The Finance Blogger

One of our readers left a question about adjustable rate mortgages and whether we thought they should consider changing from a fixed rate mortgage to an adjustable rate mortgage. They have 15 years left on their mortgage. The couple is considering switching to an adjustable rate mortgage with a lower interest rate!

They have an excellent credit rating. As a result they should have no problem renewing their fixed rate mortgage or an adjustable rate mortgage. They wanted to know about the changing interest rates and whether we thought interest rates would change. They seemed a bit concerned about interest rates going up significantly. As of this update in 2013, interest rates are rising and there is no forecast of how far they will go.

Adjustable Rate Mortgages

Basically an adjustable rate mortgage is just what it sounds like. The interest rate will be adjusted at defined intervals that are based on an index that each bank follows plus some percentage to reflect the banks required profit. This index can change regularly and if you have an adjustable rate mortgage, your mortgage payments will be adjusted to reflect this change.

Adjustable rate mortgages are usually at a lower interest rate than a fixed interest mortgage at time of renewal, however while your fixed interest mortgage will stay the same for the term you have contracted for, your adjustable rate mortgage will change as often as every month or every 6 months depending on your agreement.
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Our latest question was about home equity loan refinancing. The reader wanted to understand how refinancing worked and other information such as costs and how much they could borrow. They have an excellent credit rating and the reader is self-employed. The equity they have in the home is approximately $90,000 and they have a current mortgage of $15,000. They are in a very good financial situation and great candidates for refinancing.

This reader appears to be a perfect candidate for a home equity loan refinancing package. They have good income levels, they have a great credit rating and they have lots of equity in their home. As long as they do not have other loans that eat up their monthly income levels they should be approved for a home equity loan refinancing package with no problems.

Most banks would be happy to do business with them, however as always the deals they offer will vary depending on their business plans and availability of funds to lend.

The first question they asked was how refinancing works.

Basically the bank will want to obtain a real estate value assessment to confirm the value of the home, ensure that the current mortgage is dis-chargeable and review the finances of the applicant. The clients  may need to provide evidence of income to support the increased mortgage payments.

The fees could include Read the rest of this entry »

Our last post was from a reader who is considering applying for a home improvement loan in California. They wanted to know if it was a good idea or not to take on a home improvement loan. Considering his situation and circumstances. They also wanted to know were to apply for a home improvement loan. We get a lot of emails and comments about these sorts of questions. We will try to answer them in our next post. In the mean time, his question and situation are described below. It is pretty typical of many people who are looking for home improvement loans.

To summarize, this reader was considering a home improvement loan of $40,000. He had an existing mortgage which had 5 years left on it before it was fully paid off. They also had a car loan. They routinely paid their credit card balances each month. Also they did not indicate what the monthly payments were for the car loan and the mortgage.

Both he and his wife expect to be retiring from their jobs in the next few years. They are concerned about taking on additional debt such as this home improvement loan. One other concern was mentioned as well. The reader mentioned that he was concerned that his company may be downsizing in the next year. Although he did not indicate if he was at risk or not, this was a concern for him in terms of being saddled with a large loan and being out of work. Finally they indicated that this loan was an optional project. As a result if it did not make sense to go ahead, that would also be ok as well.
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We received a question about home equity loan refinancing from a reader and will answer his questions in our next post. This couple are trying to understand the process of how they can take advantage of the equity in their home to use to complete a number of renovations on their home. They have sufficient equity in their home to either increase their mortgage or add a line of credit that they can draw on as needed.  They want to know about appraisals, legal costs and any other costs as well. This is a common question that many homeowners have especially if they have been in their homes for some time and have paid a significant amount towards reducing the existing mortgage.

Question to Debt Counselor:: Hello, we have a question about home equity loan refinancing. We have a small mortgage balance left on our current mortgage and have approximately $90,000 in equity in our home. We would like to refinance the existing mortgage and use the funds to consolidate some debt and also complete a number of renovations on our home. Our question is ” what is the process to refinance your home and take advantage of the equity in our home. Do we need to have our home appraised and also what would this cost us?

Detailed Questions : Home Equity Loan Refinancing

Do you currently have a mortgage? :: Yes

Home/Mortgage Loan Amount :: $15,000, this is the balance left on the mortgage that is currently on our home

Other Loans, Including Credit Cards:: $4,500 in credit card debt

Are you employed and for how long:: I am elf employed, and have been running my own company for the past 10 years, and the last few years have been very profitable. I am my own boss and have ten guys working for me full time.
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This is our first post about debt and how to deal with debt. We will be covering all types of situations that people find themselves in and how they may be able to deal with it – Debt, Credit cards, loans, mortgages. In addition we will take situations, all fictional, of people who are looking for various kinds of loans and mortgages and describe how they can approach their situation, improve it and find the funds they need to manage their debt. We hope that all of this information will be helpful to readers. We plan to issue a post twice or more a month so stay tuned for more posts on this important subject that affects everyone in the country.

