Thursday, September 20, 2012

Mortgage rates remain quiet before the Fed

Mortgage rates were relatively unchanged this week, but don't let the calm before the storm fool you. When the Federal Reserve wraps up its policy meeting Thursday, the markets will be anything but quiet.
30 year fixed rate mortgage – 3 month trend
30 year fixed rate mortgage – 3 month trend
With or without an announcement for additional monetary stimulus, the Fed will indirectly affect mortgage rates this week. For borrowers who don't like to live on the edge, this may be a good time to lock a rate.
The benchmark 30-year fixed-rate mortgage rose to 3.81 percent from 3.79 percent, according to the national survey of large lenders. The mortgages in this week's survey had an average total of 0.39 discount and origination points. One year ago, the mortgage index stood at 4.32 percent; four weeks ago, it was 3.86 percent.

Wednesday, September 19, 2012

September Home-Maintenance Checklist - conclusion

Inspect your roof and chimney

If your roof isn't too steep, and isn't covered with slate or tile, you may be able to carefully walk on it on a dry day. Look for broken or missing shingles, missing or damaged flashing and seals around vent pipes and chimneys, and damage to boards along the eaves. Also peer down your chimney with a flashlight to make sure no animals have set up house in it. If you can't get on your roof, perform this inspection with a ladder around the perimeter. Pay close attention to valleys and flashings — many leaks originate in these spots. Some patches and roofing cement now can prevent thousands of dollars of water damage later in the winter.

Tuesday, September 18, 2012

September Home-Maintenance Checklist - cont.

Caulk exterior
Think of caulk as weatherstripping in a tube. Any gap on the outside of your home can be a candidate for caulking. Look at transition spots: corners, windows, doors, areas where masonry joins siding, or places where vents and other objects protrude from walls. Carefully read manufacturer's directions to make sure the caulk you buy will work where you plan to use it, and don't forget to purchase a caulking gun. Early fall is a good time for this task because caulk becomes difficult to apply when the temperature falls.

Got wood?
If you have a wood stove, it's not too early to lay in a supply of firewood. Though most of us buy whatever's local, bear in mind that soft woods like fir and cedar burn faster and create hazardous creosote in the chimney, thus requiring more system maintenance and more wood. Hardwoods such as oak, hickory and maple are slow, hot, clean burners. Wood piles attract insect and animal pests, so stack wood away from the house. Wood dries best when it's protected from rain and has air circulating around it, so under the roof of a wall-less carport would be an ideal wood storage spot.

Clean dryer vent
This is another one of those tasks that should be on your to-do list every six months. Scoot your clothes dryer away from the wall, unplug it, and vacuum behind it. (If it's a gas dryer, turn off the gas supply to the dryer at the appliance shutoff valve.) Unhook the tube that leads to the vent and clear as much lint from the tube as you can. Grab a shop vacuum, go outside, and tackle the outside dryer vent as well.

Monday, September 17, 2012

September Home-Maintenance Checklist - cont.

Check storm windows
If you have storm windows that are cracked or dirty, repair and clean them now — prior to autumn installation.

Fight winter with plywood
Find a couple of scrap sheets of plywood and set them aside. When the weatherman predicts a cold snap, set the boards against the exterior basement vents on whichever side of your house bears the brunt of your prevailing weather patterns. This bit of scrappiness could help prevent frozen pipes. Be sure to remove the boards once the weather warms up — those vents are there for a reason.

Insulation speculation
This is a good time to check the condition of insulation and see if you need more, especially if you live in an older home. You can purchase unbacked or loose-fill insulation if you are just beefing up what is already there. If you are adding batted insulation to a spot that has none, remember that the foil-backed side is the vapor barrier, and it must face the heated area.
For example, if you are laying fiberglass insulation in an unfinished attic floor to keep heat in the living room below, you should see pink when you're done — not foil. If your walls lack insulation, consider having a professional install blown-in insulation foam. The energy savings will probably offset the cost of the procedure in a couple of years.

Sunday, September 16, 2012

September Home-Maintenance Checklist

School is back in session and mornings are crisp, making this a great month for tackling home projects.

Ever wake up in early September and notice that the air smells different? School begins, days get shorter, and a sense of responsibility begins to creep up on most of us.
We've always wondered why "fall cleaning" isn't as popular as "spring cleaning." The air on brisk September mornings inspires us to dutifully button up the home in preparation for cooler days and longer nights.

Add weatherstripping to doors and windows
Weatherstripping can be plastic, foam, felt or metal; its job is to seal small gaps, keeping moisture and cold air outside where they belong. Look around your doors and windows: Is the weatherstripping torn or missing? This can become expensive if ignored. On doors, make sure the bottom seal is working properly — there are many sweeps, gaskets and thresholds designed to seal this gap. Doors generally need weatherstripping in their jambs as well. Adhesive-backed foam pads are easy to install for this purpose. Newer, energy-efficient windows generally don't require added weatherstripping, but if your windows are older, weatherstripping can keep drafts at bay and energy costs down.

Saturday, September 15, 2012

Don't Sell a Smelly House

Homebuyers don't want houses that stink. Sellers must identify and remediate odors that make prospective purchasers hold their noses and run for the exits. A buyer's market is a tough challenge for sellers.
If you're selling, your house has to look a little better, smell a little better and be priced a little better than the other houses the buyer will look at that same day.
Unfortunately, it's not always easy for sellers to identify familiar smells that might be problematic, says Neeraj Gupta, director of product research and development at ServiceMaster Clean, which performs major cleanups and post-disaster restorations of residential and commercial properties.
"There is no 'odor meter,'" Gupta says. "People get used to the odor of their house and may not notice that something is not pleasant."

Outside sniffers

The best way to find out whether a house smells OK is to "ask someone who doesn't live there to come inside and give an opinion.
The obvious "someone" would be the real estate broker hired to sell the home. But not all brokers will point out that a house smells bad, even if they're willing to offer other helpful suggestions.
Some sellers are not outspoken about odor issues. Instead, they might consider offers to pass along any unfiltered "brutal truth" comments they hear from their colleagues who bring buyers to see the property. That way, the message gets delivered with less risk to her cordial relationship with the sellers.
Some people will never be the kind that will come out and tell you that your house smells like cat litter or mothballs. They would rip their tongue out first.

Friday, September 14, 2012

6 Mortgage Relief Scams To Avoid - conclusion

How to report a scam

If you believe you are the victim of a mortgage relief scam, you can contact one of the following agencies to report it.
  • or call (877) 382-4357.
  • or call (866) 459-2162.
  • or (888) 995-4673.
  • or call (877) 744-2009.
While it is important to report a possible scam, homeowners must be careful to tell their servicers immediately, too.
If the homeowners have listened to a scammer and not paid their mortgage or have avoided communication with their lender, they need to get in touch as soon as possible to prevent foreclosure if it is still possible. Unfortunately, for some homeowners, it will be too late to stop the foreclosure process.

Thursday, September 13, 2012

6 Mortgage Relief Scams To Avoid - #6

Mass joinder scam

Fake and even legitimate law firms send notices to homeowners, including some who are not in  financial distress, that claim the homeowners have been wronged by their lenders and may be eligible for restitution.
The homeowners are told to pay $2,000 or more to become part of the lawsuit, but no one should ever pay to be part of a class-action suit.
The Precision Law Center participated in a mass joinder scam, in which borrowers are invited to file separate lawsuits but share legal fees.
Generally, these kinds of scams get 1,000 homeowners or more, each paying an average of $3,000. Sometimes an actual lawsuit is filed on the homeowner's behalf, but usually the suits are kicked out of court immediately for lack of evidence.
Never pay a fee to become part of a class-action lawsuit. Anyone who guarantees a loan modification from your lender or guarantees that a foreclosure can be prevented cannot be telling the truth.

