Medicare Open Enrollment: What You Need To Know

by Gerri Willis

Medicare Open Enrollment is on and there are big changes underway recipients need to know. Bottom line: Many seniors will see higher costs and fewer options. For example, according to the Kaiser Family Foundation, there are fewer Medicare Advantage plans for 2015. In fact, 320,000 enrollees are enrolled in plans that are exiting the market.

What’s more, enrollees in six of the 10 most popular plans this year will experience double-digit premium increases if they stay in the same plan for 2015.

The good news is this: The Part D “donut hole,” that is the coverage gap for prescription drug plans continues to shrink. Those who enter the coverage gap in 2015 will get a 55 percent discount on brand-name drugs and a 35 percent federal subsidy for generic drugs.

If you are considering keeping the same plan you have right now, be sure to check whether there are any changes in your plan. You may find a drug you need isn’t covered or not to the level you expect. Don't miss our User's Guide to Choosing the Best Health Insurance 5pmET on FOX Business.

Health Insurance: Workplace Enrollment

by Gerri Willis

It’s that time of year again. Companies are opening enrollment in health insurance plans, and if you haven’t gotten a peak at the 2015 changes, be advised, you may get sticker shock when you do. Deductibles will rise 7 percent this year as companies forecast higher healthcare costs.

Premiums and copays are likely to rise as well. If you work for a small company, watch out because your prices may rise even more than that 7 percent average.

The changes are more of the same. According to Kaiser, worker contributions to health care coverage have nearly doubled since 2003, from $2,412 to $4,565. Deductibles have jumped from $584 a decade ago to $1,217 today.

As you begin to compare plans, don’t assume your plan from last year is the same this time around. Plans are converging and looking more and more like each other. While HMOs, or health maintenance organizations, originated the co-pay, now PPOs or Preferred Provider Organizations are charging them as well.  Given that, you’ll want to think about what services you’ve used in the past and are likely to use again as you shop.

And, remember that premiums aren’t the sum total of everything that you will pay. Check out deductibles, co-pays, and whether you have to pay co-insurance even after paying your deductible.  If you are not a big user of health care, you might want to think about a high-deductible plan which will give you lower premiums. If you choose this route, consider setting aside money in a health savings account to cover your costs.

Don’t miss our User’s Guide to Choosing the Best Health Insurance tonight 5pmET on FOX Business

Ready or Not, Here Comes Round No. 2 of Obamacare

by Gerri Willis

Ready or not, here comes Round No. 2 of Obamacare. And, as much as I’d like to start this blog with an analysis of costs, details such as premiums for Obamacare 2015 policies won’t be made public until open enrollment starts Nov. 15, conveniently after the election. So forget getting your arms around price tags. At least for now.

To be sure, though, some details are already out. First off, there is a new website where you’ll go to enroll for the first time. Given the original healthcare.gov website’s glitch-plagued rollout a year ago, this could be a good thing. But, again, we don’t know because this website is still being tested. (Want to know how the testing is going? Again, forget it. That information isn’t being shared.) To their credit, the website designers have managed to shorten the number of screens in the online application from 76 on the original site to just 16 on the new site.

Unfortunately, if you bought Obamacare coverage last year, you’re stuck with the old website which is famously unreliable. Some of our sources maintain the backend of the website still isn’t complete a year after launch. And, re-enrollers will face a time crunch. They’ll have just one month – until Dec. 15 – to get on the site and update their financial information – a move that is required to have coverage beginning Jan. 1, 2015. You’ll want to have handy a 14-character identifier number to keep any current insurance policy. If you don’t re-enroll, you may be reassigned to your old plan, but you’ll also get this year’s subsidy amount, which may be smaller than they would be entitled to for 2015.

On top of all of this, it’s possible that several hundred thousand people across the country may face cancelled health insurance policies because those policies are not in compliance with Obamacare. Initially these policies were granted a reprieve, but break time is over. Thirteen states and the District of Columbia plan to cancel policies that don’t offer the level of services required by the Affordable Care Act. Federal law requires a 60-day notice of plan changes, so if you’re getting bad news in the mail, it will probably come no later than Nov. 1 (right before midterm elections.) 

So, truth be told, Obamacare Year 2 remains a mystery, though Health and Human Services Secretary Sylvia Burwell has already said that it won’t be perfect. That’s reassuring.

