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Nov, 6, 2020 Topic: Home Equity, Equity

Home Equity – An introduction

At SmartRE, defining home equity is an existential exercise.  As democratizers of the homeownership experience, we spend every moment trying to help our buyers and homeowners mutually benefit from home equity. 

Home equity is the value of a home that is owned by the title holder.  It is defined mathematically by the formula “Home Value – Outstanding Home Debt = Home Equity”.   So, if the home’s value is $1,000,000 and there is a $500,000 mortgage on the home, then the title holder has $500,000 in home equity. 

One portion of the equation – Home Value – is a moving target that fluctuates with changes in neighborhoods, the local, state, and national economies, some home improvements, and consumer taste.  When an economy is doing well and more people move into an area, the number of homes available on the market decrease and the value of all of the homes increase because they are in high demand.  If a school district improves its results, the area in that district will see increased home values.  If a home in Buffalo is the only one in it’s neighborhood that is weatherized, uses solar panels for electricity and geothermal systems for heating and cooling, its value will be higher relative to less efficient homes in the area.  Conversely, if people are leaving an area, or schools are suffering, or a home is in disrepair, the value of the home will decrease.   

Remember, what is paid for a home isn’t necessarily the home’s value in the future.  That is dictated through the factors outlined above.   A home’s value is determined by an appraisal, which compares the home to similar homes nearby. 

The other factor in the equation should be steadily going down over time.  Outstanding Home Debt is another way of saying mortgage.  A mortgage is the loan taken when a home is purchased.  Mortgages require monthly payments of interest and the loan principal.  Depending upon interest rate and the size of payments made, early year payments will pay more interest than principal.  But as payments are made, assuming that the value of the home is constant, the amount of home equity will increase.  Additional loans using the home’s value as collateral, like a second mortgage or a home equity loan, will add debt and decrease home equity.

Let’s look at some examples.  Using the example above, let’s say the home grows in value from $1,000,000 to $1,100,000.  And after ten years, say the amount owed decreases from $500,000 to $400,000.  In this case, the formula becomes $1,100,000 – $400,000 = $710,000.  Now assume that the home decreased in value by $200,000.  Then the equity would be $800,000 – $400,000 = $400,000. 

Regardless of the scenario, home equity is a powerful tool for a family.  As home equity grows, the homeowner has more flexibility to determine their financial future.  There may be a temptation to sell the home or take a home equity loan to take advantage of that home equity, but those moves come with significant costs.  Downsizing has tax implications.  Reverse mortgages have hidden fees, put limits on what you can do with the proceeds, and dictate with whom you can share the home.  Home equity loans just add more debt. 

SmartRE doesn’t pose these issues.  We let you take advantage of your home equity without ongoing costs, closing fees, meetings with realtors and lawyers, monthly payments, and all of the other hidden real and emotional costs associated with alternatives like moving.  At SmartRE, for just a low, one-time fee, a homeowner can cash in their home equity while maintaining complete control of the home, without some predetermined payback period.  Buying back the equity occurs only when the homeowner is ready, either through the sale of the home or the repurchase on our app.  That’s why SmartRE is smarter.

Jun, 10, 2020 Topic: Home Equity

HELOCs Constrained During Covid 19

As states across the country enacted social distancing to stem the devastating impact of Covid 19, unemployment rose to heights not seen since the Great Depression.  A byproduct of nearly 40 million lost jobs was the reaction by banks.

Rates have been dropped dramatically, making the cost of credit extremely low.  This is fantastic for businesses but not great for consumers.  Because banks, seeing the jobless rate balloon, are concerned about the ability of individual borrowers to repay loans.  So, banks across the country have increased thresholds to access their money.  This is impacting credit cards, personal loans, mortgages, and home equity loans.

For example, despite credit card rates being at a three year low, according to CNBC, over 50 million credit card customers have either seen their account spending limit reduced or had their accounts closed altogether.  Non-secured personal loans might be possible but require high credit scores.  Some mortgage options, like cash out refinances and jumbo fixed-rate mortgages, have been eliminated.  Other products require 20% down and a minimum 700 credit score.

Home equity loans, or Home Equity Lines of Credit, have not been spared.  Giant national banks like Chase and Wells Fargo have temporarily frozen their home equity products.  Even when they’re available, credit score requires have increased by nearly 10%, according to BankRate.com.

