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Saugatuck, Michigan
Charming, artsy Saugatuck (population 950) is on Lake Michigan's eastern shore and started as an arts colony in the late-19th century. It continues that tradition today, making it a popular tourist destination.
The wonderful downtown brims with art galleries, wine tasting rooms and farm-to-table eateries. There is also a farmers' market.
The Saugatuck Center for the Arts offers concerts, exhibits and classes. The Red Barn Players and the Lakeshore Arts Alliance present a cabaret and film showings. A chamber music festival and an annual Venetian Festival delight locals and visitors alike.
Oval Beach's white sands snuggle against Lake Michigan and has been called one of the world's top fresh water beaches. The hand-cranked Saugatuck Chain Ferry takes visitors to Mt. Baldhead, a towering sand dune while Saugatuck Dunes State Park is perfect for hiking and birdwatching.
Housing includes Cape Cods, cottages, cabins and bungalows, many reflecting Saugatuck's artistic heritage.
Cost of Living
Sauatuck has an overall cost of living that is 10% above the national average.
The median household income is $64,188
Real Estate
The median home price is $430,500. This is a 16% increase over the previous year. For comparison, the national median home price is currently $375,000 (Realtor.com).
Estimates are that Saugatuck real estate prices will increase by 5% over the next year.
The median rental price is $810 per month. Notes Saugatuck's population has grown by 10% within the last decade.
The median age is 43. For comparison, the median age of the U.S. population is 38. Saugatuck does not have a hospital, but Spectrum Health Zeeland Community Hospital is 15 miles away in Zeeland.
Saugatuck is gay-friendly, and the population triples during the summer.
The crime rate is below the national average.
Taxes
The combined sales tax is 6%.
Michigan does not tax Social Security benefits and offers a deduction between $20,000 (single) and $40,000 (married) and between $53,759 (single) to $107,517 (married) on other retirement income, depending on one's age and type of income (public or private pension, 401(k), IRA, etc.).
The average effective property tax rate (the annual tax payment as a percentage of median home value) in Saugatuck is 1.37%. The annual taxes on a $430,500 home are approximately $5,898.
Mortgage Options for Retirees
Mortgage lenders can not by law discriminate against anyone who wants a home loan as long as he or she can meet the income requirements. These requirements can be met by using current Social Security income, other retirement income and investment account income.
There are also programs designed just for seniors to help them finance a home.
Freddie Mac
The Federal Home Loan Mortgage Corporation (Freddie Mac) makes it easier for home buyers to qualify for a mortgage if they have substantial assets but a limited income. There are some caveats, but generally lenders can consider IRAs, 401(k)s, lump sum retirement account distributions and proceeds from a business sale to qualify for a mortgage.
Fannie Mae
The Federal National Mortgage Association (Fannie Mae) lets mortgage lenders factor in a borrower's retirement assets to help him or her qualify for a loan. If the borrower is already using a 401(k), IRA or other retirement accounts for retirement income, then the borrower must show that the income received from the asset is going to continue for at least three more years.
Investment Funds
Mortgage lenders can also determine mortgage eligibility based on the borrower's investment funds. If, though, the investment accounts consist of stocks, bonds or mutual funds, then lenders can only factor in 70% of the value of those accounts to determine how many distributions remain and if they will last long enough to cover the mortgage loan.
Asset Depletion
An asset depletion mortgage is a type of home loan designed for buying a home without a regular income - i.e., job income. It lets borrowers qualify for a loan based on their liquid assets instead of an ongoing income source. The total of the borrower's assets is divided into a monthly "income."
For example, if a person has $350,000 in savings, this amount would be divided by 360 months - the traditional length of a mortgage - and that resulting number - $972 - would be used to determine eligibility for the mortgage. This strategy usually requires a significant amount in savings, CDs, money market accounts, etc.
Co-Signer
Finding a co-signer - often an adult child with a solid income - is a tried and true way to qualify for a home loan. Fannie Mae makes this relatively quick and easy with its HomeReady program. The caveat is that the borrower must be buying a primary residence, not a rental property or a vacation residence.
Reverse Mortgage
Homeowners 62 or better might want to consider a reverse mortgage. Offically called a Home Equity Conversion Mortgage (HECM), this type of mortgage is backed by the Federal Housing Administration (FHA) and can used to buy a new home.
The reverse mortgage typically covers 38% to 71% of the new home's purchase price. The rest of the purchase price is covered by proceeds from selling a current home or by using other funds. This strategy lets a buyer get into a new home that he or she might not otherwise be able to afford.
So homebuying mortgage options exist no matter one's age. Although many experts still recommend heading into retirement without a mortgage, it is clear that many retirees are instead choosing to take out a mortgage and purchase a new home to enjoy throughout their golden years.
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