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Gracious Moves    LLC

Senior Transition Specialists

Brooke's Blog

Blog

Assisted Living vs. Staying at Home

Posted on December 21, 2013 at 11:39 AM Comments comments (0)
As published in the Savannah Morning News - 22 September 2013
 
Assisted Living vs. Staying at Home.
 
Are you considering the option of moving to an assisted living community or trying to stay at home?  Most people I consult with tell me they are trying to stay in their homes for as long as possible.  Here are some things to consider.
 
Assisted living adds a safety component to seniors living alone.  It can be the difference of life and death.  Falling is one of the most frequent accidents I see in the elderly, and falls can change your life in an instant.  If you hit your head, or land so that you cannot push an emergency button dangling for your neck or on your wrist, you may not get the life saving help you need.
 
I just spoke to a woman who fell in her garage and lay there all day until a neighbor across the street came home from work and saw her as he was picking up the paper from his driveway. Another client fell while her husband was out of the house, and even with an emergency device hanging from her neck, she could not activate it.  The “I’ve fallen and I can’t get up” device is good to have, but not always the answer.  Having people checking on you frequently throughout the day, or living with you in your home, raises the odds that you will be saved.
 
  • Does your home offer a safe environment?  Some things to think about:
  • Are your floors level?  Are there raised thresholds that are hard to differentiate from level ground?
  • Do you have area rugs over carpet that present tripping hazards? 
  • Can you enter and exit your home safely?  Could it be adapted to allow for handicapped access?
  • In dim light, can you tell the difference from the floors and the walls?  Where do the floors end and the walls start?  Floor and wall colors should be contrasting to help you avoid falls.
  • Are your rooms arranged for safe passage?  Do you have furniture in places that can trip you?
  • Do you have an extra bedroom to accommodate a live-in helper, or family member to provide around-the-clock assistance?
  • Can you afford in-home medical care or companion services?
  • Do you have a bathroom that can be adapted to safely accommodate a wheelchair, walker, and ingress/egress from a shower or tub?
  • Is there a bedroom on the ground floor with a bath nearby?
  • Do your hallways allow enough room for a wheel chair or walker to safely make turns into a bedroom or bath?
  • Is your kitchen serviceable from a wheelchair?
 
Many times I am called in to do assessments, manage renovations, and stage homes for safety and maneuverability.  Some homes are easily adapted to the physical capabilities of the client, and others are not.   If not, assisted living is the beginning of a journey to a safer, healthier life, providing the support that you need.  
 
Assisted living communities also provide a social setting to develop friendships, while living at home can be very isolating, a common cause of senior depression.   Some see isolation as the lesser of two evils when compared to the fear of moving and the unknown.  If you could only observe the positive changes I see in my clients (and my own mother) who have moved to new communities, you would think twice about staying at home.   They are transformed - happier, healthier, and enjoying new friends and activities, with a full support system.
 
Additionally, seniors lose the energy and/or ability to properly maintain their homes, and when I come to list a property for sale, I discover a plethora of maintenance and repair issues that need to be addressed.  Properties deteriorate without attention, and so does the value.  
 
Don’t let the fear of moving paralyze you.  This next step can be an exciting adventure...not the end, but a new beginning!  It can boost your social activities, lift your spirits and provide a safe environment in which to enjoy your life.  There are many communities to choose from; just take the first step.
 

Waiting to Sell? Here's Some Great Market News!

Posted on December 21, 2013 at 11:31 AM Comments comments (0)
As published in the Savannah Morning News - 1 September 2013
 
Waiting to Sell? Some more great market news!
 
The market is hot, hot, hot!  Last week I gave you 11 reasons why you should get off the fence and sell now.  Now here’s another that is sure to inject a slew of new buyers into the market.
 
Friday, August 16, the Federal Housing Association (FHA) pulled a rabbit out of their hat, shortening the waiting period for homebuyers who are now “seasoning”.  I have written several articles about these buyers, who must wait to buy again after experiencing a bankruptcy, foreclosure or short sale.  The last six years, has been challenging, and many people have lost jobs, homes and their self esteem. 
 
The FHA has realized that it needed to soften up its requirements for some of these buyers.  This is for buyers who meet FHA approval, which make up a large percetnage of people stuck in watiting periods after bankruptcy, foreclosure or short sale.
 
