Affordable Home Staging Strategies

These are some great suggestions. Additionally, remember to ensure your home is clean! Take the time to mop your hard surface floors and vacuum the carpets- buyers love vacuum lines! You should also pay attention to scent. It’s a good idea to place “plug-in” type air fresheners in each room. Consider alternating scents that compliment each other so that potential buyers notice a pleasant smell in each room as they enter it, instead of adjusting to the same consistent scent. Need more ideas? Give me a call- I can help! Good luck 🙂


Affordable Home Staging Strategies

An open house can be the selling point for potential buyers, and most sellers understand the importance of staging a home properly. However, few homeowners want to spend a great of money redecorating their homes. The good news is, there are several ways for sellers to stage their homes beautifully without reaching too deeply into their pockets.

Do some research

For homeowners who are unsure how they should stage their homes, speaking with a real estate professional is the first step. Real estate agents have most likely attended several open houses and have unique insight into what buyers may be looking for. In addition, homeowners themselves may benefit from venturing out to staged model homes or open houses in the area, and examining the techniques other sellers are using.

Sellers should first rely on what they have

Before going out and purchasing a new living room set, sellers should focus on decluttering their homes, cleaning it until it’s spotless and making any necessary repairs or alterations before purchasing new items. They may find that they already have all the items they need to stage their properties. If not, all the legwork will be done and sellers will have a better idea of what they are lacking before they seek out accent pieces, plants and other popular staging products.

In addition, rearranging a room to highlight certain areas or making the room feel more spacious can also have a great effect on a home staging. For example, framing a living room around bay windows and adding a bookcase or two to a home office can make a room look more appealing.

Focus on subtle changes

Homeowners who still feel their home needs sprucing up should explore small changes that may change the look of a room. For example, adding a fresh coat of paint (many suggest a neutral shade), purchasing updated kitchen appliances and putting in new lights, doors or window treatments can have a profound effect on a room. Purchasing small items, such as colorful picture frames, books and lamps may also make a staged home appear more warm and lived-in.

Lastly, homeowners who are staging on a budget may also consider borrowing small accent pieces from friends and family to cut the costs of purchasing new items.


They say timing is everything in life. And that’s particularly true when it comes to real estate. If you’ve been thinking about selling your home but are not sure if this is the right time, think again: There may not be a better time to sell than right now.

We are experiencing a severe shortage of homes for sale in our area. Our inventory of listings is at the lowest level it has been in many years. Buyers are out there each weekend scouring the neighborhoods for homes to buy; buyers are ready to make a move when they find a house to buy.

With so few homes available in this market, if you were to sell your home now you could potentially get the highest price since the downturn of the housing market. With buyers far outnumbering available homes for sale, sellers are often getting multiple offers – sometimes a dozen or more – often closing at a price that is significantly more than their asking price.

We’re not alone here in the Sacramento/Tahoe region. The low inventory of for-sale homes is creating a seller’s market throughout the country, according to an article by the National Association of Realtors®. NAR reported that “Buyers and Agents are literally waiting for the next house” to come on the market in many cities.

According to NAR, the supply of existing homes for sale reached nearly an eight-year low in January. Nationwide, there is a 4.2-month supply of existing homes for sale and it could take some time before we reach a more balanced market. There are a number of reasons for the shortage of listings. The number of distressed houses for sale is decreasing as the foreclosure crisis recedes. New home construction is improving but still at low levels in most areas of the country. And many homeowners still believe they are too underwater on their mortgage or may not have enough equity in their property to buy their next home.

But you may be surprised at how much the tide has turned in the last year.

Multiple offers and bids over the asking price are pushing up home values in many areas. Properties that looked like they would have to sell as a short sale have ended up pricing out as a traditional equity transaction with homeowners walking away with cash from the sale. We are experiencing this change in the market every day.

In a recent Money magazine article, reporter Beth Braverman said homeowners might be wise to sell now rather than hold off. “It’s tempting to postpone selling to hold out for a better price,” she said. “But if you want to move to a larger place, act sooner rather than later.”

