There was some bad news for home sellers, and good news for home buyers, in this article we read last week in the Seattle Times.  “As sales plunge,” read the headline, “King County home inventory has biggest jump on record.” For sellers and buyers alike, this increase in the number of homes for sale signals a return to a more deliberate, less frenzied home-buying process. But does this market shift have any impact on those considering a reverse mortgage? The answer is a definite yes. We’ll explain in a moment.

Buyers Can Take a Breath

As the Times real estate reporter Mike Rosenberg wrote, “The better news for homebuyers in King County keeps coming: Inventory is way up. Sales are way down. And prices have stopped skyrocketing.”  This market slowdown “has allowed weary would-be buyers to take a breath and avoid some of the hurdles that were standard in recent years when sellers could call all the shots.”  Gone (at least for now) are the tight bidding deadlines and the unwritten requirement that desperate buyers forego basic inspections in order for their bids to be accepted. What’s more, says the article, the list price now tends to match the selling price.  According to the Times, this market slowdown has been brewing for the past six months and seems to be deepening: single-family home inventory in September alone was 68 percent above the same month one year ago.

But the news isn’t all peaches and cream for home buyers, the article points out. As the inventory of houses for sale goes up, interest rates are climbing as well. The Times article gave a surprising example: “Due to rising interest rates,” said Rosenberg, “someone who bought a $700,000 house a year ago is paying the same monthly mortgage bill as someone who pays $640,000 for a house today.” Interest rates, experts report, are now at a 7-year high.

The New Reality in Home Values

According to the Times, some home sellers haven’t gotten the message that the market is softening. “Those [sellers] that have adjusted to the new reality of the market by lowering their prices have been unloading their properties fairly quickly,” says the article. “But those who still have the mindset that prices will continue to soar unabated, and have listed their home for more money than what their neighbor’s house sold for recently, are getting a reality check.” This is good news for buyers who “are now able to take their time a bit.” What’s more, the bidding frenzy seems to have abated: more often than not, the typical house is now selling right at asking price, the Times reports.

But what if you are neither a buyer nor a seller? What if you’re a qualified homeowner considering a home equity conversion mortgage (HECM), better known as a reverse mortgage? How does this shift in the local housing market combined with rising interest rates affect you? Reverse mortgage expert Ted Butler tells AgingOptions that these market changes make it imperative that seniors contemplating an HECM act quickly.

Values Softening, Interest Rates Rising

“The housing market is shifting, just as we have seen in other parts of the country,” Ted states. Here in the Puget Sound area, home values may be reaching their peak and starting to level off. That means, if homeowners are at all interested in preserving some of the tremendous gain in value they have seen the past 10 years, there may not be a better time to lock in a reverse mortgage.”  When lenders decide how much you can borrow, the appraised value of your home is one critical factor: as the market softens and the value of your house goes down, so does your borrowing power. Higher interest rates have the same effect, limiting how much you can borrow. “If you have been thinking about when might be the time to apply,” says Ted Butler, “that time is now.”

Is a reverse mortgage right for every senior homeowner? Clearly the answer is no – but it could be a terrific tool for you, says Rajiv Nagaich of AgingOptions, especially if you opt for the reverse mortgage line of credit. “This credit line is a powerful tool for retirees,” he states. “Not only do you have tremendous borrowing power to help give you financial security as you age, but with a reverse mortgage your line of credit grows over time. And except for taxes, insurance and regular maintenance, you won’t have to make a house payment again – and you won’t owe a penny on the loan until you sell the house or pass away.” However, Rajiv adds, whether or not to apply for a reverse mortgage is a major financial decision. Homeowners need solid, objective advice. If you’ll contact us here at AgingOptions, we’ll refer you to a trusted pro like Ted Butler who will answer your questions without pressure of any kind.

Putting the Pieces Together

When it comes to planning for retirement, it’s even more important that you seek objective advice from reputable sources. There’s so much misinformation out there that it’s easy to make poor decisions and find your retirement dreams in tatters. In planning for retirement, you need to have a solid financial plan, a strong legal plan, a well-crafted medical plan, a carefully considered housing plan, and a clear and comprehensive family communication plan – and they all must work together in an integrated way, not as separate, disconnected parts. That in a nutshell is why you need a LifePlan from AgingOptions – the only retirement plan we know of that weaves all these critical elements of retirement together. There’s nothing like it.

Please accept our invitation to find out more by joining Rajiv Nagaich at an AgingOptions LifePlanning Seminar very soon. See for yourself – without cost or obligation – at one of these free, information-packed sessions. For all the details and convenient online registration, visit our Live Events page, or give us a call. Age on!

(originally reported at www.seattletimes.com)