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Young at Heart DECEMBER 2021

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The highest loan limit in U.S. history is set by FHA By Donald Dimitruk RFC ® RMA Starting January 1st, 2022, the FHA property value limit will rise for the sixth consecutive year in a row, to $970,800. This means that the rapid increase in value of homes in our area and across the nation has been recog- nized and acted upon by the Federal Housing Administration. This is a pronounced rise of nearly $150,000 when compared to the 2021 lending limit of $822,375. For those of us who think of their home as a financial asset that is working with us to create wealth, this was a very good job by our partner "The house"! In a Reverse Mortgage, a quick rule of thumb is that the loan amount or Loan To Value, will be between 46% and 50% of the home value up to the FHA limit, and depending on age. With the government HECM (Home Equity Conversion Mortgage) program and their age threshold of 62 to qualify, the older you are the high- er the loan amount. At the younger 62 age, the max- imum loan amount would about $446,500. At the higher age of mid 70s and up, the loan amount could be up to $485,000. This is great news for homeown- ers with a high balance mortgage that could not be paid off completely by the old property value limits and were not in the finan- cial position to pay down their existing balance to close the loan and end future monthly mortgage payments for life. As a reminder, chal- lenging one of the most common misconceptions about a Reverse Mortgage, "That the bank will own your house", you can see from the loan to value information above that home appreciation on the full value, dollar amount of the home outpaces the cost of a loan set at 50% of that value when interest rates and appreciation rates are close. THEREFORE, YOU WILL STILL GAIN VAL- UE IN HOME EQUITY EVEN WITH A REVERSE MORTGAGE! Combine this good news with the announcement I wrote about last month, the lowering of the age limit on specific, proprietary "Homesafe" Jumbo loans to age 55 and we have the best announcements for the Reverse Mortgage programs that I've ever seen! Property values up to $4 Million on the jumbo program open the door to some very big opportuni- ties when combined with the current LOW interest rates. The recent concerns about higher inflation may mean that these current low rates will be moving up sometime soon so I expect a lot of interest and activity after January 1st, when all the changes take effect. Because both programs are calculated by using the "exact birthdate of the youngest homeowner on title", the best way to know exactly what your loan limit will be is to inquire with a Reverse Mortgage professional who can run the numbers through the program software. Donald Dimitruk is a Registered Financial Consultant and a Regis- tered Mortgage Advisor and is available for a FREE consultation about how a Reverse Mortgage may benefit you at 831- 464-6464. …. HAPPY HOLLIDAYS TO ALL, PEACE ON EARTH! Financial...continued from page 1 or around 65 years old. So, if you retire at 65 and live to be 90, you need your investments to last 25 years. When you factor in inflation, taxes, and in- creased medical bills and other expenses, shifting to a conservative allocation too early in retirement may not be the best strate- gy for your portfolio." At Jacob Young Financial, Newhouse says, they can help you develop and implement a retirement plan that will allow you to meet your short-term, me- dium-term, and long-term goals. "We don't utilize a 'one-size-fits-all' strategy with our clients because we know each investor has a unique set of goals that requires a unique plan to succeed in meeting those goals." I asked Newhouse if there are certain things that people should do once they are in their fifties, sixties, and sev- enties, respectively. "In your fifties, it's important to focus on accumulating assets. This is when most people are still working and earning an income." Newhouse recommends contributing as much as possible to your employer sponsored retirement plan (if you have one) or into an Individual Retirement Account (IRA). "At 50 years old, you are eligible for a catch-up contribution, which allows you to contribute a little bit more to your retirement accounts each year. I highly recom- mend taking advantage of that provision if you are able to. Depending on your income level and tax situation, you may want to consider con- tributing pre-tax dollars to a Traditional IRA or 401(k), after-tax dollars to a Roth IRA or Roth 401(k), or maybe even a blend of the two strate- gies." When people are in their sixties, this is when most clients are getting close to retirement. "So, we encourage them to start what we like to call 'practicing for retire- ment.' Try to come up with a budget that you think will sustain you in retirement and then practice living on that budget while you are still