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Re: Home equity not a retirement solution?
Old 07-24-2006, 12:07 PM   #61
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Re: Home equity not a retirement solution?

Yes! Love the hairball!
I see a book deal, la Dr. Phil:

Love Me, Love my Hairball

Master your Inner Hairball

The 7 Hairballs of Highly Effective People

and the bestselling Who Moved My Hairball?
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Re: Home equity not a retirement solution?
Old 07-24-2006, 12:13 PM   #62
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Re: Home equity not a retirement solution?

How about MSNBC's Hairball, with Ted "Cute" Fuzzy Bunny
hmmm, he might not yell enough to get his own show.

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Re: Home equity not a retirement solution?
Old 07-24-2006, 12:18 PM   #63
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Re: Home equity not a retirement solution?

I rarely yell. Its not particularly productive.

Good article where actual scientists and people who may have gone to medical school evaluated hairballs in politicians.

http://news.softpedia.com/news/Polit...ay-16848.shtml

If you dig into google a bit, you'll see a boatload of pretty detailed studies that show how people evaluate data and make 'decisions', and how they subsequently react to threats to those decisions.

My own googling led me to this very insightful analysis of the report.
http://www.i-leadonline.com/2006/01/...with-facts.asp
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Re: Home equity not a retirement solution?
Old 07-24-2006, 12:43 PM   #64
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Re: Home equity not a retirement solution?

Quote:
Originally Posted by ladelfina
In these parts there is a different animal from the reverse mortgage. It's called the "nuda proprieta'" (literally the "naked property"). Try to put the "naked" part out of your mind because the transactions usually involve very elderly women.

Rather than getting a mortage with a bank and paying interest, what happens is that the elderly person who wants to stay in their home, but needs cash, sells the property outright at a discount to market rates, and retains the right to live in the property until death, at which point the owner can move in or do whatever else they might want with it. At least with this system you don't have the worry of outliving your mortgage term..

It's kind of ghoulish to look at the ads for these apartments, since the prime selling point (the advanced age of the owner-occupant) is prominently displayed: "Nuda proprieta' 95-YEAR OLD.. in XYZ street... 2 bedrooms ..115 m2... etc."!!!


In the US that is called "reserving a life estate". A person sells the property, but reserves the right to use it in his or her lifetime. The age of the person (and therefore the amount of time they will probably live) determines the value that would be subtracted from the price.

I wonder if these will ever become more common here. Now it is generally something done between family members. Interesting!
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Re: Home equity not a retirement solution?
Old 07-24-2006, 01:03 PM   #65
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Re: Home equity not a retirement solution?

Quote:
Originally Posted by Cute Fuzzy Bunny


My own googling led me to this very insightful analysis of the report.
http://www.i-leadonline.com/2006/01/...with-facts.asp

I liked some of the comments people made in response to the analysis. For example:

On the political side of things, it is disheartening to see the polarization between parties. To some degree both parties suffer from this, but perhaps even more so the Democrats. . .

Even when thinking they are being balanced, biases come out.
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Re: Home equity not a retirement solution?
Old 07-24-2006, 01:05 PM   #66
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Re: Home equity not a retirement solution?

Quote:
Originally Posted by Cute Fuzzy Bunny
Ah yes, I remember that post...I havent read Bobs book, so it didnt stick.* Fine, "ted" is is.* My wife really hates Cati though.* She's filing for a name change.
Quote:
Originally Posted by Rich_in_Tampa
Ah.. there it is - post by ESRBob where mentions what I assumed was your nom de plume: p. 243 of his book, he states.
Sorry -- CFB it is.
TH is too polite to dredge up old news, but "Ted" has a bad connotation around here... *http://early-retirement.org/forums/i...sg6463#msg6463

Quote:
Originally Posted by Cute Fuzzy Bunny
This is why I call them 'hairballs' and looking into them is something I really enjoy.
Just because I'm paranoid doesn't mean you're not out to get me!!

To paraphase Peter Lynch's investing advice, if an idea can't be succinctly explained & defended to a bunch of strangers on an Internet discussion board then it's probably not worth executing...

