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30-Year Mortgage Rates at Lowest in 4 Years

Freddie Mac reports a decline in the 30-year fixed mortgage rate to 5.47 percent during the week ended Dec. 11 from 5.53 percent last week and 6.11 percent a year ago.

Some lenders are locking in even lower rates as they build on momentum started when the Federal Reserve announced plans last month to purchase a substantial number of mortgage-backed securities. HSH Associates and Inside Mortgage Finance are reporting interest on 30-year fixed loans at 5.33 percent and 5.09 percent, respectively.

Freddie Mac chief economist Frank Nothaft says mortgage rates also were driven downward by the recession and rising unemployment.

Source: The Washington Post, Dina ElBoghdady (12/12/08)

What If That Sweater Just Doesn’t Fit? 

By Nicole Paitsel

RISMEDIA, Dec. 30, 2008-What if that sweater just doesn’t fit?  If you need to go back to the mall after the holidays, it is best to get there early and bring the receipt.

Once the mad gift-giving dash is over, on to the return lines.  Here are a few tips for stress-free returns from the customer service team at Patrick Henry Mall in Newport News, Va.

1. Head to stores early.  After Christmas sales lure shoppers, but the earlier you get in line, the better.

2. Bring as much information as possible.  In addition to bringing the original receipt or gift receipt with you, bring any tags and packaging that the gift came in.  Also, it doesn’t hurt to call the store in advance to find out what their return policies are.

3. Contact the store if you don’t have the receipt.  Some stores will be able to give out store credit.

4. Save and file all receipts.  Although some retailers will allow returns without a receipt, having the original receipt or a gift receipt on hand ensures that the gift recipient receives the full value of the gift upon return.

5. Get a few answers about online returns.  If you purchased a gift online, you should always read the return policy.  Some retailers will pick up the shipping charges for exchanges, but not returns.  If the retailer has a bricks and mortar store, provide the recipient with an address.

© 2008, Daily Press (Newport News, Va.)

Pets as Presents - Think Long-Term

RISMEDIA, Dec. 23, 2008-(MCT)-Getting a pet for Christmas?  It’s one of those ideas that may seem sensible at first but can be quickly slapped silly by reality.

Buying a holiday pet-whether a dog or cat or even a bird or tank of fish-is something that needs to be carefully considered.

Some of the issues:

Getting a pet should be a family decision.  Everyone will have a stake in raising the dog or cat-feeding, walking, training, the inevitable cleaning-up-after-so everyone should be involved in the decision, from the type of animal to its name.

The cost of a new pet goes beyond the purchase price.  There are vet bills, food costs and upkeep, not to mention the ever-climbing price of squeak toys.  And don’t forget damage repair; a clawed sofa or chewed carpet can be costly.

There’s a time commitment.  A dog or cat can live 10 to 15 years or more and needs attention every single day.  A box turtle might outlive you and your kids.

Holidays are a bad time to introduce a pet to new surroundings.  You’re running around and can’t give the animal the attention it needs at this crucial time, when it should be getting acclimated to your home.  And those holiday visits from family and friends … heck, they’re your family and friends and they make you grind your teeth.  Imagine how a puppy or kitten would feel, having to deal with these strangers.

Despite the drawbacks, 53% of new pets are acquired during the holiday season, according to the American Pet Products Manufacturers Association.

Recognizing that, Best Friends Animal Society won’t shut the door on holiday adoptions.

Judah Battista of Best Friends said in an e-mail that the society’s position is that shelters and rescues can accommodate people’s desires to adopt pets as gifts “by allowing (1) the adoption of pets to households where the responsible adult(s) of that household have made a decision to add a new pet to the family, or (2) giving adoption vouchers to people wishing to gift a pet to a significant other.  We do not endorse adoptions for people looking to find a pet for a friend or relative in another household.”

So the decision is yours. Think carefully.

© 2008, Chicago Tribune

Get a Grip on Credit Card Debt

RISMEDIA, Dec. 26, 2008-(MCT)- While consumers are being urged to spend this holiday season to help bolster the economy, those who do may face big credit card bills in January.

ByDesign Financial Solutions, a nonprofit organization offering personal finance counseling and education, is urging consumers to make “getting out of debt” their New Year’s resolution.

“In tough economic times such as these, we expect even more people to resolve to work on lowering their debt in 2009,” said Martha Lucey, ByDesign’s president. ByDesign offers free and low-cost counseling, and it has offices in Modesto, Merced and Stockton.

Lucey cited statistics showing that 61% of Americans carry revolving credit card debt, with an average $10,678 balance. Atop that, she said, the average consumer expected to spend $832.36 on holiday merchandise.

“That cost, along with previously racked up debt, and an unstable economy creates the incentive to take active steps to address the problem as soon as possible,” Lucey warned.

Here is what ByDesign’s credit counselors encourage consumers in debt to do:

1. Stop Charging. Adding to your existing debt will only make the problem worse and counteract any other steps you take to pay down your balance.

2. Transfer Balances. Call your credit card issuers and try to transfer all of your balances to the card with the lowest interest rate. If this isn’t possible, make minimum payments on the cards with the lowest rates and pay as much as possible on the highest interest cards until they are paid off. Once you get down to one card, continue paying as much as you did to the highest interest rate card.

