The country's economic engine seems to be running in reverse as more expensive borrowing spurs home sales, and an uptick in borrowing sends mortgage rates back down.
The recent surge in mortgage rates, by all rational calculations, should have made America's already troubled housing market worse off. Instead, higher borrowing costs modestly boosted homes sales in November.
Before slipping down slightly this week, mortgage rates had risen for several weeks in a row as yields on 10-year Treasury bills, which largely influence the cost of mortgages, rose. The average rate for a 30-year fixed loan increased to 4.83% in the week ending December 16 from 4.61% the previous week, marking a fourth week of increases, according to Freddie Mac (FRE). The rate increases were some of the highest seen since June of this year.
Intuitively, it would make sense that higher borrowing costs would discourage potential homebuyers. And vice versa. But quite the opposite has happened.
Before the recent surge, mortgage rates had fallen to historic lows but failed to spur much refinancing or home purchases as virtually all major banks tightened lending standards. When mortgage rates started rising recently, potential homebuyers waiting in the sidelines took notice.
In November, the share of home purchases by first-time buyers surged to 37.2% from 34.4% the previous month, according to a monthly survey by Campbell/Inside Mortgage Finance, which tracks mortgage and housing industry trends.
"That's extremely significant," says Tom Popik, the survey's research director. Since the survey launched in 2009, there's typically only been a one-percentage point change, if any at all, among first-time homebuyers.
The higher rates seem to have served as a warning shot, drawing in buyers eager to lock in historically low rates before they edge any higher. In a sense, they were waiting for an uptick to prove that rates had gone as far down as possible, before deciding to buy. Unlike current homeowners, first timers are positioned well to respond quickly to fluctuations in mortgage rates.
Popik says it's unlikely the rise in rates will spur many more home purchases. After a while, potential homebuyers will again think mortgages are becoming too expensive. For now though, rising rates have brought a boost, however small, to the struggling housing market. November sales of new homes rose 5.5% to a seasonally adjusted annual rate of 290,000 units, the Commerce Department reported December 15.
Naturally, in response to the uptick in home sales and increase in demand for lending, mortgage rates have most recently . . . fallen again. Somewhere, that makes perfect sense.
Monday, December 27, 2010
Wednesday, December 22, 2010
November Home Loan Modifications Up: Treasury
Published: Wednesday, 22 Dec 2010 11:24 AM ET By: Reuters (CNBC.com)
The U.S. Treasury Department said on Wednesday that about 30,000 homeowners facing foreclosure got permanent help in November through a loan modification program that should help them keep their homes, an increase from 23,750 in October.
But dropouts from the Obama administration's premier foreclosure prevention program, called the Home Affordable Mortgage Program or HAMP, since its inception now total 774,081. About 1.46 million delinquent borrowers were eligible for help under the program.
Treasury said there were about 505,000 borrowers at the end of November who had active permanent loan modifications in place, up from 483,000 in October.
But dropouts from the Obama administration's premier foreclosure prevention program, called the Home Affordable Mortgage Program or HAMP, since its inception now total 774,081. About 1.46 million delinquent borrowers were eligible for help under the program.
Treasury said there were about 505,000 borrowers at the end of November who had active permanent loan modifications in place, up from 483,000 in October.
Monday, December 13, 2010
Christmas 2010 Could be Merriest Since Recession: CNBC Survey
Published: Monday, 13 Dec 2010 10:00 AM ET By: CNBC.com
Christmas 2010 could turn out to be the merriest since the recession began, with the exclusive CNBC All-America Economic Survey finding Americans somewhat more optimistic but real optimism remains elusive.
The survey of 800 people of all income groups, regions and walks of life finds that pessimism is down across the nation, but Americans will still hold a tight grip on their holiday spending dollars, with only a small increase in spending compared to last year.
Just over half of the survey respondents judge the current state of the economy as poor, but the 53 percent figure is the lowest reading since February 2008.
About 20 percent of the nation expects the economy to get worse over the next year, well below the 43 percent reading registered during the height of the recession in June 2008 and the lowest reading in three years.
Yet, just 7 percent judge the current state of the economy as excellent or good and just 37 percent believe it will improve next year, virtually unchanged from October and last Christmas.
Among other findings of the survey:
A very Apple-y Christmas: One in six Americans plan to give or receive an Apple product for the holidays; for upper income groups, the figure is one in four.
The wealthy get thrifty: 60 percent of Americans say they’ll spend more this Christmas than last year, up from 50 percent in 2009
But the average amount they plan to spend is up 0.7 percent compared to actual spending last year. One reason for the small increase: the wealthy seem to be getting more thrifty.
No stocks in the stockings: The holiday season finds Americans still down on the stock market with 46 percent saying it’s a bad time to invest. It’s an improvement from the 51 percent who were negative in October.
But rather than getting optimistic, Americans became more uncertain. The percentage saying they were unsure about whether to invest in stocks rose to 19 percent from 12 percent in October.
More upbeat on wage gains and home values: For the first time since 2007, average Americans believe their home prices will rise in the next year. American optimism about wage gains over the next 12 months hit a two-year high, with an expected gain of 2.1 percent, up from 1.3 percent a year ago.
Wal-Mart , Best Buy Rebound: 48 percent of Americans pick big box stores like Wal-Mart as one their top two choices for spending their holiday dollars. That’s the highest level since 2006.
Online surge: Online spending hits a milestone with one in four Americans saying that shopping on the net is one of their top two choices for spending, the largest percentage ever.
Online security worries: But on-line security remains a major issue. 60 percent of Americans still do little or no shopping at all on line, which equals the percentage of Americans who say they are concerned about on-line security.
In hard times, kids win, adults lose: When it comes to cutting back their spending, Americans will first choose to economize on gifts to adults, friends and co-workers.
One place they're reluctant to cut back is on gifts to kids. And the last place they'll cut back is on food and holiday meals. 7 percent of the public say they’ll economize by regifting.
Video madness: 44 percent of Americans say video games make bad gifts because kids spend too much time in front of the screen. 33 percent say they make good gifts because kids love them. Americans with kids are just about split on the issue.
Christmas 2010 could turn out to be the merriest since the recession began, with the exclusive CNBC All-America Economic Survey finding Americans somewhat more optimistic but real optimism remains elusive.
The survey of 800 people of all income groups, regions and walks of life finds that pessimism is down across the nation, but Americans will still hold a tight grip on their holiday spending dollars, with only a small increase in spending compared to last year.
Just over half of the survey respondents judge the current state of the economy as poor, but the 53 percent figure is the lowest reading since February 2008.
About 20 percent of the nation expects the economy to get worse over the next year, well below the 43 percent reading registered during the height of the recession in June 2008 and the lowest reading in three years.
Yet, just 7 percent judge the current state of the economy as excellent or good and just 37 percent believe it will improve next year, virtually unchanged from October and last Christmas.
Among other findings of the survey:
A very Apple-y Christmas: One in six Americans plan to give or receive an Apple product for the holidays; for upper income groups, the figure is one in four.
The wealthy get thrifty: 60 percent of Americans say they’ll spend more this Christmas than last year, up from 50 percent in 2009
But the average amount they plan to spend is up 0.7 percent compared to actual spending last year. One reason for the small increase: the wealthy seem to be getting more thrifty.
No stocks in the stockings: The holiday season finds Americans still down on the stock market with 46 percent saying it’s a bad time to invest. It’s an improvement from the 51 percent who were negative in October.
But rather than getting optimistic, Americans became more uncertain. The percentage saying they were unsure about whether to invest in stocks rose to 19 percent from 12 percent in October.
More upbeat on wage gains and home values: For the first time since 2007, average Americans believe their home prices will rise in the next year. American optimism about wage gains over the next 12 months hit a two-year high, with an expected gain of 2.1 percent, up from 1.3 percent a year ago.
Wal-Mart , Best Buy Rebound: 48 percent of Americans pick big box stores like Wal-Mart as one their top two choices for spending their holiday dollars. That’s the highest level since 2006.
Online surge: Online spending hits a milestone with one in four Americans saying that shopping on the net is one of their top two choices for spending, the largest percentage ever.
Online security worries: But on-line security remains a major issue. 60 percent of Americans still do little or no shopping at all on line, which equals the percentage of Americans who say they are concerned about on-line security.
In hard times, kids win, adults lose: When it comes to cutting back their spending, Americans will first choose to economize on gifts to adults, friends and co-workers.
One place they're reluctant to cut back is on gifts to kids. And the last place they'll cut back is on food and holiday meals. 7 percent of the public say they’ll economize by regifting.
Video madness: 44 percent of Americans say video games make bad gifts because kids spend too much time in front of the screen. 33 percent say they make good gifts because kids love them. Americans with kids are just about split on the issue.
Monday, December 6, 2010
20 Hidden Costs of Home Ownership
Published: Thursday, 2 Dec 2010 4:38 PM ET By: Cindy Perman (CNBC)
When Bill Douglass and his wife bought their first home, he budgeted for $250 a month for maintenance costs.
He soon found out that it was $300 a month — just to maintain the lawn.
“I have to admit, I was rather naïve about the costs involved in being a homeowner,” he said.
Two months after they moved in, a FedEx truck accidentally backed into the house, damaging the gutter. That was $900. Then they had a baby girl! It cost an estimated $10,000 for the first year of a baby’s life, according to this baby calculator. Then, the air conditioner went on the fritz. That was $8,000 to replace it. They soon discovered that their neighborhood is prone to power outages, so they needed to consider dropping $10,000 for a backup generator.
“Most people are unprepared for the big repairs — and even the small repairs,” said Guy Cecala, publisher of Inside Mortgage Finance magazine. “When the toilet starts flooding, you can’t call someone like you did when you were renting. You’ve got to fix it yourself.”
To help you get prepared, here are 20 Hidden Costs of Home Ownership.
1. Your heart. You may set a budget for how much you can spend on a new house, but then you find something you love — something you can’t stop thinking about — and even though it’s $50,000 or $100,000 over your budget, you buy it anyway.
“Oftentimes, homeowners make the largest financial decision of their lives — buying a home — with their heart, not their head. They get emotionally involved with the property,” said Gail Cunningham, vice president of public relations for the National Foundation for Credit Counseling. “That can put them on a very slippery slope.”
“I suggest people make all financial decisions with their head — and leave their heart out of it!” Cunningham advises.
2. Property taxes. You might think — “I’m paying $1,200 in rent. For that, I could be paying a mortgage and own my own place!” Well, yes. But if you’re only plugging in the principle and interest rate into your mortgage calculator, you’re missing out on a huge expense right out of the gate — property taxes.
You need to find out what the taxes are in advance (they’re usually on the MLS listing), divide it by 12 and immediately add it to your estimated monthly payment.
And remember, the taxes are just going to keep going up — you could even get a tax increase in the first year you own your home — so make sure you have room left in the budget to pay even more taxes.
3. Insurance. It costs a lot more to insure a home than, say, a one-bedroom apartment. So even if you had renters’ insurance, you’re going to have to up the budget for insurance. And, there are a lot of factors to consider when it comes to insurance.
Thought you saved more by buying an older house? Well, guess what: It’s going to cost more to insure it because the electrical, heating and plumbing are older and more prone to disaster. Wait, did you fall behind on credit-card payments during the recession but thought you were in the clear because you always paid your mortgage? Well, guess what: Insurance companies can periodically check your credit score and raise your rates based on their assessment of your “risk” level.
Plus, if you live in a flood zone, earthquake zone, tsunami zone or volcano zone, you’re going to have to pay extra for hazard insurance.
4. Appearance. Before the first thing in your house even breaks, there is going to be something that you want to change because this is YOUR HOUSE and when people see YOUR HOUSE, you want them to know that you have taste.
“You don’t want it to look like the worst house on the block,” said Neil Ellington, the executive vice president of CESI Debt Solutions.
So, you add shutters, a paved walkway up to the house, flower boxes, landscaping … it’s amazing how much you spend on the outside of the house that you never had to spend on an apartment.
5. The Lawn. First of all, if you decide to contract the lawn out, it’s going to cost you $100 or so a month for someone to cut the lawn, plus another $100 a month for weed killer, pest control and fertilizer. Plus, any extra you decide to spend on new trees, bushes, flowers or fencing.
If you decide to do it yourself to save money, it’s still going to cost you. You’ve now got to buy a lawnmower, weed whacker, hedge trimmers, a hose, sprinkler, rake, gloves, buckets and more. And, of course, if you don’t have a garage big enough to store all of your new lawn gear, you now also need to buy and install a shed to house them.
Ellington said he and his wife live in a drought-prone area so, to save money on water costs opted to put down stone in a part of the lawn. Well guess what? Stones cost a lot of money, too! Unless you find a builder or homeowner who’s looking to unload some stones from a construction site, stones are going to cost you more than you think. At Home Depot for example, a small, 11”x14”, resin landscape rock (we’re not even talking flagstone!) is $29.99. A bag of small landscape rocks cost $5 to $50.
