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Make the most of your home investment

Ask Our Broker
Does paying the mortgage
principle early make future
interest charges disappear?
Q: A friend says if I pay the mortgage
and interest each month, and include
the principal for the next month, then
I don’t have to pay the interest on that
month’s payment. He explained that
the mortgage company cannot charge
interest for a payment that was
received early. Is there any truth to this?
“We Need to Be Ready to Sell – Fast!”
THE OWNERS OF THIS RANCH-
STYLE home really lucked out on
their purchase.They had been
focusing on a certain upscale
neighborhood so that their chil-
dren could attend school in its
nationally ranked system.They
also wanted “a dog” that they
could fix up and then sell at a
profit in a few years.The prices
of homes in the area were fairly
volatile and bought just as hous-
ing values had hit a multi-year
MAKEOVERS
by Kit Davey
low.
Although they were able to
purchase a home in their desired
neighborhood, they didn’t have
too much money leftover for
new furnishings.They had man-
aged to sprinkle a few pieces
throughout the house, but the
furnishings didn’t enhance their
million-dollar property. By the
time they called me, prices were
starting to climb again and they
thought they should get the
house ready to sell in case they
decided to flip it.
The living room was the activ-
ity center of the house – where
they ate, watched TV and did
office work. It’s OK to live that
way, but it definitely wouldn’t
make a good impression if poten-
tial buyers came to visit. Our goal
was to transform the living room
into a formal entertaining space
without spending any money on
new furniture.
BEFORE
• It looked like a college kid
See MAKEOVER, Page 2

A: Let’s say you have the right to prepay your 30-year

mortgage, in whole or in part, without penalty. Let’s also
say that each payment coupon has a line so that you easily
can make an additional principal payment.
Suppose you pay an extra $50.This means your total
debt has been reduced by $50 for the remaining loan
term.You are NOT excused from making your next month-
ly payment; instead, your loan
will end in less than 30 years. You are not
Imagine that you borrow
$150,000 at 6.25 percent
excused from
over 30 years.Your monthly payment;
payment will be $923.58 for
principal and interest. Now your loan term will
imagine that you pay an addi- end earlier
tional $50 per month, every
month.The loan will be paid off in 312 months (26 years).
The shorter loan term will save you $44,332 (48 months x
$923.58).
Notice in this example that no payments were missed. If
you miss a monthly payment you can face a late fee, as
well as a bad mark on your credit report. Potentially, you Strength in numbers: An established social environment is one of the many perks of adult-living communities, which are targeted to many groups of seniors.
can be foreclosed.
For baby boomers turning their eyes toward

Golden Years
Q: In 2005 my house could have sold for
$500,000. Today I will be lucky if I get $425,000. If it adult-living communities, knowing what to look
does sell at that price or thereabouts, then after all
expenses I will walk away with $15,000.
for is key to discovering a personal El Dorado
I have been told that real estate has a seven-year
By Charles Scutt haps preparing to retire, if they haven’t mary residents to be below the an indicated
cycle, and that we have been in the current cycle for CTW Features already. Based on results of a 2003 survey con- restricted age.These types of communities
two years. Five more years? Does that sound right? ducted by Del Webb, a Bloomfield Hills, Mich.- typically offer attached or single-family resi-

