Most seniors are aware of reverse mortgages, but many do not really understand how they work, and some of those people misunderstand how they work. We are seeing more articles, more discussion, more interest, and more utilization. In the next 10 years, the growth in reverse mortgage activity will be very significant for the welfare of seniors and for the economy.
The timing of the availability of reverse mortgages is good, with the Baby Boomers looking to retire, the loss of savings that many have recently realized, and the ever present unknown of the impact of future inflation. Many are fine with their retirement package, but many more are wondering how it is all going to work out. Ideally, a reverse mortgage would be in every senior home owner’s plan B. For many, the equity in their home is one of their biggest assets, and it is important to understand how to convert that equity into cash.
Most senior home owners will qualify for a reverse mortgage. Individuals need to be at least 62 years of age, own the home as a primary residence, and have a fair amount of equity in the home. The home owner’s income is not a consideration and their credit score is not a consideration. The factors that determine how much money is available are: 1) the amount of the current first mortgage, if any, 2) the appraised value of the home, and 3) the age(s) of the home owners.
The term reverse mortgage has a negative connotation to many people. Reverse mortgages have been around for more than 20 years and it has taken us a long time to grow accustomed. The truth is we are still battling the concept.
Most of us with a home have had a regular mortgage at some point, or at many points. A regular mortgage, sometimes referred to as a forward mortgage, has, at times, been a struggle for us. In fact, many of us still have a forward mortgage and cherish the day when it is paid in full. So entering into a reverse mortgage is yet another mortgage… ‘not a good thing’, we say to ourselves.
So let’s call it something different. Let’s call it a HECM (heck-um). FHA refers to this product as a Home Equity Conversion Mortgage. This name is another, more friendly, way of describing the product. You may have lots of equity in your home; this may be your biggest asset. The HECM product is a way of gaining access to this asset during your lifetime so that you can use the equity to enrich your life.
The next big discussion point is about leaving the house to the children. This seems to be a fairly common goal of seniors, and a very worthy goal. For those seniors who do not need to think about using the equity in their home, a HECM should not be in their future….end of discussion. But for seniors who have retired with a modest income, or who are struggling to figure out the finances of their imminent retirement, a HECM needs to be a serious consideration. Having a HECM does not mean that the asset is gone…..it does not mean that there will be no equity in the home for the children. It does mean that the senior home owners have access to some of the equity in their home if they need it.
Here is a scenario: A 67-year-old couple has intended to leave their home to their two children. They have no mortgage, a small pension, social security, and $100,000 in a 401k program. The 401k balance is a little less than it was and they have come to realize that it takes more to live on than they had anticipated. They are doing ok, but would like to have a little extra for an occasional trip. They are concerned about what they would do if the furnace gives out, and they wonder what they will do in three years when they will need to think about replacing their car. On the one hand, they hate to think about reneging on their intention to leave the house to their children, but on the other hand, they are only 67 and have lots of retirement years left. Their home is their biggest asset and they have worked hard for it all those years.
What would the children think? Would the children want them to be able to take a trip? Would the children want them to be able to upgrade their car in three years? Would the children want them to be struggling to figure this out when they have a significant asset available to them? The best bet may be to talk to the children. Tell them your concerns; tell them that you feel guilty using part of the equity in the home because it has always been your intention to leave the home to your children. Chances are pretty good that the children will encourage you to live your life. In fact, they’ll be relieved to know that you have another source of cash available when you need it. What the retirees have thought to be a problem is probably not a problem at all.
It may be a good idea to include your children in the discussions with the HECM specialist and with the counselor (the HECM procedures require that you talk to a specially trained counselor to go over the product prior to the actual application). It may be helpful to you and the children if your children understand the process. There are decisions to be made and a family discussion might be beneficial. Decisions would include when to start the process, and how to get access to the equity. Access to the equity can be a monthly check sent to the homeowners, an upfront lump sum, an available line of credit, or a combination of these. Family members will be glad to learn that their parents can live in the home as long as they are able, they will not need to make mortgage payments during that time, that the title to the home stays in their parents’ name, and that there will most likely be equity remaining in the home when the parents can no longer live in the home. The children will be enlightened to learn that, when it is time to repay the loan because the parents have left the home, the children can sell the home to recoup the remaining equity, refinance the mortgage if they want to keep the home, or simply walk away if they feel there is little or no equity.