6. Add-Ons: decks, patios, sheds and additional rooms. That shed probably set you back a few Benjamins but guess what? It’s also going to bump up your taxes. Any addition or improvement you make, whether it’s a shed, deck, kitchen renovation or expansion of your master bedroom, is not only going to cost you for parts and labor (which can run into the thousands) but it’s going to make your taxes go up. Every year.
7. Maintenance. A co-worker thought he was catching a break on maintenance costs because he had a fireplace but it wasn’t a working fireplace. Well, then someone told him the chimney — you know, the non-working chimney on the outside of the house — needed to be repointed because the bricks were loose and could fall off and hurt someone. So, he has to pay more than $1,000 to have a mason come in and stabilize that purely aesthetic chimney. How charming!
There are a million unexpected maintenance costs like this. You’ve got to reseal the driveway, restain the deck, clean the gutters, repair and eventually replace the roof, repair any cracks in the siding, patch the front steps — and that’s just the outside! On the inside, you’ve got to repair the appliances, fix any plumbing leaks, replace filters, seal your doors and windows, drain the water heater and clean the chimney.
Plus, patch the walls, replace the toilets, repaint, restain the floors or replace the carpet and regrout the bathroom.
This is why you always hear homeowners say — It’s always something! (It's also, incidentally, the reason that mommy and daddy sometimes seem grumpy for no reason!)
8. Cleaning. Cleaning a house is a lot of work. Whereas you might’ve had one vacuum and set of cleaning supplies in an apartment, now you may want to have multiple vacuums and sets of cleaning supplies so you don’t have to lug them up and down one or two flights of steps.
Beyond the cost of multiple sets of supplies, cleaning takes time and energy — something you might not have, especially if all the adults in the home work. If you opt to hire a cleaning person, that’s going to cost you $100 or more for every visit, which can add up to over $1,000 during the year.
9. Time! Time is “the No. 1 thing — your biggest cost — of being a homeowner,” Ellington said.
You don’t realize what all your rent went toward and when you have to do it yourself, it costs you a lot — a LOT — of time.
“The time you used to spend with your kids, now you spend on lawn maintenance or changing a light bulb!” Ellington quipped.
10. The furnace and air-conditioning. So, you buy a house and the inspector tells you that the furnace is only four years old and that you may have another 16 or more years left on it. You figure you’re in the clear, you’ll be long gone by then, right? Wrong. A lot of people will tell you you’ll get 20 years out of a furnace but it’s really closer to 10, Cecala says. Then, consider the fact that if the furnace is four or more years old, it probably isn’t energy efficient. So, instead of repairing your furnace or air conditioning units for the next few years, it’s probably better to shell out the cash for a new furnace or central air.
Make sure you know what type of furnace you have before you buy the home. We found out all too late that our new home, with the gorgeous addition and luxurious central air actually had two furnaces because when the previous homeowner did that renovation, he didn’t extend the old heating system into the addition, he just put the vents for the new A/C system in there, which means you have to run both furnaces to heat both the old and the new sections of the house.
11. Wiring – cable, phone, Internet. When Amy Martin and her husband bought their first house a few years ago, they discovered that their cable service was spotty — some channels worked but others didn’t. When they went to get it repaired, they were told that they were “leaking” cable because the wiring in their house was either not the right size or connected wrong.
The wires on the outside are the utility company’s responsibility but any of the wiring on the inside of the house is YOUR responsibility. So, they had to bring an electrician in for 3 to 4 hours to rewire the home.
“In most cases, when you are house hunting, you tour the house a few times, and may or may not be present for the inspection. By the time you've purchased it, you've spent a grand total of about 2-3 hours in the house!” Martin exclaimed, which, for those keeping score, is less time than the electrician spent in the house rewiring the cable!
12. DIY. With the rise of home-improvement channels, everyone, it seems, has DIY — do-it-yourself — fever. Lay down your own flooring? No problem! Strip the bathroom, knock down a wall and put in a new master suite? No problem!
Actually, problem. Most of us, no matter how many hours of HGTV we’ve logged, don’t know a lot about plumbing, electricity, support beams or the finer nuances of cutting granite.
So, in reality, when you think you’re saving on labor costs by doing it yourself, you may be costing yourself more if you ruin the materials you bought, had to buy a second set and then had to pay a guy to come do it for you anyway!
13. Extra stuff the guy finds when he comes for something else. So, you bring in a guy to help you with the kitchen remodel and while he’s outside on his smoke break, he reaches under the front porch and pulls out what looks like a handful of straw. In fact, that’s rotting wood from your front porch — you know, the one your precious little girl bounces on when she’s playing with her friends.
To your untrained eye, the porch, the chimney — it all looks good. But bring in a professional and they’ll inevitably find two or more things that need fixed.
14. Safety. From fixing the front porch to installing an alarm system, adding motion-detector lights or lighting a footpath, those extra safety features are going to cost you extra money.
15. Pest control. If you saw a bug or a mouse in your apartment, you just called the landlord. When you own your own house, there’s no one there to hear your screams. Dealing with termites, cockroaches, mice, bats or the latest pest craze, bed bugs, costs a lot of money. Spend a couple hundred dollars for routine maintenance and it will save you lot more later if you have to get the place bombed and throw out some of your furniture or replace the floor because the varmints got to it.
16. Savings. Do you know how much money you can save by installing new windows, a programmable thermostat and energy-saving light bulbs? A whole lot! But guess what? In order to save a lot, you’ve got to spend a lot up front. While you’re focused on the savings, your money is slipping out the back door.
“These are expenses that people don’t think about when they buy a home but have to think about after the initial honeymoon phase with the house — it’s just like a marriage!” Ellington said.
17. Emergency. Like Douglass, you generally don’t realize until after the FedEx truck has backed up into your house and you’ve had a bouncing, baby girl that your neighborhood is prone to power outages. And remember, power outages usually happen at the worst times — when it’s ridiculously hot out or freezing cold, which means you'll probably be desperate enough to spend a lot of money to be comfortable!
They sell smaller generators but you’ll soon learn that they don’t power much and you have to refuel them often. Realistically, you’re looking at a couple thousand dollars to power up the basics. Or, be prepared to shell out a couple hundred bucks a night for a hotel. If you have kids, make sure it has an indoor pool — one family in one room with one TV is challenging for one night, and you have no idea how many days it will be before the power comes back on!
18. Kids. Not only are you kids going to cost you money for diapers, baby food, clothes they're going to grow out of, jeans, soccer lessons, dance classes, phones and college, but they’re going to cost you a couple thousand in damages over the years. They're going to draw on the walls, run into the screen door, put a baseball through a window, spill cranberry juice all over the living-room rug — and more. When it’s a rental, the most you had to worry about was your security deposit. Owning your own home, you’ll reminisce the days when that was all it would’ve cost you.
Some people set aside jars of money for vacations or other fun items, you might do well to set aside a jar for kid disasters!
19. Nearby construction. Make sure you know who owns the land around you and what the zoning laws are. If you buy a home with an amazing view and then someone comes and builds a 20-story condo building in front of it, that’s going to cost you big time when it comes time to sell your house. Likewise, if nearby land is designated for commercial use, you never know when a gas station will go up or a giant shopping center that will make your road busy and slash your property value.
20. Buyer demands. Congratulations! You’ve made it through 1-19 on the list. But don’t take a rest just yet — 20 is a big one. It’s important to keep up with routine maintenance — buying a new furnace, replacing the roof and fixing that wobbly board in the porch. Because when you go to sell your house, those are the things that a buyer is going to notice — and they could cost you the deal. After getting the home inspection, it’s not uncommon for a buyer to demand that you replace the furnace or get a new roof as a condition of the sale. You’re already going to have a lot of costs (paying the real-estate agent, closing costs, moving costs, etc.) so you don't want to have to tack on another $10,000 or so for repairs — or worse, have them knock money off the sale price because of it.
Before you buy a house, it’s important to figure out if you can afford all the costs of a new home.
As a good rule of thumb, don’t spend a lot on discretionary items — like clothes, gadgets and vacations — in those first few years. Set aside much as you can for the unexpected expenses and wait a year or two to see how it shakes out.
The National Federation for Credit Counseling has a list of questions on their Web site you should ask yourself to see if you’re ready to own your own home. Plus, they have more than 800 locations nationwide that offer free first-time-homebuyer courses to educate people on all the ins and outs of buying a home and the responsibilities that go with it.
Ellington also suggests hanging out with a friend who’s a homeowner on the weekends. Volunteer to do his yard work. Find out how much time and money is involved before you commit to having your own house.
“It’s like marriage,” Ellington said. “If you prepare for it, you’re much better off!”
When Bill Douglass and his wife bought their first home, he budgeted for $250 a month for maintenance costs.
He soon found out that it was $300 a month — just to maintain the lawn.
“I have to admit, I was rather naïve about the costs involved in being a homeowner,” he said.
Two months after they moved in, a FedEx truck accidentally backed into the house, damaging the gutter. That was $900. Then they had a baby girl! It cost an estimated $10,000 for the first year of a baby’s life, according to this baby calculator. Then, the air conditioner went on the fritz. That was $8,000 to replace it. They soon discovered that their neighborhood is prone to power outages, so they needed to consider dropping $10,000 for a backup generator.
“Most people are unprepared for the big repairs — and even the small repairs,” said Guy Cecala, publisher of Inside Mortgage Finance magazine. “When the toilet starts flooding, you can’t call someone like you did when you were renting. You’ve got to fix it yourself.”
To help you get prepared, here are 20 Hidden Costs of Home Ownership.
1. Your heart. You may set a budget for how much you can spend on a new house, but then you find something you love — something you can’t stop thinking about — and even though it’s $50,000 or $100,000 over your budget, you buy it anyway.
“Oftentimes, homeowners make the largest financial decision of their lives — buying a home — with their heart, not their head. They get emotionally involved with the property,” said Gail Cunningham, vice president of public relations for the National Foundation for Credit Counseling. “That can put them on a very slippery slope.”
“I suggest people make all financial decisions with their head — and leave their heart out of it!” Cunningham advises.
2. Property taxes. You might think — “I’m paying $1,200 in rent. For that, I could be paying a mortgage and own my own place!” Well, yes. But if you’re only plugging in the principle and interest rate into your mortgage calculator, you’re missing out on a huge expense right out of the gate — property taxes.
You need to find out what the taxes are in advance (they’re usually on the MLS listing), divide it by 12 and immediately add it to your estimated monthly payment.
And remember, the taxes are just going to keep going up — you could even get a tax increase in the first year you own your home — so make sure you have room left in the budget to pay even more taxes.
3. Insurance. It costs a lot more to insure a home than, say, a one-bedroom apartment. So even if you had renters’ insurance, you’re going to have to up the budget for insurance. And, there are a lot of factors to consider when it comes to insurance.
Thought you saved more by buying an older house? Well, guess what: It’s going to cost more to insure it because the electrical, heating and plumbing are older and more prone to disaster. Wait, did you fall behind on credit-card payments during the recession but thought you were in the clear because you always paid your mortgage? Well, guess what: Insurance companies can periodically check your credit score and raise your rates based on their assessment of your “risk” level.
Plus, if you live in a flood zone, earthquake zone, tsunami zone or volcano zone, you’re going to have to pay extra for hazard insurance.
4. Appearance. Before the first thing in your house even breaks, there is going to be something that you want to change because this is YOUR HOUSE and when people see YOUR HOUSE, you want them to know that you have taste.
“You don’t want it to look like the worst house on the block,” said Neil Ellington, the executive vice president of CESI Debt Solutions.
So, you add shutters, a paved walkway up to the house, flower boxes, landscaping … it’s amazing how much you spend on the outside of the house that you never had to spend on an apartment.
5. The Lawn. First of all, if you decide to contract the lawn out, it’s going to cost you $100 or so a month for someone to cut the lawn, plus another $100 a month for weed killer, pest control and fertilizer. Plus, any extra you decide to spend on new trees, bushes, flowers or fencing.
If you decide to do it yourself to save money, it’s still going to cost you. You’ve now got to buy a lawnmower, weed whacker, hedge trimmers, a hose, sprinkler, rake, gloves, buckets and more. And, of course, if you don’t have a garage big enough to store all of your new lawn gear, you now also need to buy and install a shed to house them.
Ellington said he and his wife live in a drought-prone area so, to save money on water costs opted to put down stone in a part of the lawn. Well guess what? Stones cost a lot of money, too! Unless you find a builder or homeowner who’s looking to unload some stones from a construction site, stones are going to cost you more than you think. At Home Depot for example, a small, 11”x14”, resin landscape rock (we’re not even talking flagstone!) is $29.99. A bag of small landscape rocks cost $5 to $50.
