National home prices were up slightly in February from a year ago — the first annual increase in more than three years — but are expected to give up those gains and more later this year, according to a report from First American CoreLogic.

First American CoreLogic’s LoanPerformance Home Price Index showed prices up 0.3 percent in February from a year ago, compared to a 0.5 percent year-over-year price decline in January.

The index currently shows a 30.6 percent decline in national home prices from an April 2006 peak, or 21.7 percent if distressed properties are excluded.

But home prices remain vulnerable to pressure from rising interest rates, “shadow inventory” and the pending expiration of the federal homebuyer tax credit, the report said.

The report predicts a softer recovery than previously projected, forecasting that expected gains in national home prices during the spring and summer will be wiped out in the second half of the year.

First American CoreLogic expects continued year-over-year price declines in 29 of 45 markets tracked in the reports, up from 14 in last month’s forecast.

Markets facing the biggest declines through February 2011 are Detroit (-16.4 percent), Seattle (-5.8 percent), Atlanta (-4.5 percent), Cleveland (-4.1 percent) and Indianapolis (-3.8 percent), the report said.

Markets that are expected to see price appreciation include Denver (5.2 percent), Las Vegas (5 percent), Riverside, CA (3 percent), and Houston (3 percent).

The LoanPerformance Home Price Index is projected to fall 3.4 percent during the year ending February 2011, based on expectations that inventories will grow as interest rates rise and the homebuyer tax credit expires.

The tax credit, along with foreclosure prevention programs and $1.25 trillion in purchases of mortgage-backed securities (MBS) by the Federal Reserve, have contributed to home price stabilization, the report said.

In a recent study, First American CoreLogic ran simulations measuring the impact of the expiration of the tax credit, concluding that home prices could see a 12-month decline of up to 4.2 percent if the the tax credit expires but might increase by up to 4.1 percent if it were extended.

But the Fed wrapped up its MBS purchases last month, and the homebuyer tax credit can only be claimed on homes under contract before May 1 and closing before July 1. The program has been credited with keeping mortgage rates at or near historic lows.

In an April 12 forecast, economists at the Mortgage Bankers Association projected that rates on 30-year fixed-rate mortgages will rise steadily for the next 2 1/2 years, to an average of 5.8 percent in the final quarter of 2010, 6.3 percent in the fourth quarter of 2011, and 6.6 percent in the fourth quarter of 2012.

In some analysts are pessimistic about the effect rising interest rates and the end of the homebuyer tax credit will have on home prices, consumers may be less concerned.

An online survey conducted from April 15-20 by Prudential Real Estate and Relocation Services Inc. found that 65 percent believe the end of the tax credits will have little or no effect on their interest in purchasing a home.

About 46 percent of consumers said they expected real estate prices in their area to increase over the next year, with 12 percent expecting prices will decline. Over the next five years, 79 percent expect real estate prices to increase, with 20 percent expecting that prices will increase substantially, the survey said.

There are many names for the Echo Boom generation: Gen Y, Generation Next, Net Generation, Millennials, Boomerang Generation and Trophy Generation, to name a few (OK, several).

Regardless of what you call them, the members of this generation are quickly coming of age; some are even starting to enter the housing market and there are many, many more to follow.

Echo boomers were born roughly between 1982-95 — they are largely the offspring of baby boomers.

Fast forward to 2010. There are approximately 76 million echo boomers between 15 and 28 years old, making them second in size only to the baby boomers (age and population figures cited here represent an approximation based upon information found in studies done by the National Association of Realtors, current U.S. Census data, Wikipedia, and various media sources).

According to current U.S. Census figures, 67.2 percent of this generation can be expected to become homeowners by their mid 30s, which equates to just over 35.5 million households (U.S. Census homeownership rates are calculated based on households, not people).

The National Association of Realtors’ 2009 Profile of Home Buyers and Sellers predicts that of this 35.5 million, 21 percent will be single female buyers, 12 percent will be single males, and 61 percent will be married couples or partners (couples/partners are counted as a single household).

It’s worth pointing out here that the aforementioned U.S. Census figures also state that since 1982, homeownership rates have fluctuated very little; anywhere between 64 percent and 69 percent during this 28-year span.