Wednesday, September 12, 2012

6 Mortgage Relief Scams To Avoid - #5

Misrepresented attorneys general settlement

The attorneys general settlement with the five largest mortgage lenders brought out a new group of people who call homeowners and tell them they represent the lender. They will request $500 or more to facilitate the homeowners getting money from the settlement.
Another common scam is for homeowners to be told that a caller is from a government agency with information about the mortgage settlement. The caller requests a bank routing number or other personal information to "facilitate the refund," but then the scammers drain the bank account.
People are always looking for fresh ways to get homeowners' money. One of the newest is for a scammer to tell the homeowner they will put their money in an escrow account and hold it during the loan modification process. Once the money is in the account, they drain it and disappear.
To avoid this scam, never give out personal financial information to anyone who calls. And don't pay a fee for housing counseling.

Tuesday, September 11, 2012

6 Mortgage Relief Scams To Avoid - #4

Advising you to stop contacting your lender

In March 2012, three scammers were arrested on charges of committing fraud against California homeowners. They were Gregory and Cynthia Flahive, ex-spouses and co-owners of Flahive Law Corporation, and the firm's managing attorney, Mike Johnson.
In addition to requiring upfront fees in exchange for loan modification assistance, the Flahives told one homeowner to reject his lender's offer of a loan modification. They told that homeowner that they could get a better deal. Instead, the home was lost to foreclosure within four months.
Be wary of anyone who tells you to stop paying your lender or who tells you to stop trying to contact your lender. Don't trust someone who says they will talk to your lender on your behalf. Always talk to your servicer directly.

Monday, September 10, 2012

6 Mortgage Relief Scams To Avoid - #3

Money back guarantees

Howard Shmuckler, owner of The Shmuckler Group in Vienna, Va., collected almost $2.8 million from struggling homeowners by promising them he could guarantee a loan modification under the Home Affordable Modification Program. He told these homeowners to stop making their mortgage payments and to avoid contact with their lenders.
Every mortgage relief scam is horrible, and Howard Shmuckler's scam was devastating for his victims. Victims of these scams not only lose a lot of money, but they lose the time when they could have been working directly with HAMP to save their homes. A lot of scammers tell people they can guarantee a loan modification or guarantee that they can stop a foreclosure, but unfortunately a guarantee is never possible.
Some of Shmuckler's victims might have been able to modify their mortgages under HAMP if they had not become so far behind on the mortgage by following Shmuckler's advice.
Shmuckler charged for his nonexistent services. Jones warns that some scammers, knowing consumers have been warned against paying an upfront fee, now wait until a second or third meeting before requesting a fee.
Homeowners should never pay a fee for loan modification assistance. Government and nonprofit housing counselors provide this service for free.

Friday, September 7, 2012

6 Mortgage Relief Scams To Avoid #2

Offering to perform a mortgage audit

The Federal Trade Commission filed a complaint against Sameer Lakhany of Santa Ana, Calif., and companies he controlled, including the Precision Law Center, for charging homeowners for a "forensic loan audit."
Reilly Dolan, assistant director for financial practices for the FTC, says, "A salesperson would call the homeowners and say they were going to audit their mortgage documents and use the violations they could find to force their lender to approve a loan modification. The scammers would tell people that they found violations 90 percent of the time."
Dolan says these types of scams typically ask for $1,000 to $5,000 from the homeowners, with an average fee of $3,000.
Precision Law Center employees claimed to be HUD-approved housing counselors with qualifications to do the loan audits, which they said would be the only part of the process that wasn't free.
The FTC says that more than $1 million was collected by the Precision Law Center.
Barbara Floyd Jones, program manager for foreclosure prevention efforts for NeighborWorks America, says the paperwork for a loan audit can look legitimate, but she says consumers can avoid scams by proactively contacting a local HUD-approved housing counselor through the HUD website.

Thursday, September 6, 2012

6 Mortgage Relief Scams To Avoid

Homeowners trying to avoid foreclosure are stressed and scared. They have become a prime target of con artists who prey on vulnerable people. Nonprofit organizations and government agencies are working together to warn consumers of the danger of mortgage relief scams and how to avoid them.
Many mortgage scammers have been arrested, but plenty more are trying to take advantage of homeowners' financial woes. Here are some examples of common mortgage relief scams.

Scammers posing as official counselors

Several Florida men were arrested in August 2011 and charged with defrauding homeowners under the name of a company called Home Owners Protection Economics Inc., or HOPE, meant to mimic the name of HOPE NOW, a public-private alliance of lenders, nonprofit housing counselors and other mortgage-industry participants. The scammers claimed to be connected with the homeowners' lenders or said they had already been approved for a loan modification under the Home Affordable Modification Program, or HAMP. They demanded an upfront fee for their services.
Last year, a couple came up to an attendee at a homeowners assistance event and told here they had paid what they thought was HOPE NOW $4,000 to help them with a loan modification. The scammers had taken her (HOPE NOW's) documents and letters and reproduced them so they looked legitimate and used as their website.
Many scammers use similar names to government and nonprofit programs and even add their logos to their materials.
To avoid being caught by one of these scams, homeowners should find a legitimate, free (Housing and Urban Development)-approved housing counselor by going to It's important to realize that housing counseling is free.

Tuesday, September 4, 2012

Factors That Influence Your Credit Score - conclusion

Type of refinance

Borrowers who are applying for a rate-and-term refinance will typically pay the same mortgage rate as borrowers who are purchasing a home. If you are applying for a cash-out refinance, you'll typically pay a mortgage rate about one-fourth percent higher if your loan-to-value is at 70 percent or above. Usually there won't be a bump-up in the mortgage rate if your loan-to-value is 60 percent or lower, even if you do a cash-out refinance.

Loan-lock length

A longer loan-lock period generally comes with a higher price, and that translates into a higher refinance rate. You'll see a variance in the rate from 0.125 percent to 0.375 percent depending on whether you lock in your rate from 30 to 45 or 60 days. Homeowners who want to refinance a mortgage usually need to lock their rate for at least 60 days.

Type of residence

Condominiums are considered slightly more risky than single-family homes and town houses, so condo borrowers will typically be quoted a refinance rate that is 0.125 to 0.25 of a percentage point higher than the best interest rates.

Monday, September 3, 2012

Factors That Influence Your Credit Score - cont.

Loan term

The yield curve changes sometimes, but generally, a 15-year fixed-rate loan is lower than a 30-year fixed-rate loan. You can even do a 10-year loan for a lower rate. Right now, a 15-year mortgage has an interest rate about one-half percent lower than a 30-year loan.

Loan size

If you need to borrow a large amount of money, greater than the conforming loan limits, you'll pay an interest rate of at least three-quarters of a percentage point higher for a jumbo loan. Small loans sport higher interest rates, too. Once the loan amount gets below $150,000, there's usually a small add-on to the interest rate. The add-on is larger when you get below $100,000 or $50,000 because lenders make very little money on loans of that size.

Loan to value

The loan-to-value ratio refers to the amount you owe compared to the appraised value of the home. If you owe $90,000 on a house that's worth $100,000, then your loan-to-value ratio, or LTV, is 90 percent. If you owe $70,000 on the same house, the LTV is 70 percent.
Mortgages with a loan-to-value ratio greater than 80 percent require mortgage insurance. Borrowers have the option of paying their mortgage insurance upfront or over the life of the loan, but they can also opt for "lender-paid" mortgage insurance, which covers the cost of the mortgage insurance with a higher interest rate.