6. Add-Ons: decks, patios, sheds and additional rooms. That shed probably set you back a few Benjamins but guess what? It’s also going to bump up your taxes. Any addition or improvement you make, whether it’s a shed, deck, kitchen renovation or expansion of your master bedroom, is not only going to cost you for parts and labor (which can run into the thousands) but it’s going to make your taxes go up. Every year.
7. Maintenance. A co-worker thought he was catching a break on maintenance costs because he had a fireplace but it wasn’t a working fireplace. Well, then someone told him the chimney — you know, the non-working chimney on the outside of the house — needed to be repointed because the bricks were loose and could fall off and hurt someone. So, he has to pay more than $1,000 to have a mason come in and stabilize that purely aesthetic chimney. How charming!
There are a million unexpected maintenance costs like this. You’ve got to reseal the driveway, restain the deck, clean the gutters, repair and eventually replace the roof, repair any cracks in the siding, patch the front steps — and that’s just the outside! On the inside, you’ve got to repair the appliances, fix any plumbing leaks, replace filters, seal your doors and windows, drain the water heater and clean the chimney.
Plus, patch the walls, replace the toilets, repaint, restain the floors or replace the carpet and regrout the bathroom.
This is why you always hear homeowners say — It’s always something! (It's also, incidentally, the reason that mommy and daddy sometimes seem grumpy for no reason!)
8. Cleaning. Cleaning a house is a lot of work. Whereas you might’ve had one vacuum and set of cleaning supplies in an apartment, now you may want to have multiple vacuums and sets of cleaning supplies so you don’t have to lug them up and down one or two flights of steps.
Beyond the cost of multiple sets of supplies, cleaning takes time and energy — something you might not have, especially if all the adults in the home work. If you opt to hire a cleaning person, that’s going to cost you $100 or more for every visit, which can add up to over $1,000 during the year.
9. Time! Time is “the No. 1 thing — your biggest cost — of being a homeowner,” Ellington said.
You don’t realize what all your rent went toward and when you have to do it yourself, it costs you a lot — a LOT — of time.
“The time you used to spend with your kids, now you spend on lawn maintenance or changing a light bulb!” Ellington quipped.
10. The furnace and air-conditioning. So, you buy a house and the inspector tells you that the furnace is only four years old and that you may have another 16 or more years left on it. You figure you’re in the clear, you’ll be long gone by then, right? Wrong. A lot of people will tell you you’ll get 20 years out of a furnace but it’s really closer to 10, Cecala says. Then, consider the fact that if the furnace is four or more years old, it probably isn’t energy efficient. So, instead of repairing your furnace or air conditioning units for the next few years, it’s probably better to shell out the cash for a new furnace or central air.
Make sure you know what type of furnace you have before you buy the home. We found out all too late that our new home, with the gorgeous addition and luxurious central air actually had two furnaces because when the previous homeowner did that renovation, he didn’t extend the old heating system into the addition, he just put the vents for the new A/C system in there, which means you have to run both furnaces to heat both the old and the new sections of the house.
11. Wiring – cable, phone, Internet. When Amy Martin and her husband bought their first house a few years ago, they discovered that their cable service was spotty — some channels worked but others didn’t. When they went to get it repaired, they were told that they were “leaking” cable because the wiring in their house was either not the right size or connected wrong.
The wires on the outside are the utility company’s responsibility but any of the wiring on the inside of the house is YOUR responsibility. So, they had to bring an electrician in for 3 to 4 hours to rewire the home.
“In most cases, when you are house hunting, you tour the house a few times, and may or may not be present for the inspection. By the time you've purchased it, you've spent a grand total of about 2-3 hours in the house!” Martin exclaimed, which, for those keeping score, is less time than the electrician spent in the house rewiring the cable!
12. DIY. With the rise of home-improvement channels, everyone, it seems, has DIY — do-it-yourself — fever. Lay down your own flooring? No problem! Strip the bathroom, knock down a wall and put in a new master suite? No problem!
Actually, problem. Most of us, no matter how many hours of HGTV we’ve logged, don’t know a lot about plumbing, electricity, support beams or the finer nuances of cutting granite.
So, in reality, when you think you’re saving on labor costs by doing it yourself, you may be costing yourself more if you ruin the materials you bought, had to buy a second set and then had to pay a guy to come do it for you anyway!
13. Extra stuff the guy finds when he comes for something else. So, you bring in a guy to help you with the kitchen remodel and while he’s outside on his smoke break, he reaches under the front porch and pulls out what looks like a handful of straw. In fact, that’s rotting wood from your front porch — you know, the one your precious little girl bounces on when she’s playing with her friends.
To your untrained eye, the porch, the chimney — it all looks good. But bring in a professional and they’ll inevitably find two or more things that need fixed.
14. Safety. From fixing the front porch to installing an alarm system, adding motion-detector lights or lighting a footpath, those extra safety features are going to cost you extra money.
15. Pest control. If you saw a bug or a mouse in your apartment, you just called the landlord. When you own your own house, there’s no one there to hear your screams. Dealing with termites, cockroaches, mice, bats or the latest pest craze, bed bugs, costs a lot of money. Spend a couple hundred dollars for routine maintenance and it will save you lot more later if you have to get the place bombed and throw out some of your furniture or replace the floor because the varmints got to it.
16. Savings. Do you know how much money you can save by installing new windows, a programmable thermostat and energy-saving light bulbs? A whole lot! But guess what? In order to save a lot, you’ve got to spend a lot up front. While you’re focused on the savings, your money is slipping out the back door.
“These are expenses that people don’t think about when they buy a home but have to think about after the initial honeymoon phase with the house — it’s just like a marriage!” Ellington said.
17. Emergency. Like Douglass, you generally don’t realize until after the FedEx truck has backed up into your house and you’ve had a bouncing, baby girl that your neighborhood is prone to power outages. And remember, power outages usually happen at the worst times — when it’s ridiculously hot out or freezing cold, which means you'll probably be desperate enough to spend a lot of money to be comfortable!
They sell smaller generators but you’ll soon learn that they don’t power much and you have to refuel them often. Realistically, you’re looking at a couple thousand dollars to power up the basics. Or, be prepared to shell out a couple hundred bucks a night for a hotel. If you have kids, make sure it has an indoor pool — one family in one room with one TV is challenging for one night, and you have no idea how many days it will be before the power comes back on!
18. Kids. Not only are you kids going to cost you money for diapers, baby food, clothes they're going to grow out of, jeans, soccer lessons, dance classes, phones and college, but they’re going to cost you a couple thousand in damages over the years. They're going to draw on the walls, run into the screen door, put a baseball through a window, spill cranberry juice all over the living-room rug — and more. When it’s a rental, the most you had to worry about was your security deposit. Owning your own home, you’ll reminisce the days when that was all it would’ve cost you.
Some people set aside jars of money for vacations or other fun items, you might do well to set aside a jar for kid disasters!
19. Nearby construction. Make sure you know who owns the land around you and what the zoning laws are. If you buy a home with an amazing view and then someone comes and builds a 20-story condo building in front of it, that’s going to cost you big time when it comes time to sell your house. Likewise, if nearby land is designated for commercial use, you never know when a gas station will go up or a giant shopping center that will make your road busy and slash your property value.
20. Buyer demands. Congratulations! You’ve made it through 1-19 on the list. But don’t take a rest just yet — 20 is a big one. It’s important to keep up with routine maintenance — buying a new furnace, replacing the roof and fixing that wobbly board in the porch. Because when you go to sell your house, those are the things that a buyer is going to notice — and they could cost you the deal. After getting the home inspection, it’s not uncommon for a buyer to demand that you replace the furnace or get a new roof as a condition of the sale. You’re already going to have a lot of costs (paying the real-estate agent, closing costs, moving costs, etc.) so you don't want to have to tack on another $10,000 or so for repairs — or worse, have them knock money off the sale price because of it.
Before you buy a house, it’s important to figure out if you can afford all the costs of a new home.
As a good rule of thumb, don’t spend a lot on discretionary items — like clothes, gadgets and vacations — in those first few years. Set aside much as you can for the unexpected expenses and wait a year or two to see how it shakes out.
The National Federation for Credit Counseling has a list of questions on their Web site you should ask yourself to see if you’re ready to own your own home. Plus, they have more than 800 locations nationwide that offer free first-time-homebuyer courses to educate people on all the ins and outs of buying a home and the responsibilities that go with it.
Ellington also suggests hanging out with a friend who’s a homeowner on the weekends. Volunteer to do his yard work. Find out how much time and money is involved before you commit to having your own house.
“It’s like marriage,” Ellington said. “If you prepare for it, you’re much better off!”
Tuesday, November 30, 2010
Tiny House Movement Thrives Amid Real Estate Bust
By: AP Published: Monday, 29 Nov 2010 4:21 PM ET (CNBC)
As Americans downsize in the aftermath of a colossal real estate bust, at least one tiny corner of the housing market appears to be thriving.
To save money or simplify their lives, a small but growing number of Americans are buying or building homes that could fit inside many people's living rooms, according to entrepreneurs in the small house industry.
Some put these wheeled homes in their backyards to use as offices, studios or extra bedrooms. Others use them as mobile vacation homes they can park in the woods. But the most intrepid of the tiny house owners live in them full-time, paring down their possessions and often living off the grid.
"It's very un-American in the sense that living small means consuming less," said Jay Shafer, 46, co-founder of the Small House Society, sitting on the porch of his wooden cabin in California wine country. "Living in a small house like this really entails knowing what you need to be happy and getting rid of everything else."
Shafer, author of "The Small House Book," built the 89-square-foot house himself a decade ago and lived in it full-time until his son was born last year. Inside a space the size of an ice cream truck, he has a kitchen with gas stove and sink, bathroom with shower, two-seater porch, bedroom loft and a "great room" where he can work and entertain—as long as he doesn't invite more than a couple guests.
He and his family now live in relatively sprawling 500-square foot home next to the tiny one.
Shafer, co-owner of the Tumbleweed Tiny House Company, designs and builds miniature homes with a minimalist style that prizes quality over quantity and makes sure no cubic inch goes to waste. Most can be hooked up to public utilities. The houses, which pack a range of amenities in spaces smaller than some people's closets, are sold for $40,000 to $50,000 ready-made, but cost half as much if you build it yourself.
Tumbleweed's business has grown significantly since the housing crisis began, Shafer said. He now sells about 50 blueprints, which cost $400 to $1,000 each, a year, up from 10 five years ago. The eight workshops he teaches around the country each year attract 40 participants on average, he said.
"People's reasons for living small vary a lot, but there seems to be a common thread of sustainability," Shafer said. "A lot of people don't want to use many more resources or put out more emissions than they have to."
Compared to trailers, these little houses are built with higher-quality materials, better insulation and eye-catching design. But they still have wheels that make them portable—and allow owners to get around housing regulations for stationary homes.
As Americans downsize in the aftermath of a colossal real estate bust, at least one tiny corner of the housing market appears to be thriving.
To save money or simplify their lives, a small but growing number of Americans are buying or building homes that could fit inside many people's living rooms, according to entrepreneurs in the small house industry.
Some put these wheeled homes in their backyards to use as offices, studios or extra bedrooms. Others use them as mobile vacation homes they can park in the woods. But the most intrepid of the tiny house owners live in them full-time, paring down their possessions and often living off the grid.
"It's very un-American in the sense that living small means consuming less," said Jay Shafer, 46, co-founder of the Small House Society, sitting on the porch of his wooden cabin in California wine country. "Living in a small house like this really entails knowing what you need to be happy and getting rid of everything else."
Shafer, author of "The Small House Book," built the 89-square-foot house himself a decade ago and lived in it full-time until his son was born last year. Inside a space the size of an ice cream truck, he has a kitchen with gas stove and sink, bathroom with shower, two-seater porch, bedroom loft and a "great room" where he can work and entertain—as long as he doesn't invite more than a couple guests.
He and his family now live in relatively sprawling 500-square foot home next to the tiny one.
Shafer, co-owner of the Tumbleweed Tiny House Company, designs and builds miniature homes with a minimalist style that prizes quality over quantity and makes sure no cubic inch goes to waste. Most can be hooked up to public utilities. The houses, which pack a range of amenities in spaces smaller than some people's closets, are sold for $40,000 to $50,000 ready-made, but cost half as much if you build it yourself.
Tumbleweed's business has grown significantly since the housing crisis began, Shafer said. He now sells about 50 blueprints, which cost $400 to $1,000 each, a year, up from 10 five years ago. The eight workshops he teaches around the country each year attract 40 participants on average, he said.
"People's reasons for living small vary a lot, but there seems to be a common thread of sustainability," Shafer said. "A lot of people don't want to use many more resources or put out more emissions than they have to."
Compared to trailers, these little houses are built with higher-quality materials, better insulation and eye-catching design. But they still have wheels that make them portable—and allow owners to get around housing regulations for stationary homes.