3. Asses Your Total Debt. Once you determine the total, use an online debt repayment calculator to experiment with different payment amounts to see what type of realistic monthly payment you’ll need to make to pay off the cards. Try the free calculator at: www.bankrate.com/brm/calc/creditcardpay.asp.

4. Increase Your Income. When you don’t have enough income to have funds remaining after expenses, the only alternative is to increase your income. Use as much of that extra income as possible to make additional credit card payments. Some income options include working overtime, seeking temporary part-time work and selling stuff on Amazon, eBay, Craigslist or through newspaper classified ads.

5. Focus. This plan will work if you maintain focus. Paying off your debt must become a priority for the duration of your plan.

There will always be temptations to charge a vacation, buy a new car or do home-improvement projects. Being conscious of every spending decision will help you meet your goals.

For more advice from ByDesign or to arrange for free, confidential debt counseling, go online to www.ByDesignSolutions.org or call 800-750-2227.

Copyright © 2008, The Modesto Bee, Calif.
Distributed by McClatchy-Tribune Information Services.

The Role of Real Estate Professionals

The study found that 81 percent of sellers used full-service brokerage, in which real estate agents provide a range of services that include managing most of the process of selling a home from listing to closing.  Nine percent chose limited services, which may include discount brokerage, and 9 percent used minimal service, such as simply listing a property on a multiple listing service.

Like home buyers, home sellers rely on referrals and their previous experience when looking for a real estate agent.  Thirty-eight percent of sellers were referred to a real estate agent by a friend, neighbor, or relative; 26 percent used an agent with whom they had worked before.  Sixty-seven percent of home sellers contacted only one agent before selecting one to assist with their home sale.  While some sellers do contact more than one agent, the significant role of referrals in the selection process is one factor accounting for the large share of sellers contacting only one agent.

What do home sellers want from their real estate professionals? Primarily, sellers want agents to price their home competitively, market the property, find a buyer and sell within a specific time frame.  Overall, 21 percent of sellers indicated that what they wanted most from their agent was help pricing their home competitively.  Other important considerations were help selling the home within a specific time frame, help finding a buyer, and help marketing to potential buyers.  One of every five sellers wanted each of these services from their agents.

As with home buyers, sellers' satisfaction with their real estate agent is high. Eighty-five percent of sellers would definitely or probably use their agent again or recommend their agent to others.  That is good news for real estate professionals, since referrals and "word of mouth" recommendations from satisfied clients are an important source of repeat and new business.  Selling a home in today's housing environment can indeed be daunting.  Fortunately, home sellers can rely on the expertise and knowledge of real estate professionals to help.

Method of Home Sale

The majority of home sales are transacted through a real estate agent or broker.  During the survey period, 84 percent of home sellers sold their home with the assistance of a real estate agent.  The share of homes sold using a real estate agent has been relatively constant during the past six years, hovering around 84 percent.  Some sellers attempt to sell the home themselves, but then turn to real estate professionals to "get the job done."

Among those sellers who used an agent in their home sales transactions, more than four out of five depended on the assistance of a real estate agent for a broad range of services and management of most aspects of the home sale.  Nearly half - 48 percent -- used the same agent to help them purchase a home.

Of course, there are always sellers who choose to sell their home themselves.  For-sale-by-owner (FSBO) sales accounted for 13 percent of transactions during the survey period, up slightly from a record-low market share of 12 percent in both 2007 and 2006.  The share of FSBOs has remained at 12 percent to 13 percent for the past four years.  The level of homes sold without professional representation has trended lower since reaching a cyclical peak of 18 percent in 1997.

A large number of these FSBO properties were not placed on the open market - 45 percent were "closely held" between parties who knew each other in advance, such as family or acquaintances.  Open market homes sold without professional assistance were 7 percent of all sales - the other 6 percent are unrepresented sellers in private transactions.  This matches the results in the 2007 study and marks a downtrend from 10 percent sold on the open market in 2004.

Those home sellers who choose FSBO as their method of selling face special challenges.  The most difficult tasks reported by unrepresented sellers are selling within the planned length of time, getting the right price, preparing the home for sale, and understanding and performing paperwork.

Selling the Home

The most frequently cited reason for selling a home was job relocation - 22 percent of recent home sellers reported this as the reason for selling a home. The second most frequently cited reason for selling a home was because the property was too small (17 percent of sellers), but this was the number one reason for sellers aged 44 years old or younger. Moving closer to friends and family was the chief reason for selling a home among those 65 or older, cited by one-third of the sellers in this age group.

Despite a challenging "sales" market environment, a majority of repeat buyers (73 percent) reported that they had already sold their previous home. Nearly two thirds sold their home in 2007 or 2008 while an additional 12 percent sold their home in 2006 or earlier. Nearly one in ten repeat buyers reported that they do not plan to sell their previous home. An additional 11 percent noted that their home was on the market but had not yet sold; 6 percent reported that their home was currently vacant while 5 percent were renting their home while it was on the market. Forty-two percent of sellers offered incentives to attract buyers, such as assistance with closing costs or home warranty policies. The typical home sold for 96 percent of the listing price.

