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Buy a retirement home with no monthly payments

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I have to go to real estate classes to get points for my license renewal. A few weeks ago I had a free day and went to a class about how to buy a retirement home using a reverse mortgage. It was more interesting than I expected.

There is an FHA program called a Home Equity Conversion Mortgage for Purchase. With a large down payment, usually around 50%, you can buy a house with no monthly payments as long as you live in the home. There is of course a monthly charge that gradually eats up the 50% or so equity you have in your house but at the same time the house should be appreciating in value to offset that to some degree.

Why would anyone do this ? A lot of people don’t want a mortgage payment for cash flow reasons on a fixed income. Others don’t want all their cash tied up in a house but don’t want mortgage payments either. Some buyers may have a sizable amount of money from the sale of another home say $100K. However a $100K home usually needs a fair amount of work. Using a HECM the buyer could buy a much newer totally move in ready home in the $175-$200K range with no monthly payments.

What are the negatives ? You gradually lose equity in the home. The closing costs are higher than a traditional loan. The interest rate is higher too.

This isn’t for everyone. Consult your financial planner.

Who says Ocala ain’t got no Arts and Culture

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I sometimes get people asking me about arts, culture, music, adult learning and movies in the Ocala Marion county area so I’m posting a few links to sites of interest.

Posted in no particular order.

Circle Square Cultural Center

Feel Downtown Ocala

Ocala Symphony Orchestra

Marion Chamber Music Society

Reilly Arts Center

Fine Arts for Ocala

Regal Cinema Imax

Marion Theatre

Ocala Drive In

Appleton Museum

Master the Possibilities

The Orange Blossom Opry

 

Ocala 55+ homes with a view

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view looking down Oak Run golf course

All 55+ homes in the Ocala area are on small lots and the homes are close together side by side. Builders do this because retired people don’t want to maintain a big yard and so they can fit as many homes on an acre of land as possible in order to pay for things like clubhouses pools and a golf course.

A lot of buyers can accept a small lot if there is a view or some privacy directly in back that they see while sitting on their Lanai. There are 3 options.

A water view. This would be a very hard to find view of a pond on a golf course. There are no 55+ communities in Marion County on a lake.

A golf course view. There are quite a few homes with a view of the golf course. Builders sell these lots at a premium when new and build communities to maximize golf course lots.

A view of a wooded area. These homes would usually be on the perimeter of the community. An exception is Oak Run which unlike other 55+ was not built with parallel streets. The streets are more laid out in circles allowing more privacy.

Some times you might find some sort of hedge or planting and there are huge open drainage areas that have privacy but are not a real view in my opinion.

Other than golf course frontage I can not search on private back yards. The only way to determine this is by pictures on the MLS and the map feature which often has a birdseye view of the listing

New home prices in Ocala Florida

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Below is an article I saw in the Florida Realtors newsletter that I get every day. It talks about new home prices and how builders can’t afford to build lower priced homes. I think this is something buyers don’t understand. This is especially important to understanding new and newer home prices in Ocala. When the real estate market crashed in 2007 home prices fell too low for builders to build new homes. No one started a major new subdivision until just last year. Many resales were selling for $70 to $90 sqft of living area when new home builders need $110 to $130 sqft minimum to make money. This shows that prices don’t just go down for new homes builders stop building. There still are lower priced homes here but they are from the 80’s to the early 2000’s. Newer homes, 2004+, are at a premium as so few new homes were built during the Great Recession. That is not to say newer home prices here in Ocala are high. In fact they are quite low compared to some other parts of the country.

Lower-priced homes ? Builders can’t do it

CHICAGO – June 13, 2016 – Builders find it increasingly difficult to build a home for under $150,000, despite rising consumer demand for more affordable home options.

The median sales price of a new single-family home in 2015 was just under $300,000, according to the National Association of Home Builders; and about 78 percent of new homes were priced between $150,000 and $500,000. Less than 6 percent were priced under $150,000, and an even smaller share was priced under $100,000.

Yet, a 2015 Home Buyer Preference Survey conducted by NAHB shows that 31 percent of recent or prospective home shoppers say they expect to pay less than $150,000 for a home. Fifteen percent expect to pay under $100,000.

“The costs of acquiring land, developing it into a lot and constructing a home on it often make it impossible to produce a new home at a price substantially below $150,000,” NAHB notes on its blog, Eye on Housing.

Government regulation on a new home alone accounts for 24.3 percent of the price of the home – or about $84,000 based on the average new-home price.

“Cost factors like these leave little mystery about why the lower 30 percent of the home buying public is often restricted to the market for existing homes,” NAHB notes.