**BREAK**

At the risk of ending up back on topic, perhaps home equity is a retirement solution.

A reverse mortgage certainly ain't cheap with its 2% financing/closing costs, but it does provide an approximate estimate of a monthly cash flow which, if I remember correctly, will last as long as the homeowner is alive. A reverse mortgage doesn't end when the home equity is consumed, it ends when the homeowner dies. Afterward it's just a debate over whether the home is turned over to the mortgage holder or sold to pay off the debt. If the owner lives to be 115 years old then it's a great deal for them. If the homeowner dies a few years after starting the reverse mortgage then it's a bad deal for them.

It's the same as an annuity-- the buyer shells out a chunk of cash for "lifetime income" and the hopefully reasonable insurance assurance that the payer will live up to their side of the bargain.

I'm not a fan of annuities or reverse mortgages. In this situation, personally I'd take the money from the sale of the home and run away fast.

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Re: Home equity not a retirement solution?
Old 07-24-2006, 01:36 PM   #67
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Re: Home equity not a retirement solution?

To paraphrase Jerry Reed, I've got a house that's mine alone, that me and the finance company own...

Not living in a bubble area, I'd have to move to a pretty crappy "modest" home and area to reap much benefit from my equity. Of course, I have only around 30% equity, or say $35k (excluding the costs of selling, moving. etc.). I do consider it an asset, in that I own at least some of it, but other than having a relatively nice home in a reasonably nice "hood", and having a 5.5% fixed mrt that should keep my payment low relative to inflation, it's not really an "active" part of my investment portfolio, and surely won't facilitate any step function improvements in my retirement...
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Re: Home equity not a retirement solution?
Old 07-24-2006, 01:41 PM   #68
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Re: Home equity not a retirement solution?

Quote:
Originally Posted by Nords
lution.

A reverse mortgage certainly ain't cheap with its 2% financing/closing costs, but it does provide an approximate estimate of a monthly cash flow which, if I remember correctly, will last as long as the homeowner is alive. A reverse mortgage doesn't end when the home equity is consumed, it ends when the homeowner dies. Afterward it's just a debate over whether the home is turned over to the mortgage holder or sold to pay off the debt. If the owner lives to be 115 years old then it's a great deal for them. If the homeowner dies a few years after starting the reverse mortgage then it's a bad deal for them.
I hope some banking types will clarify but I believe that when my in-laws got a reverse mortgage it was set-up such that they get a stream of income for life and if they die before all of the equity is exhausted their estate receives the balance of equity after sale minus some (probably exhorbitant) fees. I think, like annuities, you can choose among a number of different approaches.
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Re: Home equity not a retirement solution?
Old 07-24-2006, 01:49 PM   #69
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Re: Home equity not a retirement solution?

Quote:
Originally Posted by Nords
TH is too polite to dredge up old news, but "Ted" has a bad connotation around here...* http://early-retirement.org/forums/i...sg6463#msg6463
Oooh. Nasty stuff.

So, "TH??" -- who's that?
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Re: Home equity not a retirement solution?
Old 07-24-2006, 01:51 PM   #70
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Re: Home equity not a retirement solution?

Quote:
Originally Posted by Rich_in_Tampa
So, "TH??" -- who's that?
Some 45 year old a-hole with nothin' better to do...
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Re: Home equity not a retirement solution?
Old 07-24-2006, 02:10 PM   #71
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Re: Home equity not a retirement solution?

Quote:
Originally Posted by Cute Fuzzy Bunny
Some 45 year old a-hole with nothin' better to do...
Sorry, with this board's demographics you're gonna have to be more specific than that!
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Re: Home equity not a retirement solution?
Old 07-24-2006, 02:18 PM   #72
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Re: Home equity not a retirement solution?

Not too be confused with 51yo a-holes...
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Re: Home equity not a retirement solution?
Old 07-24-2006, 02:23 PM   #73
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Re: Home equity not a retirement solution?

