Posts Tagged ‘Housing’
From the WSJ comes this tale of $3M luxury condos in Concordia KS – located about 200 miles west of Kansas City. Or more specifically, the middle of nowhere. The attraction? A developer has re-purposed a vacated ICBM missile silo into the ultimate survivalist lair.
And as a result, he has attained a degree of financial freedom many would envy.
Doug Immel recently completed his custom-built dream home, sparing no expense on details like cherry-wood floors, cathedral ceilings and stained-glass windows — in just 164 square feet of living space including a loft.
“I wanted to have an edge against career vagaries,” said Immel, a former real estate appraiser. A dwelling with minimal financial burden “gives you a little attitude.” He invests the money he would have spent on a mortgage and related costs in a mutual fund, halving his retirement horizon to 10 years and maybe even as soon as three. “I am infinitely happier.”
Not many people would be comfortable living in 200 sft. But I wonder how many would have a happier life trading that unused 3rd, 4th or 5th bedroom for a greater degree of financial freedom.
Q: Other than 529 accounts, are there any other investment vehicles I should be considering to help take care of my children in the future?
Assuming you are on track with your own retirement funding needs, then a 529 plan, Coverdell education Savings account, or even a Roth IRA is a great way to help fund a younger child’s college education. All have broadly similar tax-free benefits with the major differences that 529 plans have a $14,000 (2013) annual tax-free funding limit while the Coverdell is fixed at an annual funding limit of $2,000. A custodial Roth IRA in the younger child’s name may be used to fund education expenses but contributions are limited to the amount of the minor child’s earned income, or $5,000 per year, whichever is less.
Once your retirement is secure and you have fully funded the projected costs of college, it may be time to talk to an estate planning attorney to discuss the options suited to your situation. Any individual can make gifts, tax free, of up to $14,000 per year (2013) to anyone, including a minor or adult child. For children under the age of 18, custodial Gifts to Minors accounts (UGMA or UTMA) are a wealth transfer vehicle often employed by parents and relatives. I caution parents about these accounts because the child gains full control of the account generally between the ages of 18-21, depending on your state’s laws. Once the full owner, the now-adult child is free to use the funds as he or she pleases, and is under no obligation to use the funds for college or any other purpose intended by the original contributors. There is also a gift tax exemption for an unlimited amount of college education or medical expenses paid on behalf of any third party. But you must make the payments yourself directly to the college or medical provider to qualify for the exemption.
The last big ticket item that clients consider is helping a child purchase a home. A great idea as this provides them with a steady roof over their heads, can help their credit and gives them some equity of their own. The usual caveats apply regarding making sure your own needs are taken care of first, with the addition of some major cautions around gift tax, credit and ownership issues that are too complex for this short article. If considering this option, consult with your tax advisor and/or attorney first.
A version of this answer was originally published at Nerdwallet
Have a question you'd like Martin to answer? Send to AskMartin@mwinvest.com and we'll let you know when it's been posted. To find answers to your specific and/or confidential questions, please call Martin at 1-877-442-8777 for a no obligation phone consultation.
The WashPo’s Wonkblog writes that household formation is on a steady rise. If sustainable, this is hugely inportant for the US economy. Back before the financial crisis, my former economics professor, Ed Leamer, presented a paper to the gathering at Jackson Hole claiming that as goes housing construction, so goes the US economy. This was not, and is still not, conventional wisdom. But Ed knows his data and if home building is rebounding, then I suspect a stronger recovery may be around the corner. This is also the position taken by Goldman Sachs, as I learned from a breakfast meeting this week.
Supporting the potential of economic growth, along with new household formation, is the continuing decline in private debt ratios. These have been steadily improving since the financial crisis and look to be headed back to the more normal levels last seen in the 1980s and early 1990s.
Good for borrowers, bad for savers, interest rates continue to decline. With 30 year fixed mortgage rates hovering around 3.5% (down from 4.5% a year ago) and 15 year rates below 3%, it may be time to check the rate on your current loan. Obtaining a mortgage these days is no picnic, as banks are apparently making up for the “can you fog a mirror” qualifying test of the last decade, with the full body orifice search procedures of today. But if you have the resources to qualify, there has never been a better time (and how many times have I said that in the last five years!) to refinance a home loan. The only challenge is deciding whether to pay points to get a lower rate – costs you will lose if rates slide further and you do another refi – and accepting a higher rate for a no, or low, cost loan today.
And not only a bottom in US housing but new hope for the spirit of American entrepreneurship as well. How else could one respond to this story of Willow Tufano, the 14 year old Floridian who has bought a house in foreclosure, rented it out at a profit, and is even able to source furniture for her tenants.
Reuters dissects the failure of the Federal judiciary to prosecute cases against the players in the mortgage meltdown. The documented record of law-breaking that the article exposes is damning, as is the lack of effort by the US Attorney’s Office to take any significant action.
“Why there hasn’t been more robust prosecution is a mystery,” said Raymond Brescia, a visiting professor at Yale Law School
More than 16 million children are now living in poverty and, for many of them, a proper home is elusive. Some cash-strapped families stay with relatives; others move into motels or homeless shelters. But, sometimes those options run out, leaving an even more desperate choice: living in their cars.
This from a segment on CBS News’ “60 Minutes” last night. That able-bodied Americans are having to live in parking lots, with their families, is appalling.
Mortgage rates reached record lows this week… The average rate on a 30-year fixed-rate loan fell to 4.15 percent, with borrowers paying an average point of 0.7 percent. That rate is down from 4.32 percent last week.
From the NYT.
A continuing story it seems. Now, if only anyone could get a loan.
We are looking more and more like the Japanese experience where interest rates have been stuck at historic lows and the economy in low gear for 20 years.