Sunday, September 2, 2012

Factors That Influence Your Credit Score

Rock-bottom mortgage rates entice homeowners to refinance, but many borrowers are surprised to find that the advertised mortgage rate is not necessarily the refinance rate they will be offered. In fact, mortgage rates for a refi on any given day can vary by as much as a full percentage point or more, depending on various factors.
A mortgage rate sheet looks like a menu, and there's a grid of available rates we see each day. There are lots of things that influence an individual's mortgage (refinance) rate, including whether or not they pay points.
Paying one point, equal to 1 percent of the loan amount, typically lowers the mortgage rate by one-quarter of a percentage point.
Most advertisements for low mortgage rates show the rate with one or more points. Loans with points aren't always the best way to go because of the rarity of actually recouping the money. Most borrowers refinance again or sell before they reach the break-even point from purchasing points.
Here are other factors that can influence your mortgage refinance rate.

Credit score

Generally, the lower your credit score, the higher your refinance rate will be, according to the senior vice president with Wells Fargo Home Mortgage near Chicago.
Many consumers don't realize what a big impact their credit score has on their refinance rate. For example, a credit score of 695 is pretty decent and we don't generally think of that as a bad score. But borrowers with that credit score can pay as much as three-eighths or one-half a percentage point higher on their mortgage rate compared to someone with a credit score above 760.

Saturday, September 1, 2012

5 Emotional Mistakes Made By Homebuyers - conclusion

Mistake No. 5: Lowballing instead of negotiating realistically

All homebuyers want the lowest possible price, but there's a big difference between firm negotiating and lowballing.
Buyers can come in with unrealistic expectations about what a property should go for. It's best for a buyer to make a realistic bid not too far off from where he or she would ultimately like to end up.
Lowball offers run the risk of being rejected out of hand or lengthening the process and annoying the sellers. Either way, When buyers who lowball run a big risk of losing the property.
While all buyers are capable of lowballing, it's a problem especially common among cash buyers who don't need to borrow money. Such buyers are more attractive, especially to sellers who need to move quickly, but often the cash discount isn't worth as much as some buyers think.

Friday, August 31, 2012

5 Emotional Mistakes Made By Homebuyers - cont.

Mistake No. 4: Equating 'short sale' with 'deal'

In real estate, a deal is a deal, and the terms "short sale" and "real estate owned," or "REO," are  marketing buzzwords designed to lure bargain-hungry buyers.
All too often buyers run into the trap of buying a foreclosure or short sale thinking they are buying way below market value, when they are really overpaying.
A good deal is a matter of the property's historic price, current market conditions and the home's features, as well as the buyer's own needs. Weighing all the factors isn't easy. But buyers dramatically decrease their chances of making emotional mistakes by working with professionals who know the local market.
The biggest mistake is that buyers not using Realtors that know the local market. Trying to find a home on your own is very difficult if you're not familiar with the market on a micro level. (Buyers working alone) may feel like they are receiving a deal, however, they do not get to see all inventory in the price range desired.

Thursday, August 30, 2012

5 Emotional Mistakes Made By Homebuyers - cont.

Mistake No. 3- Overpaying for Perfection

Every buyer wants the perfect home, but unfortunately it may not exist. That is a concern when homebuyers insist they've found the perfect home and are eager to make an offer.
On the remote chance that a buyer does find perfection, the emotional attachment will sometimes become so high that the buyer will overpay or overextend themselves financially.
And even if the home is perfect and the buyer isn't overpaying, the owner could have difficulty selling.
A 100 percent match for one person may be a complete disaster to the majority of the population, and a buyer must consider an exit strategy from the beginning to avoid losing money when they sell. There is definite value over time for the enjoyment and use of the home, but that number is slight when compared to the total investment.

Wednesday, August 29, 2012

5 Emotional Mistakes Made By Homebuyers - cont.

Mistake No. 2: Falling in love at first sight

With real estate, there should be no such thing as love at first sight. Here is a simple rule for homebuyers.
Many buyers will look at no less than five properties before we sign any contracts. It's easy to fall in love right away. (But) jumping on the first or second home that a buyer looks at will often result in buyer's remorse, overpaying and the inability to sell at a reasonable price down the line.
Infatuated buyers who leap at a property tend to overlook the value of the process itself -- from inspection to appraisal.
Buyers can make the mistake of falling in love with a property after a first visit (but) before they do their necessary due diligence. Love-struck buyers sometimes waive key conditions in a rush to make an offer. Sometimes those overlooked details end up sinking the deal down the road.

Tuesday, August 28, 2012

5 Emotional Mistakes Made By Homebuyers

Real estate agents say emotional mistakes are common among homebuyers, who sometimes let good deals pass them by. Or worse, buyers overpay for their "dream homes" because they let feelings cloud their judgment.
But buyers shouldn't beat themselves up for getting emotional. Buying a home is often the biggest purchase a person will make. Homebuyers "need someone in their corner who can counsel them and make sure they are making a smart investment, not an emotionally driven purchase," according to Nest Seekers International.
Buyers should be aware of emotional mistakes many of their peers make. Here are five common errors, with advice on how to avoid making them.

Mistake No. 1: Always looking for a better deal

Every market has its up and downs, but today's market has conditioned homebuyers to make the mistake of thinking there's always a better deal just around the corner. While it's true prices could drop further (and mortgage rates might decline), it's not a good idea for buyers to play the odds now.
Even in the best of markets, we cannot predict what will happen tomorrow. I can't promise you that a bigger, less-expensive home will not come on the market the day after you close on this one. Market fluctuations are always part of real estate transactions.
Be smart, do your homework, know the value of the area and the home you are buying, and be sure it meets your family's needs.

Monday, August 27, 2012

Is now really the best time to buy? - conclusion

Housing market snapshot
Just how low have mortgage rates plunged? In the week that ended July 26, the average rate on a 30-year fixed-rate loan was 3.49%, according to Freddie Mac survey data. Sound low? It should. The rate on that same loan was an average of 4.55% last July. As previously mentioned, tight housing supply helped constrain home sales in June. U.S. existing-home sales declined to 4.37 million in June, down 5.4% from 4.62 million in May. However, that pace is still 4.5% higher than the 4.18 million sold in June of last year.
“Despite the frictions related to obtaining mortgages, buyer interest remains solid,” says Lawrence Yun, the NAR’s chief economist. “But inventory continues to shrink, and that is limiting buying opportunities. That in turn is pushing up prices in many markets,” as is a reduced supply of lower-priced distressed listings. Prices increased the most in the West – 13.3% year over year – due to short supply of affordable and mid-tier homes.

Nationwide, the median existing-home price was $189,400, up 7.9% from June 2011.  June marked the fourth back-to-back increase in monthly home values.

What to do when a seller misleads you
Buying Advice received a question recently from a Pennsylvania reader who discovered a huge mold problem in the attic of a home he had purchased. It's a problem he says was covered up by an unscrupulous agent who had purchased the property to flip.

This appraiser had discovered that the home had a huge mold problem in the attic. It had been reported to the previous owner’s insurance company in a weather-damage claim, but was ultimately shot down when it was found to be the result of a poorly built addition.

“My question is: I am concerned I am stuck with this problem and now my family is having serious health problems. I feel like I was sort of misled and not fully informed by the real-estate agent investor … He actually had the attic entrance crawl space covered with drywall where I did not even know there was an attic to inspect."