The FHA is cutting the amount of time that homebuyers must wait after a bankruptcy, foreclosure or short sale to one year before they may qualify for an FHA-backed mortgage.  Previously, buyers had to wait two years after bankruptcy and three years after foreclosure or short sale.  But in order to qualify, borrowers will need to prove their household income fell by 20 percent or more for at least six months; that the income drop was tied to unemployment or another event beyond their control; that they have had at least one hour of approved housing counseling; and that they have had a full year of on-time housing payments, among other things.
 
“FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage,” said FHA Commissioner Carol Galante, in a letter to mortgagees announcing the changes.  Dubbed the "Back To Work - Extenuating Circumstances Program", the
FHA removed the familiar waiting periods that typically followed a derogatory credit event.
 
If you've experienced any of the following financial difficulties, you may be program-eligible :
Pre-foreclosure sales
Short sales
Deed-in-lieu
Foreclosure
Chapter 7 bankruptcy
Chapter 13 bankruptcy
Loan modification
Forbearance agreements
 
The FHA realizes that, sometimes, credit events may be beyond your control, and that credit histories don't always reflect a person's true ability or willingness to pay on a mortgage.  Use the Q&A below to learn more about the FHA's Back to Work - Extenuating Circumstances program.
 
What are the minimum eligibility requirements of the FHA Back To Work program?
In order to qualify for the FHA Back To Work program, you must meet several minimum eligibility standards. The first is that you must have experienced an "economic event" (e.g.; pre-foreclosure sale, short sale, deed-in-lieu, foreclosure, Chapter 7 bankruptcy, Chapter 13 bankruptcy, loan modification, forbearance agreement). The second is that you must demonstrate a full recovery from the event. And, third, you must agree to complete housing counseling prior to closing. You must also show that your household income declined by 20% or more for a period of at least 6 months, which coincided with the above "economic event".
 
How do I document a 20% loss of household income for the FHA?
In order to document a 20% loss of household income, you must present federal tax returns or W-2s, or a written Verification of Employment evidencing prior income. For loss of income based on seasonal or part-time employment, two years of seasonal or part-time employment in the same field must be verified and documented as well. Income afterthe onset of the economic event, which should represent a loss of at least 20% for at least six months, should be verified according to standard FHA guidelines. This may include W-2s, pay stubs, unemployment income receipts, or other. Your lender will help you determine the best method of verification.
 
How do I document a "satisfactory" credit history since my "economic event" for the FHA?
Your lender will review your credit report as part of the FHA Back To Work approval process. All accounts will be reviewed -- ones which went delinquent and ones which remained current. Your lender will attempt to determine three things -- that you showed good credit history prior to the economic event; that your derogatory credit occurred after the onset of the economic event; and, that you have re-established a 12-month history of perfect payment history on major accounts. Minor delinquencies are allowed on revolving accounts.
 
Does the "20 percent loss of income" eligibility condition apply to me only, or to everyone in the household?
The "20 percent loss of income" eligibility condition applies to everyone in the household. If one member of the household lost income as the result of a job less but the household income did not fall by 20 percent or more for a period of at least months, the borrower will not be FHA Back to Work Extenuating Circumstances-eligible.
 
Nice to see FHA recognize that sometimes, bad things happen to good people. Economic events that were beyond a homeowner’s control were forcing millions of Americans to sit and wait before they could buy again. This policy change makes sense and should allow responsible borrowers back into the housing market.
 
 
 

Moving Mom..."Seasoned" buyers get creative.

Posted on May 22, 2013 at 3:50 PM Comments comments (4)
As published in the Savannah Morning News - 19 May 2013
 
“Seasoned” buyers get creative
 
Last week’s column was devoted to rebound buyers:  those who have been renting, have saved a down payment, and are anxious to move forward with a purchase, while recovering from foreclosure or bankruptcy.  We learned that “seasoning” is the waiting period required (by Fannie Mae/Freddie Mac, the Veterans Administration or the Federal Housing Authority) before these buyers are qualified to purchase a home again.  During this time period, these former home owners must work to improve their credit.  But what happens when they get eager to buy a home prior to seasoning?
 
These buyers can get creative in order to secure a property during the waiting period.  If your home is on the market, and an unseasoned buyer makes an offer, it could look like one of the following:
 
Lease Purchase – This is a contract to purchase a home (with an extended closing date) coupled with a rental agreement. 
   