Quote:
Originally Posted by Nords
Sorry, with this board's demographics you're gonna have to be more specific than that!
The one sitting in the house because its 115 degrees outside and the air conditioner hasnt stopped running for 3 days. :P

Heyyy...i'm looking forward to being a 51 year old a-hole. Just six more years and counting. Its my b-day in a couple of weeks!
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Re: Home equity not a retirement solution?
Old 07-24-2006, 02:23 PM   #74
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Re: Home equity not a retirement solution?

Quote:
Originally Posted by donheff
I hope some banking types will clarify but I believe that when my in-laws got a reverse mortgage it was set-up such that they get a stream of income for life and if they die before all of the equity is exhausted their estate receives the balance of equity after sale minus some (probably exhorbitant) fees.* * I think, like annuities, you can choose among a number of different approaches.
If memory serves, with a RevMo, the mark borrower can get a lump sum, an annuity/stream of payments, or a line of credit. *A popular way to rack up big, fat commissions structure payments is to take the sucker's Grandma's RevMo proceeds and use it to buy an annuity from a life insurer.
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Re: Home equity not a retirement solution?
Old 07-24-2006, 02:25 PM   #75
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Re: Home equity not a retirement solution?

Quote:
Originally Posted by Cute Fuzzy Bunny
The one sitting in the house because its 115 degrees outside and the air conditioner hasnt stopped running for 3 days. :P

Heyyy...i'm looking forward to being a 51 year old a-hole.* Just six more years and counting.* Its my b-day in a couple of weeks!
Yeah, I'll soon be a 52yo a-hole...
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Re: Home equity not a retirement solution?
Old 07-24-2006, 02:41 PM   #76
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Re: Home equity not a retirement solution?

Only 13 more years before you can be an Opinionated Curmudgeon!
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Re: Home equity not a retirement solution?
Old 07-24-2006, 03:34 PM   #77
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Re: Home equity not a retirement solution?

Quote:
Originally Posted by HFWR
Not living in a bubble area, I'd have to move to a pretty crappy "modest" home and area to reap much benefit from my equity. Of course, I have only around 30% equity, or say $35k (excluding the costs of selling, moving. etc.). I do consider it an asset, in that I own at least some of it, but other than having a relatively nice home in a reasonably nice "hood", and having a 5.5% fixed mrt that should keep my payment low relative to inflation, it's not really an "active" part of my investment portfolio, and surely won't facilitate any step function improvements in my retirement...
I think the whole discussion is almost moot for all the non-bubble dwellers where a reasonably nice house in a reasonably nice neighborhood is $100k-$150k. I figure my house might be 5-10% of my net worth by the time I ER. Not chump change, but not a huge source of funds either. I plan on considering the house as a "back up plan" - either selling it or getting a HELOC.
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Re: Home equity not a retirement solution?
Old 07-24-2006, 05:28 PM   #78
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Re: Home equity not a retirement solution?

Quote:
Originally Posted by Nords
TH is too polite to dredge up old news, but "Ted" has a bad connotation around here...
And sorry TH/CFB about your and your wife's names in the book - picked by the editor to provide some sort of diversity in the story examples. I guess we can be grateful she didn't give you a sex change or something -- a few of my friends ended up with those in the book! There was talk about making you a lesbian couple at one point, as I remember...
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Re: Home equity not a retirement solution?
Old 07-24-2006, 05:32 PM   #79
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Re: Home equity not a retirement solution?

Quote:
Originally Posted by ESRBob
There was talk about making you a lesbian couple at one point,* as I remember...*
Maybe they are! CFB may really be a lesbian trapped in a man's body and Mrs. CFB may be a gay man trapped in a woman's body.
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Re: Home equity not a retirement solution?
Old 07-24-2006, 05:38 PM   #80
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Re: Home equity not a retirement solution?

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Originally Posted by 2B
Maybe they are! * CFB may really be a lesbian trapped in a man's body and Mrs. CFB may be a gay man trapped in a woman's body.
Be thankful -- they could have called you guys Adolf and Eva...*
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