A HECM specialist will be glad to print out data specific to your situation and explain, in detail, how it works and what your options would be. Getting more information can only be helpful to you whether or not you decide to use the HECM product.
An ordinary chair placed on a specialized platform raised about a foot off the ground might not look impressive, but the hidden benefits are there. Or at least can be heard and felt.
A new Williston-based company, Timbrephonics, is looking to harness the power of sound and vibrations to aid medical care professionals. Co-owners David French and Ole Hansen have developed a new vibroacoustic device that sends musical vibrations through a patient to aid in relaxation, pain relief and overall wellbeing.
Vibroacoustics is a method of taking low-frequency sounds and using the vibrations to help administer positive emotional and physical effects.
French and Hansen have developed what they call a “sound platform,” in which a chair can be placed on a specially designed stand that maximizes vibrations.
French comes from a background in music and philosophy, and Hansen owns Hansen & Son in Shelburne, a piano refurbishing and tuning center. The international medical supply company, Laborie Medical Technologies, helped fund the creation of the sound systems and distributes the products all over the world. The company’s local offices are located on Avenue D.
As French explained, it’s not so much the chair as what’s beneath it. Timbrephonics’ platforms, made of red Adirondack spruce timber, are designed to gently pass vibrations from a speaker up through a chair. A tactile transducer speaker is installed in the middle of the platforms. Any chair will do, said French, but many medical offices use the platforms in conjunction with medical or massage chairs.
French said the main benefit of vibroacoustic therapy is relaxation. Easing a patient’s mind and body can help in physical therapy or surgery. Plus, vibroacoustics just makes you feel better, French added.
“It’s the feeling of (a platform) that stimulates that relaxation response,” French said. “If you have a patient relaxed, then you have the ideal patient.”
The U.S. Food and Drug Administration also sings the praises of vibroacoustics. According to its Web site, the FDA considers vibroacoustic equipment as a class one medical device. Class one devices are low-impact medical instruments that provide patient care. The FDA also recognizes that vibroacoustic devices aid in relaxation, pain relief and in increasing blood circulation.
The National Institute of Health has also done studies in regards to vibroacoustics. In a 1999 study found on its Web site, 49 percent to 59 percent of cancer patients tested noticed a relief in different areas of pain.
“When you have stress and tension, that’s unhealthy,” French said. “Music has always helped to calm the nerves.”
The platforms don’t run cheap. French said a sound platform system costs between $3,500 and $4,500 depending on size and materials.
French and Hanson are also looking to expand the Timbrephonics business into the home entertainment field. At Hansen’s Shelburne store, an entertainment system is set up, complete with speakers, a flat screen television and a sound platform. Hansen believes the sound platforms will sell themselves once customers try them.
“A lot of people aren’t afraid of spending a lot of money on home entertainment,” Hansen said.
Currently, Timbrephonics has sound systems in several prominent hospitals and medical centers across the county, including Fletcher Allen Health Care’s Continence Center in South Burlington. There is also a home entertainment setup displayed at Creative Sound in Williston.
French said a Timbrephonics Web site is forthcoming, but interested parties can call him at 802-752-6574, or Hansen in his store at 985-8451 for more information.By Tim Simard
During a recent lunch hour at Natural Provisions in Williston, the parking lot quickly filled with customers. A lengthy line formed inside the market at its new hot lunch organic buffet. Another group of shoppers picked up grab-and-go all natural and healthy sandwiches.
Natural Provisions Co-General Manager Peter Lafferty said these types of steady customer rushes are a common daily occurrence, even in the face of the struggling economy.
“I literally have customers coming in every day of the week to get what they’re going to eat for that day,” Lafferty said. “They want the freshest produce.”
Business is also strong at Healthy Living in South Burlington. During an evening dinner shopping hour at the market on Dorset Street, the parking lot was packed. Healthy Living had as many customers shopping its aisles as the nearby Hannaford Supermarkets store did near the University Mall.
In recent years, natural and organic foods have become more and more familiar to conventional shoppers, launching it into a multi-billion dollar industry. In Vermont, natural and organic foods are becoming almost synonymous with locally grown products, something residents find especially appealing.
