Reverse Mortgages – Not Just for Cash-Strapped Seniors

Many seniors have the misconception that reverse mortgages are only for those that don’t have enough retirement income. While reverse mortgages are very beneficial for cash-strapped seniors, they can also be equally beneficial for those that have sufficient incomes.

One of the key reasons all seniors should at least consider a reverse mortgage is because of the line of credit (LOC) option offered through a Home Equity Conversion Mortgage (HECM)—the most popular type of reverse mortgage and one that is government insured. The LOC offers guaranteed growth, access to money, and provides a hedge against inflation and a reduction in local property values. Guaranteed growth. The LOC allows the senior guaranteed growth at much higher rates than those commercially available through CDs or Money Market Accounts. AARP writes on their web site, “The rate by which the HECM creditline will actually grow each month will be the same as the total periodic rate being charged on the loan’s balance.” Consider this example: a senior couple each age 64 who have a home valued at $150,000 and do not owe anything on the home. Through the HECM reverse mortgage, they can qualify for an initial credit line of $69,580. Assuming the line is simply established and no withdrawals are taken, this creditline is guaranteed to grow at a rate currently above 7% (7.28% as of 3/7/07) and changes monthly. In 20 years, if no withdrawals are taken and we assume the same initial growth rate each year, the creditline will be worth $283,825. Meanwhile, if their $150,000 home appreciates at an average rate of 3%, in 20 years their home would be worth $270,917— almost $13,000 less than what their creditline is worth! Access to money. It is much better to have access to money and not need it than to need the money and not have access to it. In the same example above if the senior couple did not obtain a HECM reverse mortgage, they would only be able to rely on their savings and investments in case of an immediate need for sudden and costly expenses such as those for home health care, assisted living facility care, or nursing home care. To access the money tied up in their home, they would either have to sell the property, which could take several months, or obtain a mortgage on the property. Hedge against inflation and decreasing property values. Preserving purchasing power throughout a potential retirement of 20 or 30+ years is often a senior’s greatest risk. Purchasing power is eroded due to inflation or the continual upward movement of prices for the goods and services we need and want buy. The LOC with guaranteed growth provides an ideal hedge or risk reducer against inflation. Many seniors often find their homes do not appreciate as much as others in their local real estate markets. This is often because, after living in the home for a period of years, the home becomes outdated, since home styles change and features and materials become obsolete. Again, in this case, the LOC provides a very valuable risk reducer because of its guaranteed growth–which can overcome the value of the home itself. While a reverse mortgage may not be for everyone, all seniors age 62 and over who plan on remaining in their home should explore this option and the LOC feature available. A good place to start exploring is AARP’s website.

Cooking With Kids!

Have you ever cooked dinner with the help of your children, grandchildren, or nieces and nephews, as the case may be? You’ve probably asked them to set the table or help with clearing and washing the dishes. What about the actual preparation of a sit-down meal? Have they ever participated as assistant chefs? While this may seem like a minor activity, cooking with your kids could have many more benefits than you may realize!

You’ll receive help in the kitchen. Our frantic schedules have already led to a significant decrease in the number of family dinners we’re able to enjoy. Here’s a way that we can create a home-cooked meal and have quality family time as well.

This activity instills positive values. Chores not only teach kids about social responsibility, they also promote the idea of making a contribution. The best part is that you’re able to take part in the process, unlike when they’re cleaning their room or taking out the trash.

You’re teaching your kids a practical and marketable skill. You never know, you may have the next Wolfgang Puck on your hands! Besides, can you imagine how grateful they’ll be when they arre out on their own and trying to cook for themselves?

Cooking teaches kids to take pride in what they eat as well as the importance of nutrition and health. As a nation, we need to be sure that we’re making proper choices when it comes to our dietary habits. According to the National Institute of Health, childhood obesity is at an epidemic level. One in every five children is overweight due to poor eating habits.

Preparing meals with your children will leave lasting memories. A mid-week dinner may not excite them as much as the newest Xbox game, but wait until they’re all grown up. That’s when you’ll see the lasting effect of your efforts.

Here are some suggestions to help you get started cooking as a family:
1. Make sure that the tasks assigned are age-appropriate.
2. Supervise your children at all times, especially when handling knives or anything hot.
3. Concentrate on giving them duties that are fun (i.e. rolling meatballs, mixing dough, etc.)
4. Give your kids a sense of autonomy by providing them with their own cutting boards and select equipment.
(Many kitchen stores sell plastic (kid-safe) knives, perfect for cutting lettuce and softer vegetables.)
5. Let your kids set the menu. If you have multiple kids, let them take turns.
6. Teach as you go. Explain everything you do and why you are doing it.

If you would like to obtain some kid-friendly recipes, visit the Food Network’s website at: http://www.foodnetwork.com/food/If_kids. While you’re cooking, remember to have fun too! They’ll be grown up before you know it.

Do you have any fun ideas for the family? Let me know, I’d love to hear them!