The Anna Maria Island Sun Newspaper


Vol. 16 No. 2 - November 11, 2015

REAL ESTATE

To borrow or not to borrow – that is the question

 

The brave new world of modern day retirees doesn’t look anything like retirement did 60 years ago. Today’s retirees are signing up for extreme yoga classes, starting new careers and taking out home mortgages; and why not, with improved health care and life expectancy giving retirees decades of life ahead of them.

The first real estate agent I ever worked with told me she always advises young couples to take out the highest mortgage they can afford to pay back. Over 40 years ago, when the mortgage rates were approximately 8.5 percent, she knew that mortgage money is cheap, but never as cheap as it is right now.

Today’s retirees don’t give a hoot about carrying a home mortgage especially since per federal law there are no age restrictions on qualifying for a home mortgage as long as you can show you have the income to qualify. Getting qualified also doesn’t seem to be a problem with a combination of income from pensions, investments, Social Security and second career jobs.

Sixty years ago retirees’ did not have 401(k) plans to supplement their retirement and most did not invest in the stock market. And although they had some pension benefits and some Social Security it was important to pay off their home and not have a mortgage payment in order to survive the “golden” years.

But now it’s a new game and part of the change is because of low interest mortgage rates and high stock market returns making carrying a mortgage a better financial choice. In addition, according to a study released by Merrill Lynch earlier in the year 64 percent of today’s retirees say they are likely to move at least once. They also aren’t necessarily downsizing either. The study also found that 30 percent of retirees who move are relocating to larger homes to accommodate visiting family members and adult children who may be moving back. These days retirees who apply for home mortgages are frequently doing so because of a financial choice not a financial necessity.

That said, the retiree borrower still needs to show where their money is coming from. Typically mortgage lenders favor income over assets and borrowers need to prove they can make the monthly payments without cashing in assets. It is possible to schedule distributions of retirement assets on a consistent monthly basis in order to satisfy the lender’s monthly payment criteria. All of this should be analyzed with the help of a financial planner to help you decide the best course of action in your particular situation.

Even though we’ve come a long way in our retiree persona it still doesn’t change the fact that most retirees still prefer to own their home debt-free. According to the U.S. Bureau of Labor Statistics, 72 percent of American homeowners age 65 and over have fully paid off their mortgage. However, a decade ago this number was 79 percent and chances are the percentage is on its way down even more.

I guess the old tradition of placing the paid off mortgage in the newel post of the house’s stairway and sealing it with a button is out. The practice originated in New England in the 17th century and is basically considered a myth since there was no mortgage system at that time. But it’s not a myth that many in the current crop of retirees have no intention of paying off a mortgage and will never require a mortgage button, there goes another thriving industry.

Real Estate Transactions
August 2015

Sponsored by Alan Galletto Island Real Estate

Sold Date | List Price | Sold Price | Address | Provision | Property Style

Anna Maria

09-24 499,000 499,000 135 Crescent Dr. 1033 2 Br/2 Ba SFR
09-24 785,000 700,000 807 S Bay Blvd 1224 2 Br/2 Ba SFR
09-30 799,000 750,000 406 Magnolia Ave 1146 3 Br/2.5 Ba SFR
09-08 899,000 825,000 511 Spring Ave 1248 4 Br/2 Ba SFR
09-28 1,250,000 1,150,000 703 Fern St. 2675 3 Br/3.5 Ba SFR
09-30 429,000 375,000 218 Palm Ave 52x110 Lot

Bradenton Beach

09-30 389,900 396,000 110 11th S St # A 1435 2 Br/2 Ba SFR
09-16 475,000 425,000 2516 Avenue C, #A&B 1600 50x100 4 Br/4 Ba SFR
09-18 158,000 155,000 611 Gulf N Dr. # C13 745 1 Br/1 Ba Condo
09-11 209,000 205,000 2315 Avenue C # 3 488 1 Br/1 Ba Condo
09-01 267,900 275,000 1801 Gulf N Dr. # 214 1080 2 Br/2 Ba Condo, REO/Bank Owned
09-23 314,000 310,000 1301 Bay N Dr. # 8b 1079 2 Br/2 Ba Condo
09-23 459,900 425,000 224 17th St. # 224 1268 2 Br/2 Ba Condo
09-30 499,900 485,000 1205 Gulf N Dr. # 100 1449 2 Br/2 Ba Condo
09-04 649,900 639,900 101 10th N St # 101 2020 50 X 100 3 Br/2.5 Ba CondoNone
09-24 349,900 352,000 109 S 7th St. 220 Inc., Auction / Reo

Holmes Beach

09-15 595,500 530,000 234 N 85th St. 1715 3 Br/2 Ba SFR
09-18 589,900 580,000 516 58th St. 1226 3 Br/2 Ba SFR
09-14 600,000 600,000 203 71st St. 1596 59x105 4 Br/2 Ba SFR
09-28 625,000 608,600 401 75th St. 1656 3 Br/2 Ba SFR
09-04 645,000 625,000 616 Dundee Ln. 1932 2 Br/2 Ba SFR
09-25 1,049,000 937,500 726 Key Royale Dr. 2754 3 Br/2.5 Ba SFR
09-24 1,750,000 1,610,000 528 75th St. 3344 4 Br/4 Ba SFR
09-24 799,000 730,000 103 73rd St. 1938 58x106 SFR
09-25 265,000 255,000 3601 E Bay Dr. # 213 931 2 Br/2 Ba Condo
09-28 299,900 290,000 201 35th St 3 630 1 Br/1 Ba Condo
09-02 339,000 315,000 3301 Gulf Dr. # 5 700 2 Br/1 Ba Condo
09-15 324,000 315,000 3301 Gulf Dr. # 8 700 2 Br/1 Ba Condo
09-14 360,000 320,000 33 Seaside Ct 1278 2 Br/2 Ba Villa
4Plex 1,850,000 1,750,000 3718 Gulf Dr. 2886 187x53x164x50 Fourplex
09-25 339,900 345,000 6907 Holmes Blvd 1334 2 Br/2 Ba Half Duplex, REO/Bank Owned

Source: Mid Florida Multiple Listing Service


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