“People want to know where they’re food is coming from,” said Eli Lesser-Goldsmith, general manger of Healthy Living. “They want to get it close to home and know that it’s clean and safe.”
Residents of the Champlain Valley have a surprising number of places to shop for natural and organic products. Natural Provisions, Healthy Living, and the City Market/Onion River Co-op in Burlington offer a market shopping experience, complete with produce, deli and meat sections. These stores also have a focus on locally grown products or items from locally owned sellers.
Smaller natural food stores can also be found throughout the area, including the Sweet Clover Market in Essex.
Major chain supermarkets are also getting in on the natural and organic foods business. Stores such as Shaw’s Supermarkets have a section called Wild Harvest, and Hannaford Supermarkets also have a natural foods section.
“(Natural and organic foods) are definitely the wave of the future here,” said Lafferty. “It’s becoming much more mainstream than it ever was.” It’s safe to say the organic food market has exploded in the past 20 years.
When organic foods and beverages first entered the mainstream consciousness in the 1980s, it was a $100 million industry. That’s miniscule compared to what it’s become today. In 2008, it had grown to a $23 billion industry, according to a study conducted by the Organic Trade Association.
Even in the face of the sluggish economy, the organic food industry is still expected to grow, although at a slower pace. This can be attributed to a large core group of customers that have made the choice to buy only natural foods, said Lesser-Goldsmith.
“People do not cut corners in terms of food, especially when it concerns they’re health,” Lesser-Goldsmith said.
Natural and organic foods are minimally processed. For instance, these foods do not include ingredients such as hydrogenated oils, food colorings and refined sugars, among other processed materials.
Instead, natural and organic foods use ingredients found naturally in the environment. Maple syrup and raw honey could replace white sugar in certain products, and sea salt is preferable over standard table salt. Vegetables are grown organically and free of pesticides, and meats are processed free of growth hormones and other unnatural additions.
For a food product to be labeled organic, it must first be certified. The U.S. Department of Agriculture certifies products based on their organic components in three categories. Entirely organic products can carry the “100 percent organic” label. Products that are 95 percent organic can carry an “organic label.” Products that are at least 70 percent organic can be labeled “made with organic ingredients.”
Perhaps the biggest draw of buying natural and organic foods is the health benefit. Lafferty said it’s one of the main reasons new customers walk through the doors of his store every day.
“Our focus is on products that, in one way or another, have some sort of health benefit,” Lafferty said.
Lesser-Goldsmith said many first-time customers come to his market with the idea they need to lose weight or make a significant life change. Lesser-Goldsmith said it’s a huge leap for someone unfamiliar with the natural and organic food world.
“You can tell these customers when they come in because they have a ‘deer in the headlights’ look to them,” Lesser-Goldsmith said.
Staff at Healthy Living are specially trained to help and inform these new customers, Lesser-Goldsmith said. It’s not uncommon for a staff member to spend a long time touring the market with a customer and informing them about different products and how they benefit people.
Answering a person’s questions and remembering their name when they return goes a long way building a customer base, said Lafferty. Superior customer service is what can make a store or market stand above others.
“We want to bend over backwards and get people what they want,” Lafferty said. “It’s that willingness to go the extra mile that customers remember.”
With traditional supermarkets edging into the organic food world, Lesser-Goldsmith said it wouldn’t be affecting his market much. Customers return because of the expert service, he said.
Prices at natural and organic food stores can sometimes be higher than the costs of conventional groceries. But informed shoppers can find ways to make natural food shopping cost effective. And in the current economy, markets have been adapting to the times by offering more sales and deals, said Lesser-Goldsmith.
“But our quality has never wavered, and never will,” he said.
In light of the economy, Lafferty said Natural Provisions has expanded several programs designed to cut costs for customers. The store recently started a vitamin program, which allows customers to save on vitamins through a point system.
And the store also has a popular seniors program for individuals 60 and older. Seniors can receive 10 percent off all regularly-priced items in the store every day, Lafferty said.
Both Lafferty and Lesser-Goldsmith foresee the organic industry will only grow in the coming years. As people become more health conscious, they turn towards natural food stores.
“People are taking more of a responsibility for their health and we can help them,” Lesser-Goldsmith said.