While you might be able to sell your home for more if you wait, there’s no way to tell what the future will hold. When more homeowners eventually decide to come into the market, the balance of supply and demand could change in favor of buyers once again. And even if prices go up in the future, the appreciation on a trade-up home could be even greater.

As we travel through life, housing needs evolve. You may have outgrown your starter home and need more space now that you have children. Perhaps you want to move to a similar home on a quieter street. You’ve decided to downsize now that the kids are on their own and you are empty nesters. Or you’re just tired of maintaining that big yard in your current home.

Whether you’re moving up, across or downsizing, whatever the reason for your move, it’s important to work with a well-qualified professional Realtor® who can help make the transition a success.

In order to get the best possible price for a home, you must expose it to the largest number of potential buyers. Start by hiring an Agent from a reputable firm who specializes in your local area.

Your Agent must be able to showcase your home in a variety of traditional and online media including professional photography, direct mail, property flyers, listing syndication, social media, and electronic communication to area Agents.

Additionally, your Agent should also identify the key selling features of the home and actively promote the property to other Agents during the brokers’ tour and to potential buyers during an open house.

Your best choice is to start by hiring the Sacramento/Tahoe region’s leading real estate services company, Coldwell Banker Residential Brokerage. Our proven marketing plan will showcase your home to the widest possible audience of qualified buyers and net you the best price possible for your property.

Selling your home can be a complicated and stressful process. But it doesn’t have to be, especially when you are working with the best. As a full-service company, we are with you every step of the way, keeping you informed about the entire transaction.

As your professional Realtor®, I can help you navigate through the process of selling your home and even help you find your next home that fits your current situation. Contact me today for a private consultation and to learn more about my comprehensive marketing program.

As they say, timing is everything.

This Reality Check is brought to you by Coldwell Banker Residential Brokerage, the leading provider of real estate services in Northern California. Coldwell Banker Residential Brokerage is home to more than 3,600 Sales Associates of the region's most successful real estate professionals.

Jessica Hays
(916) 691-8086
(916) 208-4347

From the first time home buyer, to the savvy investor - from the seller with equity, the seller underwater and needing options - I am here for you. 

View My Website


©2013 Coldwell Banker Real Estate LLC. All Rights Reserved. Coldwell Banker® is a registered trademark licensed to Coldwell Banker Real Estate LLC. An Equal Opportunity Company. Equal Housing Opportunity. Each Coldwell Banker Residential Brokerage Office Is Owned by a Subsidiary of NRT LLC. If your property is listed with a real estate broker, please disregard. It is not our intention to solicit the offerings of other real estate brokers. We are happy to work with them and cooperate fully. DRE License #01908304



Reality Check | Homebuyer Growing More Optimistic

A new homebuyer/Agent sentiment survey by Coldwell Banker Residential Brokerage’s parent company has found a growing sense of optimism among buyers as the nation’s housing market continues to improve. In particular, buyers are becoming more confident about the stabilizing and increasing value of home prices.The annual homebuyer survey, which drew 5,865 responses, was designed to discover what was behind the recent increases in buyer demand. The key finding here seems to be a growing optimism about improving prices, which appears to be driven by an extreme shortage of homes for sale in many markets.

While low interest rates and change in life situation were cited as the two highest factors motivating buyers, expectation that home prices will rise – a very new sentiment among buyers – came in a very close third. This optimism over values grew the most over the last 12 months (61 percent) closely followed by “increased optimism around selling” (51 percent).

