in savings, but just sold their house has $65,000 wants to buy a $300,000 house with 20% down, a 15 year loan and pays the $5k to cover closing costs. A great deal for the client? Right?

Well what if in 3 years Mr. loses his job and since Ms. is a stay at home mom they just lost their only income source. Now they should be fine with a $204,000 balance and a house worth $318,000? Right? Except they have been funneling all their extra money to pay that 15 year loan they don't have but $3,000 in savings and about $25k in a 401k. They can't make it a month with that $3,000 and their $2300 house payment the $1,400 payment on their $45,000 in debt (that was $1,200 on $30k when they bought) and what it costs just to live. They cash in the 401k after the 20% tax and 10% penalty they have $17,500 so they can make it maybe 5 months. He tried to get a loan with all that equity, but without a job he couldn't get a loan.

The market was soft and they have to severely discount the house to avoid foreclosure and the week before the house was to go to sale an investor finally offered $225k for the house so they were able to sell it 11 months after losing his job- he paid the lender and his real estate commission and walked away with nothing. So he ruined his credit, lost his $60,000 down payment, $36,000 in principal reduction via the 15 year loan, and $18,000 he thought the house had appreciated- so he lost $114k and his $25,000 401k account. Wait there was some good news he got a job in month 14 making more money than he was before.

Good thing for the client they put 20% down and got that 15 year loan, it really treated them right didn't it?

What if instead they financed 100% on one of those horrible interest only loans? They pay off their consumer debt and their after tax difference in payments between what they would have had with their debt and the 15 year loan with 20% down and paying off all the debt and 100% I/O financing they lowered their payments $1,535 per month. They invested their remaining $35,000 (they negotiated the seller to pay the closing costs) and the $1,535 in a safe conservative investment earning just 6%. In 3 years they would have had more than $103,000 in that account. So when he lost his job he could easily make his payments for a long period of time. Since it took him only 14 months to get a new job he needed a little more than $45,000 out of that EMERGENCY account, but he still had $64,000 in the account, he still had his 401k worth $25,000 and he still had his house. Oh and his credit is still perfect.

So let's recap doing everything in the best interest of the bank- 20% down 15 year fixed this family lost $139,000 ruined their credit AND lost their house. Yet with 100% financing and a PLAN they only were down $45,000, their credit is perfect, they still have $89,000 of their wealth AND they still have their house. Not to mention that they had little stress during this whole thing. Just an FYI if nothing bad had happened they would have had enough to write a $300,000 check for their house at 9 years 8 months vs. 15 years in the other plan- if we go out 15 years they would have had $532,300 in that account or a $232,300 more than with the 15 year loan.

I did use an example of someone with a good sized down payment, so let's take a quick look at lower down payments. If 100% is so bad what type of protection does 5% down give? If the above scenario had the same situation with only 5% equity what would have changed? Well if they couldn't sell their house for more than $225k they would have lost their house to foreclosure, same with 10% and maybe with 15% they might have been able to negotiate a short sale to avoid foreclosure. They still lose most of if not all of their wealth and their credit is still ruined.

When you look at worse case scenarios unless the borrower has a ton of cash available to tap if they have financial troubles everybody would be better served from a "risk management" standpoint to put no money down, get interest only financing and invest the down payment and any monthly after tax savings into a safe conservative investment. They would have a much better chance to weather a storm. You know they say the worst thing about losing your house to foreclosure is losing your house to foreclosure with all your money tied up INSIDE the house.

Personally, if I structure deals like this we are actually finding a way to give more protection to BOTH the client and the lender, because if the client can weather the financial storm then the lender continues to get paid and the client protects a majority of their wealth, their credit and they keep their house.

So I guess 100% financing is perfectly sinful, just like enjoying that bowl of your favorite ice cream with your favorite topping WITHOUT worrying about gaining weight. :)

Imagine that the Media Using Inflated Foreclosure Numbers

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Wed, 01 Aug 2007 07:52:52 -0500

According to an article at http://www.efinancedirectory.com/ titled "Organization Accused of Plumping Foreclosure Numbers for News Media and Congress" says that Realty Trac who is probably the leading provider for foreclosure information could be guilty of inflating the number of foreclosures. It appears they do not count just one foreclosure per property. If a property has more than one mortgage that files forclosure on a property they count each one as a separate foreclosure. With all the combo loans done in the past few years that could mean a lot of extra foreclosures being reported.

It's not like it's just the media that uses info from Realty Trac Congress is using these potentially inflated numbers too.

I am not trying to understate that there is a problem with foreclosures because there is, I just don't think that it is nearly as bad as everyone is saying. Keep in mind that the general public listens to the media pundits and their ambulance chasing headlines so they could be making their decisions to buy or not to buy dependent upon misinformation.