The 2008 NAR Profile of Home Buyers and Sellers:
Focus on Sellers

by Paul Bishop, Harika "Anna" Barlett and Danielle Hale, NAR Research

The 2008 National Association of REALTORS® Profile of Home Buyers and Sellers was released last month.* The Association surveys home buyers and sellers annually to gather detailed information about the home buying and selling process. These surveys provide information on demographics, housing characteristics, the experience of consumers in the housing market, and the role that real estate professionals play in home sales transactions. Last month in this column we presented highlights from the profile about home buyers. This month, we focus on home sellers and the important assistance that real estate professionals can provide to those selling a home.

Selling a home can be a complex process. That is especially true in markets where sales activity has fallen and the inventory of homes for sale has risen. Still, buyers and sellers are overcoming hurdles leading to the successful completion of home sales transactions.

Profile of Home Sellers

The median age of home sellers who sold a home between July 2007 and June of 2008 was 47. Home-selling households had a median income of $91,000. Three-quarters were married couples. Their home was on the market for eight weeks. Five percent of sellers who also purchased a home reported selling their home in a short sale.

The typical home seller has owned their home for six years. Very few sellers (4 percent) owned their home for less than one year, while one in ten had owned their home for more than 20 years. Sellers of detached single-family homes, which account for the largest share of homes sold, owned their home for a median of seven years. Sellers of condos in buildings with five or more units, along with sellers of cottages, had the shortest tenure, with more than four in ten owning their home for three years or less. Perhaps not surprisingly, younger home owners tend to be more mobile, resulting in a much shorter length of tenure when they sell their home. While the youngest group of sellers owned their home for a median of two years, those 65 and older sold their home after a median of 13 years.

Is Now a Good Time to Refinance?

Refinancing now sounds appealing, but for lots of people, it isn’t all that easy.

Applications for refinances tripled earlier this month after the Federal Reserve promised to buy up $600 billion of mortgage debt. And rates for 30-year fixed mortgages are falling below 5 percent – the lowest in 50 years – but many home owners will have trouble doing the deal.

Having at least 20 percent equity in a home is important. A credit score of at least 720 and a debt ratio that is less than 43 percent are both essential.

Jumbo mortgages are still expensive. A 5/1 adjustable-rate with an initial interest rate for five years and an annual reset is averaging 6.6 percent. Traditional 30-year fixed are at 7.49 percent. Home owners in this situation may have to just ride it out.

Source: Business Week, Lauren Young (12/22/08)

Pointers for Etiquette-Savvy Holiday Tipping

By Heidi Stevens

RISMEDIA, Dec. 22, 2008-(MCT)-If you’re looking for ways to cut back this season, holiday tipping might seem like a logical place to start.

We checked with the Emily Post Institute’s Lizzie Post, great-great-granddaughter of Emily Post, to see if crossing the newspaper guy and hair stylist off your give-to list passes muster.

“It’s perfectly OK, if you can’t afford to give to every service person, that you scale back,” she says. “But you must at the very, very least write a thank-you letter for the service they’ve provided all year for you.”

Holiday tipping, after all, is really holiday thanking, Post reminds. And it would be awfully Scrooge-like to forget your manners in the season of giving.

There are instances, however, when a thank-you note is not enough.

“For people you’re close with who are in your home on a weekly or daily basis-taking care of a parent or elderly relative, caring for your children-you still need to look into giving them a gift,” Post says. “If you can afford to keep an au pair or nanny on hand, then you should be able to afford to give them a holiday tip.”

If you’re looking for some hard-and-fast guidelines, the institute has updated its annual holiday etiquette chart for the realities of 2008.

Some main points:

If you tip regularly throughout the year at the time of service, feel free to forgo an end-of-the-year tip, or just give a small gift.

When deciding whether or how much to tip, consider the quality and frequency of the service, the number of years you’ve been using the service, your relationship with the provider and where you live-tipping tends to be higher in larger cities.  You can always call the front desk of an establishment and ask what is accepted by the company and also what tips or gifts they typically see.

For most professionals (hair stylist, personal trainer, pet groomer, housekeeper, dog walker), the cost of one session or service is an appropriate tip.

Recommendations for child-care providers: one week’s pay for a live-in nanny or au pair; $25-$70 for each staff member of a day-care center; one evening’s pay for a regular baby-sitter. A small gift from your child is also a nice touch in each case.

And don’t forget the newspaper delivery person ($10-$30); building superintendent ($20-$80); doorman ($15-$80); garage attendants ($10-$30); and yard worker ($20-$50).

Remember that mail carriers are prohibited by the U.S. Postal Service from accepting currency of any kind (cash, checks, gift cards) or any gift worth more than $20.

Don’t give your kids’ teachers cash. A small gift is a token of appreciation, but anything more sets up an awkward quid pro quo situation.

© 2008, Chicago Tribune.