Dan Barnett, senior vice president of marketing for Coldwell Banker Residential Brokerage’s parent company, said there is a very clear correlation between a growing optimism over prices and buyer frustration over the lack of homes for sale. The graph below depicts results by various NRT local operating companies:

Despite increased buyer and seller optimism overall, there still does not seem to be a big increase in move up buyers. About 42 percent of Agents said move-up buying was increasing “modestly” and only 7 percent said it was increasing significantly.Below are the results of the survey:

What is motivating buyers to look now (factor is “very motivating” or “motivating”):

83% Low interest rates
60% Change in life situation
57% Expectation that home prices will rise
51% Job relocation
46% Real estate investment value
43% Confidece in personal economic outlook
42% Increased optimism around selling
37% Rising rental prices

Which factors have become more important now than a year ago:

61% Expectation that home prices will rise
51% Increased optimism around selling
44% Low interest rates
35% Real Estate investment value
34% Confidence in personal economic outlook
28% Rising rental prices
27% Change in life situation
22% Job relocation

What are buyers complaining about:
(% saying “frequently” or both frequently and “more often than not”)
41% (69%) Lack of inventory
19% (52%) Uncertainty in economy
11% (44%) Home affordability
19% (43%) Difficulty with mortgage appraisal
18% (42%) Difficulty qualifying for a mortgage

How do buyers cope with limited inventory (Agent could pick more than one):
87% considered expanding the geography they would consider
85% prepared to pay more
74% considered distressed properties
70% stopped looking
54% considered buying new construction
54% considered foregoing a move

What is happening in the overall market:

63% of our Agents found that home prices were increasing, with larger increases identified on the west coast. Half of the San Francisco Agents described home prices as increasing significantly.

78% of our Agents found inventory to be decreasing. Atlanta, Florida, Hawaii and Sacramento are feeling the most constrained by low inventory.

Transaction volume:
Agents report that transactions are up somewhat – 40% – with the most activity being reported in the Midwest and West.

Buyer confidence:
60% of Agents report that buyer confidence is increasing, across the board. Sacramento and Harrisburg, while generally positive, lag the nation.

So what does all this mean for you? Every day, both buyers and sellers are growing more confident as the housing market continues its steady rebound. If you have been thinking about buying a home, you shouldn’t wait too long. We have a good window of opportunity right now when interest rates are low and prices are still very affordable. But that won’t last forever, as history has shown us. Even a small jump in mortgage rates could significantly change how much you’ll end up spending on a home. If you’ve been considering buying a home, there may not be a better time than now. I’m ready to help you find the home of your dreams today. Let’s get started!

©2013 Coldwell Banker Real Estate LLC. All Rights Reserved. Coldwell Banker® is a registered trademark licensed to Coldwell Banker Real Estate LLC. An Equal Opportunity Company. Equal Housing Opportunity. Each Coldwell Banker Residential Brokerage Office Is Owned by a Subsidiary of NRT LLC. If your property is listed with a real estate broker, please disregard. It is not our intention to solicit the offerings of other real estate brokers. We are happy to work with them and cooperate fully. DRE License #01908304

The Ultimate Guide to Winning the Battle Against Mosquitoes

The Ultimate Guide to Winning the Battle Against Mosquitoes

August 14, 2012
Posted by Lindsay Listanski in Tips for Home



modqqqs The Ultimate Guide to Winning the Battle Against Mosquitoes

One of the ultimate buzz kills of a backyard BBQ is having party crashing, ankle biting, blood sucking mosquitoes as your “uninvited guests”. In addition to leaving their gift of an itchy bite in the most uncomfortable and hard to reach places their bites also leave a possibility of disease transmission. Take a look at these helpful hints for limiting their habitat on your property and other repellent options.

Remove Standing Water

Mosquitoes LOVE water because they require it to breed. This is why a rainy spring often leads to a mosquito filled suggests these four tips:

Drill holes in the bottom, not the sides, of any garbage or recycling containers stored outdoors. Holes on the sides still allow enough water to accumulate in the bottom for mosquitoes to breed.

Keep gutters clean and unclogged. Be sure your downspouts drain properly, without leaving puddles in the drainage area. You may need to reroute your downspouts or add extensions to carry water away.

Keep swimming pools cleaned and chlorinated, even when not in use. Homeowners who go on vacation without chlorinating their pools may return to a veritable mosquito hatchery.

Dump anything that holds water twice per week if it has rained. Birdbaths, non-chlorinated wading pools, footbaths, garbage can lids, and pottery will all attract breeding mosquitoes. Remember to empty the saucers under your flower pots, and don’t leave water in pet bowls for more than two days.