As you wrap your head around those figures, think about the impact that this generation is going to have on housing in the coming years. According to a recent economic report by Moody’s, builders are currently developing about 500,000 housing units a year.

Add into this equation that the echo boomers will be buying homes alongside repeat purchasers from other generations and you can quickly surmise that in the foreseeable future we are going to have a shortage of housing in the “more affordable” markets (where homes are priced at or below the area’s median price).
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Echo Boomers:  The Next Generation
Call them what you may…They’re here!

The onset of the echo boomers in the housing market is a stark reminder of how important our community’s growth-management plans are. The sheer size of the Echo Boom generation will have a powerful effect on housing demand over the next decade, but will there be enough homes to meet that demand?

Current studies say no, reinforcing the importance of implementing smart growth management NOW. The first wave of change will likely occur in the more affordable price ranges — especially in those areas that are close to job centers. Over time, the effect will fan out and be felt by the outer suburbs, causing a chain reaction of sales up the price points.

The Echo Boom generation has been defined as high-tech, high-touch, social-networking, iPod-listening natives of the digital realm who trust their peers’ advice over most forms of advertising. This is the generation that will likely find the home of their dreams on a 4G wi-max third-generation iPad and will contact their real estate agent via Twitter or text message.

But as foreign as some of this may sound to some of you, they are (and will be) homebuyers nonetheless, and real estate professionals and companies need to continue to adapt to this generation’s expectations and habits.

So, the moral of this story is that I believe that the echo boomers represent the silver lining for the real estate market and U.S. economy. That might be a lot of responsibility for a single generation, but they’re unarguably emerging as the next heavyweights in housing, and I might add: not a moment too soon.

Five things to consider in simplifying your move:

1. Start thinking about moving as soon as you can. The American Moving and Storage Association, a trade association, has created a “Moving Countdown Calendar” at Moving.org that suggests a timetable for specific chores in the two-month period leading up to the big day.

On it are such necessities as interviewing three movers for estimates (60 days ahead), starting to gather and organize important personal papers (45 days), reserving rental equipment if you’re moving yourself (30 days), and getting the car serviced if using it in the relocation (12 days). Start packing 28 days ahead, the chart says in bold letters.

2. Do you really need to be told to get rid of stuff beforehand? Apparently so.

“The big thing you hear about organizing — you hear it again and again — is worth repeating,” said Bill Sheehan, chief operating officer of Relocation.com, a referral site for finding professional movers. Sheehan himself has moved eight times in the past 12 years, and says he’s lost much of his inclination to accumulate possessions.

“People move junk all the time,” he says. “Get rid of it, because you’re going to pay for moving it.”

Sheehan’s firm says that, in a hypothetical move from New York to Los Angeles for a family with a three-bedroom house, 7,500 pounds of household goods typically would make the transcontinental journey. It assumed an average price tag of $6,500, though it said there were many factors that could affect those costs.

Get rid of 10 percent of your belongings before you go and you’ll knock $250 to $400 off the bill, the company estimated. Start “editing” your belongings by getting rid of clothes. Among your household goods, pack only items you’ve used in the past year, Sheehan said.

3. Third-party companies that will handle the chore of stopping and starting utility services abound on the Internet these days.

“These are one-stop shops,” Sheehan said. They can be time-savers.

“The advantage is that you can get bundled service — phone, electricity, cable all in one,” he said.

“The disadvantage is that a specific company has a specific bundle that you have to purchase,” he said. “Maybe you want DirecTV rather than cable from another provider.”

Allconnect.com and WhiteFence.com are among the utilities-connection services.

Another consideration: Some services may require submitting personal data that you’d rather not be sending out online, no matter how secure the service says it is.

4. Some of major moving companies have added “concierge” services that go beyond merely packing, moving and unpacking.

Mayflower and United, for instance, last year unveiled cleaning services available at your old or new house. In addition, in many locations they’ll do such things as network your computers or set up your home theater at the new place, or come back after you’ve settled in and remove unwanted boxes and packing debris.

Doing it all yourself? UHaul.com has a customer-to-customer message board for those looking to give away or acquire boxes.

5. Getting ripped off probably would count as the ultimate stressor in moving.

The typical sage advice is to get multiple bids from movers, which can vary by surprising amounts.