Debt comes in many forms, so we will provide a shortlist here:

• Mortgage on your home
• Car loan
• Personal Loans
• Credit card debt
• Private loans
• Bills that have not been paid on time

These are broad categories and over the next few months we will add posts about the various categories of mortgages for example. There are many, such as 1st mortgage, 2nd and 3rd mortgages, mortgage refinancing, high ration mortgages, bad credit mortgages, and on and on. Once things you will find that many of these are really just marketing terms that help people fit them into specific situations that they need to deal with. Read the rest of this entry »

Our last post was from a reader who is looking for  a home loan and has a bad credit rating. They are looking for only $10,000 to repay their credit cards. They want to get away from the high interest rates that go along with credit cards. Credit card interest can be in access of 20%. In some cases approaching 30%. While a mortgage or personal loan can be in the range of 4 to 8 % depending on the amount being borrowed. Also security provided and the credit rating of the applicant. Consumers with the best credit ratings can find loans at rates even lower than these.

Bad Credit Home Mortgage Loan

Missing Payments Affects Credit Rating

The writer points out that they missed a few payments and this is what sparked the plunge of his credit rating. That’s right it does not take much these days for a credit report to be made to the credit rating agencies and suddenly your credit rating is in the tank and now you have to qualify for what is known as a bad credit home mortgage loan. These types of loans typically are hard to find since many lenders just will not lend money to someone with a bad credit rating and if they do they will charge a higher interest rate to cover their perceived increased risk.

They also may charge additional processing fees just in case the loan applicant defaults on the loan at some future point. This sounds onerous, however this is the way that many companies operate to protect and control their losses.

Our reader indicates that he has a decent job, a small mortgage on his home and no other loans other than the credit card balance. This type of loan would normally be a good candidate for a home mortgage loan, however due to his bad credit rating, he is going to find it difficult to find a lender.

Read the rest of this entry »

The last question we received from one of our readers was about reverse mortgage loans. They are seniors on a fixed pension. They were wondering if a reverse mortgage loan would be the right thing for them to augment their income. This would allow them to take advantage of the equity that has built up in their home. This extra income would make their lives much more comfortable and pleasant in their older years.

They are also considering going on several trips. This money would come in handy to cover the cost of these trips. They are considering traveling when they still have their health. Older consumers are able to enjoy these trips while they are still healthy. They stated that their fixed income pensions are sufficient to live on. All of their daily expenses are covered. They currently do not have any debts, loans, mortgages or credit card balances.

Reverse Mortgage Loans

This couple is one of the fortunate ones in that they are financially independent and have sufficient funds to live on with out needing to cut back on their lifestyle.

Regarding the first question, anytime you can be debt free is a big plus and being naturally conservative, we not only applaud this approach, but advise people to strive towards debt freedom and avoid taking on additional debt. Our advice as a result for this couple is to avoid any kind of debt and avoid reverse mortgage loans as well.

However they may still wish to go ahead with a reverse mortgage loan so here is some more information about them which may help readers and this couple decide if they wish to proceed with a reverse mortgage loans.
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We received a question about a reverse mortgage loan from a reader and will answer his questions in our next post. Many people have probably seen advertisements on TV and in the newspapers about reverse mortgages, so this is very timely. They are aimed at seniors primarily who generally have a lot of equity in their homes and do not want to move. They are struggling to make ends meet and could use some of this equity to make them more comfortable in their retirement years.

Question to Debt Counselor re Reverse Mortgage Loan

My wife and I are retired, living on a fixed income and finding it a bit difficult to live on our pension income. We are looking for suggestions about reverse mortgage loans and how to take advantage of the equity in our home and be able to enjoy life a bit more while we can. There is also some concerned about losing our home should we use all of the equity and also signing it over to someone. We really would prefer to stay in our home and avoid having to move to an apartment. We thought that maybe a reverse mortgage loan might be the right approach for us.

Do you currently have a mortgage? :: No we do not have a mortgage or any other debts at this time

Home/Mortgage Loan Amount :: $00.00

Other Loans, Including Credit Cards:: None , credit cards all carry a zero balance.

Are you employed and for how long:: Retired , living on a fixed income pension
Read the rest of this entry »

First Time buyers of homes need to have their act together or they will end up spending more money than they should. Our most recent reader left us a message about first time buyer mortgages. They are getting a mortgage for the first time. Since they plan to move from an apartment they currently rent into a home they plan to purchase. They appear to really have their act together in terms of credit rating. Also income, financial management skills and home inspection. They also are planning for long term expenses such as furnace and roof replacement.

