So you’re interested in a VA loan, but you’re confused about some of the terms? You’re not alone. One of the most common questions that’s asked about VA loans is “What is the funding fee?” Simply put, the funding fee is a cost associated with obtaining a VA loan. Because VA loans are paid for both by the government and taxpayer dollars, the funding fee helps to offset the cost of administering the loan.
A potential tidal wave is slowly building in the real estate world, and it’s expected to begin wreaking its financial havoc toward the end of the decade, peaking around 2020. The quake that triggered it all started in 1946 and lasted some 18 years, tapering off around 1964. That historical period is affectionately known as the Baby Boom, when post-war babies were born in the millions. These babies are now between 50-67 years old. They are at or near retirement age, and many of them no longer need the large homes in which they raised their families.
To Move or Not to Move
These boomers are getting ready to downsize, simplify their lives and trade off mowing the lawn for other activities. The tsunami effect happens when all these people try to sell those big, expensive properties, and there are not enough buyers. The majority of the younger folks—the ones who need and want these large homes—can’t afford them. The sad fact is that U.S. incomes are declining due to a variety of factors, not the least of which is inflation and higher costs of living.
This Supply/Demand Imbalance May Cause Prices to Drop
The Bipartisan Policy Center reports that over the next five or six years, baby boomers will increasingly put their houses on the market. This will steadily increase the unsold inventory of U.S. homes, and such a supply/demand imbalance will cause housing prices to drop and siphon equity off boomers’ biggest assets.
On the flip side of this downsizing picture, the number of suburban condos and urban apartments for sale or rent will decline with the increased demand from the burgeoning crowd of boomers—thus causing these prices to rise and putting added pressure on the retirees’ ability to pull off the swap.
Aging in Place
Nearly half of all boomers actually wish to to stay in their homes, a phenomenon dubbed “aging in place.” These boomers won’t be affected by the expected market changes, but they do have their own set of impending problems. Is the house set up to function as long as they live? Do they have the right property insurance and coverage? According to a survey done by The Hartford AARP and Massachusetts Institute of Technology (MIT) AgeLab, three quarters of boomer couples have talked about age-related changes, but less than a third have planned anything. Over 95 percent know what changes to make, but just one quarter have, in fact, made any modifications.
Home for a Lifetime
The Hartford and the MIT AgeLab recently launched an initiative called Home for a Lifetime to help boomers determine whether their property will need remodeling to meet their needs as they get older. Using what they learned in the Home for a Lifetime research, The Hartford developed two guides, “Modern Ideas, Modern Living” and “Simple Solutions,” which they provide free of charge. The books offer no-nonsense information and tips about how to create a new lifestyle plan. You can download the books or order by mail. Jodi Olshevski, a gerontologist at The Hartford, had this to say about the project: “We are launching Home for a Lifetime to encourage people to be thoughtful about creating a living environment that works regardless of their stage of life.”
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