Sheehan said his company’s research shows that one of the biggest complaints after a move comes from customers who end up with a much bigger bill than expected.

“They say, they quoted me ‘X’ dollars and I went with them because they were the cheapest and they weren’t good,” Sheehan says. “Just because a company is the cheapest doesn’t mean it provides the best customer service.

“You need to go onto consumer Web sites and go to the Better Business Bureau to see if they have complaints,” he said. “All moving companies are probably going to have some complaints, so it’s worth going through them to figure out how serious they are. Do they have a few complaints, which is what you might expect, or do they have dozens?”

Further, he said, make sure the moving company is legit. There are many under-the-radar movers these days. You can ask to see proof that a mover is insured.

ProtectYourMove.gov is a site maintained by the Federal Motor Carrier Safety Administration; it offers extensive information on researching moving companies’ credentials and legal responsibilities toward consumers.

After mustering the emotional energy to make an offer on a listing, it can be devastating if you hear nothing back from the seller.

In most cases, if the offer isn’t what the sellers are looking for, they will issue a counteroffer detailing the price and terms they can live with. When a seller doesn’t respond at all to your offer, it’s usually because the offer is so low that the seller thinks it’s a waste of everyone’s time.

Ask your agent to talk to the listing agent to find out why the seller didn’t counter your offer. Then, make another offer if you think the house warrants a higher price. If the sellers want too much for their house, take a breather. Let the listing sit on the market awhile before you make another offer.

The risk of this approach is that another buyer could come into the picture who is willing to pay the sellers’ price. Nothing is lost if you wouldn’t have paid that price.

Your agent should keep in touch with the listing agent during your wait-and-see period. Ideally, you’d like to know if the sellers are going to reduce the price before it shows up on the multiple listing service. A price reduction to market value could elicit interest from multiple buyers.

Risk-averse sellers can be skittish about working with buyers who have a low cash downpayment. It’s wise to include a mortgage preapproval letter with your offer. Also, some sellers aren’t in a position to accept an offer that’s contingent on the sale of the buyers’ home.

Another reason buyers don’t receive counteroffers is because there were multiple offers. The sellers can accept only one offer in primary position. If there were five offers and yours was the lowest, you’re not likely to receive a counteroffer.

Multiple offers are occurring in low-inventory, high-demand markets. For example, DataQuick, a California-based research firm, reported that home sales dropped 4 percent in the San Francisco Bay Area in January 2010 compared to the same month one year ago. Inventories of homes for sales in some Bay Area communities are half of what they were last year at this time.

However, buyers were out early this year due to lower home prices, low interest rates and homebuyer tax credits. This supply-demand imbalance contributed to a 16.7 percent year-over-year increase in the median sale price in January, according to DataQuick. This imbalance will probably correct as more inventory comes on the market in spring, which is typically the most active home-selling period in terms of sales volume.

HOUSE HUNTING: A typical reaction from buyers who lose in a multiple-offer competition is that they would have paid more. When you’re competing against other buyers, you need to make your first offer your best offer. This seems counterintuitive because you run the risk of paying more than you might need to.

One way to ensure that you don’t pay too much is to include an appraisal contingency in your purchase offer. Generally, an appraisal contingency allows the buyers to withdraw from the contract if the house doesn’t appraise for the purchase price. In today’s wary lending environment, lenders are requiring appraisers to be conservative on appraisals, particularly in declining markets.

Be aware that some buyers in a competitive situation will not include an appraisal contingency in their contract. If they have a large enough cash downpayment and the appraisal value is less that the contract price, the lender may still approve a loan amount that will enable to the buyer to proceed with the sale.

THE CLOSING: Buyers who want a house badly enough will often pay more than the appraised value if they have enough cash to make up the shortfall.

To encourage distressed borrowers to agree to deeds-in-lieu of foreclosure, Fannie Mae is reducing the waiting period — from four years to two years — for them to become eligible for a new mortgage.

The new policy, which will apply to loan applications submitted after June 30, requires a minimum downpayment of 20 percent from borrowers who have agreed to a deed-in-lieu within the past two years. Borrowers with a deed-in-lieu in the past two to four years will be required to put 10 percent down to be considered for a Fannie Mae-backed loan.