The key question is whether the agent/investor who sold the home knew about the problem. If he did, he had the legal responsibility to disclose this information to the buyer in writing. In fact, he is doubly responsible, she says, because most state laws — including Pennsylvania’s — require this disclosure both between property sellers and buyers and between selling agents and buyers.

Of course, sellers don’t necessarily know everything about their homes, and they aren't expected to disclose what they don't know. But, in this case, the agent drywalled over the attic entrance, so he not only knew about it but took steps to conceal it.
The buyer/current owner should hire a lawyer and sue the seller. The claim would be that the seller failed to disclose something that should have been disclosed and possibly committed fraud by keeping the buyer from discovering the mold independently.
It is recommended that the reader file a complaint with the state agency regulating real-estate agents. Just the threat of having his real-estate license revoked may prod the seller to compensate the current owner. Mold problems such as this one illustrate the need for a good home inspection with every purchase. It’s not clear in this case, however, if an inspection was conducted or if the inspector didn’t find the problem, as inspectors aren’t necessarily expected to look behind walls.
It’s not clear whether an inspector could be at fault for missing the problem - that depends on several factors, including local standards.

Sunday, August 26, 2012

Is now really the best time to buy?

Is now really the best time to buy? (© Steve McAlister/Getty Images)
With mortgage rates at or near record lows and prices rolled back to where they were a decade ago, this summer would seem an ideal time for first-time buyers to finally take the plunge. The problem is there aren’t a lot of starter homes on which to bid.
An inventory shortage has whipped up a feeding frenzy in some housing markets, with bidding wars and price increases. Is this pressure justified? Would most buyers be better served by waiting?
Let us take a look at what’s driving the shortage and how that picture is likely to change in the months ahead.  Where does “Act now!” make sense, and where should buyers sit it out awhile?

Buy or wait?
It’s a great time to buy a home – if you can find one. The inventory of existing for-sale homes declined nearly 25% in the U.S. from the same time a year ago, after a prolonged slowdown in foreclosure processing and continued holdout from sellers, many of whom can’t afford to sell because of negative equity.
The shortage helped inflate the price of existing homes by 7.9% in June from the same period a year earlier, according to the National Association of Realtors. This made some buyers believe that if they don’t buy now, they might be priced out.
That might be true – but only for a small fraction of buyers in certain markets or highly coveted neighborhoods, experts say. It doesn’t appear that given the forecast for the next 12 months that most buyers have a lot of reason to hurry.
Many economists predict a choppy recovery in the latter part of this year, with a sluggish economy dampening sales and prices. Winzer, for one, does not predict meaningful price increases (think 4% to 5%) until 2014. Indeed, he says, in some markets in Florida and elsewhere, the recovery hasn’t even begun in earnest.
With foreclosure starts beginning to resume and some sellers getting off the fence after seeing price upticks, there might be more homes to choose from later in the year or next spring. More choices could mean less bidding pressure from other home shoppers.
In a handful of markets, however, Winzer says buyers would be justified in acting, as strong employment growth is likely to keep demand and prices strong. The markets that LMM pegs as having the brightest and most stable year ahead are:
  • Austin, Texas
  • Houston-Sugarland-Baytown, Texas
  • Boulder, Colo.
  • Fort Collins-Loveland, Colo.
  • Washington, D.C./Arlington-Alexandria, Va.
  • Lubbock, Texas
  • Clarksville, Tenn.
In these markets, which have strong economies and unemployment as low as 5%, buyers should at least start looking now, because prices could rise as much as 4% next year – maybe even a bit more, because Winzer says his forecast is a bit conservative. Shockingly low mortgage rates are another good reason for buyers in these markets to get moving.

Saturday, August 25, 2012

Mortgage rates are rising

30 year fixed rate mortgage – 3 month trendMortgage rates inched up this week as investors were warned that the United States may slide into recession in 2013 if Congress doesn't get its act together.
30 year fixed rate mortgage – 3 month trend
The benchmark 30-year fixed-rate mortgage rose to 3.91 percent from 3.86 percent, according to the national survey of large lenders. The mortgages in this week's survey had an average total of 0.45 discount and origination points. One year ago, the mortgage index stood at 4.41 percent; four weeks ago, it was 3.75 percent.
The benchmark 15-year fixed-rate mortgage rose to 3.12 percent from 3.05 percent. The benchmark 5/1 adjustable-rate mortgage fell to 2.9 from 2.93 percent.
Rates jumped off record lows about a month ago and have been rising since then. The recent spikes serve as a reminder to borrowers that the low rates won't last forever.

Weekly national mortgage survey

Results of's Aug. 22, 2012, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:
 30-year fixed15-year fixed5-year ARM
This week's rate:3.91%3.12%2.9%
Change from last week:+0.05+0.07-0.03
Monthly payment:$779.20$1,149.01$686.78
Change from last week:+$4.72+$5.58-$2.65

Overall, rates have increased about a quarter of a percentage point in recent weeks.

Friday, August 24, 2012

Mortgages lifted due to hints of positive news in the real estate market

30 year fixed rate mortgage – 3 month trendMortgage rates rose this week as some positive economic data in the United States eased investors' worries.

30 year fixed rate mortgage – 3 month trend
The benchmark 30-year fixed-rate mortgage rose to 3.86 percent from 3.81 percent, according to the national survey of large lenders. The mortgages in this week's survey had an average total of 0.42 discount and origination points. One year ago, the mortgage index stood at 4.45 percent; four weeks ago, it was 3.78 percent.
The benchmark 15-year fixed-rate mortgage rose to 3.05 percent from 3 percent. The benchmark 5/1 adjustable-rate mortgage rose to 2.93 from 2.91 percent.

Weekly national mortgage survey

Results of's Aug. 15, 2012, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:

30-year fixed15-year fixed5-year ARM
This week's rate:3.86%3.05%2.93%
Change from last week:+0.05+0.05+0.02
Monthly payment:$774.48$1,143.43$689.43
Change from last week:+$4.71+$3.97+$1.77
Rates have been on the rise for three weeks in Bankrate's survey, but mortgage analysts say the upward trend won't last long.

Consumers help lift the economy and rates

One of the factors that helped push rates up this week was the release of a better-than-expected U.S. retail sales report that showed improvement in consumer spending for the first time in four months.
The Commerce Department says retail sales rose 0.8 percent in July, compared to the previous month. That's much better than economists had expected after sales had declined for three months in a row, including a 0.7 percent drop in June. Consumer spending is considered a key economic indicator because it accounts for more than 70 percent of U.S. economic activity.
When those types of numbers come out, the stock market seems to do well and that's not good for rates, according to Americana Mortgage in Manhasset, N.Y.
That's because when investors become more confident about the economy, there's less demand for safe investments such as U.S. Treasury and mortgage bonds. The trend normally results in higher bond yields, which translates into higher mortgage rates.
Adding to the optimism, the National Association of Home Builders said Wednesday that builder confidence increased for a fourth consecutive month in August, according to survey conducted by the association.

Thursday, August 23, 2012

Will biweekly mortgage payments save you money?

Question: You refinanced two years ago and received an offer to pay biweekly instead of monthly.  Will this help to reduce my mortgage more so than with monthly payments? If so, how and where can you apply?

Answer: Making biweekly payments on your mortgage will absolutely cut your interest cost and shorten the term of your loan, to boot. Such an arrangement usually is set up as an automatic debit from an account you specify. The mortgage lender will sweep through that account every two weeks and collect exactly half of your required monthly payment.

