Comments on: Housing…A Smart Investment or Just a Place to Live? http://retirementreform-blog.com/housinga-smart-investment-or-just-a-place-to-live/ Social Security, Retirement Planning | NCPA Fri, 27 Aug 2010 16:18:36 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Equity Release Specialist http://retirementreform-blog.com/housinga-smart-investment-or-just-a-place-to-live/comment-page-1/#comment-372 Equity Release Specialist Mon, 02 Nov 2009 12:18:26 +0000 http://retirementreform-blog.com/?p=139#comment-372 I agree, especially for the US where the housing market is much more volatile than here in the UK, but that is to be expected given there is so much more land where you are! The average pension fund in the UK is approximately £40,000, which doesnt get you very much i can assure you. So there seems to be a growing trend here where people are now releasing the equity from their property through equity release schemes. With no negative equity guarantees in place and the ability to move home i believe it is a great option for some. I agree, especially for the US where the housing market is much more volatile than here in the UK, but that is to be expected given there is so much more land where you are! The average pension fund in the UK is approximately £40,000, which doesnt get you very much i can assure you. So there seems to be a growing trend here where people are now releasing the equity from their property through equity release schemes. With no negative equity guarantees in place and the ability to move home i believe it is a great option for some.

]]> By: Michael http://retirementreform-blog.com/housinga-smart-investment-or-just-a-place-to-live/comment-page-1/#comment-304 Michael Sun, 09 Aug 2009 05:37:36 +0000 http://retirementreform-blog.com/?p=139#comment-304 I think too many people forgot the "what you can afford" part in buying a home. Job losses haven't helped the situation either. So when it comes to buying a home "you can afford", and if their home did appreciate in value during the boom, then it is worth considering separating the appreciated equity for three reasons. Liquidity-The number one rule is to have access to your money when you need it, and in the event of a job loss, rather than paying down your mortgage creating equity that you can't get to, you have a safety net of funds to get you through that period. Safety-It's safer to have equity separated in the event of a natural disaster or housing bubble burst, because you control the funds. Rate of Return-Equity in the home has no rate of return. But separated, you give it the opportunity to earn interest. You don't separate equity for the deduction, but because it still factors in, consider if you borrowed $100K at 5% ($5,000/yr) on a 30 year fixed rate mortgage. In a 34% tax bracket, that is like borrowing at 2.5%! By simply reallocating $5,000/yr in IRA contributions, they get an equivalent tax deduction plus $100k compounding immediately for their retirement (and the liquidity if they lost their job.) It would take almost 20 years of saving $5,000/yr to even get to $100k. http://www.oganpresentation.com/ I think too many people forgot the “what you can afford” part in buying a home. Job losses haven’t helped the situation either.

So when it comes to buying a home “you can afford”, and if their home did appreciate in value during the boom, then it is worth considering separating the appreciated equity for three reasons.

Liquidity-The number one rule is to have access to your money when you need it, and in the event of a job loss, rather than paying down your mortgage creating equity that you can’t get to, you have a safety net of funds to get you through that period.

Safety-It’s safer to have equity separated in the event of a natural disaster or housing bubble burst, because you control the funds.

Rate of Return-Equity in the home has no rate of return. But separated, you give it the opportunity to earn interest.

You don’t separate equity for the deduction, but because it still factors in, consider if you borrowed $100K at 5% ($5,000/yr) on a 30 year fixed rate mortgage. In a 34% tax bracket, that is like borrowing at 2.5%! By simply reallocating $5,000/yr in IRA contributions, they get an equivalent tax deduction plus $100k compounding immediately for their retirement (and the liquidity if they lost their job.) It would take almost 20 years of saving $5,000/yr to even get to $100k.

http://www.oganpresentation.com/

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