Choose Your Lighting Wisely

Replace outdoor lights with yellow bulbs, which are less attractive to mosquitoes. Products such as tiki torches, citronella candles, and lanterns will keep the pests away from the immediate area where you’re dining al fresco. (

Guard Your Body

While some prefer to spray mosquito repellant others prefer an all-natural pest repellent. If you aren’t a fan of sprays like Off or Repel there are many natural DIY alternatives you can make yourself. One trick that has worked for me is sticking a Bounce® brand dryer sheet in each pocket. Something about these fabric softener sheets repels them…and bonus…it smells awesome!

Don’t Bother Trying These

According to Wayne J. Crans, Associate Research Professor in Entomology at Rutgers University, these often-touted mosquito solutions are not worth your time or money.

Bug zappers. Though the satisfying sizzle you hear from this modern day insect torture device will convince you it’s working, don’t expect much relief from backyard mosquitoes. According to Crans, biting insects (including mosquitoes) generally make up less than 1% of the bugs zapped in these popular devices. Many beneficial insects, on the other hand, do get electrocuted.

Citrosa plants. While citronella oil does have proven mosquito-repellent properties, the genetically-modified plants sold for this purpose do not. In tests by researchers, the test subjects bitten as often while surrounded by the Citrosa plants as without them. In fact, mosquitoes were observed landing on the leaves of Citrosa plants during the study.

Bats and/or purple martins. While both bats and the colonial purple martins will consume mosquitoes, the offending insects make up a small percentage of their natural diet. Assertions about these insectivores being effective mosquito controls grew out of misrepresented and misinterpreted data from unrelated studies. While providing habitat for bats and purple martins has its value, don’t do it if only to reduce your mosquito populations.

Electronic devices that transmit sounds to mimic male mosquitoes or dragonflies do not work. Crans goes so far as to suggest “the claims made by distributors border on fraud.”

Learn the Facts

Every kid remembers an adult trying to console them in the midst of an itching episode with “they like your blood because you are so sweet” but I always wondered if mosquitoes actually have a preference for their victims. I found this Are You A Mosquito Magnet Infographic pretty interesting and hope you do too!

Minfographic The Ultimate Guide to Winning the Battle Against Mosquitoes

What steps do you take to keep mosquitoes away from your yard?

Related posts:

  1. The Ultimate Entertainment House
  2. Outfitting the Ultimate Lego House

Kris Vogt 2012 LLS Man of the Year Nominee

I am so proud to be a part of Coldwell Banker, and to work for a man like Kris Vogt. Please participate in this great cause in any way you possibly can.


From the first time home buyer to the savvy investor – from the seller with equity to the seller underwater and needing options – I am here for you.

