BUYING A RETIREMENT HOME

Here ís an interesting statistic. The average lot size shrank in the last 10 years, ending in 2005 to about 8,847 square feet, or a little more than a fifth of an acre, according to U.S. government statistics.

The new lot in the suburbs is long and narrow with homes that are designed for more casual living. And if you will be living casually, what is the first thing to go? Chances are it is either the formal living room or large dining room. Both of these rooms are disappearing in favor of sun rooms, studies, and game rooms.

Sometimes it makes sense to finance your retirement home

So all these years you have saved so that, in retirement, you can be debt free. So it is a good idea to take another mortgage? Financial advisors sometimes say that, even if you do have the cash to buy your retirement home, it often makes sense to finance one.

Retirees with a high income might well be better off taking a conventional mortgage on their retirement home. That way they can take the interest deductions while keeping their investment capital diversified.

On the other hand, retirees can also put their own home equity to work financing a vacation home. You can refinance and take some cash out of your existing home to make the down payment on a vacation residence. Home equity can be the well for a down payment through refinancing, a home equity loan, or a home equity line of credit.

Buyers grow nest egg by buying retirement homes early

Real estate agents and financial planners across North America report an increase in couples aged 35 to 55 buying 'retirement homes.'

Financial planners quoted in The Wall Street Journal say they are helping younger buyers settle on places to call home that will appreciate in value. They say it's happening all over the U.S. From the Catskills to the Rockies and in Canada from the Maritimes to Vancouver. More young people are looking for lakefront property or country cabins. And they are willing to spend money to do it, from US$100,000 to US$500,000.

One theory is that younger buyers want to enjoy their money, not just stash it and watch it stack up. They may want to invest in their families and say buying a vacation or retirement home is a good way to do it.

Many of the affluent couples have already built up their emergency savings, are contributing both to their children's education plans and their own retirement plans. Now, they want to put money somewhere else.

Advisors quoted in Business Week say, even if you have the cash, financing a retirement home can make perfect sense. The interest is tax deductible, and a mortgage frees up cash for other investments allowing you to diversify your investments and lower your overall financial risk.Those who wait until they are ready to retire could find that mortgage interest rates are much higher than they are now.

Q. How can I finance a new home before our present home is sold?

A. If you have the right credit and the ready cash, you could make two mortgage payments until your old house sells. Another strategy is to take a short term, low interest Adjustable Rate Mortgage on your new house that will give you some breathing room while you find the best buyer for your home.

But this is often an unrealistic choice for homeowners who can't swing two mortgages. One rather obscure choice is known in commercial lending as a 'blanket mortgage.' In some cases, a blanket mortgage might help bridge the gap between your new property and your old one.

A blanket mortgage is a loan secured by two or more properties, sometimes making the loan payment lower than the total outlay on two or three individual mortgages. The borrower only has one payment and one closing. Usually this type of commercial loan is made to developers buying many lots at once. But in this case, it would combine your present mortgage and the mortgage on the home you want to buy.

When the first home is sold, part of the mortgage would be paid off, bringing your payments down to where you want them to be. It is possible that the lender will want to issue a release before the property is sold. If equity in the remaining property isn't high enough, a new mortgage (or mortgages) could be required.

Your local bank may not offer blanket mortgage since it is an unusual way to solve the problem you describe. As with any mortgage, be sure to check your costs, the terms of the loan, and interest rates carefully.

Bankers don't usually recommend blanket mortgages that secure multiple properties. The combined equity in several properties securing the mortgage could be high. In case of a personal disaster leading to foreclosure, the borrower might not recover full equity. But, for some buyers with special circumstances, this obscure financing method could work.

New ARMs have long term fixed rates

As the interest rates on 30 year mortgages climb more buyers are considering adjustable rate mortgages. But these mortgages are not the kind that raise interest after one or two years.

Bank of America Corp., for one, says it offers hybrid ARMs that carry a fixed rate for the first three, five, seven, or 10 years, then adjust annually. With that many years to build equity, borrowers will be able to switch to a fixed rate mortgage by the time the ARM rate runs out.

One key to being able to buy a fixed rate instrument at the end of the ARM period is to make a proper down payment. It should be 20 percent but could be as low as 10 percent. The original ARM should not be a no down payment deal.

Romantic Roof - All about gable

An old and rusty house, known for its seven 'acutely peaked' gables, each facing a point on the compass was the setting for Nathanial Hawthorne's haunting classic "The House of the Seven Gables."

In North America, from 1830 on, gables have been a prominent
feature in home architecture. Early gothic revival styles featured many gables (triangular peaks formed by the sloping roof) with prominent decorative windows set below. Even in modern home architecture, you can still see the romantic influence of the gothic builders in new homes featuring many peaks.

The most common alternative to gables is the hip roof, where all sides of the roof slope gently down to the walls. More difficult to build, the hip roof can be more expensive than a gabled roof but it has several advantages. The walls in a hipped roof home are easier to build, since they are all the same height. The hip roof extends out over the outer walls with consistent eaves. These eaves not only look good, they protect the outer walls from the sun and easily hold gutters. Nonetheless, no hip roof yet has inspired a gothic romance or ghost story.

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