The reverse mortgage allows homeowners 62 and older to borrow against the equity of their home and continue to live in them without having to make payments, as long as the home remains their primary residence.  Interest is added to the loan balance which must be repaid after the borrower moves out or dies.  The borrower must keep current with property taxes and insurance.

 In a report released last month by Met Life Mature Market Institute and the National Council on Aging showed that:

• Homeowners aged 62 to 64 are far more likely to take out a reverse mortgage than they were in 1999, even though they are borrowing less.
• The average age of borrowers who took the federally required reverse mortgage counseling was 71.5, down from 76 in 2000 and nearly 77 in 1990.
• Two-thirds of homeowners seeking reverse mortgages to lower debt levels.

 The majority of reverse mortgages come through the Department of Housing and Urban Development and are guaranteed by the Federal Housing Administration through a program called Home Equity Conversion Mortgages.

 Some experts caution retirees against reverse mortgages especially early in their retirement because they run the risk of depleting their equity in their most important asset.  Homeowners at or near retirement should work with a financial planner or estate lawyer to make sure their plan is clear for the next 20 years of living expenses.

This article is for information purposes only.  It is not intended to be legal, financial or tax advice by the Real Estate Geezer.  Always seek the advice of a competent legal, financial and/or tax professional.

Based on New York Times article

The new form and instructions follow major changes in November to the homebuyer credit by the Worker, Homeownership, and Business Assistance Act of 2009. The new law extended the credit to a broader range of home purchasers and added new documentation requirements to deter fraud and ensure taxpayers properly claim the credit.

With the release of Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and the related instructions, eligible homebuyers can now start to file their 2009 tax returns. Taxpayers claiming the homebuyer credit must file a paper tax return because of the added documentation requirements.

The IRS expects to start processing 2009 tax returns claiming the homebuyer credit in mid-February after it completes the updating and testing of systems to meet the law’s new requirements. The updates allow the IRS to put in place critical systemic checks to deter fraud related to the homebuyer credit.

Some of these early taxpayers claiming the homebuyer credit may see tax refunds take an additional two to three weeks.

In addition to filling out a Form 5405, all eligible homebuyers must include with their 2009 tax returns one of the following documents in order to receive the credit:

• A copy of the settlement statement showing all parties’ names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
• For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

In addition, the new law allows a long-time resident of the same main home to claim the homebuyer credit if they purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS has stepped up compliance checks involving the homebuyer credit, and it encouraged homebuyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:

• Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
• Property tax records or
• Homeowner’s insurance records.

The IRS also reminded homebuyers that the new documentation requirements mean that taxpayers claiming the credit cannot file electronically and must file paper returns. Taxpayers can still use IRS Free File to prepare their returns, but the returns must be printed out and sent to the IRS, along with all required documentation.

Normally, it takes about four to eight weeks to get a refund claimed on a complete and accurate paper return where all required documents are attached. For those homebuyers filing early, the IRS expects the first refunds based on the homebuyer credit will be issued toward the end of March.

The IRS encourages taxpayers to use direct deposit to speed their refund. In addition, taxpayers can use Where’s My Refund? on IRS.gov to track the status of their refund.

http://www.youtube.com/watch?v=GkzB03uuGlg

More details on claiming the credit can be found in the instructions to Form 5405, as well as on the First-Time Homebuyer Credit page on IRS.gov.

1974: KEG
2009: EKG

1974: Acid rock
2009: Acid reflux

1974: Moving to California because it’s cool
2009: Moving to California because it’s warm

1974: Trying to look like Marlon Brando or Liz Taylor
2009: Trying NOT to look like Marlon Brando or Liz Taylor

1974: Seeds and stems
2009: Roughage

1974: Hoping for a BMW
2009: Hoping for a BM

1974: The Grateful Dead
2009: Dr. Kevorkian

1974: Going to a new, hip joint
2009  Receiving a new hip joint

1974: Rolling Stones
2009: Kidney Stones

1974: Being called into the principal’s office
2009: Calling the principal’s office

1974: Screw the system
2009: Upgrade the system

1974: Disco
2009: Costco

1974: Parents begging you to get your hair cut
2009: Children begging you to get their heads shaved

1974: Passing the drivers’ test
2009: Passing the vision test

1974: Whatever
2009: Depends

Fed housing credit?

Local media has been commenting since last August that New Yorkers seem to be blasé about the Recovery Package offer of $8,000 toward a new home. However, it was so popular nationally that Congress has extended that, and added a $6,500 offer for current owners who move.

Well, I wouldn’t pass it up if I were in the home market right now, and put my team to work finding out what you might buy with that free cash. Some new furniture and décor are obvious choices, and almost everyone needs something for their new home.

Or you could use it for other kinds of fun. Given my favorite pastimes, I might figure out how many lovely restaurant meals I could savor, including cuisine hot spots my wife and I usually reserve for special occasions.