Tuesday, November 16, 2010
It doesn't pay to remodel your home
Install new fiber-cement siding. That cost an average of $13,382 and returned 80% of the investment, according to Remodeling magazine's 2010 Remodeling Cost vs. Value survey, done in partnership with the National Association of Realtors (NAR).
Like every other renovation job though, it returned a lower percentage of its costs in added home value this year than it did in 2009.
In general, anyone planning a home remodeling will pay a lot more for the job than they will get back in return when they sell. Only 60% of remodeling costs in 2010 would be recouped by homeowners, the report said.
Exterior improvements mostly performed better than interior ones, owing to the necessity of maintaining a home's "curb appeal."
"In today's buyers market, given the large inventory, where people have so much selection, it's important to have the exterior catch the eye so they're willing to step inside," according to Lawrence Yun, chief economist for NAR.
3 Cheap Ways to Make Your Old Kitchen Feel New
The cost vs. value equation has been getting less attractive for years, but 2010 has seen a particular decline in the percentage of home improvement costs recouped.
On the average remodeling job, homeowners recouped 16% less value than they had in 2009, the steepest slide the survey has recorded in its nine-year history. This happened despite the fact that construction costs declined for the first time since 2004.
Adding a new mid-range bath, for example, returned nearly 100% of its approximately $15,000 cost back in 2003. Today, the same job costs more than $40,000 and only returns about half its cost.
Get a High-Quality Remodel For Less
In general, the more spent for a job, the lower the percentage of return. That's apparent in comparing kitchen remodels.
A mid-range kitchen remodel costs nearly $60,000 and returns just 70% of that expense at resale. A high-end renovation adds just 60% of its $113,000 cost.
The lowest return of any job was for a midrange home office renovation, which cost an average of $28,888 and added $13,235, just 45.8%.
Low cost exterior improvements do well. An exterior steel door replacement return 102% of its $1,218 cost and new garage doors recoup 84% of theirs.
Two jobs tied for the best return on any midrange remodeling investment costing more than $10,000. Adding a wood deck or doing a minor kitchen remodeling, which involves replacing cabinet doors and counters, buying new appliances, sinks and faucets and repainting walls and trim et al, both recouped 72.8% of their costs.
Tuesday, November 2, 2010
Home Ownership at Lowest Level in a Decade
Published: Tuesday, 2 Nov 2010 11:34 AM ET (CNBC)
The nation's homeownership rate remained at its lowest in more than a decade, hampered by a rise in foreclosures and weak demand for housing.
The percentage of households that owned their homes was unchanged at 66.9 percent in the July-September quarter, the Census Bureau said Tuesday. That's the same as the April-June quarter.
The last time the rate was lower was in 1999, when the rate was 66.7 percent.
The homeownership rate was around 64 percent from 1985 through 1995. It then rose dramatically during the Clinton and Bush administrations, hitting a peak of more than 69 percent in 2004 at the height of the housing boom.
After the housing bubble burst, the rate has been declining gradually.
About 18.8 million homes, or 14.4 percent of all houses and apartments, were vacant, according to the government survey. Without vacation homes, that rate would be 11 percent.
The number of vacant homes has soared over the past four years from about 16 million at the start of 2006. It has been hovering around 19 million since the end of 2008. There are around 131 million housing units nationwide, according to the Census Bureau.
About 2.5 percent of all primary residences were vacant and for sale and 10.3 percent of all year-round rental units were listed as vacant and for rent.
The nation's homeownership rate remained at its lowest in more than a decade, hampered by a rise in foreclosures and weak demand for housing.
The percentage of households that owned their homes was unchanged at 66.9 percent in the July-September quarter, the Census Bureau said Tuesday. That's the same as the April-June quarter.
The last time the rate was lower was in 1999, when the rate was 66.7 percent.
The homeownership rate was around 64 percent from 1985 through 1995. It then rose dramatically during the Clinton and Bush administrations, hitting a peak of more than 69 percent in 2004 at the height of the housing boom.
After the housing bubble burst, the rate has been declining gradually.
About 18.8 million homes, or 14.4 percent of all houses and apartments, were vacant, according to the government survey. Without vacation homes, that rate would be 11 percent.
The number of vacant homes has soared over the past four years from about 16 million at the start of 2006. It has been hovering around 19 million since the end of 2008. There are around 131 million housing units nationwide, according to the Census Bureau.
About 2.5 percent of all primary residences were vacant and for sale and 10.3 percent of all year-round rental units were listed as vacant and for rent.
Monday, October 18, 2010
Forget it. You're not getting your house back
By Charles Riley, staff reporter October 18, 2010: 11:13 AM ET
NEW YORK (CNNMoney.com) -- Is this the break that millions of people have been hoping for?Evidence continues to mount that major banks flouted their own foreclosure procedures -- and possibly the law -- when repossessing homes from owners who fell behind on payments. And that begs the question: Can owners who were wrongfully evicted take their home back? What if a new owner has already bought the place and moved in?
That's the messy scenario that lawyers, banks and hordes of ex-homeowners are facing, after revelations that loan servicer employees might have signed off on documents without a proper review, a process dubbed "robo-signing."
Experts say that very few homeowners will ever get their houses back. The possible exception: The handful of people who were wrongfully swept up by the mortgage tsunami, despite the fact that they were current on their payments.
But getting a judge to unwind a foreclosure is tough.
"The law imposes a very heavy burden on those seeking to attack final court judgments," says Robert Lawless, a professor at the University of Illinois College of Law.
If a court does rule a foreclosure invalid, either because the lender didn't have the paperwork in order or because the mortgage was not actually in default, a home's title will revert to the original owner, even if the property has since been purchased by a third party.
So where does that leave the original homeowners? It's difficult to say, because this is truly uncharted territory, and because foreclosures are subject to state laws, which vary widely.
But one thing is clear: If the original homeowner doesn't have the cash to catch up on the mortgage, the lender will restart the foreclosure process and, with the paperwork in order this time, repossess the house.
"The bottom line is that for the vast majority of these cases it's just going to delay the inevitable," said George Craft, a Texas based real estate attorney. The new owner should be able to stay in the house while the second foreclosure works through the courts because by this point, the original homeowner has probably found a new place to live.
Even someone who was wrongly evicted has probably found a new home and would prefer to take a cash settlement rather than try to reclaim their house. Most of these homeowners will almost certainly sue their lender, which is of course exposed to a tremendous amount of liability.
"Monetary damages will be the way people are compensated, because it's much easier for courts to monitor and institute," according to Andrew Raines, a California lawyer who specializes in real estate.
In the rare case that a foreclosure victim does want a house back after a third party has moved in, the new buyers will be compensated by title insurance.
Almost all lenders require mortgage applicants to purchase title insurance, which is designed to guard against gaps in the title record due to human error. If a title reverts to the original homeowner, title insurance should cover any financial loss incurred if the new owner is ordered to vacate the house.
Of course, that might not be the end of it -- there will probably be a flood of lawsuits bouncing between victims, title insurers and lenders that will further jam up a system that's already backlogged.
"One of the best and worst parts of our judicial system," said Lawless, "is that anyone has access to the courts to assert their grievance against another."
Tuesday, October 12, 2010
JPMorgan Chase expanding foreclosure review
NEW YORK (CNNMoney.com) -- JPMorgan Chase is expanding its review of foreclosure documents, according to a person close to the bank.
In September, Chase announced a review of 56,000 foreclosure cases in 23 states that require a judge to sign off on a foreclosure. The recent move expands the inspection to states that do not require judicial approval.
Under the latest expansion, the foreclosure process will continue while documents are being examined, expected to take a few weeks.
In the initial review, Chase requested that the courts not enter judgments until completion of the audit. Without a judgment from a court, those homes cannot be sold.
The initial review was announced after the lender discovered that its employees may have signed affidavits on the basis of reviews done by other personnel.
In those 56,000 cases, JPMorgan Chase has asked its local foreclosure attorneys to communicate to courts, affected homeowners and their lawyers. The notification process is underway, a company spokesman said.
Foreclosure freeze FAQ
Banks have come under increasing pressure from lawmakers in recent weeks to review foreclosures or to expand existing reviews.
On Friday, Bank of America announced it was halting foreclosure sales in all 50 states as part of a widening investigation into flaws in the process. The bank said the foreclosure process on delinquent borrowers will continue, but it will not proceed to judgment or a foreclosure sale.
Ally Financial, previously known as GMAC, the finance arm of General Motors, has said it is temporarily suspending evictions and post-foreclosure closings in states that require judicial review while it conducts a review of documents.
Monday, October 4, 2010
Bank of America halts foreclosures in 23 states
By Hibah Yousuf, staff reporter October 1, 2010: 7:12 PM ET
NEW YORK (CNNMoney.com) -- Bank of America is the latest in a string of banks to freeze home foreclosures in 23 states as it investigates whether there were flaws in its process.
"We have been assessing our existing processes," Bank of America said in a statement. "To be certain affidavits have followed the correct procedures, Bank of America will delay the process in order to amend all affidavits in foreclosure cases that have not yet gone to judgment in the 23 states where courts have jurisdiction over foreclosures."
Bank of America did not have an estimate of the number of homeowners that will be affected by the delayed process.
The announcement comes two days after JP Morgan Chase said it will also halt foreclosures for about 56,000 homeowners after learning that its employees may have approved foreclosures without personally reviewing loan files.
A Chase spokesman said it is working with outside counsel over the next few weeks to review its process to confirm that it meets the appropriate standards.
Last week, Ally Financial, previously known as GMAC, the finance arm of General Motors, said it will also pause foreclosures in the 23 states.
Mortgage lender Freddie Mac said Friday that it is "deeply concerned" with the recent reports and said the alleged practices are not in compliance with its guidelines.
"We expect to provide instructions to our servicers later today that are intended to ensure that their foreclosure processes are in compliance with state law and Freddie Mac's servicing requirements," the lender said in a statement. "It's essential that the industry work together to protect borrowers' rights and ensure the integrity of the foreclosure process."
NEW YORK (CNNMoney.com) -- Bank of America is the latest in a string of banks to freeze home foreclosures in 23 states as it investigates whether there were flaws in its process.
"We have been assessing our existing processes," Bank of America said in a statement. "To be certain affidavits have followed the correct procedures, Bank of America will delay the process in order to amend all affidavits in foreclosure cases that have not yet gone to judgment in the 23 states where courts have jurisdiction over foreclosures."
Bank of America did not have an estimate of the number of homeowners that will be affected by the delayed process.
The announcement comes two days after JP Morgan Chase said it will also halt foreclosures for about 56,000 homeowners after learning that its employees may have approved foreclosures without personally reviewing loan files.
A Chase spokesman said it is working with outside counsel over the next few weeks to review its process to confirm that it meets the appropriate standards.
Last week, Ally Financial, previously known as GMAC, the finance arm of General Motors, said it will also pause foreclosures in the 23 states.
Mortgage lender Freddie Mac said Friday that it is "deeply concerned" with the recent reports and said the alleged practices are not in compliance with its guidelines.
"We expect to provide instructions to our servicers later today that are intended to ensure that their foreclosure processes are in compliance with state law and Freddie Mac's servicing requirements," the lender said in a statement. "It's essential that the industry work together to protect borrowers' rights and ensure the integrity of the foreclosure process."
Monday, September 13, 2010
Homebuyer tax credit: 950,000 must repay
(CNNMoney.com) -- Nearly half of all Americans who claimed the first-time homebuyer tax credit on their 2009 tax returns will have to repay the government.
According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.
The confusion comes because homebuyers were eligible for two different credits, depending on when their homes were purchased.
Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home's purchase price or $7,500, whichever was less. The catch: The money was a no-interest loan that had to be repaid within 15 years.
Had they waited to buy until 2009, they could have gotten a much sweeter deal. Congress extended the credit and made it a refund rather than a loan.
Now, the IRS is developing a strategy for separating the 2009 taxpayers who are required to repay the credit from those who are not.
A review by the Inspector General earlier this year found that the IRS could not easily distinguish between home purchases made in 2008 and 2009. That heightened concerns that some claims could be erroneous or even fraudulent, that buyers could, for example, claim their purchase came later than it actually occurred.
Thursday's release reported that 73,000 claims, more than 4% of the 1.8 million homebuyers who received the credit, had incorrect purchase dates recorded by the IRS.
Some of the inaccuracies counted against the taxpayers, Nearly 60,000 were listed as purchasing in 2008 (meaning they had to repay the credit) or had no purchase dates at all, rather than their correct 2009 purchase dates, which would free them of the obligation to pay it back.
It is also taking a look at all those deceased taxpayers who received credits.
The inspector general reported that 1,326 single people listed as dead by the Social Security Administration claimed more than $10 million in credits. The IRS threw out 528 of those 1,326 claims, saving $4 million.
By Les Christie, staff writerSeptember 9, 2010: 2:40 PM ET
According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.
The confusion comes because homebuyers were eligible for two different credits, depending on when their homes were purchased.
Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home's purchase price or $7,500, whichever was less. The catch: The money was a no-interest loan that had to be repaid within 15 years.
Had they waited to buy until 2009, they could have gotten a much sweeter deal. Congress extended the credit and made it a refund rather than a loan.
Now, the IRS is developing a strategy for separating the 2009 taxpayers who are required to repay the credit from those who are not.
A review by the Inspector General earlier this year found that the IRS could not easily distinguish between home purchases made in 2008 and 2009. That heightened concerns that some claims could be erroneous or even fraudulent, that buyers could, for example, claim their purchase came later than it actually occurred.
Thursday's release reported that 73,000 claims, more than 4% of the 1.8 million homebuyers who received the credit, had incorrect purchase dates recorded by the IRS.
Some of the inaccuracies counted against the taxpayers, Nearly 60,000 were listed as purchasing in 2008 (meaning they had to repay the credit) or had no purchase dates at all, rather than their correct 2009 purchase dates, which would free them of the obligation to pay it back.
It is also taking a look at all those deceased taxpayers who received credits.
The inspector general reported that 1,326 single people listed as dead by the Social Security Administration claimed more than $10 million in credits. The IRS threw out 528 of those 1,326 claims, saving $4 million.
By Les Christie, staff writerSeptember 9, 2010: 2:40 PM ET
Monday, August 30, 2010
So Where's the Good News? by John Mauldin
Ok, I could go on for hours, sorting through the problems. Where is the good news I promised?
Here's what I should have said to Tiffani's group: Let's face it. Running a small business is never easy. I am a serial entrepreneur. I have started and run a lot of very different businesses. Some have been very, very good and some went down in spectacular flames. I can remember some near-death experiences when the economy was booming. I have watched a million-dollar income stream dwindle to zero and there was not a damn thing I could do about it, except enjoy the money while it was there and use it to buy the next income stream. I have had to rebuild several times from scratch as markets shifted drastically underneath my feet. And I've changed directions as new opportunities revealed themselves.
In all this I'm like every other small-business entrepreneur out there. It is never easy. But that is what we do. We get up in the morning and figure it out. Some 80% of startups die within ten years. But we pick ourselves up and start over.
I know unemployment is 10%. But that means almost 90% are employed. Consumers are saving more. So adjust. Figure out what your New Normal looks like.
The '70s were a bitch. I woke up many times in the middle of the night with real pains in my stomach wondering whether to pay the rent or make payroll. So did a lot of people. But look at all the new companies that came out of that era and changed everything: Microsoft, Apple, Intel, etc. Cell phones. The internet. The list is long.
Yes, we have to make our way in this Muddle Through World. It will be challenging, but I can almost guarantee you that when we do get through there will be other challenges. If it was easy everybody could do it and there would be no money in it. Embrace the challenge!
I asked one of my really close (36 years) friends and business associates last year how his business was doing. "We are doing great!" he said. That was not the answer I was expecting. "Why? How?" I asked.
"Well, most of our competitors have folded. We survived and got the business."
Ultimately, that is how we get out of this. A hundred million families and millions of businesses figuring it out, learning how to adapt to the New Normal. Sadly, some of them won't make it. But most of us will!
As I said, I am a serial entrepreneur. I have a friend who designs and oversees large teams of programmers of really robust analytic software, very cutting-edge stuff. She is a winner, and I am backing her (I know nothing about software but the rule is, invest in people!). We'll see how it goes, but my bet is that in a few years there will be a lot of people getting jobs because we take on some risk now.
We are adapting our own business here. We will soon have new websites. I will be doing (at first) an audio podcast called the Mauldin Minute and then (hopefully) by the end of the year morphing into video. That's the wave of the future and I need to keep up.
I am addicted to information and reading . We are going to try and make some money from my addiction. What would you pay to look over my shoulder and read the 5-10 most important things I find in a week? I will become your personal reader. Will that be a life-style changer? No, but it will provide some income diversification.
When Tiffani made her presentation to her Vistage group about our business, she had a lot of charts and graphs. I was surprised how our sources of income have varied over time. Some previously large (at least on my scale) sources literally dried up within a few years, completely askew from our original optimistic expectations. It was very apparent that we cannot sit and assume things will be the same year to year. So we adapt.
I have been presented with a very different opportunity in a non-finance field that is right in my wheelhouse, as they say. Tiffani and Ryan and I are going to pursue it. Will it thrive? Be a real business in five years? We will see, but I have the ability to take that risk and I am going to do so.
And so will hundreds of thousands of other visionaries and dreamers. That is how we get through this. We work through the ugly and then we get to the 2020s, and I think we will once again be talking about the Roaring 20s! Whole new industries will come into existence. Pay attention to the advancements in robotics. Biotech will be HUGE this decade, but we need to change the rules so we don't lose the intellectual property and the jobs. Electric cars will boom as we replace our fleet all over the world. Nanotech later in the '20s. Green energy and nuclear. Artificial intelligence (finally!). Really cheap (I mean really cheap!) wireless high-speed broadband all over the world will open the door to all kinds of possibilities. I met last night with very credible scientists who have developed a way to filter water very cheaply. A desalinization module that fits in a cargo container. Yes, they need a lot of money to finish, but they will figure it out. And on and on. The opportunities are going to be huge. Trillions will be made.
So, we get through this. We Muddle Through. We figure it out, one business and family at a time. And as a culture, a world, we get to a better place. My bet is that in 2020 no one is going to want to go back to the good old days of 2010. We will be excited about the future and all the cool stuff that is happening.
Recessions and tough times are God's way of telling you that you need to adjust a few things, both on a personal and business level – also nationally and globally. I am an optimist. I believe we will adjust and grow, not just in the US but as an emerging world. There are just so many opportunities.
So, don't let the problems I write about in this letter make you crawl into a cave. Just be realistic and figure out where your opportunities are. And then go make them happen! You are responsible for creating your own future. And I hope it is a good one. I plan on making mine one.
I found John Mauldin’s article inspiring. I hope you enjoy it as well. Wishing you all a great week!
Here's what I should have said to Tiffani's group: Let's face it. Running a small business is never easy. I am a serial entrepreneur. I have started and run a lot of very different businesses. Some have been very, very good and some went down in spectacular flames. I can remember some near-death experiences when the economy was booming. I have watched a million-dollar income stream dwindle to zero and there was not a damn thing I could do about it, except enjoy the money while it was there and use it to buy the next income stream. I have had to rebuild several times from scratch as markets shifted drastically underneath my feet. And I've changed directions as new opportunities revealed themselves.
In all this I'm like every other small-business entrepreneur out there. It is never easy. But that is what we do. We get up in the morning and figure it out. Some 80% of startups die within ten years. But we pick ourselves up and start over.
I know unemployment is 10%. But that means almost 90% are employed. Consumers are saving more. So adjust. Figure out what your New Normal looks like.
The '70s were a bitch. I woke up many times in the middle of the night with real pains in my stomach wondering whether to pay the rent or make payroll. So did a lot of people. But look at all the new companies that came out of that era and changed everything: Microsoft, Apple, Intel, etc. Cell phones. The internet. The list is long.
Yes, we have to make our way in this Muddle Through World. It will be challenging, but I can almost guarantee you that when we do get through there will be other challenges. If it was easy everybody could do it and there would be no money in it. Embrace the challenge!
I asked one of my really close (36 years) friends and business associates last year how his business was doing. "We are doing great!" he said. That was not the answer I was expecting. "Why? How?" I asked.
"Well, most of our competitors have folded. We survived and got the business."
Ultimately, that is how we get out of this. A hundred million families and millions of businesses figuring it out, learning how to adapt to the New Normal. Sadly, some of them won't make it. But most of us will!
As I said, I am a serial entrepreneur. I have a friend who designs and oversees large teams of programmers of really robust analytic software, very cutting-edge stuff. She is a winner, and I am backing her (I know nothing about software but the rule is, invest in people!). We'll see how it goes, but my bet is that in a few years there will be a lot of people getting jobs because we take on some risk now.
We are adapting our own business here. We will soon have new websites. I will be doing (at first) an audio podcast called the Mauldin Minute and then (hopefully) by the end of the year morphing into video. That's the wave of the future and I need to keep up.
I am addicted to information and reading . We are going to try and make some money from my addiction. What would you pay to look over my shoulder and read the 5-10 most important things I find in a week? I will become your personal reader. Will that be a life-style changer? No, but it will provide some income diversification.
When Tiffani made her presentation to her Vistage group about our business, she had a lot of charts and graphs. I was surprised how our sources of income have varied over time. Some previously large (at least on my scale) sources literally dried up within a few years, completely askew from our original optimistic expectations. It was very apparent that we cannot sit and assume things will be the same year to year. So we adapt.
I have been presented with a very different opportunity in a non-finance field that is right in my wheelhouse, as they say. Tiffani and Ryan and I are going to pursue it. Will it thrive? Be a real business in five years? We will see, but I have the ability to take that risk and I am going to do so.
And so will hundreds of thousands of other visionaries and dreamers. That is how we get through this. We work through the ugly and then we get to the 2020s, and I think we will once again be talking about the Roaring 20s! Whole new industries will come into existence. Pay attention to the advancements in robotics. Biotech will be HUGE this decade, but we need to change the rules so we don't lose the intellectual property and the jobs. Electric cars will boom as we replace our fleet all over the world. Nanotech later in the '20s. Green energy and nuclear. Artificial intelligence (finally!). Really cheap (I mean really cheap!) wireless high-speed broadband all over the world will open the door to all kinds of possibilities. I met last night with very credible scientists who have developed a way to filter water very cheaply. A desalinization module that fits in a cargo container. Yes, they need a lot of money to finish, but they will figure it out. And on and on. The opportunities are going to be huge. Trillions will be made.
So, we get through this. We Muddle Through. We figure it out, one business and family at a time. And as a culture, a world, we get to a better place. My bet is that in 2020 no one is going to want to go back to the good old days of 2010. We will be excited about the future and all the cool stuff that is happening.
Recessions and tough times are God's way of telling you that you need to adjust a few things, both on a personal and business level – also nationally and globally. I am an optimist. I believe we will adjust and grow, not just in the US but as an emerging world. There are just so many opportunities.
So, don't let the problems I write about in this letter make you crawl into a cave. Just be realistic and figure out where your opportunities are. And then go make them happen! You are responsible for creating your own future. And I hope it is a good one. I plan on making mine one.
I found John Mauldin’s article inspiring. I hope you enjoy it as well. Wishing you all a great week!
Monday, August 16, 2010
Obama Administration to Provide $3 Billion in Housing Aid
The Obama administration is providing $3 billion to unemployed homeowners facing foreclosure in the nation's toughest job markets.
The Treasury Department says it will send $2 billion to 17 states that have unemployment rates higher than the national average for a year. They will use the money for programs to aid unemployed homeowners. Some of those states have already designed such programs.
Another $1 billion will go to a new program being run by the Department of Housing and Urban Development. It will provide homeowners with emergency zero-interest rate loans of up to $50,000 for up to two years.
The administration was required to launch the HUD emergency loan program by the financial regulatory bill signed by President Barack Obama last month.
The Treasury are using money from the $700 billion Wall Street bailout to pay its share of the program. Officials said they won't know until next month how many people are likely to be helped.
California will get the largest share of money for the Treasury program, at $476 million. Florida is in line for nearly $239 million. Illinois will receive $166 million and Ohio will receive $149 million.
The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. More than 40 percent, or about 530,000 homeowners, have fallen out of the administration's main effort to assist those facing foreclosure.
That program, known as Making Home Affordable, provides lenders with incentives to reduce mortgage payments. So far, it has provided permanent help to about 390,000 homeowners, or 30 percent of the 1.3 million who have enrolled since March 2009.
Also receiving money are Michigan, $129 million; Georgia, $127 million; North Carolina, $121 million; New Jersey, $112 million; Indiana, $83 million and Tennessee, $81 million.
Alabama is due to receive $61 million, South Carolina, $59 million; Kentucky, $56 million; Oregon, $49 million; Mississippi, $38 million; Nevada, $34 million; Rhode Island, $14 million; and Washington, D.C., $8 million.
Published: Wednesday, 11 Aug 2010
2:22 PM ET (CNBC)
The Treasury Department says it will send $2 billion to 17 states that have unemployment rates higher than the national average for a year. They will use the money for programs to aid unemployed homeowners. Some of those states have already designed such programs.
Another $1 billion will go to a new program being run by the Department of Housing and Urban Development. It will provide homeowners with emergency zero-interest rate loans of up to $50,000 for up to two years.
The administration was required to launch the HUD emergency loan program by the financial regulatory bill signed by President Barack Obama last month.
The Treasury are using money from the $700 billion Wall Street bailout to pay its share of the program. Officials said they won't know until next month how many people are likely to be helped.
California will get the largest share of money for the Treasury program, at $476 million. Florida is in line for nearly $239 million. Illinois will receive $166 million and Ohio will receive $149 million.