A: As they say on Wall Street, past performance does not
guarantee future results.There is no way to know what
the future will bring. Certainly if real estate in all places
and at all times followed a seven-year schedule we all
would know when to buy and when to sell.
Before going further speak with local brokers and ask
about trends in your community.Are the population and
See ASK OUR BROKER, Page 2
T
he “old folks home” of yesteryear is pre-
cisely that – out of date. Instead, today’s
graying homebuyers are packing up and
moving into active-adult subdivisions, age-
restricted developments and assisted-living
communities designed to treat older and retire-
ment-age buyers with respect, dignity and plen-
ty of pampering amenities.
As of 2005, the U.S. Census reports that
there are over 78 million baby boomers (those
born between 1946 and 1964).The oldest
among them now are into their 60s and per-
based developer of active-adult communities,
nearly six of 10 boomers are likely to move to
a new home for retirement.And experts like
San Francisco-based business consultant Nan
Andrews Amish say that many of these new
homes will be located within active-adult or
age-restricted/targeted developments.
According to Amish, the term active-adult
implies physical activities, such as golf, cycling
and other fitness pursuits; age-targeted means
that the target market is, for example, 55 and
older; and age-restricted does not allow pri-
dences along with a variety of popular lifestyle
perks – from clubhouse activities to planned
social outings to on-site dry cleaning.
“Active-adult communities offer mainte-
nance-free living with a wide range of lifestyle
features,” says James Davis, president and CEO
of The Amsterdam House Continuing Care
Retirement Community, Inc., Port Washington,
N.Y.“This includes exterior and interior
upkeep, landscaping and grounds care and
See GOLDEN YEARS Page 2

