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There are several cities in the U.S. that make it possible to quickly lower the cost of retirement, due to their relatively low costs of living. In this article, Emily Brandon, senior editor for Retirement at U.S. News, highlights some of the American cities that offer a desirable quality of life at a very affordable price.
Reducing your housing costs can add to your retirement savings and make your ongoing bills more affordable.
U.S. News analyzed U.S. Census Bureau and Bureau of Labor Statistics data to determine where a retiree could cover his or her basic expenses, including typical costs for housing, food, transportation, health care and utilities, with less than $100 per day, or $36,500 per year, in retirement income.
It’s important to note that in many of these cities $100 a day just barely covered these five basic expenses. The analysis does not factor in the costs for recreation, clothing, consumer goods, hobbies or travel. A little extra income from savings or a part-time job would make you much more comfortable living in many of these places.
Housing costs are the biggest driver of retirement expenses, but they also vary considerably based on whether retirees rent, own or have paid off their mortgage, with homeowners who are living mortgage-free paying the lowest housing costs. “You can’t eliminate housing costs 100 percent because you still have property taxes to pay and insurance, but you could live with less if you find someplace that is cheaper for you to live or if you can get rid of your mortgage,” says Edward Fulbright, a certified public accountant and CEO of Fulbright Financial Consulting in Durham, North Carolina. It’s also important to factor in the transaction and moving costs when you relocate to a new city.
Here are 10 places where it’s possible to cover basic monthly costs on just $100 a day:
Dallas. This city in the Lone Star State has many innovative programs specifically for retirees. The Senior Source manages the Retired Senior Volunteer Program, which helps connect seniors to volunteer opportunities that match their desires and talents. The Dallas Arboretum and Botanical Garden holds weekly events specifically for people ages 65 and older and offers a senior discount on admission. And the University of Texas Southwestern Medical Center is nationally ranked for its geriatric care. Retiree renters in Dallas pay a median of $911 per month, while homeowners pay $1,544 monthly if they have a mortgage or $518 per month if they are mortgage-free. Texas doesn’t have a state income tax, but remember to factor in the property tax bill when purchasing a home.
Durham, North Carolina. Durham is the home of Duke University, which includes Duke University Hospital, and is one of the corners of the research triangle, known for its high-tech research and development. People ages 65 and older are eligible to ride the Triangle Transit bus system free of charge. There’s also an affordable door-to-door van option for people with disabilities. Median housing costs for older homeowners are $1,420 with a mortgage and $456 without one. Retiree renters pay a median of $857 in monthly housing costs.
Jacksonville, Florida. Jacksonville provides pleasantly mild winters and is just a short drive from white-sand Atlantic Ocean beaches. But housing in Jacksonville costs far less than many other parts of Florida. Retirees age 65 and older pay a median of $910 monthly to rent an apartment in Jacksonville. That cost climbs to $1,340 among homeowners with a mortgage, but that dips to $433 for retirees who have paid off their house. There’s also no state income tax in Florida.
Minneapolis. Those who dream of a retirement on the water have many options in Minneapolis, which offers access to a chain of lakes and the Mississippi River. The Grand Rounds National Scenic Byway provides plenty of walking and bicycle paths to enjoy the parks and scenery. Housing for retirees in the Minneapolis metro area, which includes St. Paul and Bloomington, costs a median of $1,594 per month with a mortgage, $520 with a paid-off house and $843 if you rent. Health care is available at the Abbott Northwestern Hospital. In nearby Rochester, Minnesota, you’ll find the top-ranked hospital in the country for geriatric care, the Mayo Clinic.
Phoenix. Arizona’s state capital is among the sunniest places in the country and is known for its hot summers and mild winters. Whatever professional sport you enjoy, Phoenix is likely to have a nearby team to root for, perhaps including the Cardinals, Diamondbacks, Suns or Coyotes. Phoenix has its own branch of the Mayo Clinic, as well as the Banner Good Samaritan Medical Center. Housing costs a median of $905 per month for renters and $1,330 for homeowners with a mortgage, while people who own their home mortgage-free pay just $392.
