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Ask Our Broker

most of your home investment AD / SPONSORSHIP Ask Our Broker Does paying the mortgage principle

Does paying the mortgage principle early make future interest charges disappear?

principle early make future interest charges disappear? Q: A friend says if I pay the mortgage

Q: A friend says if I pay the mortgage and interest each month, and include the principal for the next month, then I don’t have to pay the interest on that month’s payment. He explained that the mortgage company cannot charge

interest for a payment that was received early. Is there any truth to this?

A: Let’s say you have the right to prepay your 30-year

mortgage, in whole or in part, without penalty. Let’s also say that each payment coupon has a line so that you easily can make an additional principal payment. Suppose you pay an extra $50.This means your total debt has been reduced by $50 for the remaining loan term.You are NOT excused from making your next month- ly payment; instead, your loan

will end in less than 30 years. Imagine that you borrow $150,000 at 6.25 percent over 30 years.Your monthly payment will be $923.58 for principal and interest. Now imagine that you pay an addi-

tional $50 per month, every month.The loan will be paid off in 312 months (26 years). The shorter loan term will save you $44,332 (48 months x

$923.58).

Notice in this example that no payments were missed. If you miss a monthly payment you can face a late fee, as well as a bad mark on your credit report. Potentially, you can be foreclosed.

You are not excusedfrom payment; your loantermwill endearlier

Q: In 2005 my house could have sold for $500,000. Today I will be lucky if I get $425,000. If it does sell at that price or thereabouts, then after all expenses I will walk away with $15,000. I have been told that real estate has a seven-year cycle, and that we have been in the current cycle for two years. Five more years? Does that sound right?

A: As they say on Wall Street, past performance does not guarantee future results.There is no way to know what the future will bring. Certainly if real estate in all places and at all times followed a seven-year schedule we all would know when to buy and when to sell. Before going further speak with local brokers and ask about trends in your community.Are the population and

See ASK OUR BROKER, Page 2

“We Need to Be Ready to Sell – Fast!”

THE OWNERS OF THIS RANCH-

STYLE home really lucked out on their purchase.They had been focusing on a certain upscale neighborhood so that their chil- dren could attend school in its nationally ranked system.They also wanted “a dog”that they could fix up and then sell at a profit in a few years.The prices of homes in the area were fairly volatile and bought just as hous- ing values had hit a multi-year

MAKEOVERS

by Kit Davey

low. Although they were able to purchase a home in their desired neighborhood, they didn’t have too much money leftover for new furnishings.They had man- aged to sprinkle a few pieces throughout the house, but the furnishings didn’t enhance their

million-dollar property. By the time they called me, prices were starting to climb again and they thought they should get the house ready to sell in case they decided to flip it. The living room was the activ- ity center of the house – where they ate, watched TV and did

office work. It’s OK to live that way, but it definitely wouldn’t make a good impression if poten- tial buyers came to visit. Our goal was to transform the living room into a formal entertaining space without spending any money on new furniture.

BEFORE

• It looked like a college kid

See MAKEOVER, Page 2

• It looked like a college kid See MAKEOVER , Page 2 Strength in numbers: An

Strength in numbers: An established social environment is one of the many perks of adult-living communities, which are targeted to many groups of seniors.

Golden Years

For baby boomers turning their eyes toward adult-living communities, knowing what to look for is key to discovering a personal El Dorado

By Charles Scutt CTW Features

T he “old folks home”of yesteryear is pre-

cisely that – out of date.Instead,today’s

graying homebuyers are packing up and

moving into active-adult subdivisions,age- restricted developments and assisted-living communities designed to treat older and retire- ment-age buyers with respect,dignity and plen- ty of pampering amenities. As of 2005,the U.S.Census reports that there are over 78 million baby boomers (those born between 1946 and 1964).The oldest among them now are into their 60s and per-

haps preparing to retire,if they haven’t already.Based on results of a 2003 survey con- ducted by Del Webb,a Bloomfield Hills,Mich.- based developer of active-adult communities, nearly six of 10 boomers are likely to move to a new home for retirement.And experts like San Francisco-based business consultant Nan Andrews Amish say that many of these new homes will be located within active-adult or age-restricted/targeted developments. According to Amish,the term active-adult implies physical activities,such as golf,cycling and other fitness pursuits;age-targeted means that the target market is,for example,55 and older;and age-restricted does not allow pri-

mary residents to be below the an indicated restricted age.These types of communities typically offer attached or single-family resi- dences along with a variety of popular lifestyle perks – from clubhouse activities to planned social outings to on-site dry cleaning. “Active-adult communities offer mainte- nance-free living with a wide range of lifestyle features,”says James Davis,president and CEO of The Amsterdam House Continuing Care Retirement Community,Inc.,Port Washington, N.Y.“This includes exterior and interior upkeep,landscaping and grounds care and

See GOLDEN YEARS Page 2

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MAKEOVERS

MAKEOVER

CONTINUEDFROMPAGE1

had camped out in the corner! A

folding chair is a definite no-no anywhere in a house on the mar- ket.The workspace had to go.

• A very large, unattractive TV

filled the corner (out of view on

the left, next to a fireplace) and a huge chair was set up straight across from it.The chair and ottoman blocked entry into the room and made it difficult to step up into the dining room.

• The typical house detritus

was strewn here and there. Clutter is a staging no-no!