Don’t miss our User’s Guide to Choosing the Best Health Insurance all next week 5pmET on FOX Business         

 

User's Guide to Buying a Beach House

by Gerri Willis

Owning a home on the water is a dream for many of us. Whether your vision is to buy a family destination or an oasis that you occasionally rent out, the good news is that prices in many coastal markets have never recovered from the 2007-2008 crash. When you add into the mix that interest rates are still cheap on a relative basis, well, it’s clear the stars may have aligned to help you accomplish your goal.

The devil, though, is always in the details. Tom Kraeutler, host of the nationally syndicated radio show, The Money Pit, advises buyers to understand the requirements for insurance before signing on the dotted line. Federal flood maps have been redrawn and more properties are required to have federal flood coverage. Add in the fact that insurers have been besieged with claims over the last few years, and you may well be shocked at the amount of coverage you may be required to have.  Average flood insurance claims run tens of thousands of dollars, so it is smart to make sure you have a safety net. Plus, in flood zones the law will require you to have coverage if you have a mortgage.

Other factors to consider: Know whether your beachfront dream has mold or water damage. If major remediation was done to a home, the owners may have filed a building permit. You can check local records to see if that is the case. Otherwise, a good home inspector can help you check for telltale signs of damage. Kraeutler also advises making sure you  know whether local codes require that homes meet wind resistance or flood elevation rules.

And, there are other kinds of issues to consider as you search. If you’re new to the market, you may be surprised at the number of beds packed into houses. Antonia van der Meer, editor-in-chief of Coastal Living magazine, says that it’s not unusual to find even small homes that sleep 20, “Bunk beds are a huge trend and four beds to a room is not uncommon,” she says.

That’s great for big families who want to vacation together, but even if you don’t have a large entourage, you may also appreciate it when it comes time to resell. Beach houses with direct water access and large, bright open spaces typically command the highest premiums.

Getting the best deal means acting decisively and knowing what you want from the start.

 

College Towns, Cities Are Retirement Hot Spots

by Gerri Willis

Like everything else they’ve touched, baby boomers promise to reinvent retirement. And, with 8,000 boomers retiring every day over the next 15 years, they are bound to reshape the second home market. Forget the armchair and the rockers, more and more boomers are opting to retire in cities and college towns where they can have access to museums, free classes, restaurants and a faster pace of living. Plus, many want to downsize and trade in their home and yard for a condo or townhouse.

Pied-a-terre which literally means “foot on the ground” in French is typically a small or undersized apartment capable of doubling as a retirement location. As cities have become safer, boomers have been lured back to metropolitan areas largely because of their entertainment attractions, but also because dwellers can walk their neighborhood and enjoy public transportation. Plus, many parents find they may be closer to the children. Because retirees don’t care about school districts buying in town can be affordable. Buyers should keep in mind that most co-ops try to restrict pied-a-terre purchases.

Another popular option for boomers is buying in a college town because prices are typically low and benefits are high.  Home prices are typically near the median national average price of $212,400 or below and real estate taxes tend to be low. What’s more, many colleges allow seniors to audit courses at no or low cost and attend college sporting events at bargain prices, too. Some developers build retirement communities affiliated with universities in college towns. Kendal Corp., for example, is building such communities in Ithaca, N.Y., home of Cornell University and Hanover, N.H., home of Dartmouth University.

Florida and Arizona may have been traditional retiree havens, but boomers are changing all that, opening up new locations that fit their wallets.    

User's Guide To Buying a Second Home: What To Know Before You Buy

by Gerri Willis

If you've always dreamed of owning a second home, there are two good reasons to think the time may be right to buy now: Interest rates are still relatively low and property prices, while they have climbed, aren't in the stratosphere. In other words, the stars may be aligned for a purchase, but you'll want to do some considerable analysis before taking the plunge.

First, the facts. According to the National Association of Realtors, the market was on fire this year, with purchases up 29.7 percent as buyers benefitted from a rising stock market. The median vacation home price was $168,700 in 2013, up 12.5 percent from the year before. Buyers who considered their purchases an investment paid $130,000, up 13 percent from the previous year. 

So, if it's a roaring market, why should you consider buying now? Well, for one thing, the vacation home market is still well below its peak of 2006. And, the market is a tiny slice of the overall housing market. Even so, it makes sense to do the math before you shop. 

Many second homeowners complain they didn't foresee the costs of having a second home. Sure, there's the monthly mortgage, but ongoing expenses can add up, like, upkeep, insurance and possibly hiring a management company or just a trusted caretaker to look in on the property since you won't be there every day. Flood insurance costs need to be taken into consideration for beach and lakefront buyers, and a redrawing of flood maps by the Government may mean higher costs for some.