But you have many other options. For about $600 to $1,600 you could score a pair of trendy Christian Louboutin shoes or boots at Saks, which offers 96 choices at your fingertips. Or there’s the current Prada event with hot items coming up, now available for pre-orders. While at Sak’s you could also pick up a steal on men’s watches, such as Breil Milano’s stainless steel chronograph strap watch at $1,250.

Or how about a Hermes bag? For classic Hermes, you can’t go wrong with the Birkin bag, starting at $6,000. Here’s a entire blog dedicated to the Birkin.

Here’s a tidbit from a local fashion blog: “Katie Holmes & Suri: Spotted on Madison Avenue of New York, little Suri had her own pint-sized version of Mom’s orange Hermes shopping bag. Later on, Katie was seen with a rare burgundy Garden Party Handbag that looked more like a boarding bag. The Hermes handbag offset her black pencil skirt and red heels. With all the goodies that could be stuffed into that spacious bag, Holmes was ready for anything.” The Evelyne, starting a bit under $2,500, is très chic now.

You can toast your new home with a rare champagne.  Dom Perignon Oenotheque 1993 is just $399.00 per 750 ml. bottle, limited to one per customer at Astor Wines.  Salon Blanc de Blanc, Le Mesnil – 1997 is more expensive at $459.99, but in greater supply.  You can buy a case of 6 for $2621.94.

Does your new co-op or condo allow pooches?  How about using your savings for today’s most expensive, pure bred, a Samoyed, starting at $3,000 or an English Bulldog at around $2,500.  On the other hand, if you adopt a nice homeless puppy from a shelter approved by the Humane Society, you’ll have lots of money to buy dog food and a really fancy collar, $18 and up from wwww.muttropolis.com.

And let’s not forget the sports fans.  How about season tickets to the Yankees next year?  Despite the World Series victory, top prices will actually decline, with field level seats at $250 per game for season ticket holders, down from $325 this year.

How much more stimulated could you get?  Check out my November 2 post  for housing stimulus dates and details. Go, Feds!

• Manhattan residential real estate has performed better than the broader U.S. real estate market.
• Compared with losses of more than 40% for Los Angeles and San Francisco over the past few years, Miller Samuel reports in the third quarter 2009 Manhattan Residential Market Overview that the average price per square foot in Manhattan was $996 vs. $1289 as reported in the first quarter of 2008 , a price reduction of 23% from the peak.
• Third-quarter 2009 data show prices declined at a lower rate while transaction volume surged 46%, a sign that the Manhattan market is starting to find its bottom.
• As Donald Trump once said “It’s a water thing”. Manhattan is a landlocked island. While developers in most cities keep expanding outward, developers in Manhattan do not have this alternative.
• Wall Street firms are expected to pay a record $140 billion in bonuses this year according to The Wall Street Journal. Regardless of whether these bankers deserve their lavish bonuses, their payday will boost Manhattan real estate prices.

2 -Capital of the World

• Manhattan is a global must-see destination. Emerging markets like Brazil and China are creating wealth at a very high rate and churning out millionaires.
• New York is often the first international destination new millionaires from emerging countries want to visit. It’s also one of the first places where they want to buy investment property or a pied-a-terre.

3- Diversity of Industry

• Besides finance, New York has media, hospitality, advertising and professional services like law and accounting firms. These industries will be serving emerging-market economies and will benefit the local New York economy in terms of job creation and housing demand.
• If not for the diversity of the current New York City economy, the unemployment rate would be even higher than 10.3% that was reported in August.
• Sectors like education, health, leisure and hospitality have gained jobs, which partly offset the negative impact of the financial job losses.

4 -Quality of Life

• New York City is one of the safest cities in the US.
• The legal system is established and there is a better work-life balance compared with countries like China.
• Transportation in Manhattan via the Subway system is efficient and reduces commuting time for those living in Manhattan.
• The air in Manhattan is pristine compared to air in other global metropolises like Hong Kong.

Portions excerpted from NuWireInvestor reporting on a story written by Wei Min Tan of TheStreet.com

One of the city’s fastest-growing groups of residents is Baby Boomers (their clout is evidenced by the fact that their descriptor is usually capitalized, contrary to the basic rules of the English language).  Often empty nesters and retirees, many of these folks have been languishing in suburbia after raising their lovely children, missing the City’s vibrant culture.

Manhattan, of course, is arguably the biggest and best cultural center in America.  In fact, maybe, the world.  We have it all – whatever kind of entertainment you prefer, some of the world’s best museums, great opera, symphonies, jazz clubs, theater and more great restaurants than most of us will ever have the chance to dine in.

People 55 and older make up more than 20% of the borough’s population and they’re on the verge of a major growth spurt. While the elderly population increases across the city, Manhattan’s share is projected to increase 57.9 percent over 2000 to 2030, to 295,000 people 65 and older in 2030 according to the New York City Department For The Aging which published this report.

The figures are great news for anyone who’s a Boomer, empty nester or retiree.  It means Manhattan will continue to develop a fabulous array of the amenities you love the most.  You also have a great choice of homes, from beautifully-detailed pre-war apartments to new condos and lofts with in-house fitness and business centers.