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MAKEOVER
CONTINUED FROM PAGE 1
had camped out in the corner! A
folding chair is a definite no-no
anywhere in a house on the mar-
ket.The workspace had to go.
• A very large, unattractive TV
filled the corner (out of view on
the left, next to a fireplace) and a
huge chair was set up straight
across from it.The chair and
ottoman blocked entry into the
room and made it difficult to step
up into the dining room.
• The typical house detritus
was strewn here and there. Clutter
is a staging no-no!
AFTER
• Staging a home for sale is
about making a winning impres-
sion on potential buyers, and buy-
ers have certain expectations
about how a living room should
be set up.That means no exercise
GOLDEN YEARS
CONTINUED FROM PAGE 1
other services.”
Davis says that many of these
developments geared toward
boomer buyers also are continuing-
care retirement communities and
life-care communities that provide
priority access to future long-term
health care – should residents ever
need it – for an extra monthly fee.
“Americans are redefining retire-
ment as a time to rediscover pas-
sions and explore new opportuni-
ties,” says Davis.“Accordingly, this
generation, more than any before it,
is seeking new retirement options
that cater to its vibrant lifestyle.
People are excited to move into a
community where they can take
advantage of a long list of amenities
under one roof, such as continuing-
education classes, modern fitness
centers, cultural and recreational
trips, high-tech capabilities and spe-
cial-interest groups.”
People like these sorts of com-
MAKEOVERS
machines, desks, sewing machines
or TVs in view! We moved the
workspace into one of the kid’s
BEFORE
munities “because they are still
active and they still ‘think young,’
but now they have time on their
hands which may look different
than when they were in worka-
holic mode,” says Amish.“In the
event the almost-retired person is
thinking of leaving existing neigh-
bors, then purchasing in a new-con-
struction neighborhood puts every-
one in the same boat. Everyone is
looking to meet their new neigh-
bors at the same time – it’s like the
first day of high school.”
Additionally, older adult commu-
nities offer quiet, which is attrac-
tive to folks who don’t want to
wake up super early to make the
morning rush anymore,Amish says.
There may be better values to
be found elsewhere, but these
choices would not have the cohe-
siveness of the new communities
or the compatibility with similarly
aged neighbors,Amish says.
However, keep in mind that
new-home prices and monthly
assessment fees can be high in a
new community geared to seniors.
Another disadvantage can be the
room and freed up the wall for
something better fit for a living
room.We brought in a console
table from elsewhere in the house
to take its place.
• We moved out the TV and put
the big chair in its place.The
couch and chair then created a
simple conversation area and
cleared the pathway to the dining
room.
• It took 5 minutes to put away
the clutter. It’s best not to leave
out magazines, remote controls
and blankets when you’re show-
ing a home for sale.We selected a
few elegant accessories to dress
the tables.
The homeowners now had a
lack of age diversity.
“While it creates common inter-
ests, the community can also lack
varied perspectives and younger,
healthier folks when you needs
some ‘heavy lifting,’ for example,”
Amish says.
Remember, too, that your resale
is limited to buyers over 55, says
Chad Young, president of
Community Development, Inc.,
Indianapolis.Also, in an age-restrict-
ed community, those under age 55
may not be permitted, while fami-
lies with children are permitted in
an age-targeted community, he says.
“Those wanting to get away
from the big wheels on the side-
walks and the swing sets in the
backyard may want to take this into
consideration,”Young says.
The key to selecting the right
older-adult community is to find
one “that matches your interests,
health, lifestyle and, of course,
budgetary constraints,” says Amish.
“Planning for the future means tak-
ing into account mobility issues as
one ages.Ask yourself when shop-
ping around, is it handicap friendly?
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AFTER
more formal living room that
could still work as a family gather-
ing. It definitely made their house
more sale-ready – without spend-
ing a dime on new furniture.
© CTW Features
Kit Davey, an
interior design-
er based in
Redwood City,
Calif., helps
redecorate
homes through
the creative use
of their existing
furnishings. Send your questions
to kit@ctwfeatures.com
Is the home located on one floor?
Are there elevators or ramps? Walk-
in showers and grab bars? Are there
services available to support transi-
tions as one ages, such as cleaning
services, assisted-living support, spa
services such as massage for aging
muscles, and exercise classes and
fitness rooms?”
Most seniors assume they will
never need these things, but they
will,Amish says. For example, the
home should have wide doorways
to accommodate a wheelchair.Well-
lit paths are critical, too.
The best advice, Davis says,“is to
look beyond just the real estate
aspect and focus on the complete
lifestyle package. Does the commu-
nity fit your needs now and in the
future? Will living there encourage
you to stay physically active, men-
tally stimulated and socially con-
nected? Does the community pro-
vide you with a sense of security
for your future, especially in terms
of health care?”
© CTW Features
Ask Our Broker
CONTINUED FROM PAGE 1
job base growing? What’s a reasonable rental for
your property?
And when you hear about a sure-fire formula
that guarantees real estate results, hold onto your
wallet.There’s no such thing, otherwise we all
would be rich.
Q: Our current listing will expire in a cou-
ple of weeks. I’m looking for a broker who
specializes in my local area. I need someone
who is competent and, most importantly,
someone I can trust. My selling situation is
somewhat complicated because our house
will be divided after escrow between other
parties – our attorney and a plaintiff – as per
a court agreement. Any recommendations?
A: How profits will be divided does not make
the sale more complicated.You need to find a
buyer and then direct the settlement provider as
to how you want the proceeds of the sale distrib-
uted.To find a good local broker, speak with
friends and neighbors who have recently bought
or sold a nearby property, brokers who are active
in your immediate neighborhood and brokers
who are recommended by professionals you trust,
such as your doctor, lawyer or CPA.
Q: We’re selling our home for approxi-
mately $330,000. We are very confused about
who pays what. Do we pay the broker? Does
the buyer pay? Both parties? What percent-
age or amount should we pay for real estate
services?
A: Real estate fees and charges are not set by
law.As a consumer, you should seek the package
of services that best meets your needs.
As to who pays for what, a typical arrangement
would work like this: Owners agree to pay a list-
ing broker to market their home.A portion of the
listing fee is made available to other brokers who
locate or represent a ready, willing and able buyer.
However, there are a variety of approaches to
broker compensation.A 2006 study by the
National Association of Realtors shows that bro-
kers were paid by sellers in 81 percent of all
transactions, buyers paid in 5 percent of all sales,
buyers and sellers both paid a portion of the fee
in 8 percent of all transactions and 4 percent of
buyers and sellers had “other” arrangements.
Amazingly, 2 percent of the survey respondents
did not know how the broker or brokers were
paid.
For specifics, ask several local, active brokers in
your neighborhood to make listing presentations.
© CTW Features
Need real estate advice? Peter G. Miller, author of “The
Common-Sense Mortgage,” would love to hear from you.
Send your questions to peter@ctwfeatures.com. Due to
the volume received, not all letters may be answered.