How does it work?
While there are only 12 months per year, there are 26 two-week periods. This means you are essentially making 13 monthly payments per year. In today's market, this can save you a bundle, especially if you start counting from the first monthly payment, because it reduces the term of a 30-year loan to about 25 years.

How much are the savings?
On a $200,000 mortgage at 5%, you'll cut the total term by just about five years, while shaving off more than $34,000 in interest cost. Biweekly payments can be valuable, but there's no magic to them. In fact, if you are responsible and dedicated, you can simply send in an extra monthly payment once per year and achieve nearly the same savings. The biweekly plan just makes it happen automatically.
That said, you should check the fine print. While it's OK for a lender to charge you a one-time setup fee, watch out for any recurring transaction fees that could diminish your savings over time.
Use a mortgage calculator to see how you can save money with biweekly mortgage (or other) prepayments.

Wednesday, August 22, 2012

The new subprime – 1 out of 6 FHA insured loans is now delinquent.

Perfectly timed, the Federal Housing Administration (FHA) is starting to see significant delinquencies at a time when the housing market nationwide is appearing to recover.  If you define “subprime” as the lowest quality mortgages on a totem pole, FHA insured loans now take that place.  It should not come as a surprise given the FHA is insuring an insane 30x leverage market with many that are diving in with only 3.5 percent down.  This is no surprise and even this summer, the FHA to assist in shoring up their dwindling capital base jacked up their mortgage insurance premiums.  The FHA has completely deviated from their mission and is simply another method of over extending debt strapped and income restricted Americans into homes that they clearly cannot afford.  What was once a tiny echo is now becoming a larger siren of impending financial issues.  The FHA is heading directly into a bailout scenario.

FHA is the new subprime
Some astounding information is coming out regarding the deterioration of FHA insured loans:
“(Reuters)- Fitch Ratings sees a growing divergence between 90-day past due delinquency patterns for guaranteed and nonguaranteed loans as a potentially troubling signal of future losses. This may eventually force the FHA to look for opportunities to put back some defaulted loans to the banks, particularly if the agency’s funding status worsens and U.S. home prices fail to rebound quickly.”
What stood out in the report is that eight of the largest US banks now have $79.4 billion in delinquent FHA insured loans.  Of this, 83 percent represent government-guaranteed mortgages.  If you need additional proof of this maximum leverage nonsense and that banks are willing to give loans out to a homeless person if they could offload the risk to the American taxpayer, read this:
“While delinquency rates for nonguaranteed loans have been improving steadily at these institutions, the trend for FHA-guaranteed loans is starkly different.”
In other words, banks are cautious when their money is at stake but when it comes to government backed loans they are willing to make any kind of loan product so long as they get their cut.  This is very similar to the entire Alt-A MBS process where banks bundled crap loans together and distributed their toxic waste around the globe deceiving investors.  Now why is this a problem?  Because FHA has essentially stepped in as the low-rung mortgage option:

Tuesday, August 14, 2012

Is a short-term mortgage right for you?- cont.

When shorter terms work

No single solution works for everyone. A man in his late 30s, has lowered his interest rate by 1.75% by refinancing four times in less than four years. In his recent refinance, he chose a 30-year term after briefly considering a shorter mortgage. But this client is all about the cash flow. The idea of throwing too much toward the principal doesn’t make sense right now. He isn't about paying it off 30 years from now. The home, great as it is … will be something they've sold off or converted to a rental property at that point.
The client's new 3.75% rate also includes his loan fees. That cost him about a quarter of a percentage point, or $30 to $40 more a month.
Another client refinanced out of a 30-year mortgage and into a 10-year fixed term at 3% — while lowering his monthly payments. Reducing the loan term and the monthly payment is "pretty rare,". But this homeowner had some advantages: He had been paying off the loan for 12 years, and his rate dropped from 6.5% to 3%. Also, years of payments had shrunk his mortgage balance enough so he could borrow considerably less money this time.
For him, a 10-year term "was a no-brainer.". Also, the man is in his 60s, and retiring with a paid-off home is important to him. He has plenty of cash, so lowering his monthly payment through a 30-year term doesn't matter as much as it might to someone else.
A third recent client who chose a five-year mortgage for his refinance. What's more, the man wanted an interest-only, adjustable-rate mortgage, a loan that many consider risky. The rate is reset periodically, and it can rise. Also, paying only interest never gets you any closer to owning your home outright.
Interest-only mortgages were sold aggressively to lower-income borrowers by some lenders during the bubble. That led to defaults when the escalating payments grew beyond what homeowners could afford.
Before that, however, short-term interest-only loans were marketed primarily to high-income homeowners as a sophisticated financial tactic. Because these loans' interest rates are cheap, at least initially, wealthy borrowers can use the savings to earn a better return on their money elsewhere — a rental property, business investment or annuity, for example.

Monday, August 13, 2012

Is a short-term mortgage right for you?

  • Own your home outright faster. You'll be free of mortgage payments sooner, too. You still must pay taxes and insurance, though.
  • Save on interest. The savings are potentially massive. A certified financial planner in Southfield, Mich., says that she and her husband will save a whopping $128,190 in interest if they keep the new mortgage with its 3.375% interest rate for the entire 15 years.
  • Equity builds faster. It was noticeable right off the bat, especially to individuals who see equity piling up quicker on their monthly mortgage statements. Even if some sell their home before the new mortgage is paid, they'll pocket more cash from the sale than they would have with the old mortgage.
For example, if the you had borrowed $200,000 over 30 years at 5.25% and sold your home in the 10th year of the loan, you would have accumulated $38,424 in equity from your payments. But by borrowing the same amount over 15 years at their new rate of 3.375%, you'll have roughly $129,000 in equity after 10 years.

  • You may not qualify. You'll need a strong mortgage application to satisfy lenders, and your home's appraisal must be high enough to support your loan request. That could be a problem if you have low or negative equity.
  • Your payment may grow. Depending on the fees, the size and term of your loan, and the difference between your old and new interest rates, your new monthly payment is likely to be higher, maybe much higher. Or it could remain the same. The Joys' payment grew from $900 a month to $1,250.
  • It's expensive. Fees of $5,000 or more could wipe out any benefit to refinancing. These charges may include an appraisal fee, inspection fee, private mortgage insurance, prepaid interest, application fee, loan origination fee, homeowners insurance, and points and fees imposed by the Federal Housing Administration or other government lending programs. The Federal Reserve's Consumer Guide to Mortgage Settlement Costs explains mortgage fees and estimates costs.
  • The paperwork is a headache. Lenders may demand a lot of documents, from tax statements to old divorce papers. It can seem invasive.
  • It takes months. Lenders are so busy now, and their lending requirements are so strict, that it can take months to get a loan approved. TD Bank, for example, averages 51 days to process a refinance from the time the application is submitted, according to TD Bank. That's relatively quick. Some banks can take as long as 120 days. When choosing a lender, ask several about their turnaround times.

Sunday, August 12, 2012

5 Scams to Avoid in the Summertime - conclusion

The vacation rental scam

It's every traveler's worst nightmare: finding a great deal online for a vacation rental only to discover, upon arrival, that the address doesn't exist. Or the keys don't work. Or the telephone number for the person that took your deposit is suddenly out of service. But according to Elizabeth Walling, Internet crime analyst at the National White Collar Crime Center, nearly 8,000 rental-related complaints were reported to the center between June 2011 and June 2012, including vacation rental scams.
When you think you have found the perfect rental, at the perfect time with the perfect price, you want to jump at the opportunity, according to the National White Collar Crime Center. Scammers rely on the impulsiveness of the vacation renter.
Avoid it: Before paying, do your homework. Run a search on the rental address or rental description. If the same (property) is for rent in San Francisco, Calif., and Savannah, Ga., you have a scam on your hands. Also, search the name of the individual or business providing the rental. If they've pulled the scam before, someone might have complained on a scam-busters site, giving you the chance to walk away.