How does this effect you?  Clearly overall access to cash is severely limited.  And, as a homeowner hoping to use their equity as collateral, banks are increasingly a limited resource.  And, even if they are, loan recipients are required to pay fees and ongoing interest.  Fortunately, that is not the case with SmartRE. 

We only charge a low, one-time fee when your home equity sells on our platform.  We never charge interest.  We have no payback period and no inheritance issues.  And access to our buyers requires no minimum credit scores or income.  All you need is ownership of 50% of the value of your home.  Visit We Can Help to learn more about our process.

Jan, 28, 2020 Topic: Hobbies

Benefits of Hobbying SmartRE

Work is a constant challenge that keeps your mind sharp.  Whatever your occupation, you needed to both think on your feet and spend time in contemplation.  Logic, math, science – whatever the subject we swore we’d never use again when learning them in school – were ubiquitous despite our incorrect assertions.  But once you stop working, that is no longer the case.  Problem solving is often times a thing of the past.  That’s why, no matter your age upon retirement, it is important to find a hobby.  Why? Because hobbies replace the mental manipulation that was a minute by minute fixture of your working days. 

The key is to do something that keeps your mind sharp.  Because using your head has multiple benefits.

 According to the European Journal of Epidemiology, which reviewed recent studies done in the US and 12 European countries, the memory problems are correlated to age of retirement – the earlier one retires, the more likely they are to eventually have memory issues.  One study showed that short-term memory decreased 40% faster once employees retired.  So consider a hobby that places a barrier to stop the erosion of mental acuity.

Kelly Lambert, a University of Richmond neuroscientist, likens working with the hands to pharmaceuticals because the actual neurochemistry of the brain can be positively altered through craftwork.  In addition to cognitive benefits (the Journal of Neuropsychiatry showed that crafting, playing games, and reading books could reduce the chance of developing mild cognitive impairment by 30 to 50%), crafting is used to treat soldiers with post traumatic stress disorder; CNN reported one study showed 81% of over knitters with depression reported feeling happy after knitting.  50% felt very happy.

In another study from University College of London, Dr Daisy Fancourt found that basketwork conducted by stroke patients helped re-establish neural pathways and improve brain plasticity.  It can do the same for people suffering from dementia.   Creativity can be used to control emotions, to boost self esteem, and as a means of reflection and contemplation. 

Gardening has similar positive impacts.  According to a study called “The benefits of gardening and food growing for health and wellbeing”, gardening reduces dementia risky by 36% in people aged 60 or older.  A bacteria in soil releases serotonin, a natural anti-depressant that strengthens the immune system, into the brain.

AgingInPlace.org is a website whose goal is to help people stay in their home as they age.  They’ve actually been able to identify specific benefits for different types of hobbies.  Music helps to reduce blood pressure and elevate mood.  Meditation helps induce positive outlook and reduce anxiety.  Reading, and recounting what has been read, is a significant means of improving cognitive ability.  Problem solving, a constant during everyone’s careers that is typically lost upon retirement, can be replaced through working puzzles.  They also reduce blood pressure and heart rate, while 3D puzzles especially improve manual dexterity.   Research reveals that playing brain games delays dementia’s onset in older people. Hobbies are critical in retirement.  But they often don’t come cheap.  Woodworking requires tools.  Car restorations require expensive tools, materials, and, of course, cars.  Art work like sculpting, painting, and pottery typically require retrofitting kids’ old rooms into studios and have their own equipment and material costs.  So approach your hobby the SmartRE way – use the money frozen in your home equity to fund your retirement hobbies. 

Jan, 13, 2020 Topic: Travel, Volunteering

Volunteer AND Travel SmartRE

“The best way to find yourself is to lose yourself in the service of others.” — Mahatma Gandhi

Everyone has heard the reason – I’m traveling to find myself.  A great place to look is through providing service while traveling, because it combines the thrill of exploring the unknown with the fulfillment of helping those in need. 

Initially, the idea of volunteering abroad might be intimidating.  But consider the benefits.  You are literally broadening your horizons, seeing new places but connecting in an intimate and personal way that can never be matched by mere touring.  You are immersed in local culture in a way that normal tourists can never hope to experience.  With volunteering, unlike a monetary donation, you know firsthand how your contribution is being applied.  And just by telling your story to others when you arrive home after your excursion, you’re helping to bridge the divide in understanding that can exist. 

And you can do it without going overseas.  AmeriCorps says “AmeriCorps is your moment to take the path less traveled, to break the status quo, to stop talking about the problem and be the solution.”  AmeriCorps State and National has programs as short as 3 months.  Projects include disaster services, environmental impact, and veterans and military families.