2011 Real Estate Reality Check!

Leslie Appleton Young, the chief economist for the California Association of Realtors, recently noted that all that California’s real estate market really needs to right itself is six straight months with no surprises. All the ingredients for a turnaround are there — record low interest rates, outstanding affordability, and very attractive home prices. But economic and political headwinds at home and abroad kept the market from really gaining much momentum this year. To be sure, 2011 was anything but predictable. On top of the tepid economic recovery here in the U.S., there was one crisis after another around the world — the Japanese Earthquake and Tsunami, the “Arab Spring” uprising, a spike in oil prices, political standoffs on Capital Hill, the debt limit ceiling and downgrade of U.S. debt, and most recently the sovereign debt crisis in the eurozone and the subsequent stock market volatility here at home.While California’s real estate market did show some encouraging signs of improvement in certain price segments and communities, skittish consumer confidence, the sluggish economy, stubbornly high unemployment and volatile financial markets all combined to keep home prices and sales flat in most areas. Locally, The Sacramento Bee reported on November 17 that home sales in the Sacramento region in October — the most recent figures available — jumped 19.6 percent from a year ago, according to research by DataQuick, the La Jolla real estate information firm. But the median price edged lower as distressed home sales continued to be the lion’s share of the market. The median sale price in Sacramento County was down 8.2 percent to $157,000, according to The Bee. Placer County saw the median drop 12 percent to $252,000. In El Dorado County, the median was down 12.2 percent to $230,000. And in Yolo County it was off 14.6 percent to $194,750.The California Association of Realtors, in its annual forecast predicts that home sales in California will rise just 1 percent in the coming year. But as we know, real estate is really all about location. And in this challenging housing market, it’s also a matter of price segments. Locally, entry level homes and distressed properties continue to see robust sales in many areas as bargain hunters rush to take advantage of attractive prices and, of course, low interest rates. As a result, we actually have seen inventory drop sharply this year to the lowest level in about two years.Market wide, we are down to 4.2 months supply of homes on the market, according to MLS figures — a 31 percent decline year over year. At the same time, sales year over year market wide were up 16 percent. That trend, if it continues, could be very positive for the market and help it move back towards normalcy.Distressed vs. Luxury Markets
One trend we’ve noticed of late is a drop in the number of bank-owned properties that are listed for sale and an increase in short sales. The reason may be that government regulations and controversies over “robo-signing” have kept more foreclosures from coming on the market. As banks put the robo-signing debacle behind them, we may see more REO properties released in 2012.
While the release of additional distressed properties could keep prices of all homes down in 2012, we suspect that strong demand by investors for these homes will probably keep prices from falling much further. We’ve seen multiple offers for many bank-owned properties, sometimes all cash offers, as investors snap up what they believe to be great bargains.On the other end of the spectrum, the high-end market saw solid buying throughout much of 2011. But in recent weeks we have seen that interest decline, with sales dropping 8 percent in September and inventory levels rising 2 percent from the previous month. Non-distressed mid-market
Homes that are somewhere between distressed and luxury properties – the bulk of the market here in Northern California – probably were the most challenged in 2011. One big reason for the softness is that we didn’t see very many move-up buyers trading their entry-level homes for larger, more expensive properties as they have traditionally done in the past.
Equity homeowners stayed on the sidelines, perhaps due to a lack of confidence in the housing market and the economy in general. They may have been frightened away by doom and gloom news headlines about the housing market, or maybe fear over whether they might lose their job should the economy stumble again. This uncertainty and lack of confidence, I suspect, will continue to some degree into 2012 until there is more positive improvement in the economy.But as we approach the new year there are glimmers of hope that the housing recovery could finally gain some traction.Gradually we’re seeing fewer distressed sales and more “normal” transactions. Despite the recent downturn, the high-end market had a solid year in 2011, which is a good sign for the entire market.In the past, luxury homebuyers – the so-called “smart money” – are often the first to declare a market bottom and jump back in because they have the means to do so once they are convinced the time is right. The other segments eventually follow.Buyers are far more active right now and that, coupled with tight inventories, is helping to firm up pricing while getting serious buyers to be a little more realistic when making offers–especially in the entry-level arena. Properties priced correctly and that show well are getting a tremendous amount of traffic as well as multiple offers in some cases.Additionally, we are finally seeing many banks starting to process short sales in a more streamlined fashion, allowing us quicker short sale approvals. Finally, the news media are starting to join the chorus suggesting a turnaround is near and that now is the time to get back into the housing market. A recent Fortune magazine article declared, “Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.” And The Wall Street Journal followed with a headline declaring, “It’s Time to buy that House.”So will 2012 usher in a steady, predictable economic recovery at long last or another wild rollercoaster ride of economic and political surprises? Only time will tell how it all plays out. Fasten your seat belt

From the first time buyer to the savvy investor – From the seller with equity to the seller underwater and needing options. I am here for you.



Are you paying too much in property taxes?

Do you know how much your home is currently worth? Is that amount lower than the assessed value of your home on which you are taxed?  As it turns out, Sacramento County allows its residents to apply for reassessments based on declines in market values via Prop 8.  Prop 8 reassessments are temporary reductions in the assessed value of your home.  Here’s how it works:

Property owner provides Assessor with facts they feel justify a reduction in value and requests a review of the property’s value. (The Assessor may initiate the review if the problem is discovered independently*.)