Avoid Holiday Theft

Although we'd like to believe the holidays bring out peace on earth and good will towards men (as the Christmas carol goes), the weeks between Thanksgiving and New Year's Day tend to be a prime season for criminals. During this busy time of year, you can take some easy precautions to prevent becoming a victim of theft. Consider the following safety tips:

When holiday shopping:

• Don't park in unlit areas at night.
• Put your shopping bags in your trunk.  Don't try to cover items on your seats with a blanket.  Better yet, take your packages straight home after a shopping spree and then go back out.
• Don't carry large amounts of cash with you, or else, keep it in your front pocket not in your purse or wallet.
• Be extra careful when carrying a purse - they are the prime targets of criminals in crowded shopping areas.  If you must carry one, make sure it has a strap that can go over the shoulder and be held under the arm, making them more difficult for purse snatchers to grab.
• Keep a record of all of your credit card numbers in a safe place at home.
• Beware of strangers approaching you.  This is the time of year when thieves may try various methods to distract you with the intention of taking your money or belongings.

At home:

• When leaving home for an extended time, have a neighbor or family member watch your house and pick up your newspapers and mail.
• Leave a light on when you leave your home at night or put your lights (including Christmas lights) on an automatic timer.
• Make sure your holiday gifts are not visible through the windows and doors of your home.
• Never say you are away from home on the outgoing message on you answering machine or voice mail.  Simply say you are unable to get answer the phone at the time.

During the holidays, many people can become careless and vulnerable to theft and other holiday crime.  Protecting yourself and your home from potential crime is the easiest way to ensure a safe and happy holiday season.

Take Care When Indulging This Holiday Season-By Fred Tasker

RISMEDIA, Dec. 20, 2008-(MCT)- Not to be a Grinch about it, but we are amid the most dangerous six weeks of the year, diet-wise.  Nutritionists say the average American will gain five to 15 pounds between Thanksgiving and New Year’s Day.  And before Valentine’s Day, will break his or her resolution to lose it.  Thanksgiving was the most dangerous day.  We’re allowed-almost expected-to nibble and sip all morning, eat too much, and drink too much at dinner, doze off over the game on TV, then wake up an hour later with an insane craving for a 450-calorie turkey sandwich with mayo, stuffing, and cranberry sauce.  And, a diet soda.

It’s an axiom:  There’s nothing like a big meal to make you hungry later.

There are two ways to deal with this:

First, we will give you the usual tips on doing holiday meals and parties the way your mother always told you-with moderation.

“There’s a lot you can do,” says Sabrina Candelaria, a registered dietitian at the University of Miami School of Medicine. Her advice:

- If you’re a guest, offer to bring a low-calorie dish.
- If you’re the host, offer bubbly instead of high-calorie mixed drinks, or soda water or seltzer instead of soft drinks.
- On the hors d’oeuvres tray, offer celery and carrot sticks as well as cheese balls and bacon-wrapped chicken livers.  As an elegant alternative, lay out endive leaves with a little dollop of crab on the ends.
- At dinner, offer low-cal alternatives.
- In cooking, use wine instead of cream in sauces, low-fat yogurt instead of full-fat sour cream in dips, egg whites instead of whole eggs in baking, sugar-free gelatin in the cranberry mold, applesauce for part of the oil in muffins.
- At a buffet, fill your plate moderately and then move over by the potted plant, as far as possible from seconds.

The American Heart Association offers more tips:

- Work on your diet for a few days in advance of the holiday feast.
- Take half a slice of pie-possibly the most-daunting act of human self-denial ever suggested.
- After the meal, take a walk. In fact, a new University of Exeter study in the journal “Appetite” says a brisk, 15-minute walk before dinner helped reduce cravings for chocolate and other addictive foods. Probably also helps you avoid that third glass of bubbly.

WebMD offers more tips:

- Eat less and exercise more, it says. Thank you “so” much. Remember those signs people used to put up on office walls that said, “Think?”
- Peruse the entire buffet line before you start filling your plate, so you don’t pile it with foods you can have any time of year.  Now, that’s a useful tip. Especially since restaurants sometimes put the cheap stuff at the front.
- Take moderate portions, it says.  Don’t you just hate moderation?
- Valuable, well-intentioned measures, to be sure. But they’re only gestures that might trim your holiday meal from 3,000 calories to maybe 2,800. (Well, there’s the additional advantage that your progeny will probably spend next Thanksgiving at their other grandma’s house.)

The second approach is to enjoy dinner in all its Reubenesque rotundity, its Botero-like bounty. To stop worrying and learn to love the excess.

This doesn’t apply, of course, if you have diabetes, high blood pressure, heart disease and so on, Candelaria warns.

“If you’re otherwise healthy, I think the extra calories on one day will not hurt you.  You want to have fun, enjoy the holiday,” she says.

Only keep in mind the grim mathematics of culinary indulgence.  Go ahead and eat a 3,000-calorie meal with drinks, hors d’oeuvres, dip, chips, cake AND pie a la mode.  Then, see what you’ll have to do to work it off:  Bowl for 15 hours, mow the lawn for 8 hours, walk the dog for 40 miles-incidentally punishing Fido for your sins.

Maybe, you figure, your body will not turn all those extra calories into fat since they’re arriving all at one time?  Maybe it sloughs them off like dead skin?

Dream on, says Candelaria.  For every extra 3,500 calories you eat, your body will layer another pound of icky, yellow fat on those already dimpled thighs.  The only way to avoid it is to cut out a whole lot of calories the day or two after, or maybe 500 a day for the next week.  That’s a Big Mac a day.