While any contract is negotiable, it is very common for a lease purchase to have a non-refundable deposit, a time limit for the purchase date, a deductible on repairs (buyer is responsible for the first “X” dollars of repairs), and some even offer a rent credit where some amount of the monthly rent is applied to the buyer's down payment. The purchase price is established, with a closing to occur at some defined date in the future.
 
A lease purchase may be mistakenly called a Lease Option. However, there is a distinct difference between a lease purchase and a lease option.  A lease purchase includes a written purchase and sale agreement that has been signed, sealed and delivered. The sale must go through or there may be penalties applied to the party in default. 
 
Lease Option – With a lease option, the party wants to rent your house and has purchased a legal right or option to purchase the property at a later date.  In a lease-option, the buyer does not have an obligation to purchase it.   There should be an earnest money deposit, or “option deposit”, at risk if they decide not to exercise their option to purchase by the due date.
 
Many times, a renter will have a “first right of refusal”, should another buyer make an offer to purchase the house they are renting.  This would give the optionee, within a certain time period, the right to exercise their option to purchase, bumping the other buyer out of the picture.
 
Seller Financing or Purchase Money Mortgage – This is amortgage issued to the buyer by the seller of the home as part of the purchase transaction, also known as seller or owner financing. This is usually done in situations where the buyer cannot qualify for a mortgage through traditional lending channels.  This is an attractive option for unseasoned buyers that will need short term financing until their seasoning date, after which they can secure a mortgage through a traditional lender.
 
A purchase-money mortgage might be offered by the seller as incentive to purchase a property.  Seller financing is usually short term (2 to 5 years), giving the buyer the time to save money, improve their credit, then obtain a traditional mortgage that requires a larger down payment.  Commensurate with the risk, seller financing traditionally demands a higher interest rate than conventional financing.
 
All sale or lease agreements have inherent risks.   It is a method to receive a nun-refundable cash deposit while providing monthly income to cover expenses.   Potentially, it is another path to a successful closing.  A professional Realtor® and real estate attorney should be consulted and engaged to prepare the necessary legal documents to protect the parties and help mitigate the risks.
 
Next week in Moving Mom…How to visually expand interior spaces.  Stay tuned!
 

Moving Mom...Foreclosures and Bankruptcies, Part II

Posted on May 22, 2013 at 3:42 PM Comments comments (0)
As published in the Savannah Morning News - 12 May 2013
 
Foreclosures and Bankruptcies - “Seasoned” buyers are buying…Part II
 
Last week we talked about rebound buyers, who are on a determined track of recovery following bankruptcy or foreclosure.  These buyers have worked hard to rebuild their lives, their credit, save money and re-qualify for home ownership.  They are also being “seasoned” to meet the time line requirements set by the following lenders:  Fannie Mae/Freddie Mac; Department of Veterans Affairs; Federal Housing Administration.
 
“Seasoning” is less like herbs and more like wine, as buyers are not qualified for another home loan until they have met the minimum waiting period, the time in which they must demonstrate that they are a good credit risk.  During seasoning, the buyers must perform:  improve their credit scores, pay bills on time and lower debt.  Some buyers have told me they took out a higher interest rate car loan just to show they can make the payments.  Car payments are reported to the credit bureaus and, when paid responsibly, can help re-establish credit post-bankruptcy.
 
So, how long does it take to get seasoned?  There are grey areas, or extenuating circumstances, that can shorten a time line requirement, including job loss or a prolonged illness followed by the subsequent death of the wage earner.  It is up to the person who reviews the file to make an exception; there is no guarantee. Having said that, the big 3time lines basically look like this: 
 
Fannie May and Freddie Mac:  Foreclosure7 years; 3 years if extenuating circumstances are met.  Chapter 7 or 11 Bankruptcy4 years; 2 years with extenuating circumstances.  Chapter 13 Bankruptcy2 years from discharge date; 4 years from dismissal date.***
 
Department of Veterans Affairs:  Foreclosure, Chapter 7 or 11 Bankruptcy – generally, not less than 2 years with foreclosures and bankruptcies filed under straight liquidation and discharge provisions.  If the foreclosure was a VA loan, the buyer must have paid the VA for its loss before qualifying for a new VA loan.  Chapter 13 Bankruptcy – After making 12 months of payments, or a court-appointed trustee and the trustee ,or the bankruptcy judge approves new credit.***
 