This couple makes sufficient money to carry the mortgage they are applying for including taxes and utilities. Many couples get themselves into financial difficulty for many reasons, however one is that they forget about having to pay the taxes and the utilities in their planning and end up running short at the end of the month. No one wants to be stuck in their home because their expenses are so high that they cannot afford to go out once and a while. Make sure that you have accounted for taxes when you are budgeting for that new home you are buying.

Home Maintenance Issues for First Time Mortgage Buyers

Another area that many couples fail to consider is home maintenance. They have lived in an apartment for several years and have only had to pay for their rent, the cable TV and the telephone. Heat , electricity, and water are extras, but what happens when the furnace quits and they must cough up $4000 to replace the furnace or replace the roof that is suddenly leaking. These can be major issues for many couples who are living on the edge in terms of monthly payments on their mortgage and have not planned for maintenance. This couple has a home inspection that suggest that these items should not present a problem in the near future.

They asked for advice, and this is one area to consider setting up a maintenance fund that they can draw on for major house repairs as needed.
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We received a question about poor credit home loans from a reader and will answer his questions in our next post. Many people are faced with trying to find lenders who will loan money to them when they have poor or bad credit. With so many people unemployed over the past 5 years and not earning income, it is no wonder that many consumers now have a poor credit rating. With no or little income, they could just not pay their bills.

Poor Credit Home Loan

Question to Debt Counselor::

We have been attempting to find a lender that will provide us with a home loan so that we can complete a number of renovations around our home. The basement, add a bedroom and a bathroom downstairs as well as change the roof before it begins to leak are on the list. We have a poor credit rating and as a result we are having a hard time finding a lender who will lend us any money.

Do you currently have a mortgage? :: Yes, there is 19 years left on the mortgage

Home/Mortgage Loan Amount :: $15,000 ( $5000 for the roof and the rest for the basement)

Other Loans, Including Credit Cards:: No other loans or credit card debt

Are you employed and for how long:: Both my wife and I are employed and we have worked at the same place for the past 3 years
Read the rest of this entry »

We received the following question and information from a reader and will answer his questions in our next post. If you have questions please leave a comment and we will try to answer them. They are first time home buyers and have completed a number of steps towards purchasing a home, but want to know if there is anything else that they should be doing when they purchase their home. We will try to answer their questions on the next post.

First Time Buyer Mortgage

Question to Debt Counselor::

My wife and I are potential first time buyers of a home. We have been looking at houses for the past 6 months and finally have found one that we think we can afford and also like. This is a really big step for us to be buying a home and becoming first time buyers with a mortgage.

We are currently renting an apartment and are anxious to move out to our own home. Our plan is to have a family soon and also build up equity in a home that we can call our own. We both work and we have an excellent credit rating. What we are concerned about is that we want to make sure that we do not overstep ourselves and take on a mortgage that is too large for us.

Do you currently have a mortgage? ::No, we currently rent

Home/Mortgage Loan Amount ::$100,000

Other Loans, Including Credit Cards:: None, we have no other debts at all

Are you employed and for how long:: We both have good jobs which we have been at for several years.
Read the rest of this entry »

In our last post we wrote about living in an RV and traveling. Living in an RV is not something for us! This post is a bit more general in the sense that many people who retire also want to spend time traveling i.e. Travel and Retirement. They have the time to travel and the freedom to really go were ever they wish provided that their health allows them to travel and even leave the country.

Some people are in for a rude shock, though. Once they retire they suddenly find out that not only can they not travel, they may just have enough to live on and maintain their current standard of living. In addition they have begun to have health issues and this really increases the cost of travel significantly or they may not even be able to travel at all because they cannot find any travel insurance to cover them due to their health issues.

These are tough times for many people, so it is important that you really evaluate your situation well to make sure you have the money to do what you want to be able to do. Travel can be expensive, depending on how you plan to do it. If you go first class, staying in top hotels etc, it is going to be expensive. Even if you plan to live in an RV like the couple we talked about in our last post, you still need to have sufficient funds to be able to purchase or rent an RV. Selling your home and moving into an RV is a pretty drastic step for many people.

Travel and Retirement – Budget

The first step is to have a budget. Use pen and paper or a spreadsheet if you have a computer available and are comfortable using spreadsheets. Enter all of your monthly and annual income as well as cost for living expenses, utilities, taxes etc. Don’t forget to set aside some money for maintenance of your home and car as well as medical bills. These can mount up in a hurry and really affect your lifestyle if you are not careful.

Once you have developed your budget, add in your plan expenses for travel or whatever you want to do from a retirement perspective. Some people only want to golf for example. You may need to make adjustments to your budget so that you can squeeze in some travel or other activities that are high on your priority list.