Will the Federal Reserve decide to increase mortgage rates anytime soon? And how will that affect your decision on when to purchase a new home? This article from Lisa Prevost of The New York Times offers some advice, and gives potential new home buyers some helpful mortgage tips.
The intense media focus on when the Federal Reserve will finally raise its benchmark interest rate above zero can be nerve-wracking for home buyers. Many might be wondering whether they should rush to close on a deal before a move by the Fed causes mortgage rates to climb.
While it might be smart to expedite deals already in the works, those who aren’t quite ready to buy shouldn’t feel pressured. Mortgage rates are influenced by many factors, some of which can be controlled by borrowers to get a better deal.
When the Fed does act, the effect is unlikely to be an immediate spike in mortgage rates, said Jonathan Smoke, the chief economist for Realtor.com. What’s more likely, he said, is a gradual increase in rates totaling around half a percentage point over a 12-month period.
One could even argue that “rates could stay the same or possibly go down when the Fed moves,” said Bob Walters, the chief economist for Quicken Loans, the online lender. “It’s not as though the long-term rates move in lockstep with the federal funds rate, which is a very short-term rate. And when they do move, the market’s not going to be surprised. A lot of that is anticipated.”
So instead of worrying about the Fed, borrowers might do better to concentrate on rate factors within their control. First and foremost is the type of loan they choose. Initial rates are significantly lower on adjustable-rate mortgages, called ARMs, relative to a 30-year fixed, but these loans may not make sense for buyers who plan to stay in their homes for more than five to seven years. As the rate adjusts, it could become less affordable.
One way for home buyers who opt for a fixed-rate loan to drive down their rate is by paying points upfront – essentially prepaying interest. This strategy may make sense for buyers who can afford it and who plan to be in their homes for a long time, Mr. Walters said.
Two other factors that influence rates are credit scores and down-payment levels. Credit scores, in particular, have a considerable effect. On a conventional mortgage, the span between rates offered to borrowers with lower FICO credit scores (in the 600s) versus high (750 or higher) can be as much as a percentage point, Mr. Walters said.
Here’s some personal relationship advice from the most unlikeliest of places: the U.S. Federal Reserve Board. This article from The Atlantic highlights a fascinating link between our credit scores and the longevity of our relationships.
Those pondering the longevity of their relationships can rely on something other than the opinions of friends – they can look at their credit scores.
A new working paper published by the U.S. Federal Reserve Board finds that the higher someone’s credit score is, the higher his or her chances of a lasting relationship will be.
A trio of economists parsed data from the Fed’s consumer-credit panel to identify the credit scores of couples in committed relationships. People tend to form committed relationships with people whose credit scores are in the same range, the study found. And couples with high credit scores tend to stay together longer.
For every additional 100 points or so in a couple’s average credit score at the beginning of their relationship, their odds of separating during the second year of the relationship drop by 30 percent, the researchers found. Also, if the difference between a couple’s individual credit scores is greater than 66 points at the start of the relationship, the couple is 24 percent more likely to split up within the second, third, or fourth year of the relationship. The study also noted that a pair’s credit scores are likely to converge slightly over the course of a relationship.
The link between credit scores and relationship longevity probably has to do with creditworthiness being a proxy for “an individual’s general trustworthiness and commitment to non-debt obligations,” the study notes. Those characteristics affect all sorts of things involved in sharing a household – who takes out the trash, for example, and who’s more likely to forget a birthday or anniversary.
If you’re considering lending money to your kids to help them purchase a new home, this article from The New York Times offers some valuable advice regarding important steps you should take before and during the mortgage process.
Parents often come to the rescue when their adult children need help putting together enough cash for a down payment. Whether they offer financial assistance as a gift or with the expectation of repayment, parents acting from the heart might want to consider a more businesslike approach.