Borrowers who lost their homes due to “extenuating circumstances” beyond their control — such as the loss of a job, illness or divorce — can put as little as 10 percent down after two years.

Those loan-to-value ratios will also apply to borrowers who have been involved in short sales and who were already subject to a two-year waiting period.

Bankruptcies and foreclosures are expected to damage millions of borrowers’ credit scores, leaving many unable to obtain a mortgage for years to com.

Fannie Mae generally requires five years for borrowers to re-establish credit after a foreclosure, but they may qualify in as soon as three years if they can document extenuating circumstances. The minimum wait for borrowers who have filed for bankruptcy is two to four years, depending on the type of relief sought.

Fannie Mae said the waiting periods for borrowers who have declared bankruptcy or been foreclosed on will remain in effect, and issued new guidance on requirements for re-establishing credit after a bankruptcy, foreclosure or deed-in-lieu of foreclosure.

After the waiting period has passed, only borrowers with traditional credit will be approved for loans, the policy said — nontraditional credit or “thin files” will not be accepted.

Borrowers who have filed for Chapter 7 bankruptcy liquidation must generally wait for four years after closure of the bankruptcy proceeding before Fannie Mae will consider them for a loan. The waiting period can be as short as if extenuating circumstances can be shown.

Those who have paid off all or part of their debts through a Chapter 13 bankruptcy filing may be eligible within two years of having their cases discharged. If they fail to complete their Chapter 13 plan, they are required to wait four years after their case is dismissed.

Ginny… I owe about $150,000 more on my home than it’s currently worth, and my hours were recently cut back at work. I applied for the Obama Home Affordable modification, and after many months my lender refused to give me a permanent modification. However, my sister and her husband were interested in buying my house from me. So, we worked with a real estate agent to put together the short-sale application and my sister’s offer to buy the place.

After about five months, the bank approved the price and my sister paid for an appraisal. Then, at the last minute, the bank’s negotiator asked me if I knew the buyers or was related to them, and I explained that the buyers were my sister and brother-in-law. The bank canceled the whole deal, and now it looks like I’m going to lose the house to foreclosure!

I don’t understand why they care who the money comes from. I really feel disgusted, and wonder if my real estate agent should have been able to anticipate this problem from the beginning, when I might have still had enough time to find another buyer.  Am I off base here? Jan A., Phoenix

Jan… Short answer: No, you’re not.

Longer answer: It’s not the case that the bank cares who the money comes from, per se. Rather, the bank cares about ensuring that it is getting the full fair market value for your home, and not taking any more of a loss on your home than necessary. Remember, the bank is always of the mind that if a modification or short sale fails, it’ll end up owning your home as a foreclosure.

While we’ve all hear the party line that your bank doesn’t want to own your home, it would absolutely rather own your home and resell it at its full value on today’s market than authorize a short sale at a price significantly less than that.

The bank has several ways of assuring itself that the price it accepts on a short sale is as close as possible to the home’s fair market value. One is to obtain documentation that your agent listed the home on the open market. Another is to request to see all offers that have been made to purchase the property, where more than one offer was received. Yet another is to compare the offered purchase price against a value estimate procured from a real estate broker or agent of the bank’s choosing, called a broker price opinion or BPO. (The formal appraisal done in a short sale is for the benefit of the buyer’s bank, not the seller’s.)

One additional guideline every bank and mortgage servicer puts in place to help assure its investors that they are receiving a fair market value for the asset (i.e., your home) is to require that all transactions be “arm’s-length” transactions. This simply means that the parties are not related, either by family relation or by contract.

In a short sale, this arm’s-length transaction requirement is meant as another check to make sure you’re not cutting your relative a sweet deal, at the bank’s expense. It’s also intended to deter fraud by diminishing the likelihood that you are, say, short-selling your home to your sister at a super-low price, and then continuing to live in it or buying it back from her — again, at your mortgage servicer’s expense.

As you can see, what sounds like a pretty bizarre requirement that short sales be arm’s-length transactions — in your case, a prohibition on short-selling your home to your sister — actually is grounded in a reasonable effort to prevent fraud and the wholesale short selling of homes to friends and relatives in an effort to turn upside-down equity positions right side up, at the lender’s loss.