working. This way you can determine if your sources of income in re- tirement will suffice or if you need to start saving more before you retire. It's a great way of testing the water before jumping in the pool." Most clients in their seventies, explains Newhouse, are already retired, or have cut back to part-time work. "This doesn't mean your days of financial planning are over though! As I men- tioned earlier, you still have many years (hope- fully) left for your assets to sustain your desired lifestyle. I encourage my clients in their seventies to continue planning for their future. However, their financial goals in their seventies may be different than they were in their fifties. Perhaps their goals are focused on legacy planning or maybe they're more focused on gifting while they are still alive. Some clients want to pay for their grandchildren's college while others want to travel the world." Working with a Financial Planner can help you both develop and adjust your financial plan as you get older and as your goals change. Newhouse prides himself on being active in his community. "Whether it's volunteering time at Sec- ond Harvest Food Bank or giving tours for the Aptos History Museum, I find great joy in connecting with my neighbors. It's easy to get overwhelmed with everything that's going on in the world, but I find that the biggest difference we can make is to be kind and to support each other locally." He sees financial planning as just another way for him to support my community. "I can help bring ease and understanding to what most people consider a very stressful and vul- nerable topic. Building relationships and connect- ing with my clients on a personal level is what I find most rewarding about this industry." 5 Tips from Kristina Kuprina of Sequoia Wealth Advisors 1. Create a plan before investing, or, if you are already investing, create a plan to confirm the investments or investment strategy is right for you. 2. Work with a fee-only planner, if possible, to minimize potential con- flicts of interest. If this is not available, then clearly understand how your advisor or investment company is compensated. There is nothing wrong with fees, we pay for what we value-just be sure they are appropriate. 3. Spend the time to inter- view more than one per- son to find the best fit and personality. This can be a long-term plan, so the right fit is critical. Having that trust and confidence really makes a difference when times get difficult. 4. Your life, values, purpose and what is most important to YOU matters more than investment re- turns, common strategies or what others are doing. 5. Be sure you have everything in place just in case. Regardless of age any of us could be faced with an accident, illness, or other significant life event. How this will be managed is a critical part of planning. Better to plan and not need than need and not have a plan. 5 Tips from Kevin Newhouse of Jacob Young Financial Services 1. Start saving now. It's never too early and it's never too late. You would be surprised how quickly your assets will accumu- late once you start saving on a regular basis. If you're not sure how much to start with or what type of account to open, you can consult with a Finan- cial Planner for advice. 2. Stick to your plan. Especially during volatili- ty. Don't let your emo- tions dictate your trading strategy. Set realistic goals that can be measured over time. If you have a plan that allows you to weather short-term volatility, you will be in a better position to realize your long-term goals. 3. Stay diversified. Not every sector in the stock market will go up and down at the same time. If you are in a diversified portfolio, you will never earn the most amount possible, but you will also never lose the most either. Diversification is a way to fine-tune your investments so that they match your risk tolerance. This is something that should be reviewed on a regular basis and adjusted as needed. 4. Pay closer attention to net performance rather than fees. Of course, you want to know what you're paying your advisor and they should be very transparent with that information. However, that shouldn't be the main focus of your portfolio review. You can get an account online with free trading and no annual fees, but you also won't get the service or advice you may need to be suc- cessful. Paying a profes- sional will often result in a greater benefit in both investment growth and financial planning than trying to do it on your own or with a discount broker. 5. Work with a profes- sional. Trying to navigate this on your own can be confusing and costly. You want to find an advisor who stays in contact with you and is available when you need them. You should select an advisor the same way you select a doctor or a lawyer. This is a long- term relationship you are building so be sure to find someone you are comfort- able with and someone you can trust.

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