Appraisal staff reviews market data, estimates the property’s market value as of January 1st and then compares this market value to the property’s current Prop 13 factored base year value.

If the January 1 market value is below factored Prop 13 value, then:

  • Assessed value is lowered to market value for next fiscal year.
  • Owner is notified of reduced value.
  • New tax bill is based on lower value for next fiscal year.
  • The following year, Assessor repeats process and enrolls the January 1 market value at that time or Prop 13 factored value, whichever is lower.

If January 1 market value is higher than factored Prop 13 value, then:

  • No change in assessed value is made, and
  • Owner is notified that value will not be reduced.
  • If owner still feels value should be reduced, then owner may file an assessment appeal with the Assessment Appeals Board, from July 2nd – Nov 30th each year.
  • Appeals Board hears evidence from owner and Assessor; the Board then determines proper assessed value

*The Assessor may also initiate the Prop 8 process without a request from an owner.

THERE IS A DEADLINE! All applications must be filed by 5:00 pm on November 30th to be considered.  There is a non-refundable $30 application fee.  You’ll need to fill out THIS FORM to apply.

Need help figuring out your current assessed value and/or market value? Give me call! I’m happy to be your real estate resource.

From the first time buyer to the savvy investor – from the seller with equity to the seller underwater and needing options. I am here for you.

Jessica Hays
Mobile: (916) 208-4347  Fax: (916) 684-7706

Website:  Blog:
Twitter: @JessSellsHomes  Facebook:
LinkedIn:  DRE: 01878401

A Winning Combination!

Coldwell Banker and Jessica Hays….
A Winning Combination

I am honored to announce that I have joined forces with Coldwell Banker, one of the most widely respected and trusted real estate names in the nation.

I am certain that my progressive approach to marketing, dedication to perfection and uncompromising service, combined with the unparalleled resources available through Coldwell Banker will create a winning combination.

Together, we are poised to deliver the highest degree of service through our unmatched global network, nationally acclaimed marketing resources and knowledge of the local Elk Grove market.

Please feel free to count on me to be your real estate resource. I am happy to keep you informed with up-to-date market information, and will continue to answer any questions you may have. For expert representation in buying or selling your home contact me today.

From the first time home buyer to the savvy investor; From the seller with equity to the seller underwater and needing options… I am here for you.

Ten Years Later…

Wow. I’m looking at this blog and I realize that I let an entire month pass by without a single post. Why? Because I’ve been busy. I let myself get caught up in the hustle and bustle of work and life, and I have to admit that I really haven’t taken the time to appreciate all of the things I have to be grateful for (and there’s a lot).

I woke up this morning and let reality wash over me. It’s been ten years since the September 11th attacks and yet I can recall every detail as if it were yesterday. I lived in the bay area at the time. I had my alarm clock radio tuned to Z95.7’s Jean & Julie Show in the Morning. I hit the snooze button twice that morning before I heard what was happening and in an instant I felt small and insignificant. On September 10th 2001 I was absolutely convinced the world revolved around me and my needs, and the very next morning I realized how little it all mattered. As I watched our nation band together in the following days I was filled with sadness but also overwhelmed with a sense of pride and companionship. Kathy Ollerton-Krafchow, co-owner of Better Homes & Gardens Real Estate Mason-McDuffie, created a charity called the World Transformation Center. She led a group of individuals to Ground Zero to assist the families of the victims and care for the rescue workers between shifts. I was still fairly young at the time, and not yet working with Mason-McDuffie. My mother, however, had a relationship with Kathy and followed her to New York. I believe she was rightfully changed for having experienced it. Eventually, I was able to join her for one of her many return visits to New York to work with students who survived the ordeal. I gained a greater sense of belonging in this world. I had an understanding that I was one piece of a grander puzzle.