Travel can be Inexpensive

Another friend of ours will fly into a location, rent a car and then spend the next month camping in various state parks. They really like to hike and explore and this not meets their objectives in terms of leisure activities, it also helps their budget as well. They are paying for airfare and a rental car, however at that point they are living very inexpensively while they are camping. If the weather gets bad or they just feel they need a day or two in a motel with a clean bed and a shower they also will do that, but their main plan is to camp.

Staying with relatives is another approach many people use. As long as you reciprocate, you can have a very nice vacation that is inexpensive and yet very enjoyable as well. Sure you pay for a few meals, and probably bring some gifts, but this is much less  expensive than staying in hotels and motels or going to resorts. One friend of ours never stays in a hotel. They will only travel if they can stay with friends or relatives.  These people are being cheap since they actually have the money to travel with and can stay anywhere they want. As they have shown this is a great way to travel relatively inexpensively.

Well that is the end of this post. The main point about travel and retirement is to set up a budget and stick to it so that you can really enjoy your retirement and not worry about whether you are spending too much. Comments about your retirement plans are welcome.

Most of us really do not give it much thought when we head off on vacation to the United States. We may have been going to the states for many years on the standard two week vacation to Florida, Texas, Arizona or California. We really not been concerned about any tax issues at all. The answer is that you have been right unless you purchased a property in the United States which will complicate matters significantly. This can cause Tax Issues for Snow Birds which you need to work through or face a huge tax bill. Personally we like to rent a condo or home rather than make a purchase. It is called freedom from a lot of issues, but there are advantages to owning as well.

Own vs. Rent

Now that you are older and retired, many people are extending their vacation in the warm south to anywhere from on month to as much as 6 months at a time to escape the cold winters. If you are staying that long, it begins to make sense to own a small condo or sometimes a trailer to live in instead of renting a place every time you head south. We fall into the category were we are just on the edge of it making sense to rent vs/ own. We head south every year for two to three months at a time with a number of other small two or three week vacations to various locations in the US.

Our personal philosophy, tax issues for snow birds aside, is that we do not want to be tied to one location. If I own a place somewhere as a vacation home, then I would want to spend a lot of time there to make use of my investment. Having it sit empty all of the time is not really what it is all about. My wife would not want to rent it out to anyone so I cannot really consider it to be an investment either. It really is a vacation home. As a result we decided not to purchase a place in the US preferring the freedom to be able to go to a variety of places while we travel the US and not need to support two places.

Tax Issues for Snow Birds

This removes one  area of tax issue for us as snow birds since we do not own a property in the states and will not need to be concerned about capital gains etc. The other major area is income tax. This is something that all snow birds should look into. If you plan to be in the United States for an extended period up to 180 days a year then you could become subject to income tax on all of your income and have to pay tax to the IRS. You need to be able to demonstrate that your home is in Canada and that you have not severed ties to Canada. How do you do that, well you should talk to an expert, but here is a short list of things to make sure that you do not give up:

• Own or rent a home in Canada that is available to you upon your return
• Pay taxes on this home
• Have Canadian bank accounts
• Pay federal and provincial income tax
• Can show that this home in Canada is your permanent home
• Have a provincial drivers license
• Have a provincial health card

IRS Snowbird Tax Issues

While this may seem trivial, snowbirds traveling to the US should have evidence of these things with them. Or be able to get them to show US customs officials. There is a lot more detail to dig into , however the main issue is to be able to show that you are a non resident alien and do not fall under the IRS tax rules. If you are labeled a resident alien you could be forced to pay tax in the US to the IRS, which makes life a lot more complex.

If you plan to purchase a property in the US and / or spend a significant amount of time in the US it is definitely worth taking the time to understand these issues in more detail and complete your tax planning properly.

A little while ago, we wrote a post about Snow Birds Renting Long Term Condos. This was a general post about retired people heading south for the winter. Perhaps renting a condo for a couple of months during the winter. We covered a lot of things that you may want to look out for. Especially if you want to ensure that you do not get ripped off or experience disappointment.

Snow Birds Renting Long Term

Some people will head south for the winter. Perhaps they have a work situation that requires them to live in a city for an extended period of time. Until a project is completed. They may want to rent a furnished apartment or condo for this period. Instead of living out of a hotel room which is much more confining and limiting. This is a great way to see a city by the way. Experience living in another culture without having to invest a lot of money. No furniture or even buying a home, condo or whatever is required.

Long Term Rentals

We have never rented on a long term basis for personal reasons. We have traveled on business and lived in a condo that was furnished for a period of 8 months. The condo came with 2 bedrooms, and all of the standard furniture and utensils. Everything that one would need to live comfortably. For short duration’s such as this, renting a furnished condo or home is by far the way to go.