AFTER

• Staging a home for sale is

about making a winning impres- sion on potential buyers, and buy- ers have certain expectations about how a living room should be set up.That means no exercise

AFTER
AFTER

machines, desks, sewing machines or TVs in view! We moved the workspace into one of the kid’s

room and freed up the wall for something better fit for a living room.We brought in a console table from elsewhere in the house to take its place. • We moved out the TV and put the big chair in its place.The couch and chair then created a simple conversation area and cleared the pathway to the dining room. • It took 5 minutes to put away the clutter. It’s best not to leave out magazines, remote controls and blankets when you’re show- ing a home for sale.We selected a few elegant accessories to dress the tables. The homeowners now had a

more formal living room that could still work as a family gather- ing. It definitely made their house more sale-ready – without spend- ing a dime on new furniture.

© CTW Features

Kit Davey, an interior design- er based in Redwood City, Calif., helps redecorate homes through the creative use

Calif., helps redecorate homes through the creative use of their existing furnishings.Send your questions to

of their existing furnishings.Send your questions to kit@ctwfeatures.com

BEFORE
BEFORE

GOLDEN YEARS

CONTINUEDFROMPAGE1

other services.” Davis says that many of these developments geared toward boomer buyers also are continuing- care retirement communities and life-care communities that provide priority access to future long-term health care – should residents ever need it – for an extra monthly fee. “Americans are redefining retire- ment as a time to rediscover pas- sions and explore new opportuni- ties,”says Davis.“Accordingly,this generation,more than any before it, is seeking new retirement options that cater to its vibrant lifestyle. People are excited to move into a community where they can take advantage of a long list of amenities under one roof,such as continuing- education classes,modern fitness centers,cultural and recreational trips,high-tech capabilities and spe- cial-interest groups.” People like these sorts of com-

munities “because they are still active and they still ‘think young,’ but now they have time on their hands which may look different than when they were in worka- holic mode,”says Amish.“In the event the almost-retired person is thinking of leaving existing neigh- bors,then purchasing in a new-con- struction neighborhood puts every- one in the same boat.Everyone is looking to meet their new neigh- bors at the same time – it’s like the first day of high school.” Additionally,older adult commu- nities offer quiet,which is attrac- tive to folks who don’t want to wake up super early to make the morning rush anymore,Amish says. There may be better values to be found elsewhere,but these choices would not have the cohe- siveness of the new communities or the compatibility with similarly aged neighbors,Amish says. However,keep in mind that new-home prices and monthly assessment fees can be high in a new community geared to seniors. Another disadvantage can be the

lack of age diversity. “While it creates common inter- ests,the community can also lack varied perspectives and younger, healthier folks when you needs some ‘heavy lifting,’for example,” Amish says. Remember,too,that your resale is limited to buyers over 55,says Chad Young,president of Community Development,Inc., Indianapolis.Also,in an age-restrict- ed community,those under age 55 may not be permitted,while fami- lies with children are permitted in an age-targeted community,he says. “Those wanting to get away from the big wheels on the side- walks and the swing sets in the backyard may want to take this into consideration,”Young says. The key to selecting the right older-adult community is to find one “that matches your interests, health,lifestyle and,of course, budgetary constraints,”says Amish. “Planning for the future means tak- ing into account mobility issues as one ages.Ask yourself when shop- ping around,is it handicap friendly?

Is the home located on one floor? Are there elevators or ramps? Walk- in showers and grab bars? Are there services available to support transi- tions as one ages,such as cleaning services,assisted-living support,spa services such as massage for aging muscles,and exercise classes and fitness rooms?” Most seniors assume they will never need these things,but they will,Amish says.For example,the home should have wide doorways to accommodate a wheelchair.Well- lit paths are critical,too. The best advice,Davis says,“is to look beyond just the real estate aspect and focus on the complete lifestyle package.Does the commu- nity fit your needs now and in the future? Will living there encourage you to stay physically active,men- tally stimulated and socially con- nected? Does the community pro- vide you with a sense of security for your future,especially in terms of health care?”

© CTW Features

Ask Our Broker

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job base growing? What’s a reasonable rental for your property? And when you hear about a sure-fire formula that guarantees real estate results, hold onto your wallet.There’s no such thing, otherwise we all would be rich.

Q: Our current listing will expire in a cou- ple of weeks. I’m looking for a broker who specializes in my local area. I need someone who is competent and, most importantly, someone I can trust. My selling situation is somewhat complicated because our house will be divided after escrow between other parties – our attorney and a plaintiff – as per a court agreement. Any recommendations?

A: How profits will be divided does not make the sale more complicated.You need to find a buyer and then direct the settlement provider as to how you want the proceeds of the sale distrib- uted.To find a good local broker, speak with friends and neighbors who have recently bought or sold a nearby property, brokers who are active in your immediate neighborhood and brokers who are recommended by professionals you trust, such as your doctor, lawyer or CPA.

Q: We’re selling our home for approxi- mately $330,000. We are very confused about who pays what. Do we pay the broker? Does the buyer pay? Both parties? What percent- age or amount should we pay for real estate services?

A: Real estate fees and charges are not set by law.As a consumer, you should seek the package of services that best meets your needs. As to who pays for what, a typical arrangement would work like this: Owners agree to pay a list- ing broker to market their home.A portion of the listing fee is made available to other brokers who locate or represent a ready, willing and able buyer. However, there are a variety of approaches to broker compensation.A 2006 study by the National Association of Realtors shows that bro- kers were paid by sellers in 81 percent of all transactions, buyers paid in 5 percent of all sales, buyers and sellers both paid a portion of the fee in 8 percent of all transactions and 4 percent of buyers and sellers had “other”arrangements. Amazingly, 2 percent of the survey respondents did not know how the broker or brokers were paid. For specifics, ask several local, active brokers in your neighborhood to make listing presentations.

© CTW Features

Need real estate advice? Peter G.Miller, author of “The Common-Sense Mortgage,”would love to hear from you. Send your questions to peter@ctwfeatures.com. Due to

the volume received, not all letters may be answered.

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