© 2008, The Miami Herald

Curb Appeal Matters Now More Than Ever, Say Realtors 

RISMEDIA, Dec. 4, 2008-For the second year in a row, Realtors® report that exterior remodeling projects return the most money as a percentage of cost, as detailed in the 2008 Remodeling Cost vs. Value Report.

On a national level, wood deck additions and all types of siding replacements - upscale fiber cement, midrange vinyl, and upscale foam-backed vinyl - returned more than 80% of project costs upon resale. Of these, the most profitable project was upscale fiber cement siding, which recouped 86.7% of costs, followed by wood decks at 81.8%, midrange vinyl siding at 80.7%, and upscale foam-backed vinyl siding at 80.4%.

“Because today’s buyers have much more to choose from in the way of inventory, any home for sale must make a positive first impression,” said National Association of Realtors® President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “As a trusted source for real estate information, Realtors® understand what attracts and motivates their buyer clients, which is why the results of this year’s Cost vs. Value report underscore the importance of curb appeal in the buyer’s eye.”

The 2008 Remodeling Cost vs. Value Report compares construction costs with resale values for 30 midrange and upscale remodeling projects comprising additions, remodels and replacements in 79 markets across the country, expanding from 60 markets last year. Data are grouped into nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 11th consecutive year that the report, which is produced by Hanley Wood, LLC, was completed in cooperation with REALTOR Magazine, as Realtors provided their insight into local markets and buyer home preferences within those markets.

In addition to wood decks and siding, window replacements and kitchen remodels also returned a relatively high percentage of remodeling costs on a national basis. All types of window replacements - upscale and midrange wood and upscale and midscale vinyl - returned more than 76% of costs. A major midrange kitchen remodel returned 76.0% of project costs, while a minor midrange kitchen remodel returned 79.5% of costs.

On a national level, bathroom remodels, while still a relatively good investment, do not return as high a percentage as in previous years. A midrange bathroom remodel was estimated to return 74.4% on resale, comparable to a midrange attic-to-bedroom conversion, at 73.6% of costs recouped, and a midrange basement remodel, at 72.7% of costs recouped.

As in last year’s report, the least profitable remodeling projects in terms of resale value were home office remodels, sunroom additions, and back-up power generators, returning only 54.4%, 56.6%, and 57.1%, respectively, of project costs.

Although most regions followed national trends, the regions that consistently were estimated to return a higher percentage of remodeling costs upon resale were the Pacific region of Alaska, California, Hawaii, Oregon and Washington; the West South Central region of Arkansas, Louisiana, Oklahoma, and Texas; the East South Central region of Alabama, Kentucky, Mississippi and Tennessee; and the South Atlantic region of the District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia.

The regions that generally returned the lowest percentage of costs were New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont), East North Central (Illinois, Indiana, Michigan, Ohio and Wisconsin), West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota), and Middle Atlantic (New York and Pennsylvania).

McMillan explained that the resale value of any given remodeling project depends on a variety of factors. “A home’s overall condition, availability and condition of surrounding properties, location, and regional economic climate are all factors that will influence the value of any remodeling project,” he said. “That’s why it’s important to consult with professionals like Realtors in your area when you want to enhance the value of your home. Realtors see hundreds, if not thousands, of homes every year with their buyer clients and can provide valuable insight into what projects and improvements will make a difference with buyers in your area.”

Results of the report are summarized in the December 2008 issue of REALTOR® Magazine. The issue also includes examples of actual remodeling projects that were less expensive than many of the report’s cost estimates. Full project descriptions, as well as national, regional and local project data for the 79 cities covered by the report will be posted at www.costvsvalue.com by December 5. “Cost vs. Value” is a registered trademark of Hanley Wood, LLC.

Mortgage Forgiveness Debt Relief Act Details

Home-selling Strategies by Chris Kaucnik and Michael J. Greenen

RISMEDIA, Dec. 2, 2008-No matter the circumstances, there’s a lot of stress a homeowner goes through in a foreclosure or a short sale.

Brief Background

Prior to December 2007, if a homeowner lost his house due to a bank foreclosure, and the bank forgave any difference between the price it was sold for and what was owed, the homeowner would owe additional income tax on that portion. Yes, it’s hard to believe, but true.

Let’s say the homeowner owed $300,000 on the mortgage, but the foreclosure sale only brought in $200,000. Then the bank forgave the $100,000 shortfall. The homeowner would have been liable for the income tax on the $100,000 debt forgiveness from the bank.

The IRS considered this money effectively paid to the homeowner, and it would be taxable in their top bracket.

Now, because of the unique stresses in the housing industry lately and on our whole economy, in December 2007, Congress stepped in to provide temporary relief in the form of forgiving this debt, but only for the 2007, 2008 and 2009 tax years. After that, the old rule applies again.

To be eligible for this tax relief, the mortgage must be for your principal residence. It does not apply to vacation, investment or other properties. And no more than $2 million of forgiven debt can be excluded from taxable income.