We found that negotiation is everything when it comes to service as well as prices that we were paying. It is never too late to renegotiate the price you are paying for the condo. As long as you have a relatively open contract which we did. This same approach applies to snowbirds as well who are heading south for the winter for a period of 6 months. Although once you agree for a specific price etc, it can be difficult to renegotiate. Unless you are not receiving the services or conditions that you agreed to in the contract.

The key to any contract is to negotiate everything up front and make sure you have everything you want before you sign on the dotted line. Once you sign the owner is going to be unwilling in most cases to open the contract unless it is too his advantage.

Negotiate Rental Contracts

Read our other post about Snow Birds Renting Condos for some of the things to watch out for when you book your place. Note that since you are staying longer there is a better chance that you will be able to negotiate a lower price than you would for a shorter term contract as well. Sometimes you can save as much as 50% between a one month contract rental price and one that is for a period of 6 months.

It really depends on what the demand is and your negotiation skills. The same contract issues apply,  such as term, price, items in the condo, inventories, damages, services to be provided, pool availability and how you are supposed to leave the condo at the end of your stay. If there are damages or if it is very difficult to clean the unit after you leave, your deposit may not be refunded or you may be assessed an additional fee.

In addition, you may also not be invited or accepted back the following year. If you are concerned about any of these issues and cannot get out of the contract, take pictures of the condo when you first arrive to establish and inventory and to establish the cleanliness of the unit. Some landlords rely on the tenants to keep things clean and in most cases, tenants do not do a good job at this.

If you have comments about this subject feel free to leave them. We can all benefit from everyone’s experience.

You might wonder what does living in an RV and traveling have to do with finance and financial issues for seniors? Well as it turns out lots. I met a buddy the other night who stays in touch with a couple who are in their 60’s that we both know from years ago who have taken a really different approach to how they want to enjoy their retirement.

They sold their home and purchased a small RV. One that is relatively easy on fuel and an RV that his wife can drive. They put all of their things in storage and have all of their mail going to a friend’s place and off they go following the warm weather and the things they want to see from a site seeing perspective. They have been traveling around North America for the past couple of years thoroughly enjoying life. Talk about a life style change and a dramatic shift from home ownership which generally appreciates to living in small quarters in a vehicle that is depreciating! They are taking some risk, but enjoying their life and that is generally what it is all about once we retire.

Life Style Issues

There are lots of financial aspects to this plan and approach and there are also a number of lifestyle issues as well that many people might not be able to deal with. For example, although this couple is very close and they have no kids, were do you go when you are having a disagreement and just need some space. There is no other room in the RV. This is it, you can go to the other end, but you cannot lock the door and get away from your significant other! We all need our space from time to time no matter how much we love each other.

There is also the need to have flowers and pots, to decorate to have stuff you can call your own. Some call it the nesting syndrome. In an RV there is not a lot of room for this sort of thing. Having the flexibility to move around at will and always have a place to live, cook your meals and sleep has a lot of advantages.

Financial Issues of Living in an RV and Traveling

Selling your home and buying an RV has many financial impacts. The proceeds from your home can be invested, generating a nice income that can be re-invested or used to live on. The important thing here is to not touch the principal so that if you decide to repurchase a home, you still have some funds to do this.

The down side of selling your home and getting out of the real estate market is that if homes appreciate, you will be quickly priced out of the market and may not be able to buy back into the housing market. Instead you will have to rent which is fine with many people, however this is something to be aware of.

An RV will depreciate over time as it ages. At some point you will need repairs as well and it becomes a cost area that may be too much to deal with. A house needs maintenance as well, however it continues to appreciate in most cases.

While you no longer need to pay for utilities, taxes and home maintenance, which can be a large expense, you still need to pay for RV camping fees and park fees. Rent in some states in provinces and states can also be expensive as well. If you are planning to do this sort of thing it is important to develop a small spreadsheet and compare all of the costs and savings to help you with your financial part of the decision.

The Practical Side of Living in an RV and Traveling

Unless you have tried living in an RV even on vacation, you may not want to just make this leap in direction that dramatically changes your lifestyle. We suggest renting an RV for at least a month to try it out first. This is a good test to see if you and your significant other can handle the trials of living in an RV. One friend of ours rented out his house for 4 months and moved into his RV and headed south. After 2 months, they decided that they needed to rent a house. The RV was just too small for them! It is not for everyone.

If you have tried this approach, we would really like to hear your comments, the good and the bad.

What will we do with all our stuff? Downsize to a Condo? We cannot possibly fit all of the things we have into a two bedroom condo! We hear that a lot from our friends as well as having wondered about this ourselves. The answer is that you cannot fit everything into a condo, unless it is really really big and then you are probably coming from a large home so it still will not work. This is probably one of the toughest emotional things to deal with when you are considering moving and down sizing to something smaller.