Cathy Turney, a real estate broker in the East Bay area of San Francisco, said she has watched young homeowners walk away from their houses after values fell below their mortgage amounts during the recession, even if they could still afford the payments. And “there went their parents’ down payment money,” Ms. Turney said. “That’s the risk – the kids aren’t necessarily going to treat it as well as if they had invested their own blood, sweat and tears in getting that money,” she said.
Another potential risk down the road: the son or daughter winds up getting a divorce, and the terms of the down payment become a subject of dispute. “It comes up more often than not when divorcing spouses are either trying to grab assets or skip obligations,” said Danielle L. Schultz, a financial planner and divorce financial analyst with Haven Financial Solutions, in Evanston, Ill.
So what should a parent do? First, before providing any money, make sure the portion that will be used as a deposit on a home (usually 5 percent to 10 percent of the purchase price, but sometimes more) is protected. The purchase contract should contain a mortgage contingency clause, which provides for return of the deposit if the buyer cannot get a mortgage. If the seller won’t allow such a clause – as is common in very tight markets – then before signing a contract, “that borrower should get prequalified – not preapproved – for a mortgage,” said Richard Pisnoy, a principal at the Silver Fin Capital Group, a mortgage brokerage in Great Neck, N.Y. “Have the loan officer review all of their documentation to make sure it’s in real good standing.”
Parents who are providing a significant sum and want to maintain some control over the property could require that their children allow them to be added to the title at closing. “If the kids ever want to refinance, the parent gets notice and has to give his O.K.,” Ms. Turney said. “They can’t pull out $50,000 to go on a vacation or buy a Mercedes or whatever.”
Regardless of whether they are included in the title, parents should make clear the terms of the gift or loan in writing to guard against future problems.
Lennar’s Coastal Carolinas team was recently featured in an article from The Post And Courier, highlighting how our pets are such an important part of the decisions we make about our lives, and especially our homes.
Colby Broxton and her fiance, Jon Preston, of Goose Creek have a cat room for their five cats.
The pet room used to belong to Broxton’s father.
“After he passed away, it was just sitting there empty, so we decided to do something for the animals. My dad adored the cats, too, so it’s for him as well,” Broxton says.
The room has comfortable couches for the couple’s three dogs and a spiral staircase so the cats can ascend to the cat level of the room and escape the dogs. Shelves are mounted at multiple levels and cat beds are attached with Velcro to the shelves, which are covered in carpet so they double as scratching posts. Toys hang from string so the cats can swat at them.
Preston and Broxton are not alone in seeking or building houses with special accommodations for their fur babies.
Amy Dooley, marketing manager of Lennar, says the homebuilder is increasingly seeing buyers looking with pets in mind.
“We are definitely thinking where we can add value and some of the ways we have done that is with dedicated green space and walking trails which the pets can utilize,” Dooley says. “Our sales people say that pets are part of the family when people are looking for a new home. And our market research shows that people are more likely to buy with these amenities. Adding pet-friendly amenities adds value, not just to the community, but to the home.”
In fact, pets are so important to Lennar’s market that Lennar Coastal Carolinas is partnering with animal societies in Charleston, Dorchester and Berkeley counties to promote adoption to those visiting Lennar’s model homes. The goal is to increase adoption by 20 percent in the final quarter of 2015.
“We understand that for many of our residents, no home is complete without a pet,” said Guy Ackerman, Lennar Coastal Carolinas area sales manager. “This initiative is a terrific way to add something special to the experience for our home buyers while helping the local pet community.”
I must know something about home and fashion trends, because I already have an “Iced Coffee”-color chair in my living room – one of the top 10 colors mentioned in Pantone’s newest Fashion Color Report. Actually, that’s only because I spilled an iced coffee on my beautiful white chair. But here’s some color commentary from Builder, highlighting Iced Coffee, Rose Quartz, Peach Echo, Snorkel Blue, Buttercup, and all the other top colors in the Pantone report: “Color trends are harmoniously shared between fashion and home, so expect to see these 10 shades pop-up in upcoming textiles, furnishings, and interior design.”