Also, consider this: If you aren't paying all cash, financial requirements are higher for second homes than first homes. Typically, you'll need to put down a considerable down payment to buy. Some lenders require borrowers put down 25 percent of the purchase price before writing a mortgage for the balance and the median down payment in 2013 was 26 percent. Keep in mind that, 38 percent of second-home buyers will pay all cash. Among investors, that proportion paying all cash was 46 percent.

I also think it makes sense to decide why you are buying the property in the first place. Is this a vacation only getaway for friends and family? An eventual retirement location? Or, do you plan to rent it out, or even buy it, upgrade and sell? Determining your own motivation in buying will help you pick the right location, and ultimately, the right property.

Every day this week, The Willis Report will be covering some aspect of second home ownership, helping you make the right calculations about where and when to buy and how much to pay. 

Americans Sold on Real Estate as Best Long-Term Investment

by Gerri Willis

You don’t have to look far to find negative news on the housing market. Just this week there were headlines proclaiming that millennials had abandoned the market and may never come back. Another lamented the rising unaffordability of housing. And, yet, most Americans are ignoring the constant drumbeat of negative news about the housing market. According to a recent Gallup poll, Americans believe that real estate is the best long-term investment, even better than stocks, bonds or gold.

Frankly, having spent a lot of time writing and researching real estate, I’m not all that surprised people feel that way. That’s because housing is an arena where the individual investor really can become the expert. Unlike stocks or bonds, you can walk around a neighborhood, touch and feel the properties and really get to know your investment first hand.

Founder of the Real Deal, Amir Korangy says that if you want to invest in real estate, choosing a market you already know is critical. Korangy, who has bought and sold dozens of properties, in addition to founding the monthly real estate publication, advises getting started with a property you live in as the “safest and best investment.”

Investing in a property you intend to rent out, however, is a little more complicated. One metric professional investors use to compare deals when shopping for an investment  is the “cap rate,” or capitalization rate, which is simply the net annual operating income divided by the sale price. “As a general rule of thumb, the lower the cap rate, the better the deal for seller. The higher the cap rate, the better the deal for the buyer,” Korangy says.

Don’t stop your research there. He says investors need to investigate the property’s condition, income trends, and the neighborhood’s condition. As with any investment, it’s important to do your due diligence.

 

Don’t miss our User’s Guide to Spring Real Estate 5pmET on FOX Business

How to Choose a Home Renovation

by Gerri Willis

Flipping homes is back! After a long hiatus, it is again popular in some markets to buy homes, spruce them up and sell for a profit, a topic we are covering in today's User's Guide to Spring Real Estate. Flippers know something home owners may not -- renovations can boost property values. But it can't be just any remodel.

Remodeling Magazine's annual cost versus value survey, is a great way to figure out which remodel projects have the best return on investment and what the average price is that you'll pay to get the work done.

And, there are some surprises this year. The highest return on investment for a mid-range project is switching out your entry door for a steel replacement. That job returned 97 percent of consumers' average investment of $1,162. No. 2 was the wood deck addition, which returned 87 percent of the $9,539 investment. Also scoring high on the mid-range list were attic bedrooms, garage door replacements and minor kitchen remodels.

If you're willing to pony up more dough for a luxury project, the best ROI replacing old-fashioned wood siding with fiber-cement siding. Cost is estimated at $13,378, and the return on investment is 87 percent. A foam-backed siding replacement gets less, 78 percent on the $14,236 investment. Also big on the luxury list: garage door and window replacements.

Some investments just don't pay for themselves. High on the ‘Don't Do’ list are big projects like a master suite or sunroom addition.

You can check out Remodeling's lists yourself at www.remodeling.hw.net. Drill down to your region of the country, and even your city, for more precise data. 

 

Don’t miss our User’s Guide to Spring Real Estate starting 5pmET on FOX Business

Millennials Face Homebuying Hurdles

by Gerri Willis

First off, let me just put my cards on the table: I am in favor of home ownership. To be clear, I don’t believe in investing in a home to the exclusion of everything else, but I do believe it’s part of the equation if you want to set yourself up for financial success. Millennials, however, appear to be unconvinced about the value of owning a home.

It’s hard to read the business pages and not see a story or two about how younger potential buyers have decided that the ownership society is not for them. They are happy enough, according to these reports, with their smartphone and maybe a set of Beats wireless headphones. It’s cool to travel light, so the thinking goes.