The Peace Corps isn’t just for recent college graduates. “Retired Americans can use the life skills and professional experience they gained during their careers to make a lasting impact in communities around the world,” says Peace Corps Director Jody Olsen.  About 6% of Peace Corps volunteers are over 50.  The oldest is 93, working in Malawi.  housing is paid for and volunteers get enough of a stipend that they don’t have to dip into savings set aside for retirement.  Approach with an open mind, because the Peace Corps isn’t for everyone.  Living is rougher than American standards and there is a significant time commitment.

Fortunately, there are many opportunities for travel and service that are much shorter and a more comfortable.  

  • Discover Corps is an organization that combines vacations abroad with service.  Trips target Wildlife & Nature, Festivals, Cultural Explorations, and Custom Travel to places like Hawaii, the Galapagos Islands, and Thailand. 
  • Build Abroad is like a global Habitat for Humanity.  Volunteers construct homes, schools, or better infrastructure in places like Nepal, and Costa Rica.  
  • GVI is an organization committed to providing high-quality and sustainable experiential and development programs in 13 countries around the world.  Volunteers travel to places like Ghans, Laos, Fiji, and Greece to work with children, marine life, or in public health.  
  • Go Overseas is a website that acts as a clearing house for global volunteer programs.  They have projects in countries like South Africa, India, and Brazil. 
  • Global Volunteers is the highest rated volunteer abroad program since 1984.  They have a multitude of service projects, including computer literacy, gardening, nutrition and teaching.  Their programs are all over the world as well – 13 counties including China, the Cook Islands, Poland, Cuba, Vietnam, Tanzania, and St. Lucia.

Travel volunteerism is a commitment of both time and money.  Be prepared to be away from home for weeks at a time and to pay a four or sometimes low five figure amount.  And since these programs are addictive, with many people pursing several trips a year, the cost adds up.  But it is a cost that is more than worth it.  So use SmartRE to fund your adventures.  With only a low, one-time fee, you can free cash locked in your growing home equity and put it to use for you and the world.

Jan, 3, 2020 Topic: Hobbies, Retirement

SmartRE Choices for Hobbies

According to USA Today, 34% of people approaching retirement intend to spend their time pursuing hobbies.  But, since most people have spent their pre-retirement time working and raising a family, there was never enough time to commit to hobbies.  So what choices are there?

Whether you like to spend time alone or with others, inside or outside, or saving money versus spending money, there are a lot of wonderful things to do to occupy your time.  Because studies show that maintaining a routine, even if it is not as robust or strict a routine as your former workday, is critical to a healthy retirement. 

‘Making’ is a term that covers creating with your hands.  Artwork like painting, drawing, and sculpting, craftwork like crochet, scrapbooking, or knitting, and shopwork like woodworking or working on cars are all hobbies that fit within the ‘making’ category.  Working with your hands has multiple benefits, not least of which is the finished product.  The gratification of a beautiful (to just you or to everyone) piece of art makes the hours of effort pay off.

If making is too much, try finding.  As in finding treasures at swap meets, flea markets, or arts conventions.  You can build collections like car parts or comic books or lamps or thimbles or movie posters or lunchboxes, or dabble across categories, but the thrill of the hunt drives ‘pickers’ to find that item that others overlooked or even trashed.  Building your knowledge so you can spot the needle in the haystack is a constant driver, and you’re always on the lookout for something you’ve never seen before.

Keep your mind active through continuing education.  You can do something close by at a nearby parks and recreation center or community college, you can go a little further to a four-year university’s “learning in retirement” program.  Many schools offer UBRC, or university based retirement communities.  There you immerse yourself in the college experience – with people like you – and live in a campus-like facility with events, gyms, and classes all a walk away. 

Go global and combine travel with education.  Road Scholars is an organization that individuals, couples, and families love.  See the world and learn deeply while also closely embracing the local culture of the country you visit.  Its killing three birds with one stone. 

Before you go away, consider starting to learn the language of the country you’re visiting.  Studies now show that learning a new language is no harder than when you’re young.  And learning that second (or third?) language stimulates cognitive activity, creates new neural pathways, and helps to decrease chances of developing Alzheimer’s. 

If travelling far and enrolling in classes is too much, you can still learn a lot just by day-tripping.  People are always amazed at what’s in their own backyard.  State parks, local museums, funky shopping districts – new and fun things are typically a short drive away. 