This month, Pantone, the longtime global authority on color trends and standards for the design industries, revealed the spring 2016 edition of its semiannual Fashion Color Report. As high-fashion is often a forerunner to styling for home furnishings in line, design, texture and color, the latest 10-shade installment from the institute predicts the season’s most prominent shades in both fashion and interior design.
Spring’s palette is calm and cool, paying homage to natural resources and influenced by an emerging desire to disconnect from technology and unwind. The selection aims to represent current conditions of the world, both organic and constructed.
Designers and industry experts drew inspiration from the contrast of urban design and lush vegetation, “leading to unexpected color combinations and collections reminiscent of architecture, travel and nostalgia,” according to a press release issued by Pantone. South of the border destinations and Cuba were noted as influencers as well, inspiring designers to couple vibrant hues with more quiet, classic, and neutral tones.
A report from Clear Capital and RealtyTrac shows that despite increasing U.S. home prices, homes were at their most affordable level in two years during the first quarter of 2015. The details of the report are highlighted in this article from Trey Garrison of HousingWire.
“Although home prices continue to outpace wage growth in the majority of local markets, this analysis somewhat surprisingly shows that affordability is actually improving in most markets thanks to falling interest rates and slowing home price growth, which is allowing wage growth to catch up in some markets,” said Daren Blomquist, vice president at RealtyTrac. “At the national level, buying an average-priced home in the first quarter of 2015 was the most affordable it’s been in two years and nearly twice as affordable as it was in the second quarter of 2006 – when affordability was its worst in the past 10 years.
“At the local level we’re seeing several bellwether markets where wage growth matched or even outpaced home price growth over the past year,” he said.
Average home price appreciation outpaced average wage growth between the first quarter of 2014 and the first quarter of 2015 in 397 out of 582 (68%) U.S. counties analyzed for the report. But during the same time period, the average interest rate on a 30-year fixed rate mortgage dropped 57 basis points (13%), from 4.34% in the first quarter of 2014 to 3.77% in the first quarter of 2015. The drop in interest rates – along with wage growth outpacing home price appreciation in 32% of counties – meant buying a home in the first quarter of 2015 required a smaller share of the average wage compared to a year ago in 339 of the 582 counties (58%).
Major markets where wage growth outpaced home price growth in the first quarter – counter to the national trend – included Cook County, Illinois in the Chicago metro area; Orange County, California in the Los Angeles metro area; Brooklyn, New York; Fairfax County, Virginia in the Washington, D.C., metro area; and Riverside County in Southern California, where the average weekly wage in the first quarter was up 10% from a year ago, double the 5% growth in average home prices during the same time period.
Since bottoming out in the first quarter of 2012, the average U.S. home price has risen 24% while the average weekly wage nationwide has risen 7% during the same time period and the average interest rate on a 30-year fixed rate mortgage has dropped 5%.
For some of us, going through a mortgage process can sound like being in a doctor’s office, with a lot of terms being tossed around that only the experts truly understand. “This ARM needs a DTI right away, and somebody get me a RESPA in here!” Fortunately this extremely informative article from Bankrate provides definitions for all the mortgage acronyms you might need to know.
If you’ve ever shopped for a mortgage, you’ve probably been overwhelmed by an alphabet soup of acronyms that seem to be designed to confuse the borrower at every turn.
The lingo is complex, but the definitions aren’t hard to understand. Here are the basics.
LE: Loan Estimate
The Loan Estimate, or LE, is a document that provides details about a mortgage that the borrower has applied for. The lender is required to mail or deliver it within 3 business days of the loan application. The LE describes the interest rate on the mortgage, shows whether the rate is fixed or adjustable, summarizes the estimated loan costs, calculates how much money the borrower will need to take to the closing table and contains loan-comparison calculations that encourage borrowers to apply at more than 1 lender and compare loan offers.