The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. More than 40 percent, or about 530,000 homeowners, have fallen out of the administration's main effort to assist those facing foreclosure.
That program, known as Making Home Affordable, provides lenders with incentives to reduce mortgage payments. So far, it has provided permanent help to about 390,000 homeowners, or 30 percent of the 1.3 million who have enrolled since March 2009.
Also receiving money are Michigan, $129 million; Georgia, $127 million; North Carolina, $121 million; New Jersey, $112 million; Indiana, $83 million and Tennessee, $81 million.
Alabama is due to receive $61 million, South Carolina, $59 million; Kentucky, $56 million; Oregon, $49 million; Mississippi, $38 million; Nevada, $34 million; Rhode Island, $14 million; and Washington, D.C., $8 million.
Published: Wednesday, 11 Aug 2010
2:22 PM ET (CNBC)
Monday, August 2, 2010
Mortgage brokers to be fingerprinted and registered
Mortgage loan originators will have to be fingerprinted and sign up to a central registry to do business in future, according to final rules issued on Wednesday by the Federal Reserve and other regulators.
The rules are part of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, also called the S.A.F.E. Act.
They were issued by the Fed, Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision, Farm Credit Administration and National Credit Union Administration.
Mortgage brokers came under tough scrutiny in the wake of the 2007-09 financial crisis, with some lawmakers and regulators sharply critical of underwriting standards and practices that were seen as so loose they helped foster a housing price bubble.
The S.A.F.E. Act specifies that mortgage brokers who are employees of agency-regulated institutions must register with the Nationwide Mortgage Licensing System and Registry,
"As part of this registration process, residential mortgage loan originators must furnish to the registry information and fingerprints for background checks," a joint release from regulators said.
The final rules take effect on October 1 and it is anticipated that the registry could start accepting registrations as early as January 28, 2011.
Industry sources say that thousands of brokers have gone through mandatory education, credit checks and state and federal testing in order to retain the right to handle mortgage originations.
The process has thinned the ranks of brokers, who may be even fewer soon given talk of a 30 percent fail rate on testing, said Bob Moulton, president of Americana Mortgage Group in Manhasset, New York.
"It cleaned up the industry," said Moulton, who nonetheless cautioned that he felt credit availability for mortgage lending has been reduced as a result of uncertainty caused by U.S. financial regulatory reform.
Published: Wednesday, 28 Jul 2010
6:51 PM ET (CNBC)
The rules are part of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, also called the S.A.F.E. Act.
They were issued by the Fed, Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision, Farm Credit Administration and National Credit Union Administration.
Mortgage brokers came under tough scrutiny in the wake of the 2007-09 financial crisis, with some lawmakers and regulators sharply critical of underwriting standards and practices that were seen as so loose they helped foster a housing price bubble.
The S.A.F.E. Act specifies that mortgage brokers who are employees of agency-regulated institutions must register with the Nationwide Mortgage Licensing System and Registry,
"As part of this registration process, residential mortgage loan originators must furnish to the registry information and fingerprints for background checks," a joint release from regulators said.
The final rules take effect on October 1 and it is anticipated that the registry could start accepting registrations as early as January 28, 2011.
Industry sources say that thousands of brokers have gone through mandatory education, credit checks and state and federal testing in order to retain the right to handle mortgage originations.
The process has thinned the ranks of brokers, who may be even fewer soon given talk of a 30 percent fail rate on testing, said Bob Moulton, president of Americana Mortgage Group in Manhasset, New York.
"It cleaned up the industry," said Moulton, who nonetheless cautioned that he felt credit availability for mortgage lending has been reduced as a result of uncertainty caused by U.S. financial regulatory reform.
Published: Wednesday, 28 Jul 2010
6:51 PM ET (CNBC)
Wednesday, July 28, 2010
Social relationships key to survival, study says
It turns out that people with adequate social relationships have a 50 percent greater likelihood of survival than people who have poor or insufficient relationships. That means that having good relationships is comparable to quitting smoking in terms of survival benefit, and is a stronger factor than obesity and physical activity.
Researchers from Brigham Young University and the University of North Carolina at Chapel Hill looked at 148 different studies that examined the connection between survival and relationships. Regardless of age, sex, initial health status, cause of death, and follow-up period in the individual studies, the new analysis finds that those with stronger relationships have an increased likelihood of survival.
This principle of social relationships aiding survival has even been seen in babies, the study noted. In the mid-20th century, infants in orphanages were observed to have high mortality rates predicted by lack of human contact. Death rates in these settings substantially decreased with changes in practice and policy to promote social interaction.
One theory behind these results is that social relationships may buffer the negative effects of stressors on health, such as illness and transitions and changes in life. Social relationships may also promote healthy behaviors, in the sense that people may directly encourage each other's good habits or indirectly provide good models.
"In addition, being part of a social network gives individuals meaningful roles that provide esteem and purpose to life," the authors wrote.
As seen in the research of Nicholas Christakis and James Fowler, positive attributes such as happiness spread in social networks, as well as negative behaviors such as smoking and obesity. But they also found that people who dropped their friends who gained weight were more susceptible to obesity themselves.
The study on social relationships and mortality appears in the journal PLoS Medicine.
Post by: Elizabeth Landau - CNN.com Health Writer/Producer
Filed under: Longevity • Relationships
Monday, June 21, 2010
The Best Time to Buy Almost Everything
House and home
• Real estate—March through August are active months for buying and selling, so a buyer looking for a deal will have better luck negotiating on an offer in autumn and winter.
• Flooring—Carpet and flooring goes on sale near the end of the year due to slow sales, though discounts are possible throughout the year from independent retailers.
• Furniture—January and July, when stores need to make room for new inventory.
• Gas grill—Like air conditioners, the best time to buy is during winter months, when demand for outdoor grills is low.
• Cookware—April and May (think graduation and wedding prime time) and October and November (holidays approaching).
• Linens—January “white sales” and the end of each season (i.e. as spring approaches, winter-colored linens will go on sale). It’s common to see linens (in all colors, not just white!) on sale for up to 60 percent off retail.
• Mattress—New mattresses arrive in stores in May, when you’ll find a good deal on the previous year’s models.
• Vacuum cleaner—June, when new models hit the floors, and end of winter.
• Hardware—Big sales occur around Father’s Day and between Thanksgiving and Christmas.
• Home appliances—New models arrive in September and October, when you’ll find good deals on last year’s models. Holiday weekends—Fourth of July, Labor Day, Columbus Day, Presidents Day—also are good bets for deals. If you’re willing to buy an appliance with a ding or a scratch, you can save hundreds.
• Air conditioner—Winter months, when demand is low.
Flora
• Flowers—Tulips are less expensive in February, peonies in May. Flowers are at their best when in season.
• Shrubs, trees, etc.—Autumn is a good time to buy bulbs (store them according to directions on the packaging) and trees and shrubs (nurseries are trying to clear out inventory).
Recreation
• Outdoor (general)—Swings, beach and pool toys, swimming gear, and other outdoor items go on sale in August, when retailers are trying to make room for fall and winter items.
• Outdoor gear (bicycles, for example)—February and March, when new models replace last year’s models.
• Boat—Boat shows, held from January through March, generally offer the best prices.
• Gym membership—Membership sales soar in January as everyone resolves to lose weight, but lag in spring and summer. You’ll find lower fees and waived enrollment fees to lure you to their treadmills.
• Movie tickets—Matinees are an established way to spend less at the theater (as is smuggling in your own M&Ms, not that I’d condone such behavior or ever do so myself…). A.M. Cinema (AMC Theaters) sells discounted tickets before noon from Friday to Sunday and on holidays.
• Broadway tickets—Find bargains hours before the show, or try the well-known TKTS booth in Times Square.
Electronics
• Blu-ray player—Black Friday sales and after-Christmas sales offer some of the best deals.
• TV—Sales can be found throughout the year. Times to note include Black Friday, between Thanksgiving and Christmas, right after New Year’s Day, before the Super Bowl, and in May and June. New models hit stores in August and September, when you’ll find sales on new models and discounts on the previous year models.
• Cell phone—New customers get the best deals. For new phones, wait six months if you can. Search online for coupon codes, as well.
• Digital camera—The Consumer Electronics Show and Photo Marketing Association convention mean new models will arrive in stores. Shop in January and February for deals on last year’s models.
• Computer—Back-to-school season yields a few sales, but the best deals can be found when a technology is outdated and retailers want to get rid of the older models. Look for a few extras (free shipping, bundled accessories, etc.) around the holidays.
Tip: In general, you’ll find a good deal when an electronic item is outdated. Wait until after technology shows like MacWorld and the International Consumer Electronics Show to see if your iWhatever will be discounted to make way for the next big thing.
Auto
• New car—New models roll into the lot in fall, so shop in September for last year’s model. Shop on a weekday at the end of the month to get the undivided attention of a salesperson trying to make their monthly quota.
• Used car—Dealers increase their inventory in April to start the spring selling season. You’ll find a good selection and willing negotiators.
• Recreational vehicle—Dealers sometimes offer specials in winter, but generally buying an RV works like buying a car (see new cars).
• Gasoline—Fuel up on a weekday, early in the morning if gas prices are rising or in the evening if gas prices are going down (prices are usually changed between 10 a.m. and noon).
• Oil change—Look for early bird specials in your area.
• Tires and auto parts—During April (National Car Care Month) and October (Fall Car Care Month), you are likely to find buy-three-get-one-free deals on tires, free oil changes, and other checkups.
• Car wash—Early birds (before 8 or 9 a.m.) can often find deals at full-service car washes.
Travel
• Airline tickets—For domestic nonholiday travel, look for the lowest fares 21 days from your departure. Fares are updated at 10 a.m., 12:30 p.m., and 8 p.m. on weekdays, and airlines file one update on Saturday and Sunday. Lowest fares are filed on Tuesdays, Wednesdays, and occasionally on Saturdays. Wednesday is generally the cheapest day to fly and Sunday the most expensive. (Exception: the Wednesday before Thanksgiving—the busiest travel day of the year.) For holiday travel, start looking in September to get a good price. Fares can change quickly, and much depends on the carrier and the market.
• Travel (general)—The off-season or shoulder-season for your destination will offer the most savings on lodging, recreation, transportation, etc.
Food
• Groceries (supermarket)—On Sunday evenings, you’ll save money through store sales (typically run Wednesday through Thursday), and by shopping in the evening, you can save even more on items that must be sold by day’s end. If you clip coupons from the Sunday newspaper, you’ll enjoy additional savings.
• Coupons—While coupons are available throughout the year, the most coupons appear in the Sunday paper during November and December. The best deals on turkeys can be found two weeks before Thanksgiving to Christmas. In spring, you’ll find coupons on seasonal produce, ham, and frozen food (apparently March is National Frozen Food Month—who knew?). Summer coupons offer discounts on grilling items and ice cream. Autumn brings coupons on soup and other canned items.
• Groceries (farmers market)—Vendors often lower prices near closing to avoid having to pack up perishables and take them back to the farm.
• Champagne—With steep competition to be your New Year’s Eve bubbly, Champagne houses drop prices during the holidays.
Clothing and accessories
• Clothing (general)—Got your heart set on something in particular? Shop on a Thursday evening six to eight weeks after the item arrived in the store. By Thursday, the weekend sales have started and the selection will still be good. Season-end clearance sales also offer up savings.
• Baby clothes—Shop during your pregnancy for end-of-season clearance items. If it’s springtime and you are due in winter, look for winter closeout sales now for infant clothing.
• Jewelry—Avoid the holidays, when you are most likely to pay full price.
Weddings
• Wedding (general)—The off-season can mean big discounts. If you live in a cooler climate, you’ll find savings during the winter months. Hotter climates mean likely deals in summer months.
• Wedding dresses—After Thanksgiving and before Christmas. Boutiques are stocked with gowns for Christmas engagements, but it’s a slow sales period.
Other
• Toys—October and November offer good bargains as retailers gear up for the holiday season.
• Wrapping paper—January, of course!
• Real estate—March through August are active months for buying and selling, so a buyer looking for a deal will have better luck negotiating on an offer in autumn and winter.
• Flooring—Carpet and flooring goes on sale near the end of the year due to slow sales, though discounts are possible throughout the year from independent retailers.
• Furniture—January and July, when stores need to make room for new inventory.
• Gas grill—Like air conditioners, the best time to buy is during winter months, when demand for outdoor grills is low.
• Cookware—April and May (think graduation and wedding prime time) and October and November (holidays approaching).
• Linens—January “white sales” and the end of each season (i.e. as spring approaches, winter-colored linens will go on sale). It’s common to see linens (in all colors, not just white!) on sale for up to 60 percent off retail.
• Mattress—New mattresses arrive in stores in May, when you’ll find a good deal on the previous year’s models.
• Vacuum cleaner—June, when new models hit the floors, and end of winter.