Home Equity Loans

Another very important detail in this temporary tax break is if part of the forgiven debt was a home equity loan and used for purposes other than to build, buy or substantially improve the property, that portion is still taxable. In other words, home equity loans used for vacations aren’t included.

Short Sales

Now, what happens in a short sale? In brief, this can occur when a borrower is behind on the mortgage payments and the lender agrees he can sell his house for less than what is owed on the mortgage. But all proceeds must be turned over to the bank.

The portion of the mortgage the bank forgives, plus any commission expenses or other selling costs, are taxable income if this debt is canceled. Yes, even the commission and selling expenses count.

A homeowner can now receive a $250,000 (single) and $500,000 (married) capital gain exclusion on the sale of their primary residence.

While $7,500 capital gains tax is surely a lot less than the $100,000 canceled by the lender, the homeowner may not think of this or be aware it could happen down the road, perhaps just prior to retirement. And capital gains taxes are always subject to change.

Mortgage Insurance Affected

It is important to also note this act extended mortgage insurance as an itemized deduction all the way through 2010. Yes, there’s a restriction. The mortgage contract has to be entered into between December 31, 2006 and January 1, 2011.

Has Fido Been Naughty or Nice?

By Sandra M. Jones

RISMEDIA, Dec. 18, 2008-The Grinch may not be able to save Christmas, but maybe his little dog can.  Shopping centers are turning to an increasingly popular method for bringing consumers to the mall:  pet nights with Santa.

They’re setting aside time for pet lovers to have their pet’s photo taken with Santa Claus. Some malls have gone so far as to provide snowflake sweaters for Fluffy and reindeer ears for Mr. Fido, so they can look their best for their holiday moment.

Santa has been known to pose with a wide range of pets, from dogs and cats to ferrets and lizards.

Big-box pet stores have been offering photo opportunities with Santa for years, but malls have been slower to catch on.

“In the past there was hesitancy to have it because of restrictions in the shopping environment, but we know now pets are just as important for many people as their children,” said Wally Brewster, senior vice president of marketing and communications at Chicago-based General Growth Properties Inc. “Where people would dress up their child to get a picture with Santa, they’re now dressing up their pets.”

General Growth is hosting holiday pet nights at more than 150 malls nationwide, including at Northbrook Court in Northbrook and Spring Hill Mall in West Dundee. Yorktown Center in Lombard and Gurnee Mills in Gurnee also are hosting pet nights this month.

Malls also are making picture-taking more comfortable for Santa. The latest development: lap pads to guard against accidents.

Copyright © 2008, Chicago Tribune

In response to the Federal Reserve's cut in the federal funds rate to near zero, Freddie Mac reports that the 30-year fixed mortgage rate fell to 5.17 percent during the week ended Dec. 18--down from 5.47 percent last week and the lowest since the survey's inception in 1971.

Interest on 15-year fixed loans slipped to 4.92 percent from 5.20 percent.

Meanwhile, the five-year hybrid adjustable mortgage rate dropped to 5.6 percent from 5.82 percent; and the one-year ARM dipped to 4.94 percent from 5.09 percent.

A year ago, the 30-year fixed rate stood at 6.14 percent, the 15-year fixed rate at 5.79 percent, the five-year hybrid ARM at 5.9 percent, and the one-year ARM at 5.51 percent.

Source: The Wall Street Journal, Steve Kerch (12/19/08)

Fed Cuts Interest Rate to Historic Low 

By Kevin G. Hall

RISMEDIA, Dec. 18, 2008-(MCT)-By cutting its benchmark lending rate to historic lows Tuesday and promising to combat the U.S. recession head-on and aggressively, the Federal Reserve served notice that more unconventional actions probably are ahead as it fights to reverse the nation’s economic woes.

The Fed pushed its federal funds rate from an already low 1% to a target range of 0 to 0.25%. This marks the lowest point ever for this target rate, which banks charge each other for overnight loans. The funds rate serves as a benchmark for a wide range of loans in the U.S. economy.

The Fed’s rate cut was larger than expected, and highly unusual, as the Fed usually targets a specific rate instead of a range. The move highlighted the Fed’s determination to act aggressively along with the reality that the U.S. recession is deepening rapidly.

Evidence of that came from the Commerce Department, which reported that housing starts fell 19% in November and 47% on a year-over-year basis. New residential construction has fallen to levels not seen in almost half a century.

In theory, the Fed’s action should reduce the cost of borrowing for consumers and businesses, since the prime rate-what banks charge their best customers-moves in tandem with the federal funds rate.

The prime rate typically influences rates for car loans, student loans, credit cards and other debt. With Tuesday’s cut, the prime rate is expected to fall to 3.0 to 3.25% from 4%.

However, despite the attractive rates, banks aren’t lending to most consumers and businesses. Weak financial institutions continue to hoard cash and build their balance sheets, with little appetite for risk in new loans. That’s worsening the economic downturn, especially since it hurts consumers, who drive almost two-thirds of U.S. economic activity.

In a statement, the rate-setting Federal Open Market Committee said: “The outlook for economic activity has weakened further … the Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability.”

The vow to deploy “all available tools” sparked a rally on Wall Street. The Dow Jones industrial average shot up 359.61 points to close at 8924.14, while the S&P 500 finished up 44.61 points to 913.18 and the Nasdaq added 81.55 points to end the day at 1589.89.