Friends of ours have done this. They had garage sales for weeks, they gave away all kinds of things and they just had to throw some things out that they might not have if they had stayed in their home. We have seen two couples do this and both are now happy with their decision, but it took them over two years to get rid of everything and even then it was a challenge. There is just so much emotional baggage attached to many things that we have. Everyone has to get over this part of the decision, however the more important aspect of the decision we think is all about the money and the life style change that you are making.

Downsize to a Condo – some Issues

Life Style Change

You may be moving from a single detached home with space between you and your neighbors to a condo with 4 walls and neighbors who might be noisy above or beside you. There may be one parking spot and in a lot of cases no place to store anything.  You are also cooped up inside unless you have a balcony. Even then it is only so large. This is a big change and one that should not be taken lightly. Think about it for awhile, even spend some time living in a vacation condo to see what it is really like to live in one. Take the time to imagine living this way for the rest of your life.

Financial Issues

This is really the point of this post and this blog. We want to review the issues around moving from your home to a condo from a financial perspective. In most cases utilities are going to cost less since you have a smaller space and you have people living on one or both sides of you.

Taxes can be even more expensive depending on the relative value of the condo vs. your home and the way your city or state evaluates tax rates. The big expense is going to be condo fee’s. This comes as a shock to many people. We have seen condo fees approaching $1000 per month for a 2 bedroom condo in our city for a unit that costs in the neighborhood of $500,000! Many residents are older, do not do anything for themselves and want everything absolutely perfect and they are willing to pay for it.

Downsize to a Condo – Low Condo Fees

Beware of moving into a new condo with low fees. They are set that way by the builder to entice buyers. Once the board is elected they must complete a financial study which they are required to do by law. Suddenly they need to raise the condo fees by a large amount to cover anticipated expenses in the future. This can really hurt some people if they are only just making it in terms of meeting the monthly bills.

Many communities charge a land transfer tax that can be quite substantial. This may cause a lot of people some consternation when they realize just how much it is. Before you make a decision to downsize make sure you have included and understood all of the fees associated with selling and buying a home.

For the record we looked at this solution to downsize. We have not been able to find anything that we like with reasonable numbers. We are planning to stay right were we are. Our family will pay the fees we need to maintain our own home!

If you have looked at this scenario for downsizing and concluded that it is something you want to do, we would like to get your comments. What we have discussed is not an issue of whether you can afford it or not. It is more of an issue of whether it makes sense from a lifestyle and financial perspective or not.

Many Baby boomers are going through this exact decision process and it is difficult.

Many people are becoming snow birds these days, ourselves included, so we thought we would write about Snowbird Lifestyle Issues and ask readers to let us know about their experiences so that we can all improve our chances of enjoying our time away from the cold Canadian and Northern US winters.

Here are some of the major issues  that all snowbirds need to consider whether you are going away for a month or longer. Each situation will be different so we will keep this general so you can apply it to your personal situation. We will expand the list in more detail later in this post, however if we missed something, please leave us a comment and will be happy to add it at anytime. Here is our list for Snowbird Lifestyle Issues:

• Home Maintenance While You are Away
• Health Insurance ( Especially for Canadians)
• Condo Rentals / Hotel Contracts
• Car Contracts
• Communications
• Meeting other Snow Birds
• Friends and Visitors While You are Away
• Staying in Touch With Family
• Emergency Situations

Snowbird Lifestyle Issues – Home Maintenance While You are Away

Always make sure that there is someone looking after your home or apartment while you are away.  Basic things such as security, picking up the mail and making sure the home is heated. Your insurance company may have specific things that you need to do to maintain your insurance. Check with them before you embark on your snow bird trip for the winter. Whoever is looking after your home needs to be able to get in touch with you and deal with any emergencies that may come up.

Health Insurance ( Especially for Canadians)

We all need health insurance, however it is a big issue for Canadians, since our health insurance does not begin to pay the costs involved when using foreign medical treatment. Investigate the coverage you need to have for your family while you are away and never travel without it.

Condo Rentals / Hotel Contracts

It is better to have a contract than none at all, however these things really do not protect you while in a foreign country. What are you going to do, sue them. It gets way too expensive, so you are better to dot the i’s and cross the t’s before you go. Rely on word of mouth and recommendations. Remember that pictures can be doctored and they are often taken when the property was pristine and do not reflect the way it is today. Many snowbirds have been ripped off in this manner or had to deal with inferior conditions.

Snowbird Lifestyle Issues to Consider

Car Contracts

Always set up your car contract before you arrive, so that you know there is a car waiting for you and you know the price. If you have to negotiate a contract in a foreign country you are clearly at a disadvantage.

Many snow birds will travel in their own cards. Always make sure you have sufficient insurance coverage for the country you are going to. Many will not insure your car for Mexico for example without a special rider being added.