Now to the question of whether this snafu was avoidable. With the caveat that I’m not aware of what information your agent did or did not possess, what warnings she did or did not issue, or what she represented (or did not represent) in terms of her familiarity with short sales. I will say that the average short-sale agent is aware of the arm’s-length transaction requirement.

Generally speaking, an agent would warn clients up front upon learning that an interested buyer was a relative, that the lender would be extremely unlikely to approve such a short sale — so unlikely that it would behoove you to market your home for sale on the open market and seek out offers from unrelated parties, if indeed you desired to do a short sale in order to avoid foreclosure.

However, I have seen time and time again where sellers choose to work with a friend who is a full-time nurse, say, but also has a real estate license, to do these sorts of deals and end up paying for it.

The reality of today’s market is that it changes so rapidly and that only agents who do these specialized transactions on a regular basis can stay sufficiently up to speed on lender’s guidelines and short-sale success strategies to give you the full scope of advice, troubleshooting and strategy your short sale takes to get the deal done.

For just about anyone, a home is the single most expensive and single most complex thing that you’ll ever own. So when making that purchase, you certainly want to do everything possible to be an informed buyer, and to protect yourself and your investment.

One of the ways to do that is to have a home inspection prior to closing the deal on the purchase. A home inspection will give you a lot of information about the physical condition of the home you’re considering buying, and should alert you to any potentially serious problems that you need to be aware of.

But as a potential homebuyer, it’s important that you understand what a home inspection is, and what it isn’t. There are certain things that you can legitimately expect your inspection to provide for you, and certain things that it won’t. And you also need to understand that the more you participate in the inspection process, the more you’ll get out of it in return.

Finally, understand that just like there are good and bad contractors and real estate agents, there are also good and bad home inspectors. Expect to have to do a little homework to find one of the good ones.

What is a home inspection?

A home inspection is a visual inspection of the home you’re thinking of purchasing, performed by an objective third-party inspector. The inspector will examine the physical structure of the home from top to bottom, as well as the home’s operating systems. Typically, a home inspector will look at the following things:

* Outside: the exterior home site; general condition of the foundation and basement walls; condition of the exterior walls, including the siding, exterior trim, windows, exterior doors and exterior paint; type and condition of the roofing; condition of gutters, downspouts, flashings and vents.

* Inside: the condition of the attic, roof support structure, attic insulation and attic moisture issues; condition of the basement and crawl space, including insulation and moisture issues; garage and carport; electrical system; visible plumbing system; heating, cooling and ventilation system; general interior condition of the home.

A short time after the end of the inspection you’ll receive a written report detailing the inspector’s findings. Any defects the inspector identified will be noted. Inspectors should never attempt to sell you anything, such as their services to come in and fix anything that was identified in the report. To do so would be a clear conflict of interest.

It’s important to understand that inspectors do not do what is known as “destructive testing.” In other words: they don’t cut holes in walls or otherwise open up inaccessible areas in order to look inside. Everything is based on their visual inspection of whatever they have access to. They’re also not there to comment on anything that’s readily apparent from a cosmetic standpoint, such as a sloppy paint job.

What types of things does the inspection not cover?

It’s equally important to understand what a home inspection doesn’t cover, because this is where you need to be sure that you continue with your due diligence when you’re buying your home. For example, your home inspector will point out any obvious signs of visible mold or mildew in the home. However, he will not be performing any type of actual mold inspection. If you suspect a mold infestation in the home, you need to have testing done by a trained hygienist.

Home inspectors will point out structural problems that have been caused by insect damage. But they’re not there to perform a complete termite inspection. They also don’t do inspections for the condition of the well, septic tank, or any type of soil contaminants.

You also need to be very aware of the fact that a home inspection has nothing to do with code violations or zoning issues. You need to check those things out for yourself with the local building and planning offices. It’s up to you to assure yourself that any prior work on the house was done with the necessary building permits.

It’s also up to you to check that there are not any issues when it comes to how the house is currently zoned, or how the current zoning might affect your use of the property in the future.

What do you need to do?