• Hardware—Big sales occur around Father’s Day and between Thanksgiving and Christmas.
• Home appliances—New models arrive in September and October, when you’ll find good deals on last year’s models. Holiday weekends—Fourth of July, Labor Day, Columbus Day, Presidents Day—also are good bets for deals. If you’re willing to buy an appliance with a ding or a scratch, you can save hundreds.
• Air conditioner—Winter months, when demand is low.
Flora
• Flowers—Tulips are less expensive in February, peonies in May. Flowers are at their best when in season.
• Shrubs, trees, etc.—Autumn is a good time to buy bulbs (store them according to directions on the packaging) and trees and shrubs (nurseries are trying to clear out inventory).
Recreation
• Outdoor (general)—Swings, beach and pool toys, swimming gear, and other outdoor items go on sale in August, when retailers are trying to make room for fall and winter items.
• Outdoor gear (bicycles, for example)—February and March, when new models replace last year’s models.
• Boat—Boat shows, held from January through March, generally offer the best prices.
• Gym membership—Membership sales soar in January as everyone resolves to lose weight, but lag in spring and summer. You’ll find lower fees and waived enrollment fees to lure you to their treadmills.
• Movie tickets—Matinees are an established way to spend less at the theater (as is smuggling in your own M&Ms, not that I’d condone such behavior or ever do so myself…). A.M. Cinema (AMC Theaters) sells discounted tickets before noon from Friday to Sunday and on holidays.
• Broadway tickets—Find bargains hours before the show, or try the well-known TKTS booth in Times Square.
Electronics
• Blu-ray player—Black Friday sales and after-Christmas sales offer some of the best deals.
• TV—Sales can be found throughout the year. Times to note include Black Friday, between Thanksgiving and Christmas, right after New Year’s Day, before the Super Bowl, and in May and June. New models hit stores in August and September, when you’ll find sales on new models and discounts on the previous year models.
• Cell phone—New customers get the best deals. For new phones, wait six months if you can. Search online for coupon codes, as well.
• Digital camera—The Consumer Electronics Show and Photo Marketing Association convention mean new models will arrive in stores. Shop in January and February for deals on last year’s models.
• Computer—Back-to-school season yields a few sales, but the best deals can be found when a technology is outdated and retailers want to get rid of the older models. Look for a few extras (free shipping, bundled accessories, etc.) around the holidays.
Tip: In general, you’ll find a good deal when an electronic item is outdated. Wait until after technology shows like MacWorld and the International Consumer Electronics Show to see if your iWhatever will be discounted to make way for the next big thing.
Auto
• New car—New models roll into the lot in fall, so shop in September for last year’s model. Shop on a weekday at the end of the month to get the undivided attention of a salesperson trying to make their monthly quota.
• Used car—Dealers increase their inventory in April to start the spring selling season. You’ll find a good selection and willing negotiators.
• Recreational vehicle—Dealers sometimes offer specials in winter, but generally buying an RV works like buying a car (see new cars).
• Gasoline—Fuel up on a weekday, early in the morning if gas prices are rising or in the evening if gas prices are going down (prices are usually changed between 10 a.m. and noon).
• Oil change—Look for early bird specials in your area.
• Tires and auto parts—During April (National Car Care Month) and October (Fall Car Care Month), you are likely to find buy-three-get-one-free deals on tires, free oil changes, and other checkups.
• Car wash—Early birds (before 8 or 9 a.m.) can often find deals at full-service car washes.
Travel
• Airline tickets—For domestic nonholiday travel, look for the lowest fares 21 days from your departure. Fares are updated at 10 a.m., 12:30 p.m., and 8 p.m. on weekdays, and airlines file one update on Saturday and Sunday. Lowest fares are filed on Tuesdays, Wednesdays, and occasionally on Saturdays. Wednesday is generally the cheapest day to fly and Sunday the most expensive. (Exception: the Wednesday before Thanksgiving—the busiest travel day of the year.) For holiday travel, start looking in September to get a good price. Fares can change quickly, and much depends on the carrier and the market.
• Travel (general)—The off-season or shoulder-season for your destination will offer the most savings on lodging, recreation, transportation, etc.
Food
• Groceries (supermarket)—On Sunday evenings, you’ll save money through store sales (typically run Wednesday through Thursday), and by shopping in the evening, you can save even more on items that must be sold by day’s end. If you clip coupons from the Sunday newspaper, you’ll enjoy additional savings.
• Coupons—While coupons are available throughout the year, the most coupons appear in the Sunday paper during November and December. The best deals on turkeys can be found two weeks before Thanksgiving to Christmas. In spring, you’ll find coupons on seasonal produce, ham, and frozen food (apparently March is National Frozen Food Month—who knew?). Summer coupons offer discounts on grilling items and ice cream. Autumn brings coupons on soup and other canned items.
• Groceries (farmers market)—Vendors often lower prices near closing to avoid having to pack up perishables and take them back to the farm.
• Champagne—With steep competition to be your New Year’s Eve bubbly, Champagne houses drop prices during the holidays.
Clothing and accessories
• Clothing (general)—Got your heart set on something in particular? Shop on a Thursday evening six to eight weeks after the item arrived in the store. By Thursday, the weekend sales have started and the selection will still be good. Season-end clearance sales also offer up savings.
• Baby clothes—Shop during your pregnancy for end-of-season clearance items. If it’s springtime and you are due in winter, look for winter closeout sales now for infant clothing.
• Jewelry—Avoid the holidays, when you are most likely to pay full price.
Weddings
• Wedding (general)—The off-season can mean big discounts. If you live in a cooler climate, you’ll find savings during the winter months. Hotter climates mean likely deals in summer months.
• Wedding dresses—After Thanksgiving and before Christmas. Boutiques are stocked with gowns for Christmas engagements, but it’s a slow sales period.
Other
• Toys—October and November offer good bargains as retailers gear up for the holiday season.
• Wrapping paper—January, of course!
Monday, June 14, 2010
9 Ways to Save Money at the Grocery Store
No. 1: Stick to Groceries
Many supermarkets are expanding their product offerings beyond food products, but they tend to carry a heftier price tag than a drug or wholesale store.
No. 2: Don’t Get Sucked in By Displays
Manufacturers often pay to have their items on display, which means they aren’t necessarily on sale, according to Nelson.
You will have to pay attention, there can be a lot of signs on a display, but they might not actually say ‘sale.
No. 3: Bigger Isn’t Always Better
It’s important to pay attention to the unit costs, not the list prices. Convert the unit cost by dividing the price by the number of units -- and then compare to find out which product is cheaper.
Also be mindful of what you are buying in bulk. Sometimes when you buy produce in bulk you end up throwing half of it away because it couldn’t be used in time.
No. 4: Stock Up on Sales
Track the prices of the top ten items you most often buy, so you know when it hits its lowest price and you stock up.
No. 5: Three’s a Crowd
Stores will often pair sale items with non-sale items to entice you to buy more.
No. 6: Skip Special Sections
If you need bagels, go to the actual bread aisle, don’t just grab them off the table in the bakery aisle.
No. 7: Scan Above Eye Level
Many of the sales aren’t on eye-level, the experts said. Look at the top and bottom of the shelves to make sure you are snagging the best deal.
No. 8: Early Bird Gets the Discount
Be sure to ask the manager when the mark-downs are done in the produce and meat prices.
No. 9: Shop Alone and on a Full Stomach
While they can be helpful at times, kids and spouses can often lead to impulse buys, so leave them at home, Jones suggested. It’s also a good idea to eat before heading to the store.
Many supermarkets are expanding their product offerings beyond food products, but they tend to carry a heftier price tag than a drug or wholesale store.
No. 2: Don’t Get Sucked in By Displays
Manufacturers often pay to have their items on display, which means they aren’t necessarily on sale, according to Nelson.
You will have to pay attention, there can be a lot of signs on a display, but they might not actually say ‘sale.
No. 3: Bigger Isn’t Always Better
It’s important to pay attention to the unit costs, not the list prices. Convert the unit cost by dividing the price by the number of units -- and then compare to find out which product is cheaper.
Also be mindful of what you are buying in bulk. Sometimes when you buy produce in bulk you end up throwing half of it away because it couldn’t be used in time.
No. 4: Stock Up on Sales
Track the prices of the top ten items you most often buy, so you know when it hits its lowest price and you stock up.
No. 5: Three’s a Crowd
Stores will often pair sale items with non-sale items to entice you to buy more.
No. 6: Skip Special Sections
If you need bagels, go to the actual bread aisle, don’t just grab them off the table in the bakery aisle.
No. 7: Scan Above Eye Level
Many of the sales aren’t on eye-level, the experts said. Look at the top and bottom of the shelves to make sure you are snagging the best deal.
No. 8: Early Bird Gets the Discount
Be sure to ask the manager when the mark-downs are done in the produce and meat prices.
No. 9: Shop Alone and on a Full Stomach
While they can be helpful at times, kids and spouses can often lead to impulse buys, so leave them at home, Jones suggested. It’s also a good idea to eat before heading to the store.
Monday, June 7, 2010
Market Recovery...Could it Really be Here?!
Flex 97 Product M.I. Return
When the Mortgage Insurance companies decide that the market has stabilized enough to offer a product like this, it proves we are on the way back up. M.I. companies spend millions on market research, they don’t make changes like this unless that very expensive data says the rewards outweighs the risk!
Modified Guidelines
On top of returning the Fannie Flex 97, they also modified the guidelines and added a few new features that are completely in line with credit “loosening”. You can call me for further details but they are called “boarder income” & “second job or O.T. history”. Exciting stuff.
The Jumbo Market Makes a Comeback
First Jumbo bulk is a purchased by Redwood Trust Inc. for $238 Million. There has not been a Jumbo bulk sold in the private sector for several years. Redwood then announced they will buy Jumbo loans on a “flow” basis, shortly after they purchased this bulk. That means, the Jumbo market is finally making comeback.
85% Cash-Out Returns
This says two things, credit is loosening, and that investors are confident the Real Estate market is nearing recovery with regard to value. Otherwise the cash-out offering stays below 80% as investors anticipate values declining further. This is excellent news
Condo Purchase to 90% Allowed Again
The condo market has probably been beaten down worse than any other sector. For a short time, there was virtually no financing available to purchase a condo. Now, the LTV restrictions have been lifted up to 90% again. Further proof that the credit curve is loosening and the values are stabilizing.
Overlays Removed
Two of our major investors have made guideline changes to loosen the credit curve just this week. They are removing what are called “overlays” that are put in place to lower risk, tighten the credit curve and essentially they eliminate certain segments of the population from obtaining credit due to fear of default. When those are removed, it is proof that there is an appetite for mortgages and that risk is being managed properly.
When the Mortgage Insurance companies decide that the market has stabilized enough to offer a product like this, it proves we are on the way back up. M.I. companies spend millions on market research, they don’t make changes like this unless that very expensive data says the rewards outweighs the risk!
Modified Guidelines
On top of returning the Fannie Flex 97, they also modified the guidelines and added a few new features that are completely in line with credit “loosening”. You can call me for further details but they are called “boarder income” & “second job or O.T. history”. Exciting stuff.
The Jumbo Market Makes a Comeback
First Jumbo bulk is a purchased by Redwood Trust Inc. for $238 Million. There has not been a Jumbo bulk sold in the private sector for several years. Redwood then announced they will buy Jumbo loans on a “flow” basis, shortly after they purchased this bulk. That means, the Jumbo market is finally making comeback.
85% Cash-Out Returns
This says two things, credit is loosening, and that investors are confident the Real Estate market is nearing recovery with regard to value. Otherwise the cash-out offering stays below 80% as investors anticipate values declining further. This is excellent news
Condo Purchase to 90% Allowed Again
The condo market has probably been beaten down worse than any other sector. For a short time, there was virtually no financing available to purchase a condo. Now, the LTV restrictions have been lifted up to 90% again. Further proof that the credit curve is loosening and the values are stabilizing.
Overlays Removed
Two of our major investors have made guideline changes to loosen the credit curve just this week. They are removing what are called “overlays” that are put in place to lower risk, tighten the credit curve and essentially they eliminate certain segments of the population from obtaining credit due to fear of default. When those are removed, it is proof that there is an appetite for mortgages and that risk is being managed properly.
Tuesday, May 18, 2010
Riddles for The Week
#1
What gets wetter and wetter the more it dries?
#2
You throw away the outside and cook the inside. Then you eat the outside and throw away the inside. What did you eat?
#3
What goes up and down the stairs without moving?
#4
What can you catch but not throw?
#5
I can run but not walk. Wherever I go, thought follows close behind. What am I?
#6
What's black and white and red all over?
#7
What goes around the world but stays in a corner?
#8
I have holes in my top and bottom, my left and right, and in the middle. But I still hold water. What am I?
#9
Give me food, and I will live; give me water, and I will die. What am I?