Source: “New House Price Data Shows Why Costs Are a Problem,” National Association of Home Builders’ Eye on Housing blog (June 6, 2016)

© Copyright 2016 INFORMATION, INC. Bethesda, MD (301) 215-4688

New Testimonials Page

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I recently updated my web site and blog to work better on phones and tablets. That is something Google is pushing and should help with my search ranking. Any way during the process I added a page where buyers can write testimonials. I expected maybe buyers might write a short note saying they were happy with me. To my surprise most people wrote an almost short story about their experience buying a home with me here in Ocala.

http://www.ocalahousehunter.com/real-estate/testimonials/

You can only have 1 homestead deduction in Florida

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This is an article about a recent court decision where a couple wanted to claim homestead deductions on 2 homes in 2 different states one being here in Florida.

Court upholds homestead exemption restrictions

 TALLAHASSEE, Fla. – March 30, 2016 – Venice Endsley and her husband, Robert, had what a court described as an “intact, congenial marriage” for more than 60 years.

In the 1980s, Venice Endsley signed over her rights to a home in Huntington, Ind., to her husband. In turn, Robert Endsley signed over his rights to a home in Lauderdale-By-The-Sea to his wife. Venice Endsley had a homestead exemption on the Florida home, while her husband received a similar exemption on the Indiana home.

But the Broward County property appraiser learned of the arrangement in 2006, leading to a dispute that resulted Wednesday in an appeals court ruling that Venice Endsley was not entitled to receive the Florida homestead exemption. In doing so, the court waded into questions about whether state law only barred multiple homestead exemptions in Florida – or whether the prohibition also addresses properties in other states.

A three-judge panel of the 4th District Court of Appeal, pointing to a provision in the Florida Constitution, upheld a decision by a Broward County circuit judge, who found that the Endsleys were a “single family unit and could not claim separate homestead exemptions,” according to last Wednesday’s ruling.

Read more

Ocala deed restrictions

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junk car and over grown lawn in front of home's garage

I get asked a lot about Ocala area deed restrictions. Let me start by saying that no one dislikes authority figures or being told what to do more than me. However, as you can see from the picture above there are good reasons for deed restrictions. Try selling your house if you live next door to that guy. I took this picture while walking my dog in the neighborhood next to where I live.

If there is a mandatory HOA you should be given a copy of the deed restrictions to read before making an offer. Most are pretty much common sense like no mobile homes or that you can’t park your RV or boat on the front lawn. Others might bother some people.  For example, you can only put up a certain kind of fence or you can’t have a shed in your back yard. Adult communities with 55+ restrictions are another example.

If you can’t imagine living with deed restrictions you do have options in the Ocala area. There are a number of sub divisions with either no or very few deed restrictions. There are older communities that have let them expire. There is also agricultural zoning but if the house is in a sub division the zoning can be over ridden by the deed restrictions.

 

Factors that influence a homes price in Ocala

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These are factors that account for a homes price in our Ocala real estate market.

Age Homes prior to the mid 90’s do not have today’s open floor plans. Older homes are broken up more into rooms. The kitchen is a separate room from the living room as opposed to new homes where the kitchen and living room are actually a single room divided by a large kitchen island. Older homes are also more expensive to insure because they do not meet the newest building codes.

Size Kind of obvious. Less expensive homes are also smaller.

Garage Most homes here have a 2 car attached garage but smaller older homes have a 1 car garage and sometimes even a carport.

Construction Method Concrete block with a stucco finish is considered superior in this area. In most cases frame homes with stucco or some sort of siding like vinyl or aluminum  sell for less money.

Location Similar homes will be priced differently due to the desirability of the community.

Homeowners Insurance and Roof Age

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In Florida our very hot summers along with strong thunderstorms limit the useful life of a roof. Most insurance companies have a 20 year cut off point with some going as low as 15 years where they will not insure a home. This is true for even architectural shingle roofs with a 30 year warranty. My home is a 1998 with a 30 year architectural shingle roof and when I decided to look for a different company that my present one I discovered that many Florida insurance companies were not interested in my business. I did find a new company but my choices were more limited than I expected.

Roof age is a consideration in buying a resale home. The seller is not expected to replace a roof just because it is old. The age of a home is already factored into the list price. If a home inspector says the roof is at the end of it’s life but does not leak then that is not a defect under the florida real estate contract. Many homes between 1995 and 1999 are either due for a new roof or getting close. When showing homes I always point out the age of the home as shown on the MLS printout to make my buyers aware of the home’s age.

Reasonable Expectations in Home Buying

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I had a buyer recently who thought a home that was built in 2004 needed a new air conditioner even though it was in working condition. My buyer thought that she should deduct from the list price the cost of a new AC along with a laundry list of renovations that she needed to make the house more to her liking in determining her offer. Not only did she want a new AC but the most expensive Trane model made. I thought the home was in pretty pristine condition and it is normal for a home that age to have an original AC unit. I showed her sold comps from the past 3 months to determine fair market value. Homes in that community consistently sold for $5K to $10K off list price. The home we were looking at was priced right. Her offer based on her needed upgrades was $20K off list price. Needless to say the seller thought she was crazy and we were unable to make a deal. I’m telling this story for a couple of reasons. If the list price of a house is correct it already takes into account the age of the home and the community where it is located. You can’t just ignore sold comparables and make up an offer based on nothing other than your personal opinion.