Saturday, August 11, 2012

5 Scams to Avoid in the Summertime - cont.

The job offer scam

With national unemployment rates still high, countless new graduates will spend this summer sweating over online employment ads. Unfortunately, such ads can be rife with scams. According to the BBB, scams are most prevalent on Craigslist or other free job listing sites, but email phishing work-from-home cons are also widespread.
I've seen some very slick operations. They look and feel totally legitimate. The more crafty scammers have professional-looking websites and sometimes conduct lengthy telephone interviews, after which they "hire" you. Then the true scam begins.
Bogus businesses usually ask for money upfront for reasonable-sounding purposes, such as to run a credit or background check. Alternatively, they might require you to complete online forms "for the HR department" that ask for information like your birth date, Social Security number or mother's maiden name. Of course, they're really asking for everything needed for identify theft.
Avoid it: Never divulge personal information without ensuring the company and the offer are legitimate. Thoroughly research the company's reputation and stay alert to red flags during the interview process. Anytime someone wants an advance fee, or says you'll make 'big money,' you want to be suspect.

Friday, August 10, 2012

5 Scams to Avoid in the Summertime - cont.

The moving man scamSummer is the most popular time of year to move, which can make finding a quality moving company tough. But if you're considering hiring an off-the-books mover, you'd better reconsider.
Remember: You're hiring people to enter your home, take your belongings, put them in a padlocked van and drive away according to the American Moving & Storage Association. If these movers don't have a record of trustworthiness, "it's not always going to work out well for you."
A common scam among rogue movers is the hostage situation. After packing your possessions, these movers will refuse to unload the truck unless you pay extra, saying the price has increased because your belongings weighed more than anticipated. The police can't help. They'll say it's a contractual dispute. The mover may then store your property, at your expense, until the dispute is resolved.
Avoid it: For interstate moves, hire movers who are members of AMSA's ProMover program, recommends Bisney. The AMSA rigorously examines the business practices of each ProMover candidate, and only admits a business to the program if it has been deemed to have excellent and ethical business standards. In addition, it must sign an agreement pledging to uphold the AMSA's code of ethics and bylaws.
If a ProMover isn't available, then at least confirm the mover is properly licensed by the Department of Transportation. For intrastate moves, check the mover's reputation through the BBB or your state's moving association.

Thursday, August 9, 2012

5 Scams to Avoid in the Summertime - cont.

Here's the scenario: Grandpa gets an email from his grandkid, who claims to have been mugged while on vacation and desperately needs money. The details seem right, so Grandpa wires the money -- to an imposter who has hacked the grandkid's email account and lifted facts about the kid's life from social media. People put so much information about themselves on social media, it's scary. Scammers use this information to make cons more realistic.
While older people are often targeted in these scams, anyone can fall victim. An anonymous person's email was hacked a few years ago, friends received a message saying she had lost her wallet and passport during a trip to the U.K. and needed money. The letter was so convincing even my own sister believed it.  Because (the scammer) had also stolen the contacts through Facebook, he knew some information about people who sent back questions like 'Tell me how you know me. Several friends wound up losing money.
Avoid it: Never announce your vacation plans on social media. Moreover, if you receive an email purportedly from a stranded friend, don't send money without first speaking directly to your chum.

Wednesday, August 8, 2012

5 Scams to Avoid in the Summertime

Summertime conjures up daydreams of beach holidays, lazy picnics and firing up the barbecue grill. Don't get too distracted, though: Summertime scammers are busy dreaming up schemes as well. According to Katherine Hutt of the Council of Better Business Bureaus, or BBB, certain swindles are more prevalent in summer months than any other time of the year.
Summertime seems to offer scammers a lot of opportunities to catch us out of our routine. It's best to keep your eye out for red flags and stay vigilant, even when you're trying to relax.

To keep from getting burned, steer clear of these five scams.

The Home Improvement Scam

The ravages of winter or rains of spring can leave your house looking worse for wear -- a fact not lost on home improvement scammers. During summer, it's common for homeowners to be approached by a contractor who will point out property damage and offer to repair it. Often they'll say they can give you a good price because they've got materials left over from another job.
But many of these workers who appear out of nowhere only do cosmetic repairs. All too often people complain of driveways being painted black instead of being asphalted as promised. Other scams involve the "contractor" loosening shingles on your roof to create damage. And some swindlers simply take your deposit and run.
Avoid it: Be wary of anyone offering unsolicited home improvement services. Be picky, ask questions and make sure the worker has insurance. Also, take the time to check the worker's BBB report and don't yield to high-pressure tactics.
People tend to be less cautious about hiring workers for outside the home. But any time you allow someone access to your property, you should know exactly with whom you're dealing.

Tuesday, August 7, 2012

August home-maintenance checklist - conclusion

Get a furnace inspection
Have your heating system inspected and serviced by a professional. Call the company that sold it to you or your fuel distributor to get recommendations for servicers.

Blanket the water heater
Get one of those nice, fat insulating blankets for your water heater if it doesn’t have one. You don’t want to pay to heat all that water and then let the heat leak into the atmosphere.

Inspect and maintain the water heater
Have your water heater professionally serviced once a year. (Keep track with this furnace maintenance record from the University of Alaska Fairbanks Cooperative Extension Service.) Inspect the water heater thoroughly and check the walls and floor around it for evidence of leaks, rust or corrosion. Also check the lines and connections to the heater. Even a small amount of moisture can rot the flooring and subfloor. Lie on the floor to look at the bottom of the heater from underneath, using a flashlight. If you find leaks, replace the water heater.

Test the water-heater valve
Test the valve that controls temperature and pressure on tank-type water heaters. Do this once a year because, if the valve becomes stuck in the on or off position, an explosion can result. Work carefully because the water in the tank is extremely hot. Do it during business hours on a weekday so you can get help if you find problems. Put a bucket under the water heater’s overflow pipe to catch the drainage. The valve is at the top of the water heater and is recognizable because it has a small handle. Lift the test handle for five seconds to release a little water, then close it. If the valve refuses to close, or if nothing comes out, call a plumber immediately to replace it. (See an illustration and detailed instructions in this pamphlet by the Washington state Department of Labor and Industries.)

Monday, August 6, 2012

August home-maintenance checklist - cont.

Fix leaky faucets
Check faucets for leaks and install new rubber gaskets by unscrewing the faucet end, removing the old gasket and reassembling it. Also fix dripping faucets. First, shut off the water under the sink. For sinks with independent hot and cold water faucets, dismantle each faucet, removing the washers (rings made of rubber, plastic or brass). Put the washers in a sandwich bag and bring them to the hardware store to look for replacements. Reassemble the faucets and turn the water back on. For a single-arm faucet, fix leaks by replacing the faucet’s inner workings. That’s not hard, because you can just note the brand and buy a faucet rebuild kit (about $50 at hardware stores). Dismantle the faucet, laying out the pieces on a paper towel. Shoot a photo or make a sketch to refer to when assembling it. Put the faucet back together and turn the water back on.