If you just want to sit at home, fill your time reading, solving puzzles, playing mind games, competing online in chess or bridge, or solving the daily crossword.  Create your own little reading club, deciphering motifs, symbols, and themes with your spouse, sister, or friend down the street.  Play any of a number of highly rated apps on your phone.  Medical News Today rated their favorites as Luminosity, Elevate, Peak, Fit Brains, Reaction Field, and Speedy Sorts. 

Birdwatching is something you can do from any window in your house.  If you like to travel, it can be done all over the globe as well.  Watch or read “The Big Year”, a great film about the passion and devotion of bird watchers.  A wonderful documentary about the people of birding is called “Birders: The Central Park Effect”.  Phone apps make this hobby easy as well.

Hobbies are a fantastic way to ease the transition from work to retirement.  Remember, though – they cost money.  Lessons for painters or musicians, binoculars for bird watching, studio space for sculptors, furniture purchases, tuition expenses, or frequent global travel – it takes substantial money to fund your interests.  Don’t take away from your retirement savings.  Get the money instead from your home equity.  Speaking of hidden treasures, that’s just what your home equity is.  Your home has grown in value since you first purchased it, and that increase is just sitting in your equity.  Take the cash frozen in your equity and put it to use – all while remaining in your home.  Cash in and stay in – the SmartRE Way. 

A look at different hobbies and what they do for you….
Dec, 22, 2019 Topic: Volunteering

Volunteering SmartRE

“You give but little when you give of your possessions. It is when you give of yourself that you truly give”. Kahlil Gibran

Whether you retired at 65, 75, or 50, charitable opportunities open up exponentially.  Because time is now not an issue.  A life of hard work mandates lounging and vacationing upon retirement, but that ends and new retirees are eventually faced with boredom.  Volunteering beckons as a welcome medium between the slavish demands of your working days and the sedentary sameness of retirement.

The dual demands of a life raising a family as well as providing for that family leave little time for volunteering.  Really, because of this time crunch, the best avenue for accessing volunteering opportunities is through work.  Charities.org conducted a study that revealed 82% of businesses say that they’re employees would like to volunteer with their work colleagues through an employer sponsored volunteer program.  Yet only 21% of businesses offer paid time off for volunteering according to OneOC, a nonprofit consultancy.  Meanwhile, 65% of Fortune 500 companies offer matching donation programs.   

So it’s clear that giving is more accessible than volunteering.  And that’s a shame, because according to UnitedHealthcare (UnitedHealth Group 2017 Doing Good is Good for You Study), volunteering yields significant physical, mental, and emotional benefits.  75% of Americans over 18 feel physically healthier, which they attribute to volunteering.  More impactfully, 93% report a better mood, 79% feel less stress, and 88% have more self-esteem when donating their time.  And now that you have more time, consider volunteering as a way to spend it. 

As you contemplate what to do, be mindful that volunteering is not going to be like the career from which you just retired.  Non-profits are a wholly different animal from for-profits.  While you may not have been blown away by your department’s funding in the past, it was likely far higher than the shoe-string budget that most non-profits deal with.  Staffs are comprised of people from varied backgrounds with different skill sets, so there will always be holes to fill.  And doing so won’t necessarily be your call, so if you’re used to driving the car, you may need to be willing to take a back seat and let someone else learn to drive while you learn the road.  All this is a long way of saying to carefully set your expectations; volunteering is likely different from your previous experiences, so give it some time.

And that’s a good thing.  Because some people want to use their retirement to learn new things, meet new people, and grow new skill sets.  While they may initially feel out of place, these volunteers thrill at the draw of the unknown and eventually grow comfortable.  If initial comfort is what you crave, then try volunteering where you know you can make an immediate impact.  If you’re a lawyer, provide pro bono services.  If you’re a teacher, provide education services.  Avoid burn out (after all, you did just retire from doing what you’re best at) by being selective with your work and limiting your hours.

Volunteering is good for the soul.  Thomas Jefferson said it best – “I believe that every human mind feels pleasure in doing good to another”.  SmartRE can help.  Our service liquidates the cash frozen in your home equity – without debt, without interest, and without vacating your home.  You can use that cash to help fund your retirement, and volunteer to your soul’s content without worrying about paying your bills.  To learn more, go to our Volunteering section to see more articles, like “Ready to Volunteer – Here Are Some Great Ideas”.

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