LAS VEGAS REVERSE MORTGAGE CANDIDATES CAUTIONED TO SEEK ADVICE
Whenever the words “reverse mortgage” is uttered, any Las Vegas TV viewer immediately makes the connection with one of several celebrity spokesmen who blanket the airwaves with commercials touting the concept. If you listen carefully, those reverse mortgage ads do actually describe the product with legal accuracy. If you have the standard degree of sales resistance most of us have developed after years of exposure to Madison Avenue pitches, you probably guess that instead of relying solely upon the celebrity spokesman’s trustworthiness, you’d better investigate further before running out and applying. Most people do. So it was surprising when the government’s Consumer Financial Protection Bureau found it necessary to issue a special advisory on the subject. Potential Las Vegas reverse mortgage applicants—that is, Las Vegas homeowners who meet the minimum age requirement of 62 ½—were warned “not to be deceived” by the “late night TV ads that seem too good to be true.” Without quibbling with the CFPB about when those commercials appear (you can see them almost any time after about 3 p.m.), it is easy to see how they might create broadly mistaken impressions on at least two counts. And it’s too bad, because although a reverse mortgage can be a useful instrument, it really can have nightmarish consequences for someone who doesn’t fully understand the concept and its ramifications. The warnings were the result of the consumer watchdog organization’s focus group study that showed many viewers coming away with misimpressions following screenings of the ads. Many did not understand that a reverse mortgage is a loan. Others got the impression that a reverse mortgage is a government benefit—and worse, some thought it guaranteed that consumers could stay in their homes for the rest of their lives. The fact is, these loans are simply a specialized way seniors can tap into their home’s equity: the value that has built up over the years. It’s true that they are designed so that the homeowners do not have to repay the loan until he or she passes away, sells or moves out—but it’s no guarantee that other factors (like taxes, homeowner’s insurance, and maintenance expenses) might not still cause a default should the borrower run out of money. There are other fine print details that are not mentioned in most of the ads…and they’re every bit as important as the terms of any loan. Among those that are barely touched upon are the fact that there are costs and interest provisions attached to reverse mortgages—and the CFPB finds them to be relatively expensive. Most Las Vegas homeowners are probably skeptical enough of any “too good to be true” pitch to automatically take a harder look—especially when it involves their Las Vegas home’s equity. If you have questions about financial matters having to do with that equity, your best bet is to discuss the details with a trusted financial advisor or a federally-approved housing counselor. And for any other questions about Las Vegas real estate, you needn’t hesitate to give me a call!
OPEN HOUSES REMAIN USEFUL REAL ESTATE ARTIFACTS
More than one Las Vegas home sale has resulted from a couple’s chance encounter with a Las Vegas open house. It still happens that they just drop in on the spur of the moment. “Oh look! They’re having an open house down the street!” turns into curiosity, then interest, excitement—and ultimately, a life-altering change in where they call home. Today that still happens, but a good deal less frequently than in the past. Part of the reason is the demotion of the open house in the pecking order of Las Vegas real estate strategies. At this point, a Las Vegas open house is simply never the central element in a home’s marketing blitz. The web has seen to that. Let’s face it: if you can visit any listed home via its online virtual tour, the whole idea is that it requires a fraction of the time and effort an in-person visit takes. A home’s virtual tour is where you’ll head first. If you are aware of a Las Vegas open house scheduled for the weekend, chances are you may also check it out online first. If you like what you see there, you might even be tempted to call your agent or email the selling agent to schedule a private showing. Getting there ahead of the masses can give you an edge if the property draws a crowd. If the online media (including the rapidly-expanding mobile universe) weren’t so ubiquitous, it’s a cinch we’d be seeing a whole lot more ‘Open House’ signs just driving around Las Vegas. But it’s not a completely extinct phenomenon. For the house hunter who is just initiating the effort—anyone who suspects that a less virtual, more three-dimensional excursion is the best way to get a feel for what’s out there—look for notices in the newspaper classifieds, and even check the old-fashioned places—like grocery store bulletin boards. And Sunday is still the day you’ll find the most “Open House” signs in Las Vegas front yards—as well as their cooperative neighbors’ corner lot lawns. Open houses can offer a leisurely weekend way to wade into this fall’s residential offerings, but for those who have advanced to a stage where a more concentrated and efficient effort is called for, there’s no substitute for the assistance of an experienced Las Vegas real estate agent. And there is also no need for such a substitute—I’m right here, ready for your call!
ON WHETHER TO BUY A HOME IN LAS VEGAS OR KEEP ON RENTING
The answer to the question about whether any individual or family would be better off if they rent or buy a home can differ depending upon when the question is posed as well as the particulars of the available properties in either category. Even when the financial calculations make it clear that to buy a home in Las Vegas would result in significant savings, it’s possible that credit problems or simple cash inaccessibility render the choice moot—for the moment, anyway. The reason a family budget is universally recognized as the single best way to get a handle on finances is because if you don’t know how much you’re spending in any given area, you won’t know when it needs to be curtailed. Given the size of monthly rent or mortgage outflows, it’s a pretty good idea for anyone with a long-term outlook to know what the rent vs. buy a home tradeoffs are. The answer to that can be spectacular enough that a change in plan is called for. For some time, one of the national real estate web sites—Trulia—has posted a calculator that yields an approximate answer to the rent or buy question. It is aimed at metro areas only, and concedes it’s at best an approximation, but when you enter “US Average” for the location, it comes up with a percentage difference. Right now, for the U.S. median home price of $180,800 and median rent price of $1,545, “buying a home” comes up as 44% cheaper than renting! Now, there are a whole bunch of assumptions that should have us taking that answer with a shaker or two of salt. This assumes, for instance, that were you to buy a Las Vegas home with the national parameters you would be the happy beneficiary of “today’s mortgage rate,” which Trulia presents as 3.6%. Yes, this rate is actually being offered in some places to borrowers with spotless credentials, but counting on it would be iffy for most folks. Yet if you substitute 3.9%, buying a home is still 43% cheaper; a 4.2% loan makes the answer 41% cheaper. Likewise, because the tax advantage gained when you buy a home is so stark, your income tax bracket can tip the buy vs. rent comparison greatly. If you move down from the assumption of a 25% tax rate (seems unlikely for the $180,000 median home buyer), even with a 15% tax rate, buying is 41% cheaper. Sooooo, it looks like it’s always a very good idea to buy a house instead of renting it, right? Wrong! The most important factor is the one that makes the most sense: “how long you intend to live there.” Its starting point assumption begins at 7 years. Move that down to 3 years and—all else being equal—the calculator comes up with buying being only 19% cheaper. Assume 2 years, and the buy vs. rent answer is that the costs are about the same. And at 1 year, renting is 37% cheaper than buying! The precision of these percentages are unlikely to be spot-on for any given Las Vegas individual or family, but the answers are probably useful anyway. It does indicate that for anyone planning on staying put Las Vegas for at least 3 or 4 years, taking a closer look at the rent a home/buy a home financial impacts will be worthwhile. I can help with current realistic Las Vegas specifics, so why not give me a call?
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