Clean and replace grout and caulk
Inspect the grout in tiled areas of your home, particularly in bathrooms and the kitchen. If grout is cracked or missing, remove and replace it in the affected areas. Grout should be cleaned regularly, particularly if it comes into contact with moisture, to keep it free from stains and mold. Use an old toothbrush and one of these cleaning products: TSP, hydrogen peroxide, vinegar, bleach or grout cleaning solutions (available at tile stores or on the Internet). Inspect the seal around sinks, showers and tubs and recaulk any spots where caulk has cracked or separated. Use silicone tub and tile caulk.

Sunday, August 5, 2012

August home-maintenance checklist - cont.

Clean sink drains

If you’ve got a slow-draining sink, take action. First, try a homemade drain cleaner. recommends mixing a solution of equal parts of salt, baking soda and vinegar. Pour it into the drain and chase it down with two quarts of boiling water. You can use this solution monthly. Avoid chemical drain cleaners; they can damage the pipes and create toxic exposure for you and your family.

Or you can apply some elbow grease and fix slow drains by cleaning out the drain and trap  – the U-shaped pipe that’s directly under the sink. Position a bucket under the trap to catch falling water and gunk and keep a pile of rags at hand for cleaning up. This can be a messy job – you may also want to wear rubber gloves.
Loosen and remove the couplings that hold the trap to the straight pipes that run from the sink and to the sewer. You may need to use a plumber’s wrench. If the pipe is plugged, all kinds of messy stuff will fall into the bucket and must be removed from the trap. If possible, take the trap outside and shoot a stream of water from the hose through it. Rinse it out thoroughly. Use a snake or wire from a coat hanger to remove built-up debris from the pipes.

Also, pull out the sink’s drain plug to clean it. The plug pops up and down in the sink. It is attached to a rod and lever that are held to the back of the drain pipe by a nut. Pull out the rod by unscrewing the nut. Clean the drain plug and remove any gunk that’s in the pipe, then reassemble the plug. Reassemble the trap, tightening the couplings by hand so you don’t screw them too tight. Flush the drain by running hot water for a few minutes. 

Saturday, August 4, 2012

August home-maintenance checklist - cont.

Pamper the lawn

Homeowners can’t successfully emulate the tightly trimmed golf-course look because they don’t have a golf course’s budget and army of maintenance professionals. Instead, the best thing you can do to achieve a good-looking lawn is to mow frequently and high (three inches or more – or just set your mower blades as high as they’ll go). This discourages weeds and trains the grass to grow in thickly. High, frequent cutting encourages roots to grow deep and retain water, so you’ll need to water less frequently. Let the clippings fall onto the lawn to add nourishment.

If you’ve been watering the lawn this summer, keep it up: Water infrequently but deeply, giving it an inch to an inch and a half of water each time (measure by putting an empty tuna can on the lawn). Water early in the day to avoid evaporation — not at night, which invites disease. You’ll know it’s time to water when your footprints don’t spring back when you walk across the grass, when the grass gets a blue tinge or when you can’t easily push a screwdriver or steel rod into the soil.
If your lawn has turned brown, don’t try to rescue it by watering now. That’s hard on the grass plants and a waste of water. It’ll come back when the rain starts in the fall.

The best time to fertilize depends on your climate and the grass type in your lawn. In general, avoid fertilizing during extremely hot weather or periods of drought. Do not use products with nitrogen when your lawn isn’t green – it can encourage weeds. Start thinking about fertilizing at the end of this month and consult professionals who sell lawn-care products or call your local home-extension service (Wikipedia links to state cooperative extension services here) to get advice on what to use and exactly when to use it. August is the perfect time to root dandelions out of the lawn using a long-handled forked tool or with judicious use of an herbicide.

Friday, August 3, 2012

August home-maintenance checklist

Fend off pests outdoors, pamper lawns, keep drains flowing, clean grout and maintain water heaters this month.
August home-maintenance checklist (© Image Source/Getty Images)There are many reasons – fire protection, air circulation, drainage, attractiveness and safety — to keep the outside walls of your home clear and free of debris. One more compelling reason is that piles and stacks of tools, lumber, ladders, yard waste and toys create a haven for spiders, rats, mice and wood-boring insects. Take an hour to circle your home outside, removing anything touching the siding. Donate, discard or store what you’ve removed. (Bing: How much do pest control services cost?)
Firewood is one common hiding place. Stacking it under the eaves of the house keeps it dry, but there’s a price: The wood creates a home for spiders and invites them into the house. Also, wood piles trap moisture against the siding and prevent circulation. If left long enough, the dampness could rot siding or trim. Instead, store firewood at least two feet from the house and 18 inches above the ground. Keep it dry by building a little shelter over the top of the pile.
In addition, discourage pests by clearing out vegetation under decks that might give them a safe place to hide. And pick fruit from trees as soon as it is ripe. Keep the ground clean under fruit and nut trees.

Seal garbage cans tightly. If you’ve had problems with rats, dogs or raccoons getting into the trash, make sure the cans have tight-fitting lids. Tighten the lids by linking a stretchy tie-down from handle to handle. Knot it to shorten it if necessary. Buy or build a small enclosure for your cans.

Wash and rinse items you intend to recycle. Keep them waiting for disposal indoors or in a sealed enclosure. If you store pet food in a garage or carport, keep it in containers with tight lids. (Read “Three tips for keeping your home rodent-free.”) Also, if your bird feeder is attracting rats, get rid of it. To see if you’ve got “four-legged birds,” shine a light on the feeder in the middle of the night or in the wee hours of the morning.

Don’t let water sit around your yard or garden; it breeds mosquitoes. Change the birdbath and wading pool water at least weekly. Toss water out of pet dishes, flowerpot saucers, cans, buckets and anything else lying around that collects rain. Keep gutters clean.

Thursday, August 2, 2012

Cash-saving tips that pay big bucks - cont.

Raise the deductibles

The average individual annually spends $4,704 on health insurance premiums, according to the Kaiser Foundation; $1,954 is spent on car insurance premiums, according to RateWatch auto insurance; and $804 is spent on homeowners insurance, reports the Insurance Information Institute. That's $621.83 per month on insurance premiums alone.  Smart spenders can sidestep some of those premiums by raising their deductibles.How much you save is going to vary from policy to policy, but it does pay to go back and see where you can trim some fat.

What it's worth: According to, raising your homeowners insurance deductible from $250 to $1,000 can save you a sweet 25 percent. That's $201 alone. Assuming that raising your deductible could lower your other two insurance bills by a modest 10 percent, consumers can save $866.80 per year on average.
  • A one-time deposit of $866.80 grows to $2,392.
  • Annual deposits add up to $21,782 in 15 years.

Time the vacations

Saving money means scouting hot vacation deals.For example, Nicaragua, the whole trip -- airfare and tours -- only cost  $500 each. That's what happens when you vacation somewhere cheap in the off-season.
On top of saving on airfare, those who leave their hometown when nobody else does can also save anywhere from 20 to 50 percent off hotels and tourist activities. Combine that savings with discounts from online promotional codes, and consumers can travel much cheaper this year.
What it's worth: A study conducted by Visa shows that the average consumer plans to blow $1,654 per person on their summer vacation. Flip that vacation from summer to winter, factor one-fourth off hotel, airfare and entertainment, and that $1,654 drops down to a $1,241 vacation budget, for a $413 savings.
  • A one-time deposit of $413 grows to $1,139.
  • Annual deposits of $413 add up to $10,378.