A senior Fed official, briefing reporters late Thursday on the condition of anonymity in order to speak freely, said that a rate range was chosen because the real federal funds rate-what banks actually charge-has been well below the Fed’s target in recent months.

The Fed’s statement said that “weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.”

The Fed has little room left to maneuver on interest-rate policy now and will use other tools.

“They are saying that they have unlimited arrows. As the central bank of the United States, it is the only entity that can write checks on itself without limit, and that’s a very powerful weapon the Fed has against the downturn,” said Marvin Goodfriend, a former research director at the Federal Reserve Bank of Richmond who’s now an economics professor at Carnegie Mellon University in Pittsburgh. “It won’t work immediately, but if it is used aggressively, it will work.”

Chief among those other tools is to keep lending aggressively; the Fed’s balance sheet already has gone from about $800 billion to $2.2 trillion as it pulls out all the stops to confront the worst financial crisis since the Great Depression.

Fed Chairman Ben Bernanke next can scale up existing Fed lending facilities or create new ones, Goodfriend said. The Fed statement said that the central bank was weighing the possibility of purchasing long-term Treasury bonds, which would drive down their yield and make other investments such as corporate and municipal bonds more attractive.

“The Fed did it before in the 1940s and it could do it again,” said Vincent Reinhart, a former chief economist of the Fed’s rate-setting body who’s now a scholar at the American Enterprise Institute, a conservative policy institute in Washington.

The Fed’s statement also said that it will extend credit to households and small businesses early next year. Other experts think that the Fed will increase its purchases of troubled assets to unclog credit markets.

“The Fed’s next step is to ramp up its purchases of various financial securities to bring down borrowing costs to households and businesses,” said Mark Zandi, the chief economist for forecaster Moody’s Economy.com in West Chester, Pa.

The Fed already has become the buyer of last resort for financial products that aren’t moving in today’s frozen credit markets. It’s bypassed banks and is purchasing short-term promissory notes issued by big U.S. corporations, called commercial paper. It’s also announced plans to buy pooled car loans, student loans and credit card debt, collectively called asset-backed securities.

In another creative step to boost the housing market, the central bank also has been purchasing pooled mortgages-called mortgage-backed securities-and debt issued by Fannie Mae and Freddie Mac, the mortgage finance giants that the government seized in September. The senior Fed official said that efforts to purchase mortgages backed by Fannie Mae and Freddie Mac were being ramped up.

The Fed will take additional aggressive steps along those lines in the weeks and months ahead, Zandi predicted.

“They will soon be buying long-term Treasury bonds and will then branch out to high-grade corporate bonds, private-label mortgage securities, asset-backed securities and, if conditions get particularly bad, corporate equity,” he said. “The Fed has the ability to purchase just about anything, and they will do so if they think it will help unfreeze credit markets.”

The Fed got a bit of good news Tuesday before its announcement, when the Bureau of Labor Statistics reported that inflation fell in November. The BLS said that consumer prices fell 1.7%, the second straight month with a record decline in inflation.

On a year-over-year basis, consumer inflation rose 1.1% from November 2007 to last month.

© 2008, McClatchy-Tribune Information Services

Is Your Property Tax Bill Too High?

Income tax, sales tax, estate tax, excise tax, alternative minimum tax...and just when you thought you'd paid them all...along comes your property tax bill as a homeowner.  But did you know that the National Taxpayers Union estimates that as many as 60% of homes are assessed for too high of a value, resulting in an incorrectly larger property tax bill?  Chances are good you might be in that group of people paying too much, so taking the time to review your property tax bill could save you a nice chunk of change.

The good news is that it's easy.

First, contact your local tax assessor's office and ask for someone in the reassessment area.  Find out when appeals are heard, and how the process for submitting a property tax appeal works.  Additionally, ask for a copy of your property card.  Review the card and confirm that the basic information about your property is correct.  For example, is the square footage and number of rooms for your home accurate?  If the number is incorrect, the county may change the assessment without a formal appeal.  If everything on the property card is correct but the assessed value still seems too high, your next step is to gather the following documentation to support an appeal.  And don't be surprised if the assessed value is lower than what you think the market value for your home is--many counties use a formula which uses a percentage of market value to determine assessed value.  Ask what the formula is, because an assessment which is less than market value still might be too high.

If you have a current appraisal that supports the value being lower using recent market-value information, many counties will accept a copy of the appraisal with the appeal.  If the appraisal is outdated, you can order a new one--just call me for a referral to a great appraiser.  You can also visit the local assessor's office or search online, and look through the public records for other homes that have similar features to yours, but have lower assessments.  Additionally, contact a great REALTOR® like me (jerrybailey@seacoastrealty.com) who knows your area.  I can provide you current market information for your neighborhood, and help you see how your market value and assessed value stacks up against your neighbors'.

Submitting an appeal is generally a fairly simple process, but make sure to take the time to fill out all forms in advance and be prepared with your documentation if there is an in-person hearing that needs to take place.