Federal Housing Administration:  (Note:  This program is most commonly used by rebound buyers, since the down payment requirement is only 3.5 percent, with a waiting period of  2 to 3 years after foreclosure).   Foreclosure 3 years;2 years with extenuating circumstances, and the borrower has reestablished good credit. Chapter 7 Bankruptcy2 years after the discharge with re-established good credit or no incurred new credit obligations.  Chapter 13 Bankruptcy – To be considered, the buyer must be current on required payments for 1 year.***
 
So what happens when these buyers come knocking at your door?  Remember, they are survivors dedicated to the American Dream.  If they choose your home, be assured they will do everything they can to close.  They have a different mindset from the norm, and if your home is “the one” for them, it means more than buying a house - it represents their new beginning.  Their skin is in the game.  Their hearts are in it.  They are dreaming of sleeping in their own home, cooking in their own kitchen, planting their flowers and raising their kids.  Without a doubt, when these folks are properly seasoned, they will buy a home again.    
 
Next week in Moving Mom…”Seasoned” buyers get creative.  Stay tuned!
 
***Information provided by Starkey Mortgage and Realtor.org.
 

Moving Mom...Foreclosures and Bankruptcies, Part I

Posted on May 22, 2013 at 3:38 PM Comments comments (0)
As published in the Savannah Morning News - 5 May 2013
 
Foreclosures and Bankruptcies - “seasoned” buyers are buying…Part I
 
It’s been a rough six years.  We are spotting the survivors…peeking their heads out of the sand, working their way out of debt, improving their credit scores, saving for a down payment and working hard in their recovery efforts to buy a home again.  Many have lost jobs, spouses, have experienced illnesses, the collapse of companies, and yet we all share a common thread in the American Dream, that of home ownership. 
 
It’s been a painful and embarrassing recovery for many of these former home owners, whose personal stories have begun to sound like a blur in the sea of economic hard times.  My heart goes out to those that have suffered great loss, both emotional and financial, sometimes through no fault of their own.  Their recovery is admirable, many setting out immediately, post bankruptcy or foreclosure, to rebuild their lives, their credit and their ability to provide again for themselves and their families.  It has been through dogged determination, education, sacrifice and hard work that they are now able to buy again.
 
With rents creeping up and interest rates still at record lows, and the fact that rebound buyers are missing the mortgage interest deductions, it’s no wonder we are seeing these determined folks back in the market now.  They still think and feel like home owners and want a place to call their own. 
 
As Realtors®, in order to work with these buyers affectively, we must understand the ramifications of foreclosures and bankruptcies.  Rebound buyers are plentiful, so both buyers and sellers should know the rules of the game.  Buyers have been working hard to get to this point, and they know when they are approved for a loan.  Sellers need to know what a “seasoned” buyer looks like, and how to spot one who is not.  Avoiding a Purchase and Sales Agreement with an unqualified purchaser saves lost time on the market and headaches in the long run.
 
But financing is difficult these days, even for those with good credit. 
 
Unless a buyer has 20-percent of the purchase price saved for a down payment, they will be required to secure mortgage insurance.  They can’t originate a loan without it, and because the real estate crisis pushed many mortgage insurers out of business, those that survived are extremely picky.  Buyers with a foreclosure in their history may have a tough time.  They will probably pay more for mortgage insurance, homeowners insurance, have to lower their home expectations and save more for a down payment.
 
Guidelines for rebounding buyers hoping to qualify for a loan are not black and white, and subject to interpretation.  “Seasoning” refers to a time line that lenders follow in which the rebound buyer must meet certain post-foreclosure and post-bankruptcy dates and requirements in order to qualify for a new loan.  Credit score is still a consideration, but the dates follow the discharge or dismissal date of a bankruptcy, or the recorded date of a resale of the home (by the lender) post foreclosure.  These dates must mature, or an exception must be made in order to get a loan approved by one of the big three:   Fannie Mae (FNMA)/Freddie Mac; Department of Veterans Affairs (VA); and Federal Housing Administration (FHA).  Exceptions may be granted and timelines shortened for extenuating circumstances, such as job loss or a prolonged illness and subsequent death of a wage earner.
 