I’m ashamed to say that over the years I’ve managed to lose that. I woke up yesterday morning, September 10th 2011, back to believing the world revolved around me and my needs. I’m blessed to have a career that I love. I impact the lives of people on a regular basis. Whether I’m helping struggling homeowners to short sale their houses and get on the road to a fresh start, or helping buyers to make the next step, I’ve always felt that my work has the potential to change people’s lives for the better, which is a pretty amazing feeling. Even so, I’ve really let that philosophy fall to the wayside. I’ve gotten so wrapped up in the paperwork, and negotiations, and marketing, and meetings that life has really just been passing me by.

That reality hit me like a ton of bricks today. I’m grateful that the 10th anniversary of the 9/11 tragedy fell on a Sunday, because a realization like that really left me needing a good church sermon. I have a lot to be thankful for in this life. I am married to my best friend of 9 years and we have a beautiful little girl who’ll be celebrating her 4th birthday next month. I have a great job that I’m passionate about. I live in Elk Grove, an amazing community with all the amenities one could think to ask for. My husband is a combat veteran who has served our country honorably and was blessed to be able to come home. I know many women who cannot say the same.

Today has been a long day of reflection for me personally, and I’ve realized that I need to get back to the basics. I need to make a point of dedicating time to appreciating the many blessings this life has to offer instead of dwelling on its obstacles. I hope you do the same.

Jessica Hays

The Pros and Cons of Reverse Mortgages

Another cause and effect of the four-year housing recession is the surprising gain in popularity of reverse mortgages. Once prey for predatory lenders, older homeowners who want to tap their home’s equity safely are more protected under today’s stricter guidelines.  

Conventional reverse mortgages are only available to homeowners aged 62 or older, who occupy the home as a principal residence, and who either own their home outright or have substantial equity in the home. Credit worthiness is not a factor, nor is monthly income, but homeowners are expected to pay hazard insurance, pay property taxes and maintain the property.

Approximately 90% of reverse mortgages are conventional loans, or FHA-insured Home Equity Conversion Mortgages (HECM).   The HECM guarantees that the FHA will meet the lender’s obligations to the borrower, limits loan origination costs, and ensures full repayment of the loan to the lender up to the maximum claim amount, explains Dr. James Gaines, research economist for the Real Estate Center at Texas A&M University.

How reverse mortgages work is ingenious, and they can be a blessing to homeowners who want to stay in their homes. With a typical loan, borrowers pay interest added to the total payment. With a reverse mortgage, the interest is subtracted from the current price of the home, and the borrower is given the difference.

“Reverse mortgages are based on the home’s current value, borrower’s age and existing interest rates,” says Dr. Gaines, “Borrowers can choose to receive loan proceeds in a single, lump-sum payment, as periodic predetermined payments, a line of credit or both.”

According to Dr. Gaines, reverse mortgages have definite pros and cons that should be considered carefully by borrowers. In fact, FHA insists that homeowners are counseled to make sure they understand the transaction before they are allowed to sign for the loan.

According to the July 2010 Tierra Grande, a publication of the Texas Real EstateCenter , the pros and cons of a reverse mortgage are as follows:


Pros of a Reverse Mortgage:

  • No fixed due date
  • No repayment required as long as the home remains the principal residence of the borrower
  • Nonrecourse loans – the amount can never exceed the selling price
  • Borrowers hold title to property
  • Loan proceeds not taxable
  • Flexible payment options


Cons of a Reverse Mortgage:

  • Loan-to-value ratios typically yield only 65% to 80% of the home’s present value
  • Upon death, the loan’s interest and costs are due and payable, usually requiring the sale of the home. Inheritance planning may not please heirs, who may have to pay back the loan to retain the home.
  • Foreclosure is still possible, if the borrower fails to remain in the home for 12 months, or fails to pay taxes or maintain the home.
  • Terms and conditions of reverse mortgages may be difficult to understand and borrowers may also be targets for aggressive sales pitches or other expensive or inappropriate services or products.

With an aging population that is living longer and likely to outlive savings or outspend Social Security and other retirement funds, reverse mortgages can be a legitimate option for homeowners, as long as they and their heirs fully understand all the pros and cons.