CD: Closing Disclosure
This document itemizes the loan costs. The CD is designed to make it fairly easy to compare with the LE, so borrowers can see if the lender changed any terms of the mortgage.
DTI: Debt-To-Income Ratio
A debt-to-income ratio, or DTI, is how a lender determines how much a borrower can afford to pay every month. By dividing the borrower’s monthly liabilities by monthly income before taxes, the lender arrives at a percentage. To qualify for the mortgage, borrowers usually need to fall below certain thresholds. Typically, lenders don’t want the monthly house payment to exceed 28% of income, and don’t want all debt payments (house, auto, credit cards, student loan) to exceed 36% of income. Thresholds can vary by lender.
LTV: Loan-To-Value
An LTV, or loan-to-value, is one of the key ratios that lenders use to assess the risk of a loan. The ratio is the mortgage divided by the purchase price or appraised value of the property. When a property has multiple mortgages, lenders use a combined loan-to-value ratio, or CLTV. Borrowers with an LTV or CLTV of less than 80% often get lower interest rates because lenders view such loans as less risky.
RESPA: Real Estate Settlement Procedures Act
The Real Estate Settlement Procedures Act, or RESPA, and the Truth in Lending Act, or TILA, are the 2 main pieces of federal legislation that govern mortgage lending to consumers. Among other things, RESPA requires lenders to provide borrowers with a Loan Estimate within 3 days of applying for a loan, as well as the Closing Disclosure 3 days before closing.
ARM: Adjustable-Rate Mortgage
An adjustable-rate mortgage, or ARM, is a home loan in which the interest rate can change based on movement in an agreed-upon index, such as the London Interbank Offered Rate, or Libor. Usually, ARMs start with lower rates than fixed loans. But there’s always the risk that the borrower can eventually end up paying more than if he or she had secured a fixed rate.
If you take a few minutes to read this article from BrightNest, you might find yourself saving hours of time at home, and eliminating some of the stress from your life in the process.
How would you feel with four hours of extra free time a week? It isn’t a pipe dream. With a few new habits, you’ll save time and feel more relaxed at home. First, take a deep breath. Then, try these simple ways to chillax more at home:
Simplify your breakfast on weekdays. Scrambled eggs and ham are delicious, but saving the big breakfast for the weekends will make your mornings go a lot smoother. Choose something that’s easy (and quick) to assemble like yogurt and granola.
Pick up five things before bed each night. Skeptical about the idea that cleaning makes you feel more relaxed? Hear us out. Rather than spending a few hours each weekend cleaning everything that’s piled up during the week, pick up five things every night and put them away. It will take you at most 15 minutes. By the time the weekend rolls around, your home will take way less time to clean and you can move on to more important things, like brunch.
Prioritize your home tasks. How much time do you spend doing chores? The answer is too much time. To fix that, prioritize your home tasks into these buckets: (1) Most important, must get done ASAP; (2) Needs doing but not urgent; (3) Meh, I don’t really notice the difference after I finish. Now, stop doing the chores in the third bucket! With this system, you’ll stop wasting time doing things like washing unworn sheets in the guest room. The important thing here is to only cut tasks that really don’t matter to you. Otherwise, you’re only going to increase your stress level.
Stick to a schedule. Staying up too late always sounds like a good idea… that is, until your alarm sounds the next morning. Then you rush to get ready, drive to work and start the whole cycle all over again. (Aren’t you stressed just reading about it?) Instead, go to bed early and set your alarm for an hour earlier than your regular routine. You’ll wake up rested and have time to enjoy a cup of coffee and knock out a few emails before work.
Plan one electronics-free night a week. While this habit won’t save you time, it will help you fall asleep faster, which is just as valuable! Designate one night a week as “no-electronics” night, and avoid your phone, computer, iPad, Netflix account, etc. away as soon as you walk in the door.