I believe it is our responsibility to make sure we get accurate information out to the public. One stat I have been sharing is that in May of 2007 the foreclosures (which now may have been inflated) reached new highs. In fact we have to go back and I mean waaaaaay back to December of 2003 which as we all know was just a horrible time in the real estate business. It was a record year only surpassed by 2004 and 2005 and by far the biggest year in mortgage history. So even though foreclosures are higher they aren't any higher right now than they were in 2003- do you remember anybody complaining about foreclosures then? (Other than people that were losing their houses). I read somewhere, my apologies can't remember exactly where, that said the current issues we are facing won't even come close to the S&L crisis of the 80's.

The bottom line to this post is to make sure you are sharing with everybody you talk to (especially others in your office) the REAL numbers and the reality of the situation so that the consumers can make educated and well informed decisions whether or not they should buy or sell real estate.

Have a great week.

Did the Real Estate Agent Do Their Job?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Sun, 29 Jul 2007 08:58:16 -0500

I was perusing the net and found a story online I wanted to share. Let's put a little different angle in hopes of creating some responses from real estate agents. Before I share the link I want to say first that the mortgage person depicted in this story is a criminal and deserves to go to jail.

The question I am asking is did the real estate agent do their job in looking out for their client or were they more interested in earning a commission or worse too ignorant/inexperienced about their job to realize what was going on. Please understand that I am asking this question in the aftermath of what has gone on the last 6 years and especially in the past 2 or 3 years. Before that time frame we weren't really concerned with what happened in this story, but now should we be?

It's a pretty quick read at http://www.housingpredictor.com/foreclosurecrisis.html

This starts out pretty regular where the McGregor family realizes they can buy a home with no money down and poor credit. Where it goes south is with the mortgage broker (MB) (please understand that it was/is not only brokers doing this type of activity, but also banks and mortgage banks- I personally know of a Washington Mutual employee that argued with me for an hour how inflating an income was not mortgage fraud).

The MB inflated income, so there is no documentation of income other than a verification of employment, and they charged $31,000 in fees that was rolled into the loan- I assume through a higher home price. Now more than 8% of the purchase price in closing costs seems to be extreme, it is in my area, but maybe elsewhere it isn't.

The story says that the MB didn't care because he gets paid when the loan closes, well that is true for an overwhelming majority of lenders the originator doesn't get residual income from the monthly payments on the loan, but certainly not unique to MB.

Okay here is what I am getting to. Was the real estate agent doing their job? Here are my thoughts. First, did the agent even ask them about how they qualified, a simple question "what type of income documentation did the lender require" could have raised a red flag?

Next, did the agent get a GFE before and see those high fees? Granted, the lender could have jacked those fees up at closing. Then of course the question would be why would you let your client work with a lender you don't know and therefore don't yet trust?

Did the agent know the loan was an adjustable that had the possibility of going up significantly in two years? If they didn't shouldn't they? All you need to ask for is the TIL and an ARM disclosure to realize that this loan could easily cause the payments to go up significantly. If the agent had discovered that wouldn't it be prudent to go deeper with their client to make sure they could afford a big payment increase?

It's no secret these two year ARMs were sold under the premise that you will have two years to get your credit cleaned up and we'll refinance you. Come on how naïve is that? What do people do when they buy a new home? They spend money don't they? How are they going to clean up their credit while they are spending all their money on their new home? So wouldn't it be prudent to make sure the client could afford a new much higher payment?

Now I am sure I have most of you saying "well that's the job of the mortgage lender" and I fully agree. The question I'll throw back at you is don't you think part of your job is to make sure that the lender your client is working with is doing right by the client? Isn't that part of your fiduciary responsibility? If it isn't shouldn't it be? If it isn't do you think that Civil Attorneys could make it your responsibility? Eight years ago maybe not, but now, today don't you think they have a hell of a lot of ammunition?

Do you think a financial services type "suitability" standard is that far off? The media, Congress, NAR, NAMB and the MBA are already talking about it. Heck the NAR President said that agents are partially to blame in all this because they weren't making sure their clients were getting into financially prudent loans. There's a new much higher standard coming and by gosh we obviously need one and we are all going to be involved, because even if the powers that be don't do it the legal profession will likely take care of it for us.

Please don't take offense to this, I put a higher standard on my fellow mortgage originators I am just saying that the real estate agent doesn't deserve a pass in this.

Please share your thoughts.

Equity in your house-is it really yours?

Kurt Jackson, CMA, CMPS (kcmortgageplanning.com) — Wed, 25 Jul 2007 09:17:17 -0500

Equity in our homes is our prized possession we guard it with every fiber in our body and souls.

We think it is the key to financial freedom.
When we have a lot of equity we feel good about ourselves.
When we have a lot of equity we think we are sticking it to the bank because they aren't charging us as much interest as they could.
We do everything in our power to pay down our mortgages as fast as possible so we can have more equity.
If we had cash we'd pay cash for the house so we could have 100% equity.

I'm surprised we don't have a big "equity god" statue in our front yards just to show off to our neighbors that we have a bunch of equity.

Why is equity so important to us?