You have a couple of other responsibilities in this process as well. First of all, know who your inspector is, and what’s required of him. Different states have different regulations pertaining to how home inspectors are regulated, so find out what’s required.

Interview the inspector before you hire him. Be sure he complies with all those requirements, including whatever license, insurance and bond is needed. Ask for and verify references. Ask for and read a sample report. Be sure it gives you the type of information you need, in a format you can understand. Find out if the inspector belongs to any professional trade organizations, and what their standards and codes of ethics are.

The other important thing is that you need to attend the inspection. Follow the inspector around, even up into the attic and into the crawlspace if you’re physically able to do so. See what he’s looking at. Understand the potential problems. Ask questions and take notes. When you get your report, read it over from cover to cover at least twice, and be sure you understand it.

You paid for it, and it’s one of the most important documents you’ll ever have. So if you don’t understand any of it, be sure someone explains it to you.

Although not a new concept, fractionals, as with other vacation-home programs such as condotels and destination clubs, became very popular during the past decade, or at least before 2007 — a time when everyone had money to throw around at bad real estate investments.

On the face of it, a fractional seems to make sense. People generally use their vacation homes for about 25 to 35 days a year. The rest of the time the houses sit empty. The fractional idea was to purchase only the amount of time you would actually use a property. The difference between a timeshare and fractional was that with the latter you got an actual deed based on percentage utilization — so for all practical purposes this meant property ownership.

The downsides to this great concept were numerous, but I’ll just focus on four:

* Time management. In places such as Jackson Hole, everyone usually wants the same weeks: Christmas to New Year’s and seven to 14 days in the heart of the summer. No one really wants the rest of the year. So, how do you fairly allocate usage amongst fractional owners for prime time? Even if the management company figures out this conundrum, as a fractional owner you get prime time only every few years, not every year as you would want.

* No appreciation. No one likes complications in real estate investments, and fractionals are about as intricate as you can get because of the shared ownership. Historically, these don’t usually appreciate in value. No one makes money on a timeshare investment, which isn’t about real estate, and few, if any, make money on a fractional, which supposedly is.

* All cash. In the freewheeling finance markets before 2007, a mortgage could be found for just about any structure that had claim to a roof. After the subprime blowout, lenders became much more conservative and a mortgage for fractional ownership no longer could be obtained. For the past three years, if you wanted to buy into a fractional you had to come in with cash.

* For the developer. Fractionals, again like other vacation-home programs such as condotels, are great deals — but only for the developer. A study by Ernst & Young back in 2008 showed fractional developments were generating price premiums of 100 percent to 200 percent per square foot over full-ownership products. At the Four Seasons Teton Village, for example, a 2-bedroom/2-bathroom condo was on sale earlier this year at $1.8 million. Let’s say that was a reduced price because of the recession and the owner originally wanted $2 million. A one-seventh fractional ownership for a two-bedroom at the Four Seasons sold at peak at around $550,000. Do the math: Seven fractional sales would equal $3.85 million — a nice premium to the developer.

According to Hoffman, originally 32 of the 57 condominium units would be sold as fractionals, but within 12 months the Four Seasons made a very wise decision to end fractional sales. Now only 14 remain fractional and the other 43 condos were put on the market as whole units and sold out.

Condominium owners at the Four Seasons here in Teton Village can put their unit into the pool for hotel usage as in a condotel concept, or not. Let’s say you don’t. As a straight condominium there is a lot of value added because owners can use the facilities of this five-star hotel.

As it turned out, fractionals have had a rocky history in Jackson Hole. Also in Teton Village was another fractional property that Van Gelder says ended up in bankruptcy, and a nascent fractional development at Teton Pines that never really got off the ground.

Part of the problem with the reportedly bankrupted Teton Village project  was that it didn’t manage the prime-time problem well. As a result, the desirable weeks sold out fairly quickly, but that left gaping holes in the schedule. The developers were stuck with April and November, which are affectionately known as off-season and unaffectionately known as mud season.

The original plan was to develop 24 units, but only eight were built.

A number of investors who bought fractionals in Jackson Hole are now trying to get out. At the Four Seasons, unit pricing is now down about 40-50 percent. As for the other projec…Prices are all over the map. It’s not easy to get realistic numbers.