It goes without saying, have your car fully maintained, good tires and anything that needs replacement before you go. A breakdown while on the road can be expensive.

Communications

Whether it is prepaid cell phone, your computer with Skype loaded or your current phone, always make sure you have sufficient communications to cover emergencies and so that someone can get in touch with you within a 24 hour period. A cell phone  is also handy to have for making arrangements, since many hotels and condos either charge an arm and a leg for the use of a phone or they simply do not provide service.

Meeting other Snow Birds

Be outgoing and ready to meet people along the way, however always be cautious too to avoid getting into situations that are not comfortable. You can have a lot of fun with new found friends.

Friends and Visitors While You are Away

Many people will want to visit for free, especially if you let them know you have the room. Advertise this fact carefully and to those people who you want to visit, especially if you have a hard time saying no. We found that the rule of a 5 pm happy hour is a great idea. The rest of the day everyone is on their own, but meeting at 5pm to visit and compare notes is a great way to set plans for the evening without feeling that you have to entertain someone all of the time.

Staying in Touch With Family

Stay in touch with the family especially the kids and grand kids. Use Skype video or some other similar product to talk to people for free and see them over the video service provided. Remember a computer to computer call over Skype is a free call.

Emergency Situations

This is the toughest thing to deal with. Obviously you cannot anticipate all situations, however you can ease the situation somewhat. Make sure that your spouse and your family members (those that you trust) have your itinerary, know how to get in touch, have access to your medical insurance, home insurance and car insurance policies. One call should be enough for someone to get into action to help you deal with whatever emergency comes up.

We have only covered the major Snowbird Lifestyle Issues that a snowbird traveler should consider. Take these and work out the details for your situation, and family to ensure that your long term vacation is a successful one.

Downsizing to a bungalow is not for everyone. We just finished a post on downsizing to a smaller home and whether it would be a good idea for us or not. One of the options that we considered was downsizing to a bungalow to achieve a number of objectives that we will discuss in a few minutes. Friends of ours just moved into a new bungalow and based on their experience we will not be following their path to downsizing. If you downsize to a bungalow, there is all of the landscaping that must be done, new window coverings and other expenses. If you downsize to a bungalow that is older, there is usually lots or renovation work that needs to be completed.

Criteria and Objectives

Everyone has their own criteria and objectives for moving and it is important to set your own based on your life style , age and needs. Our list includes the following:

• Cost of a bungalow should be less than what our current home is worth
• We want to make money on the deal or at least break even
• We want all rooms on one level so no stairs
• Same neighborhood
• Nice area and neighborhood
• Decent sized lot so that we can enjoy the backyard
• Parking for two cars
• A relatively uncrowded street

This is our criteria and readers may have others that they may want to add to the list. Comments are welcome.

For us, bungalows in our city fail for a couple of reasons. The cost of a new home with upgrades will cost almost as much as what we can sell our 4 bedroom home for on a much smaller postage sized lot. When you add in the cost of real estate, legal fees and moving, not to mention decorating and new furniture, this ends up costing us much more money. This was the first big failure in terms of our criteria.

Downsize to a Bungalow – Size of Lot and Parking

We cannot find anything in our area with a decent sized lot and the streets are narrow compared to what we are used to with lots of cars parked in driveways and on the streets. Everyone seems to have at least two cars and they end up being parked everywhere. This gives that really busy cluttered look compared to what we have. This is the second reason why we do not what to proceed with a bungalow choice.

The big concern we have is the stairs as we get older. Well that is easy to solve and we can stay in our current home.  There are all kinds of companies that offer elevators that fit into or onto the stairs and lift you up to the second floor.  So this problem is solved in terms of us staying in the current home we are in. We also have ample parking and a quiet street with most people parking in their garage or on their driveway.

Staying Where We Are

So I guess the answer for us is that we will not downsize. We will stay right were we are and the money we save can be spent on maintaining the house and making it more comfortable for us to live in as we get older. I am find that the more people we talk to the more we are convinced that this is the right approach.

One couple who are good friends of ours downsized from a 4 bedroom home to a two bedroom bungalow. They finished off the basement, upgraded the floors, counter tops and many more items. By the time they were done they were well over budget. They had spent more than they had received for the home they sold. They have a really nice home too. We still wonder why they sold. Now they have bad neighbors with big dogs that crap over everything. Their street is really busy and they have no were really to park other than their driveway. The street is always full.

They also had the hassle of dealing with a builder that did not do a good job on many things. Even after a year the builder is still fixing things for them.

So that is my take on downsizing. If you are happy with your current home, stay there. Don’t waste the money moving to another home and risk disappointment. As you get older consumers have less patience to deal with all of these types of issues.

Comments on your experience down sizing or thoughts about what we have said in this post are welcome. Looking for more details about downsize to a bungalow and options, click here.