Here are some of my thoughts on the subject.

We have been taught by well meaning people in our lives that having equity in our homes is paramount to being financially successful. Our parents, grandparents, teachers, friends, family, the media, financial pros, almost everybody has told us that having equity in your house is equal to financial freedom. That when you get your house paid off you are financially free.

We want equity so our house is safer from the bank taking it back from us. We want equity because that means our mortgage balance is lower so the amount we are paying the bank is lower or better yet with no mortgage I don't have to pay the bank anymore interest. We think that if we have our house paid off then when we retire we won't have any financial worries I mean why should we there's no monthly house payment for us to make.

That's all good in theory the problem is reality doesn't always follow theory. Let's look deeper into what equity is and who's it really is.

How can you get your equity out of your house?

There are just two ways I know to get your equity out you can sell or you can refinance?

Well if we sell then don't we lose use and control of the house?

Where would we live if we sold the house?

What other factors impact selling your house? How about:

The market?
The economy?
Area employment?
Affordability?
Is monetary policy tight or loose?
Is your house attractive to potential buyers?
Do potential buyers have the financial ability to buy your house?
Can they pay cash for the house?
Can they qualify for the loan to buy your house?

As you can see there are a lot of factors that impact whether or not you could sell your house to get your equity back out and many of them are dependent on the bank. Can and will the bank loan money to potential buyers- if there are any?

What about refinancing? This is what many people prefer since they get to maintain control over the house and they can have the money too?

How do you refinance?

You need to borrow money from the bank/mortgage company?
What dictates you getting that money from the bank?
Your ability to qualify, right?
If you don't qualify can you get to the money?

What type of events would dictate the NEED for your equity?

Job loss,
Disability,
Major illness,
Family emergency,
Death of a spouse, need I go on?

What do almost all of these have in common? What do all of these share?

A loss in income?

If you suffered a loss in income do you think you will be able to qualify to get your equity?

Will you be able to QUALIFY to get your equity?

If you have to qualify to get something is it really yours?

Are you picking up what I am putting down? ;)

Even though the equity might be yours if it is not easily accessible, if you can't get to it when you really need it, since you really need the bank to get it whether you refinance or sell is it really yours?

Let's go a little deeper here. Let's look back to why we want equity in our houses?

Safety and financial freedom?

How many folks do you think had free and clear houses in the south before Hurricane Katrina blew through?

I haven't seen any final figures but there were thousands. Thousands of folks that were financially free because they owned their homes free and clear right?

What do you think happened after Katrina?

Were those people that had their homes safely paid off and were financially free able to pick up their homes and the money in them and do whatever they wanted to do?

If your home is destroyed then your insurance company would pay you your wealth right?

What if you didn't have flood insurance? Oh, homeowner insurance companies don't pay on flood damage?

Even if you did have flood insurance with a free and clear house they don't necessarily pay you the value of your house. Just ask Senator Trent Lott from Mississippi. He lost his free and clear house worth more than $700k.

He had flood insurance, but it only paid $300,000 because that's the limit the national flood insurance program has. He did have homeowner's insurance, but State Farm didn't think he had any wind damage. They ruled it as flood damage even though his roof was in the neighbor's yard. The bottom line to him was State Farm wouldn't pay on his claim so he lost at least $400,000 of his equity- wait did I say his equity? Was it really his if he can't get it when he needs it?

I have been hearing stories where it took more than a year for people to get insurance money from their houses- many of them free and clear.

What do you think would have happened with the flood insurance provider and the homeowner's insurance companies if these houses had little to no equity and big mortgages? Do you think the mortgage holders would have pulled out their high priced attorneys to get their money back?

Wait, that can't be right, since those folks had their homes free and clear and that is financial freedom they were all taken care of right?

You may be thinking I don't live in an area of the country that has hurricanes so this doesn't apply to me. What about earthquakes are you anywhere near a fault that could give birth to an earthquake? Did you know that unless you have an earthquake insurance rider your homeowner insurance doesn't cover it?

Well I'm not near a fault so I'm not worried about an earthquake. Well what about a terrorist attack? Those aren't covered either. The point here is having equity in your house no matter where you live is not a safe place to have it, certainly not safe enough for all the financial importance we put on it.

Another way of looking at this is IF having 100% equity in your home equals financial freedom then why are so many retirees having to tap their equity with expensive reverse mortgages just to survive? Why would they need to do that- doesn't a free and clear house equal financial freedom?

Oh, wait many of these folks sacrificed saving for retirement to pay off their house early and never got around to saving for retirement because their pensions and social security would take care of them, right? Except pension benefits have been getting hammered, social security is only designed for maybe 1/3 of retirement, health care costs are going through the roof and the recent run up in home values has retirees on fixed incomes unable to afford their new much higher property taxes.

The Bottom Line is that even though the equity in your house technically is yours, for all practical purposes it's the banks because they control almost every access to it.

Until next time.

Kurt