The Senior Scene

Old scams never die, and new ones are popping up all the time. From sophisticated AI (artificial intelligence) deepfakes to phishing attacks cloaked in e-mails and text messages, criminals from all over the world are constantly concocting a variety of ways to steal information and money.

They pose as our banks, familiar stores, the IRS, and potential romantic partners. They hack into accounts. They swipe passwords and they even steal our voices and images. They prey on the young, the old, and everybody in between. They use our worst fears and even shocking news events to catch us off guard.

Recent data from the Federal Trade Commission underscores the scale of the problem. The FTC found Americans in 2022 lost $8 billion to fraud, a staggering amount that was up more than 30 percent from the previous year.

Though rip-offs are rampant nationwide, some states are hotbeds, with Washington in that range. To identify the states where scams are most prevalent, Forbes Advisor analyzed data from the FTC for the first quarter of 2023 and scored states by focusing on four factors:

• Fraud reports per 100,000 residents (35 percent of the total score per state).
• Total number of fraud reports (15 percent of the total score).
• Median loss from fraud, in dollars (35 percent).
• Total loss from fraud, in dollars (15 percent).

Georgia is the state where financial scams are most prevalent, with 437 fraud reports for every 100,000 residents during the first quarter of 2023. Washington ranks 13^th, with 228 reports per 100,000 residents. South Dakota is least-affected, at 132 reports per 100,000 people.

Nationwide, imposter scams are the most common fraud. Online shopping leads to the second most common type of fraud.

Source: Forbes Advisor, which reports on financial issues related to consumer credit, debt, banking, insurance, and real estate.

By Rachel Keohan

An investment property can be a great way to earn extra income, reap potential tax advantages, and diversify your portfolio, but it pays to do your homework when it comes to financing. If you’re overwhelmed by your options and aren’t quite sure where to start, here’s a rundown of the most common ways to fund a down payment and/or renovations on your first investment property.

• Conventional bank loans.

For many prospective investors, this is the first option they explore, as they likely already have a relationship with a bank for their personal finances. While these loans can offer low interest rates and fees and often allow multiple mortgages (up to a limit), the downsides include high down-payment requirements for investment properties — typically at least 15 to 25 percent —and your likelihood of being approved is dependent on your personal credit.

• Fix-and-flip .oans.

As their name suggests, fix-and-flip loans (sometimes called “hard money”) are specifically for the purpose of renovating and preparing investment properties for tenancy. While they can be easier to qualify for than conventional loans, they typically have short term lengths of three years or less and relatively high interest rates (10 to 15 percent on average). Frequently, the amount you’re eligible to borrow is dictated by the home’s post-repair value.

• Home equity investment.

You receive cash in exchange for a share of your home’s future value, and providers let you access your equity without interest or monthly payments and use the money for whatever you’d like, including a down payment or making necessary improvements on a property before renting it out to tenants. And the timeline is typically quite quick, with funding in as little as three weeks.

• LLC loans.

An LLC loan isn’t a personal loan to you, but instead one to the LLC (limited liability company). Going this route allows investors to build business credit, safeguard themselves from disputes or lawsuits, and limit personal liability. This isn’t the best option for fast funds, as you’ll need to set up an LLC, apply for a mortgage, and have enough credit history for lenders to review.

• Home equity loan.

This loan provides access to equity, a fixed interest rate that’s often lower than a personal loan, and a predictable repayment schedule. However, you are taking out another mortgage in addition to the one on your primary home, so you’ll need to be prepared for those extra costs.

• Home equity line of credit (HELOC).

A major advantage of a HELOC is its flexibility in terms of the amount of cash you can access and the frequency with which you can borrow. But there are drawbacks. Monthly payments will be unpredictable due to the variable interest rate, and the lender can freeze a HELOC at any time if your credit score decreases. In addition, the application process can be quite rigorous and the approval criteria pretty restrictive.

• Cash-out refinance.

With this, you’re taking out a new mortgage for which the balance is more than you owe on your current mortgage, giving you access to extra funds. As a bonus, you have the potential to lock in a lower interest rate on your current mortgage and lower your monthly payments. However, you may be extending your mortgage timeline and also have to deal with the application and approval process, along with fees for closing and origination.

The best option ultimately depends on personal financial situations and goals, but with some research and planning, first-time property investors can confidently move forward.

 

Rachel Keohan is vice president of marketing at Hometap, a home-financing provider doing business in Washington and 17 other states.

Fearful of outliving their savings, many older homeowners are making difficult lifestyle choices to cut expenses, according to a national survey of 1,500 people 60 to 75 years old.

The survey conducted last November by American Advisors Group (AAG), which works with older adults on financial planning involving the use of home equity, also provided evidence that despite inflation and economic concerns, some seniors have managed to weather the storm without making lifestyle changes. However, some seniors have had to cut back.

“The retirement savings crisis is a real thing. Our (survey) data highlights the severity of the crisis and the actions seniors are taking to make ends meet,” said Chris Moschner, AAG’s chief marketing officer.

“In inflationary times like these a reverse mortgage is one option seniors can utilize to generate increased cash flow by unlocking their home equity and easing the pressures on everyday expenses.”

Of the seniors who responded to the survey:

• 89 percent believe there is a retirement savings crisis.
• 43 percent rated the condition of their retirement savings as fair or poor.
• 47 percent find it difficult to save for retirement.
• 44 percent haven’t saved enough to retire comfortably.
• 57 percent are somewhat optimistic or not optimistic at all that their savings will last through retirement.
• 40 percent are worried about making ends meet, and almost 60 percent are cutting back on non-essentials to save money. The latter includes less dining out, travel, and entertainment.