I just had a buyer turned down by FHA after a job loss forced him into eventual bankruptcy.  Post-bankruptcy, he gave up his home by giving his lender the keys to the property and a Deed in Lieu of Foreclosure.  If he had included the house in the bankruptcy instead of holding on, his “seasoning” would have started at the bankruptcy date and not the foreclosure resale date, which was later.  FHA did not approve his job loss as extenuating circumstances, even though he depleted all resources before giving up the keys.  The lender argued the buyer’s hardship with FHA, but to no avail.  The buyer consequently has another year to season, post-foreclosure.
 
With foreclosure, the seasoning starts on the recorded date the lender resells the property, not when the homeowner gives up the property to the lender. 
 
Time lines are a bit involved, so next week I’ll talk about the specific time lines for all three types of loans and what to expect from rebounding buyers. 
 
Next week in Moving Mom…Foreclosures and Bankruptcies—“seasoned” buyers are back, Part II.  Stay tuned!
 

Plan Before You Sell Your Home

Posted on May 2, 2013 at 7:47 AM Comments comments (0)
As published in the Savannah Morning News - 21 April 2013
 
Plan for your next home before you sell.
 
The road map to a secure financial future, and knowing what you can afford to buy or rent after you sell your home, is all about planning.  Meeting with a financial planner is an important step in the process of knowing how long your retirement money will last and what you can afford to spend on your next home.
 
Too often I meet with senior customers who want to list and sell their home, but don’t have a clear picture as to what comes next.  They have no idea how much money they will need in order to live out their life, and they don’t know whether they should buy or rent, or what they can afford.  My next question is always, “have you met with a financial planner?” These folks are trained to review your financials and give you advice.  They can estimate, based on your assets and investments, what your projected monthly income will be for the rest of your life.  You will then be able to see what your income can support in a home or retirement community over the long haul.
 
Additionally, it is important that both spouses know the full extent of their financial picture.  Depression era babies are often of the traditional mindset:  the husband takes care of the bills and everything financial; the wife takes care of the cooking, laundry and the house.  That’s fine, but I believe in cross-training, because if you lose a spouse due to death or divorce, the other is left without a clue.  With seniors, occasionally I see the roles reversed, but not often.  And let’s face it, a good number of women outlive their spouses.  Regardless, it’s always wise for both spouses to know all about their assets, the name of a key advisor to call in case they need to suddenly step into their spouse’s role, where the files are kept, etc.  Read on…
 
We have all heard about shocking revelations where one spouse spends all the money and the other has no knowledge?  Recently, a neighbor had a heart attack and died unexpectedly.  His wife thought the finances were in order because her husband took care of everything.  In the midst of her grieving and dealing with estate issues, she discovered the husband had tapped their retirement and mortgaged the house to the max.  Their assets were depleted.  It was not long before the lender foreclosed on the house and this shattered woman was forced to leave her home.
 
Another scenario which happens all too often:  A newly widowed woman has been “taken care of” all her life and now finds herself alone.  She has never managed the money nor lived on a budget, and since they have always lived well, she thinks there must be enough money to last.  All too soon, the nest egg dwindles, and when it comes time to sell the house and move to a retirement community or assisted living facility, she cannot afford it. 
 
I am told that Savannah’s average annual cost for assisted living is about $45K a year. A good long term care policy should be in your plan, but you still must have the monthly income to support yourself above and beyond that coverage.   And, if you plan to move into a buy-in continuing care retirement community, they often require that you qualify based on your total assets, plus your monthly income.  If either falls short, you will not meet their qualifications to buy-in.  Financial planners can assist in this assessment and guide you accordingly.
 
Planning while both spouses are still alive is the solution to making sure you can live out the rest of your lives in comfort and with the proper finances in place.  Establishing an accurate budget will be an essential piece of the puzzle and your financial planner can provide you with forms to help you establish your budget.  You will be able to see if your income can support the new lifestyle you desire, and if not, how much of a draw from your capital you must take each month to meet your expenses.  That subsequent decrease in assets will be factored into your projections.   Your family longevity will also be a factor.   Your planner can then estimate how much you can spend on a home and project your monthly income for the rest of your life.
 
After your financial plan is mapped out, you can move forward to find your next home with confidence.  Your peace of mind is worth it and you will be ready for the next step.
 
Next week in Moving Mom…Sellers get cold feet too!  Stay tuned!
 

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