Jackson Hole is about as pretty a place as you can imagine with its glorious neighbors, Teton National Park and Yellowstone National Park. In the winter, the Teton Village ski mountain boasts an astounding 4,139 feet in vertical rise and an average of 459 inches of snowfall — in short, you won’t get bored skiing this mountain.

In the summer, the great outdoors is — literally — at your feet, whether you hike, camp or climb. So, a condominium here does make sense.

But, what about fractionals?

99.9 percent of the people (who) are purchasing shouldn’t look at a fractional product. It just doesn’t make a whole lot of sense unless you are buying a particular lifestyle (such as a Four Seasons lifestyle) and you are OK with the fact that you will never get any money out of your investment.

What many people have now — house, lifestyle, neighborhood, friends, church, clubs — is exactly what they’d like to keep.

Unfortunately, many older folks simply don’t know how or where to look to find the funds that would allow them to maintain the status quo. The immediate need for seniors now is supplementing the income to provide the standard of living they desire.

In the past, the typical reverse mortgage was taken out by a single woman, 75, who needed funds to fix up her home so she could comfortably age in place. Reverse mortgages now are also being used to support a more well-to-do routine.

For example, Frank Williams, 77, and his wife, Carla, own 35 weeks of timeshares each year in five different timeshare systems. They work points, bonus time and favored status like some people work airline miles. They know how to successfully maneuver through each different organization to gain the maximum overall benefit. They are actively filling in their timeshare schedule into calendar year 2022. Now that’s organization!

The Williamses took out a reverse mortgage on their principal residence in New Mexico not to buy more timeshare weeks, but to make sure they didn’t have to skimp getting to them, or cut back on activities once they arrived.

“I know a lot of people are skeptical about reverse mortgages, but it worked for us,” Frank said. “Our friends want to leave everything they have to their kids, and that’s OK. But we’re not primed to punish our kids by spending all of our money. Our kids are doing fine — they own their own homes, and would rather see us enjoy the rest of our lives.”

Consumers can choose how to receive the money from a reverse mortgage. The options include a lump sum, fixed monthly payments (for life), a line of credit, or a combination of the above. The most popular option, chosen by more than 60 percent of borrowers, is the line of credit, which allows consumers to draw on the loan proceeds at any time.

The size of the reverse mortgage depends on age at application, the loan type and home value. In general, the older the consumer and the more valuable the home (and the less amount owed), the larger the reverse mortgage.

A reverse mortgage can be viewed similar to a home equity loan but without a monthly payment. Owners do not repay the loan as long as the home remains the principal residence. Income and credit rating are not considered when qualifying for the loan. There is no requirement that owners requalify during the term of the reverse mortgage, yet property taxes and home insurance must remain current.

With a home equity loan, borrowers must make regular payments to repay the loan. These payments begin as soon as the loan is originated. To qualify for such a loan, the borrower must earn a monthly income great enough to make those payments. If payments are not made, the lender can foreclose, forcing the sale of the home.

The Williamses took out a home equity loan to do a major remodel on their home. Frank repaid most of the debt by selling some lackluster bonds and then paid off the remainder with a reverse mortgage from Golden Gateway Financial. The couple also receives $1,500 a month, tax-free, for the next 20 years from funds remaining in the reverse mortgage.

“I had some assets that I didn’t really want to sell because I thought they would rebound and do quite well,” Frank said. “So, I look at the reverse mortgage as a way of buying us some time for those assets to come back. The bonds that I did sell were not yielding anything close to the interest rate we were paying on the home equity loan, so I sold them and paid it down.”

In winter, the Williamses spend up to five consecutive weeks in the same timeshare unit on the Big Island of Hawaii. They then will hop over to Kauai for a couple of weeks and then maybe hit Palm Springs and San Diego in California before drifting back home to New Mexico. Northern Idaho is a favorite summer spotfor the couple.

But why would they want to pay $22,000-$23,000 in annual timeshare fees rather than simply plunk that down on a mortgage for a second home?

“I have no delusions about timesharing being a good investment. They’re a lousy investment,” Frank said. “But we enjoy doing what we do, going where we go. We have no regrets and wouldn’t change anything.”