Archive
Guru Q&A: Is an Annuity Right for Me?
FiLife User Question: I draw social security and I work part time. My wife and I have rental property that we plan to sell when she retires in another 8 to 10 years. I rolled my 401K into an IRA when I retired. It has lost about 30% of its value this year. What guaranteed rate would I be able to get on an annuity? I don’t expect to start drawin the annuity for another 5 years. What is my best product?
-Lake
FiLife Guru Repsonse from Ali Rogers: Hi Lake, I’m the real estate guru, so I can’t directly answer your annuity question — someone else will have to jump in there — but I do want to provide a note of reassurance about that rental property!
The U.S. housing market is in the middle of a down cycle, but prices do typically recover, especially when you look at timeframes that are ten years long — make sure that you keep it insured and in good repair, and it will be a valuable chunk of your wife’s retirement when her turn comes.
FiLife User Repsonse from Lake: Thanks for answering my question. My wife and I too are real estate agents. I have decided to buy a model home (under construction) from a national builder and rent it back. They are willing to pay 25% above market rent. I plan on rolling my retirement IRA into it as a down payment (depending on what my accountant has to say).
FiLife Guru Response from Michael Kitces: There are a number of annuity products that may be helpful for you, but you need to be VERY careful to understand what is guaranteed and what is not.
In terms of annuities that provide a guaranteed RETURN (generally, fixed annuities), you will find that the rates are typically similar to CDs (although some annuities have been offering slightly better returns than CDs lately). Suffice it to say, you’re talking about typical fixed-income-oriented returns.
- Comments (0)
- Add a comment »
Guru Q&A: Suspected Mortgage Fraud
FiLife User Question: I bought a home brand new in 2007, and everything I was told about getting the mortgage was said to be normal practice. Now I am stuck with repairs and fixes that needed to be done and I have a high mortgage payment.
-BabyDolly
FiLife Guru Response from Ali Rogers: The mortgage guru might have things to add, but I’d start by following the link here.
That page tells you about different agencies that can help you.
FiLife Guru Repsonse from Steve Heideman: This is a difficult one. Ali’s suggestion of mortgage fraud resources are a good start. One thing that I would try as well is to contact the lender that you make your mortgage payments to. Mortgage fraud is very hard to prove. There are laws in place that make it difficult to prove fraud if you have signed your name to the mortgage documents. That is why it is VERY important to read everything before you sign it to make sure that:
1. It is what you were told you were getting
2. The payments are something that you can afford
One strategy that I use in my own practice is to get a copy of all loan documents to my clients a few days before their closing. That way, they have plenty of time to read them over and/or get an attorney to help them understand the nuances.
Remember, when you take out a mortgage, you are signing a contract that you will pay the interest rate and payments that are outlined in that document. Get informed! There are some good resources here on filife such as “The Grilling Guide” to help you arm yourself with knowledge before shopping for a mortgage.
-FiLife Gurus Ali Rogers and Steve Heideman
Looking for a mortgage? Find one here.
Guru Q&A: Does Renters Insurance Cover Mold and Marijuana Damage?
FiLife User Question: I have a rental home in Las Vegas that was raided because the renter was growing marijuana in the attic now there is a mold problem. Will my renters insurance cover the damage?
-spazz
FiLife Guru Answer: Probably not . . there’s a section called “Perils Insured Against” in your policy, so pull it out and read it . . mine specifically excludes “mold, fungus or wet rot.”
You are going to want to fix the problem quickly though — mold is one of those problems that gets worse the longer that you ignore it. I used a technician from All Tech Environmental to remediate my basement mold; I don’t know if they have a franchise in Nevada, but perhaps they can recommend someone.
You basically need to get rid of the existing mold through treatment, and then make sure there’s enough air circulation/sunshine so the problem doesn’t recur.
What the Bailout of Fannie and Freddie Means to You
As of this week, two amazing things happened: the Federal government moved to shore up mortgage agencies Fannie Mae and Freddie Mac, and Kate Moss’ line of clothes for British firm Topshop became available in the U.S.
The Fannie/Freddie news caused the best mortgage rates in a long time – we got a first day bounce down 3/8ths of a point - which rarely happens. (For ongoing rate moves, check out FiLife’s mortgage rate search.)
However, let me give you a word of consumer caution: not everyone who CAN buy skinny jeans SHOULD. God simply did not build all of us to look like Kate Moss.
Similarly, while lower mortgage rates are great for buyers, it doesn’t mean that every potential buyer should now rush headlong into the housing market.
If you were planning to buy anyway — let’s say you were already financially qualified — great, take advantage of the hot new fashion.
But if last week you were on the sidelines struggling to scrape together a 3% down payment, don’t try to squeeze yourself into the latest loan just because it’s cheap today. It’s still not really right for you, and, chances are, it won’t look that good on the back end.
-Alison Rogers, FiLife’s Real Estate Guru
Ask Your Real Estate Agent for a Break
Want a price break when selling your home? Try asking your agent.
According to a Consumer Reports survey released earlier this month, of the thousands of sellers who were interviewed who attempted to negotiate a break in real estate commissions, 71% succeeded.
Of course, you’re likely to get some pushback in this slow market. An agent will argue - correctly - that if homes take longer to sell, then he or she is investing more time, and wants to be paid for it.
Still, that doesn’t mean you have to pay the top rate. It’s like buying a car: the first thing you have to do is to ask for a discount off list. And according to Consumer Reports, more than half the sellers surveyed didn’t even bother to do that!
One more tip: once you’ve asked your real estate agent to justify his or her commission, get some specific commitments. If her response is “ads sell houses, and ads cost money,” get her to agree – in writing – to a specific number of classifieds or web banner ads that showcase your property.
–Alison Rogers, FiLife’s Real Estate Guru
* Have a real estate question? Ask Ali and read more of her answers here.