Oregon Mortgage News: Oregon: King City

3.9% of Oregon's 1st mortgages were at least 30 days late and 1.3% of Oregon homes were in foreclosure in the 3rd quarter of 2008 according to an article in today's Oregonian, More Oregonians late on Mortgages by Ryan Frank. While these are alarming figures, the upside is that we are still doing better than most of the rest of the country.

I tried to find information on how many of these homes are owned by senior citizens and was unsuccessful. However, I would imagine that the numbers are high. Many seniors are on fixed incomes and if this income is tied to investments, they have seen a reduction in their assets. Many who were able to live off of the interest from these accounts are now having to withdrawal principle.

One of the areas that we are a little luckier then the rest of the country is.. (click to read on my outside blog)

Jack and Betty own a duplex that is completely paid off. At 79, Jack is still driving truck but is seeing a downturn in his income due to the economy. Last year they made over $90,000 between driving, a couple of pensions and SSR. They haven't rented out the 2nd unit in the duplex for a few years as there isn't enough room in the driveway for more then 2 cars. Parking on the street disappeared when the city widened their street.

Jack's concern was to be able to pave over the yard and create more parking, and for Betty to have access to cash should she need it if Jack were away from town on a trip. Betty was concerned about the ability to pay their bills with Jacks reduction in work. They both wanted to access cash as they need it, rather then tap all of the equity at one time. They also would like to be able to leave some money to a niece and her husband.

We looked at taking out a traditional Equity Line of Credit. While it would have been the least expensive option up front, it would have required them to make a monthly payment. At that point, the rent from the other side of the duplex would have covered the new mortgage debt with a few hundred dollars left over.

After talking with Jack and Betty, my solution was to use a HECM 175 Reverse Mortgage with a cash draw in an amount sufficient to make the needed repairs to their property and give nice cushion for the remainder of the year. This also left them with a sizable line of credit that will continue to grow as their property appreciates

This loan is setup so that if they use their equity wisely, and if the home appreciates at 5% per year, their equity will never be exhausted. In fact, if they live to age 100, there will still be roughly $357,000 in equity after paying off the loan balance.

While Jack and Betty didn't "need" a Reverse Mortgage, they have found that it has allowed them to do some things that need to be done without selling their home or making drastic cuts to their living. It also is giving them the peace of mind in knowing that they have unlocked the equity in their home should they need it.

While this isn't sophisticated mortgage planning, it is solving a real life problem for real clients.

Call me if you would like to see if a Reverse Mortgage is right for you. 1-888-660-2842.

Also, visit my Reverse Mortgage blog at www.OregonReverseMortgageNews.com

Many seniors are finding themselves House Rich and Cash Poor. There just doesn't seem to be enough money left over at the end of the month, or they are having to tap into the principle of their retirement funds in order to enjoy a comfortable retirement.

A Reverse Mortgage is a financial tool for seniors that allows them to unlock the equity in their homes. While it is technically a loan against the equity, it has several key differences from a traditional, or forward, mortgage. To find out more about a reverse mortgage click on the following links:

Oregon Reverse Mortgage Article

Oregon Reverse Mortgage Video

Give me a call if you have any questions regarding a reverse mortgage. I can be reached at 503-421-0096.

The slumping economy is now forcing baby boomers to move back with their parents, resulting in financial consequences for all. Some have lost jobs. Others are suffering the consequences of overextending themselves with larger houses then they could afford, real estate investments gone bad, or just buying to much "stuff". While this is inconvenient for the "kids", it can be devastating for the parents.

According to an Associated Press article more and more "kids" are moving back home with their parents to help make ends meet.

Financial planners report receiving many calls from parents seeking advice about taking in their grown children following divorces and layoffs. Kim Foss Erickson, a financial planner in Roseville, Calif., north of Sacramento, said she has never seen older children, even those in their 50s, depending so much on their parents as in the last six months. "This is not like, 'OK, my son just graduated from college and needs to move back in' type of thing," she said. "These are 40- and 50-year-old children of my clients that they're helping out."

Parents "jeopardize their financial freedom by continuing to subsidize their children," said Karin Maloney Stifler, a financial planner in Hudson, Ohio, and a board member of the Financial Planning Association. "We have a hard time saying no as a culture to our children, and they keep asking for more."

But plenty of well-meaning parents must delay retirement or scale back their dreams because they have to help their children, Stifler said. Parents feel guilty if they don't offer help, but she warns them to be careful with their savings.

A new survey by the retiree-advocacy group AARP found that one-fourth of Generation Xers, those 28 to 39 years old, receive financial help from family and friends. The on-line survey of nearly 1,800 people ages 19 to 39 also found 57 percent believed they were "financially independent." But in a separate question, 33 percent said they received financial support from family and friends."

This combined with the inflation, decreasing home values and an unstable economy, could jeopardize the retirement of many seniors. One option that will become more and more necessary for some is to access the equity in their home through a government insured Reverse Mortgage. Used judiciously, a Reverse Mortgage can supplement the retirement income without having to eat up the principle of the retirement account.

Feel free to call if you have any questions. Larry Morris 503-421-0096.