The art of haggling is alive and well. Staunch advocates of negotiating for good bargains, say that you can get breaks on everything from plumbing to preschool simply by asking.It especially works if it's a local vendor that operates on reputation or you've been a loyal customer. Even if you were to miss two (credit card) payments and you are good and loyal customers, they often waive any fees.
What it's worth: You can't put a number on this one. You might be able to save an extra $360 per year on preschool bills, but amateur hagglers may not be so lucky. While there's no guarantee that haggling will pay off, it couldn't hurt."

Wednesday, August 1, 2012

Cash-saving tips that pay big bucks - cont.

Communicate cheaply

Always look for ways to maximize savings, such as cutting the phone bill. After switching from a local phone service to Vonage last year, one person pocketed an extra $240, or $20 per month. Thanks to broadband Internet phone systems like Vonage and Skype -- a service that allows free member-to-member calls and long distance for a penny per minute -- thrifty consumers can all but forget about footing landline bills.What it's worth: Households that eliminate a landline and stick with cell phone plans can cut $30 per month out of their utilities budget, and those who trade cell phones for broadband phone systems can save even more. Shove $40 per month, or $480 at the end of the year, in a tax-favored savings plan for 15 years, and here's what happens:
  • A one-time deposit of $480 grows to $1,324.
  • Annual deposits of $480 add up to $12,062.

Weatherize the house

Your kid's college fund could be flying out the window. Consumers save 3 percent on their heating bill for every degree they turn down the thermostat. They also lose money by not replacing the weather stripping around their windows, washing clothes in hot water and not insulating pipes around their water heater.What it's worth: It depends on location. In states with moderate weather year round, tightening the insulation screws may have little effect. For those living in more extreme climates, simple steps like installing heating and air conditioning timers can save hundreds. According to a study by the Energy Information Administration -- the U.S. government's official source for energy statistics -- the average household spent $1,137 last winter in heat alone. Lowering the thermostat just 5 degrees in winter means reducing costs by 15 percent, or saving $170.55 after one season.
  • A one-time deposit of $170.55 grows to $471.
  • Annual deposits add up to $4,286 in 15 years.

Tuesday, July 31, 2012

Cash-saving tips that pay big bucks - cont.

Here's the payoff for switching meal plans (from my previous post):
  • A one-time deposit of $3,333 grows to $9,196 in 15 years.
  • Annual deposits of $3,333 add up to $83,755.

Find free entertainment

Between nights out at rock concerts, opera and theater performances, some Americans spend more on entertainment than on groceries and gasoline combined. To cut down entertainment expenses, try hunting for free events in your area and volunteer as an usher for live theater, for example.You could feasibly see at least two plays every weekend, and since tickets are $18 to $45 apiece, that's a lot of money if you wasn't ushering. "If you volunteer at 15 theaters, you could save probably $160 a month doing it.
What it's worth: I don't recommend forgoing all cultural events, but consumers who opt for free or low-cost concerts, lectures, outdoor movies and art shows even one night per weekend can easily reduce their entertainment budget by $50 to $100 per month. For purposes of our calculation, let's split the difference and assume savings of $75 a month or $900 a year for 15 years.
  • A one-time deposit of $900 grows to $2,483.
  • Annual deposits of $900 add up to $22,616.

Use the public library

Home entertainment costs can be considerable if you add up cable television, satellite radio, video games and movie rentals. Young recommends getting familiar with the public library. In addition to carrying books, magazines, audiobooks, films and CDs, libraries frequently offer free children's events, language programs, financial literacy workshops and performing arts events to cut your budget down further. If the library in your area is scant on resources, check out what's on campus at the nearest college or university.What it's worth: According to the School Library Journal, the world's largest book review publication, the average cost of a new hardcover book is $26.43 ($18.02 for paperbacks). Families that buy one book per month and rent two to three movies at $4 to $5 a pop can easily run up a $30-per-month tab or $360 annually.
  • A one-time deposit of $360 grows to nearly $993.
  • Annual deposits of $360 add up to $9,046 in 15 years.

Bargain shop

When buying luxury items, save some cash doing it. For many bargain-hunters, that means using bartering sites such as Craigslist to find used goods and seeking out promotional codes for discounts on all other online purchases.Try using sites like (an online bike supply store) a lot that only list one item at a time, but for 50 (percent) to 90 percent off. If you can't find something at a one-deal-at-a-time shop,  comparison shop at places like and to see if I can get a discount.

What it's worth: Making 75 percent of all purchases through online discounts, you can estimate that you could save $40 a month simply by shopping around for deals. Because you can get everything from pencils to plane tickets discounted online, price-comparing families could shave $50 to $200 off their spending budgets each month.
  • A one-time deposit of $600 to $2,400 amounts to $1,655 to $6,622, respectively.
  • Annual deposits of these amounts add up to $15,077 to $60,310, respectively.

Monday, July 30, 2012

Cash-saving tips that pay big bucks

The expression "a penny saved is a penny earned" doesn't cut it these days. But saving a few dollars here and there can add up, particularly if you park the money in a high-interest-bearing savings account or, better yet, a tax-favored vehicle such as a 529 plan or an IRA containing a mix of investments that offer higher returns over the long run.
OK, so 10 percent annual returns from the stock market may seem far-fetched after the recent market mayhem. But we contend that it's not unreasonable to expect 7 percent annualized returns from a conservative blend of bonds and stocks over a period of 15 years. These are the assumptions we used below to calculate how the few bucks you squirrel away today can turn into big-time savings later.
9 ways to save big bucks:
  1. Form a cooking co-op.
  2. Find free entertainment.
  3. Use the public library.
  4. Bargain shop.
  5. Communicate cheaply.
  6. Weatherize the house.
  7. Raise the deductibles.
  8. Time the vacations.
  9. Negotiate.

1) Form a cooking co-op

Sure, cooking is cheaper than eating out, but a daily home-cooked meal simply isn't an option for many full-time working parents. Ginny Bowie, vice president of a Richmond, Va.-based financial securities firm and mother of three, solved her scheduling and budgeting dilemma in one swoop by forming a cooking co-op."Every Tuesday night, I cook dinner for three families besides my own, which is about 18 to 20 people, and deliver it to their door," Bowie says. "Monday, Wednesday and Thursday, the three other families cook for me."
Bowie's Web site and DVD, "If it's Tuesday ... it's my night 2 cook," contain recipes and tips for starting a co-op. She says cooking in bulk has cut her grocery bill in half and practically eliminated her need for eating out.

What it's worth: The average household spent $6,133 per year on food -- $3,465 on groceries and $2,668 on meals away from the home -- in 2007, the most recent year for which data are available from the U.S. Bureau of Labor Statistics. We suspect food prices soared in 2008, but let's use these numbers anyway. Assuming that a co-op could reduce the grocery bill by half and lower restaurant expenses by, say, 60 percent (factoring in the occasional meal out), families could save $3,333 per year by going co-op.

Sunday, July 29, 2012

Avoid financial ruin - cont.

Take it slow

Rome wasn't built in a day, and neither is an emergency fund. Any action you can take to establish an emergency fund will do you good. If you transfer $10 to a savings account each week, you'll have $500 in a year.
Take it slowDon't be afraid to start with a small amount of savings each month, but try to increase it whenever possible.
When you pay off a credit card with a $50 monthly payment, increase your savings by that $50. With the same outflow you have today, you'll be paying yourself.
When you get a tax refund or commission check, add it to your fund, he says. And gradually boost your savings by selling items you don't need on eBay, holding a yard sale or putting change into a jar every evening.
Save rather than blow your excess money. By stashing the extra, in addition to your regular predetermined amount from your budget, you'll see your savings soar.