But that attitude is masking a deeper issue:  Millennials are having a tough time affording a home. A punk job market isn’t just making it difficult to find work, but even those who do may find it’s difficult to find a job that pays enough to sustain a mortgage. Possibly even more important is the burden of student loan debt. According to the Federal Reserve, the number of 25-year-olds with student debt is rising, and the amount of debt they have has doubled in the last decade from $10,649 in 2003 to $20,926 in 2013.  As if that were not enough, housing prices are up 11 percent year to year, mortgage rates are higher and bank lending requirements are still tight.

All of those hurdles mean that many younger potential buyers are on the sidelines at a time when the opportunity in housing is huge. Prices may be up 11 percent year to year, but in many markets, prices still haven’t rebounded to the 2006 high water mark. What’s more, mortgage rates are still at multi-year lows. In other words, the stars are aligned for people who can afford to buy.

My advice: Don’t delay homeownership forever. Once you own, you’ll be able to take advantage of tax breaks like the mortgage deduction. And, even more important: Wouldn’t you rather pay yourself than pay a landlord? Overtime, when you buy a house, you build up equity, that’s an asset. Paying rent buys you nothing.

For millennials, the good news is this: The housing market isn’t going away. What’s more, inventories are constrained right now, and despite projections that interest rates are poised to go through the roof, it hasn’t happened yet. By the time this age group gets a down payment together, they may well find more choices on the market, and banks easing down payment and other lending restrictions.

Look, home ownership rates over the last decade may have slipped seven percent for those 35 years and younger, but they could rebound just as quickly. Millennials who want to invest for their future will save for a house. 

Don’t miss our User’s Guide to Spring Real Estate 5pmET on FOX Business

User’s Guide to Spring Real Estate

by Gerri Willis

Every month economists pour through a handful of real estate reports weighing the health of the housing market. Two weeks ago, for example, we learned that March home sales were down from the previous month. Then a week ago, we learned that the Case-Shiller 20-city home price index was showing that home prices were cooling for the third month in a row. Pending home sales, however, jumped.

What does this all mean for you? Probably precious little. The truth is all real estate is local. Local markets vary, taking their cues from the strength of the local employment market, affordability relative to renting and a number of other factors. And, all of that could be pointing in a very different direction than the national averages.

The good news is that you can do your own research to determine if now is a good time to buy or sell. In this blog, I’ll break down some of the metrics the pros use to evaluate a market and some common sense ideas as well.

In many communities, the local and state national association of realtors has a website where they post their reports on how many homes are selling and at what price. This can be a great reservoir of information. If there is not one available to you, it makes sense to contact a realtor active in your neighborhood or the neighborhood you want to buy in for information. Two numbers are critical: Price per square foot and days on market.

To get a sense of either how much you should charge for the home you want to sell or what you should be prepared to pay, divide the sales price of home sales from the last six to nine months by the square footage. This will give you a sense how to price a home or what to offer. This isn’t the last word on price, by the way, because the terms of a housing deal are set three months before they are made public, typically.

It’s also important to get a sense of the health of the community and what the common home attributes might be. Communities are like people, sometimes they are healthy and thriving, sometimes not so much. Check out whether local employers are hiring by talking to neighbors or reading newspapers. If you’re thinking about selling, make sure your home has all the attributes that the majority of homes have. Is central air common? You should have it too. Renovated kitchen? Better figure out how your kitchen stacks up before you put it on the market.

Days-on-market is a figure that you can get from a local realtor and gives you a sense of just how hot a market is. And, as you might expect, it’s simply the number of days it takes the average home to sell. Nationally, that time frame is going up, up, up. The National Association of Realtors reports that the average number of days it takes to sell a home in this country is 102. But there are big variations across the country. Homes in Denver sell in just 25 days, while homes in Santa Fe, NM, sell in 180 days. The longer a home is on the market, the more likely it is to get discounted. And, keep in mind, sometimes agents will let an aging listing expire so that they can re-list it and make it look fresh again.

Understanding the market is critical whether you are buying or selling. But it’s not the only thing that matters. This week we’ll be talking about a variety of other topics you’ll want to consider, such as whether now is the time to buy and flip a home. Is a primary home a good investment? Plus, we’ll dig into a variety of individual markets to find out the low down in Miami, Phoenix and others. Join us at 5p.m. ET each weekday starting Monday, May 12, for our special coverage of the real estate market. 

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