#10
The man who invented it doesn't want it. The man who bought it doesn't need it. The man who needs it doesn't know it. What is it?
Go here for the answers...........http://www.rinkworks.com/brainfood/p/riddles1.shtml
What gets wetter and wetter the more it dries?
#2
You throw away the outside and cook the inside. Then you eat the outside and throw away the inside. What did you eat?
#3
What goes up and down the stairs without moving?
#4
What can you catch but not throw?
#5
I can run but not walk. Wherever I go, thought follows close behind. What am I?
#6
What's black and white and red all over?
#7
What goes around the world but stays in a corner?
#8
I have holes in my top and bottom, my left and right, and in the middle. But I still hold water. What am I?
#9
Give me food, and I will live; give me water, and I will die. What am I?
#10
The man who invented it doesn't want it. The man who bought it doesn't need it. The man who needs it doesn't know it. What is it?
Go here for the answers...........http://www.rinkworks.com/brainfood/p/riddles1.shtml
Friday, May 7, 2010
Tuesday, April 27, 2010
Riddle of The Day
The more you take, the more you leave behind. What are they?
Go here for the Answer. Good luck!
http://wiki.answers.com/Q/The_more_of_them_you_take_the_more_you_leave_behind_what_am_I
Go here for the Answer. Good luck!
http://wiki.answers.com/Q/The_more_of_them_you_take_the_more_you_leave_behind_what_am_I
Monday, April 19, 2010
Credit Score
Credit scores are made up of 5 components. Below is a breakdown of what makes up your credit score. It is estimated that 80% of credit reports contain errors. When applying for a loan, it is important to work with someone that has the ability to utilize programs that can detect errors and enhance scores before accepting loan terms. The interest rate you are offered for a mortgage loan is based off of your credit score, loan to value, type of loan, type of property and other factors.
Your referrals are always appreciated. I count on them to continue my business. If you know of anyone who needs a mortgage review, is looking to purchase or has questions on current mortgage guidelines, please put me into contact with them.
1. Paying on time (35 percent)
2. Amount and type of debt (30 percent)
3. Length of time you have been using credit (15 percent)
4. Variety of accounts (10 percent)
5. Number and types of recent inquiries (10 percent)
Monday, April 5, 2010
A few tips for PAYING IT FORWARD!
1. Donate unwanted clothing items to a local shelter.
2. Volunteer for community service or with your local church.
3. Sponsor a child.
4. Volunteer at Doernbeckers or at a nearby hospice.
5. Donate blood.
6. Take a minute to stop & pick up a piece of trash while taking a stroll through the park.
7. Stop to lend a helping hand.
8. Offer a hug when you see someone who needs one.
9. Smile at people when you pass them by.
10. Offer to pay for someone's bread when their credit card is declined at the grocery store.
11. Before you get off the bus or train, leave an inspiring book on a seat with a Smile Card.
1. Donate unwanted clothing items to a local shelter.
2. Volunteer for community service or with your local church.
3. Sponsor a child.
4. Volunteer at Doernbeckers or at a nearby hospice.
5. Donate blood.
6. Take a minute to stop & pick up a piece of trash while taking a stroll through the park.
7. Stop to lend a helping hand.
8. Offer a hug when you see someone who needs one.
9. Smile at people when you pass them by.
10. Offer to pay for someone's bread when their credit card is declined at the grocery store.
11. Before you get off the bus or train, leave an inspiring book on a seat with a Smile Card.
Monday, March 22, 2010
Forecast for the Week
The action during Sunday's healthcare vote will almost certainly impact the markets in the coming week, and there is also a full slate of economic reports to watch for. First up, there will be a double-dose of housing news with Tuesday's Existing Home Sales Report and Wednesday's New Home Sales Report.
Also, on Wednesday we'll get a read on the health of the economy with the Durable Goods Report, which gives us an update on consumer and business buying behavior on big ticket items that last for an extended period of time. Friday will bring another read on the economy with the Gross Domestic Product Report, which is the broadest measure of economic activity.
Not to be missed will be Thursday's weekly Initial Jobless Claims Report. While last week's initial claims were essentially inline with expectations, the ugly component of the report was the 5,888,048 people collecting EUC (Emergency Unemployment Compensation) benefits. This is a whopping 360,000 person increase from the prior week. Unfortunately, the labor market continues to be very weak.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
As you can see in the chart below, despite midweek volatility, Bonds and home loan rates ended the week very near where they began. With all the action in store, I'll be watching closely to see in what direction the markets and rates move this week. As always, please feel free to call or email to get more information on what the current rate climate means to you.
Chart: Fannie Mae 4.5%% Mortgage Bond (Friday Mar 19, 2010)
Also, on Wednesday we'll get a read on the health of the economy with the Durable Goods Report, which gives us an update on consumer and business buying behavior on big ticket items that last for an extended period of time. Friday will bring another read on the economy with the Gross Domestic Product Report, which is the broadest measure of economic activity.
Not to be missed will be Thursday's weekly Initial Jobless Claims Report. While last week's initial claims were essentially inline with expectations, the ugly component of the report was the 5,888,048 people collecting EUC (Emergency Unemployment Compensation) benefits. This is a whopping 360,000 person increase from the prior week. Unfortunately, the labor market continues to be very weak.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
As you can see in the chart below, despite midweek volatility, Bonds and home loan rates ended the week very near where they began. With all the action in store, I'll be watching closely to see in what direction the markets and rates move this week. As always, please feel free to call or email to get more information on what the current rate climate means to you.
Chart: Fannie Mae 4.5%% Mortgage Bond (Friday Mar 19, 2010)
Monday, March 8, 2010
Forecast for the Week
With the healthcare debate heating up in Washington and the Fed's Mortgage Backed Securities Purchase program winding down, there are still plenty of events that could impact the markets and home loan rates.
On the economic report front, Thursday brings another Initial Jobless Claims Report. Last week's Initial Jobless Claims met expectations, but the big news was that the report showed 5.7M people claiming EUC (Emergency Unemployment Compensation) benefits, which was an increase of over 207,000 from the prior week.
On tap for Friday is the Retail Sales Report, and as the most-timely indicator of broad consumer spending patterns, it is important to see how the numbers come in. In fact, last week's Personal Consumption Expenditure report revealed that during January, consumers made less, saved less and spent more - but it remains to be seen if the increase in spending will show up in the Retail Sales Data.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
As you can see in the chart below, Bonds made some improvements during the week, but the gains were capped by a rally in Stocks and positive economic data. I'll be watching closely as always during the coming week - and please feel free to contact me anytime to learn more, or discuss your own financial and home loan situation.
Chart: Fannie Mae 4.5%% Mortgage Bond (Friday Mar 05, 2010)
Tuesday, February 23, 2010
Try This....
Save money on restaurants you already go to! Go to http://www.restaurant.com/! Read the fine print but most of the deals on this web page are legit! A penny saved, a penny earned!
Tuesday, February 16, 2010
Pay It Forward
March 1st-21st...
So lets do this. Spread the word ♥
Love, C
Do three random acts of kindness for people you don't know and expect nothing in return. No matter how "poor" you are or how busy you may feel you can find five minutes to help someone else. Lets see if we can actually start something big.
If they want to repay you just tell them to Pay if Forward
Even small acts, such as paying the bridge toll for the car behind you when you pay for your own, counts. If it makes the world a friendlier place, you succeeded!
Love, C
Monday, February 8, 2010
Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness, that most frightens us. Your playing small does not serve the world. There is nothing enlightened about shrinking so that other people won't feel insecure around you. We are all meant to shine as children do. It's not just in some of us; it is in everyone. And as we let our own lights shine, we unconsciously give other people permission to do the same. As we are liberated from our own fear, our presence automatically liberates others.Tuesday, February 2, 2010
Voices performance/dinner on Wednesday, 2/3/10
I’m attending Contemporary Lecture Voices with Kathy Root on Wednesday 2/3/10. I’m looking forward to sharing this experience with Kathy Root who is a partner at Johnston, Root & Leibenguth, P.C. Attorneys at Law. There is more information about the event at http://www.voicesinc.com/ if you’re interested.
Thanks, C
Thanks, C
Friday, January 22, 2010
"WHAT DO WE LIVE FOR, IF IT IS NOT TO MAKE LIFE LESS DIFFICULT FOR EACH OTHER?" George Eliot.
The current crisis in Haiti certainly puts this sentiment into perspective. For information on how you can help, see the View article below.
Last week it was reported that the inflation measuring Consumer Price Index (CPI) for December came in lower than expected. Overall, CPI for all of 2009 was fairly tame. But as you can see in the chart below, the closely watched Core CPI, which strips out volatile food and energy, rose to 1.8% year-over-year in December after hitting a multi-year low of 1.4% in August.
So what does this mean for Bonds and home loan rates?
Clearly, inflation is tame at the moment...but slowly trending higher. The Fed will be watching this data very carefully in the coming months, as they seek to time perfectly the exit from what is essentially a zero rate environment. The Fed will likely err on the side of keeping the Fed Funds Rate lower for longer than they perhaps should, in order to avoid a "double dip" recession...but that will likely lead to more inflation down the road. Remember, Bonds and home loan rates hate inflation - so home loan rates are likely to trend higher as more inflation creeps into the economy.
Speaking of the Fed, they stepped up their Mortgage Backed Security (MBS) buying in the latest week, purchasing $14B in MBS, whereas the most recent prior purchases were around $9.5B. The Fed now has $113B left of their $1.25T allotted commitment, with the buying program set to wrap up on March 31st. The Fed's purchases have helped home loan rates stay historically low - and although there has been some buzz about an extension of the program, it seems unlikely that will come to fruition. When the Fed purchases stop, home loan rates will be very susceptible to moving higher - so if we have not talked yet about your own home loan situation, or if you know of a friend, family member, neighbor or coworker who might like some advice, let's be sure to connect very soon...time is of the essence.
The next Federal Reserve Policy Statement will be coming on January 27th, and they have gone out of their way to mention in the last several statements that the MBS buying program will not continue. Count on me to be listening closely when the Fed releases this next Statement, as this will help further gauge what home loan rates have in store.
In other news, Retail Sales for December came in well below expectations and were down from the 1.8% increase seen in November. While this suggests weakness in the Retail sector, it has to be taken with a grain of salt, as it is likely that frigid temperatures and snowy conditions throughout much of the country were contributing factors to the decline. Overall, 2009 was a very tough year for retail. Retail Sales for 2009 dropped 6.2% compared with 2008, which was the biggest decline on record, dating back to 1992.
There was some good news, however, on the manufacturing front, as the Empire State Manufacturing Index was reported above estimates, indicating manufacturing expansion in New York state and parts of New Jersey and Connecticut.
For the week overall Bonds were able to break above important technical levels, and home loan rates ended the week slightly better than where they began.
Thank you, C
So what does this mean for Bonds and home loan rates?
Clearly, inflation is tame at the moment...but slowly trending higher. The Fed will be watching this data very carefully in the coming months, as they seek to time perfectly the exit from what is essentially a zero rate environment. The Fed will likely err on the side of keeping the Fed Funds Rate lower for longer than they perhaps should, in order to avoid a "double dip" recession...but that will likely lead to more inflation down the road. Remember, Bonds and home loan rates hate inflation - so home loan rates are likely to trend higher as more inflation creeps into the economy.
Speaking of the Fed, they stepped up their Mortgage Backed Security (MBS) buying in the latest week, purchasing $14B in MBS, whereas the most recent prior purchases were around $9.5B. The Fed now has $113B left of their $1.25T allotted commitment, with the buying program set to wrap up on March 31st. The Fed's purchases have helped home loan rates stay historically low - and although there has been some buzz about an extension of the program, it seems unlikely that will come to fruition. When the Fed purchases stop, home loan rates will be very susceptible to moving higher - so if we have not talked yet about your own home loan situation, or if you know of a friend, family member, neighbor or coworker who might like some advice, let's be sure to connect very soon...time is of the essence.
The next Federal Reserve Policy Statement will be coming on January 27th, and they have gone out of their way to mention in the last several statements that the MBS buying program will not continue. Count on me to be listening closely when the Fed releases this next Statement, as this will help further gauge what home loan rates have in store.
In other news, Retail Sales for December came in well below expectations and were down from the 1.8% increase seen in November. While this suggests weakness in the Retail sector, it has to be taken with a grain of salt, as it is likely that frigid temperatures and snowy conditions throughout much of the country were contributing factors to the decline. Overall, 2009 was a very tough year for retail. Retail Sales for 2009 dropped 6.2% compared with 2008, which was the biggest decline on record, dating back to 1992.
There was some good news, however, on the manufacturing front, as the Empire State Manufacturing Index was reported above estimates, indicating manufacturing expansion in New York state and parts of New Jersey and Connecticut.
For the week overall Bonds were able to break above important technical levels, and home loan rates ended the week slightly better than where they began.
Thank you, C
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