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I have been writing a lot of material for a customer of mine about loans, mortgages, interest rates, and the impact that credit ratings have on what people pay of these financial items and whether they can even get a loan due to their credit rating. Mortgages and credit ratings play a huge part in everyone’s life, so why not write about this subject. It is time to write a general post about all of these issues here on my  blog since it has such a huge impact on our personal life, our quality of life and even our jobs.

If it was not for the economic downturn that took place in 2008, we all would be writing about something else, because presumably life would be rosy, right. We think the answer is wrong, since it really comes down to personal accountability and whether you can pay your monthly bills or not, whether you can borrow money for a new car or a home or just put food on the table.

Mortgages and Credit Ratings – bottom line is the following:

• You are going to pay higher interest rates if you have a bad credit rating
• You are going to have a bad credit rating if you do not pay your bills on time all of the time.
• Carry a balance on your credit card and you are going to pay huge interest charges each and every month
• If you spend more than you earn, you are going into debt and if you do not repay this debt, your credit rating will fall
• If not managed , it can be a downward financial spiral that does not end until bankruptcy

Sounds pretty bad and even negative, however if you pay attention to these details and manage your money properly with some discipline you just may find the following occurs:

• Your credit rating is high
• You can borrow money with loans and mortgages easily
• Enjoy some of the most competitive interest rates on these loans and mortgages
• You have money for some of the things you wish to buy
• Your life style is enjoyable and you do not worry about money

Financial Recommendations Everywhere

There are literally thousands of articles out there on the net talking about this subject in various forms. This simple post summarizes it all and boils it down to a few simple lines which if followed will vastly improve your life style over time.

Too many people , especially the young want to have everything now. When kids get married today, they have the house, the car, the fancy clothes and the furniture to go with it. They also have a huge debt to go with all of that it is pretty tough for them because they are living paycheck to pay check. A friend of mind said a few days ago, there are many people in our neighborhood that are “two pay checks away from bankruptcy”. Scary but so true. If you lose your job you lose your home, your car and much more.

Financial Discipline

When we grew up we had to do without until we could afford it. As we saved and made enough money, then we began to add the homes , the furniture and the cars along with the fancy trips.  If only the people in Canada and the US had followed this approach, perhaps the entire depression which started in 2008 would not have happened or at least have not been as bad as it was!

Comments welcome!

Many people are wondering how these Reverse Mortgage Loans work and whether they are a viable option for them.  They may have all of the equity in their homes and little savings outside the home. They need money to live on. Either they have to sell their home which they have lived in for many years or find another solution.

Fortunately, Reverse Mortgage Loans offer another solution to moving, selling or renting a home. They can stay right were they are. They can avoid the stress of leaving the home they may have lived in for many years.

Here is how they work!

How Reverse Mortgage Loans work?

A reverse mortgage loan is the opposite of a traditional mortgage that you might have on your home. Instead of making monthly payments, you use the equity that you have built up in your home to generate income that you can use for personal use, paying bills and other living expenses, or just going on a trip or for medical expenses. Many seniors have a lot invested in their homes in terms of equity. They can draw on this equity from their home by using a reverse mortgage.

Eligibility for a Reverse Mortgage Loans

• Applicants and borrowers must be 62 years or older
• The applicant must own their own home outright, or have a low mortgage balance (any mortgage balance is paid off at closing with proceeds from the new reverse loan)
• There is no income restriction
• The home you are borrowing against must be the one you live in year round or in other words it must be your primary residence

Payment Disbursement Options

• Lump sum payment to you, after existing mortgage balance if any is repaid
• Monthly installments, based on repaying your existing mortgage first.
• Line of credit, which you can draw on as needed up to the approved amount

Additional Important Details Regarding Reverse Mortgage Loans

• You retain ownership and occupancy of your home
• Closing costs and fees can be financed as part of the loan
• When the loan is due, your heirs have choices: they can repay the loan and keep the house, or sell the house and repay the loan
• Interest is paid at the time the loan is repaid and the interest may be tax deductible (consult your tax adviser)
• You will never owe more than the current market value of your home

Reverse Mortgage Program Option

This is a financial option that may appeal to many homeowners who need money. As a result they would prefer to take advantage of this option instead of moving to an apartment or some other location. There are issues which people considering this option should take into account.

Issues

• Use a lawyer to make sure that the mortgage is properly recorded
• Use a bank that offers these mortgages
• Avoid using firms that may not be recognized by the Federal Government
• Recognize that when you finally do sell, there will be less equity available
• Take Reverse Mortgage Loans into account when planning your estate
• Consult with an expert financial planner , bank manager prior to making a decision
• Consult with several experts to get more than one opinion regarding Reverse Mortgage Loans