Mortgages

If you are looking for a house, try to find the cheapest one you can fit into. A less expensive home gives you more latitude to make good financial decisions.

When it comes to buying a house, the conventional wisdom is that you should select the most expensive one you can afford. You might want one that provides extra growing room, in hopes that your income and financial resources grow into the house as time goes on.

It’s hardly time to party like it’s 2004, 2005 or 2006, but there is a lot to be excited about in residential real estate. Once again, homeownership is a good investment. And unlike a lot of good investments you hear about too late, this one is rising, affordable and stable (finally).

One of a financial advisor’s toughest jobs is to rescue people nearing retirement who can’t afford to retire. Flexibility and sacrifice are the solution, although neither is easy.

Consider a pair of clients that I began working with eight years ago. Larry was 60 years old, and Lois was 59. (These are not the clients’ real names.) They had a modest income, a very small investment portfolio and like many folks, a fair amount of liabilities including a mortgage, two auto loans and a small credit card balance.

For many Americans, the equity in their home is the single greatest asset, often dwarfing their investment assets. But this is an illusion fostered by the high leverage involved in home buying, not because it’s such a great deal to invest in a home.

In light of that, home ownership is not necessarily a step you need (or want) to take to build financial success.

Buying a second home is a major financial accomplishment, but it can be a financial nightmare if you don’t properly plan. Before you get caught up dreaming about your peaceful, serene weekend getaway, remember that it’s also a major financial responsibility.

Here are a few suggestions for anyone interested in owning multiple homes.

The housing market finally hit bottom and the long-awaited recovery is already under way. This means that record-low refinancing rates won’t stay low for long. If you are thinking about refinancing your home, now is the time to do it, but don’t rush in. The devil is always in the details when it comes to money.

So we supposedly are still in trouble. Congress fixed the tax part of the fiscal cliff, but the deficit spending question remains and big Washington battles loom ahead that could damage the economy. Don’t believe that: Things are looking up for 2013.

The fiscal cliff is overhyped, much like the Y2K scare was. I predict that the sun will continue to rise, and most of us will go about doing what we do regardless of what the politicians do or not do.

Reverse mortgages may be a good idea for the elderly if they want to stay in their home and receive cash to pay for their retirement. But there are significant downsides: It is hard to keep the home in the family once Mom and Dad leave the place, the house’s equity value disappears and the debt owed can balloon.

Because women often live longer than men, they should be particularly concerned for their financial future.
 
Women tend to live 80.2 years, nearly six years longer than men, according to the U.S. Census Bureau. Over 75% of women 65 and older are widowed.
 

 
It pays to be ready for a plunge off the fiscal cliff and back into economic hard times.
 
The news is full of baleful talk about the fiscal cliff, a combination of tax increases and spending cuts that hit Jan. 1 unless a divided Congress acts. We keep hearing that lawmakers will resolve this dire situation. But what if they don’t and the worst occurs – the U.S. economy tumbles back into a recession?