More good news - according to the National Taxpayers Union, about 33% of property tax appeals succeed!  Taking the time to review the accuracy of a tax bill could easily save you hundreds of dollars per year, adding up to thousands of dollars during the time you own your home.  Please feel free to contact me for more information on this money-saving tip.

FOX News Poll: Merry Christmas or Happy Holidays?

Do you say Merry Christmas or Happy Holidays?

For some people it's a dilemma: 21 percent say they feel obligated to say "Happy Holidays" -- incorporating Christmas, Hanukkah, Kwanzaa and, perhaps, the Winter Solstice or the Seinfeldian Festivus into their seasonal hello.

But they are still a considerable minority. A full 77 percent of Americans say they say "Merry Christmas," according to a FOX News poll released Tuesday.

Democrats (28 percent), urbanites (28 percent) and Northeasterners (25 percent) are among those more likely to say they feel pressured to use a generic "Happy Holidays" greeting.

On the flip side, Republicans (87 percent), regular churchgoers (82 percent) and rural Americans (83 percent) are more likely to say "Merry Christmas," the poll found.

The Gift That Keeps On Giving

If a present you receive this year looks vaguely familiar, it could be because you've seen it before — as a gift you gave in the past.

In these tough economic times re-gifting, the art of giving someone a gift you were given previously, is on the rise.

Some 19 percent — about one in five Americans — say it is likely they will re-gift something this holiday season, up from 12 percent in 2005, according to the FOX News poll.

Re-gifting has broad appeal across income groups, although those living in households making less than $50,000 dollars a year are somewhat more likely to re-purpose a gift: 24 percent compared to 17 percent of those living in households with incomes of $50,000 or more.

Even 19 percent of those living in households earning $100,000 dollars a year or more say they will re-gift something this year.

Women (21 percent) are slightly more likely than men (16 percent) to say they will re-gift.

Opinion Dynamics Corp. conducted the national telephone poll of 900 registered voters for FOX News from Dec. 9 to Dec. 10. The poll has a 3-point margin of error.

Nearly half overall, 45 percent, say they plan to spend less on gifts this year — more than six times as many as plan to spend more (7 percent). A 48 percent plurality say they plan to spend about the same amount this year compared to last.

There is little difference among income groups, as 47 percent of those in households with income below $50,000 and 45 percent of those in higher income households ($50,000+) say they plan to spend less this year. Similarly, 7 percent of lower income and 6 percent of higher income Americans plan to spend more on gifts.

Democrats (55 percent) are significantly more likely than Republicans (35 percent) and independents (39 percent) to say they will spend less.

Most agents make it a point to tell you that they are the smartest Real Estate Professional ever.  But where is all of the information to back it up?  I would rather give you all the information you need to make an informed decision when it comes to buying or selling your home.  I love working with informed clients.  I find that our transactions go much more smoothly when we all understand the process and we are all on the same page.  Here are just a few things that I wanted you to know about Real Estate.

These are all very basic real estate facts.  If you are interested in learning more about real estate or if you are thinking of buying or selling a property, feel free to contact me.  I'd love to help you with your next transaction.

Foreclosure Activity Decreases 7% in November, Still up 28% from 2007

Study Shows Housing Values Have Climbed

News reports have been packed with stories about declining home values, but a recent government report shows that the situation is not nearly so dire as some reports make it sound.

Despite big loses in some areas of the country, the majority of markets continue to show growth in home value over the last five years.

According to the third-quarter survey released by the Federal Housing Finance Agency, out of 292 metropolitan markets, 273 showed positive net home values in the last five years. Only 19 percent were negative.

While home values declined 4 percent on average in the last year, values were up nearly 29 percent over the past five years.

According to the Federal Housing Finance Agency, markets that gained the most over the last five years were:

• Honolulu: up 78.7 percent
• Virginia Beach: 72.6 percent
• Flagstaff, Ariz.: 66.5 percent
• Bellingham, Wash.: 65.6 percent
• Wilmington, N.C.: 62.1 percent
• Baltimore: 60.6 percent

Source: The Washington Post Writers Group, Kenneth R. Harney, (12/06/08)

Click on this link for information regarding the First Time Homebuyer Tax Credit signed by President Bush on July 30, 2008.

First Time Homebuyer Tax Credit

For more information as to how this tax credit would apply to you, please contact your mortgage lender or your accountant.

Our mortgage experts from Alpha Mortgage at Sea Coast have calculated the difference in payment from a 4.5% mortgage and a 5.25% mortgage.  The difference in payment from 5.25% (which is about where we are now with a 1% origination fee) vs the hypothetical dream scenario of 4.5% is $91/mo difference on a $200k loan amount.  Of course, interest rates matter, but interest rates are at basically generational lows right now.  Clients need to be careful in getting too greedy hoping for the magical 4.5% rates.  The same can be said for housing prices in the Wilmington area.  There are no guarantees prices are going to be headed much lower than where they are right now especially if the property was priced right originally.  If you are seriously considering making a property purchase, now is a great time to get the ball rolling! 

Mortgage Interest Rates are finally beginning to fall.  During the past week couple of weeks, interest rates have fallen to a national average of 5.53%.  Realogy, the parent company of Coldwell Banker, Century 21, ERA, and Better Homes and Gardens Real Estate is working with Congress in an attempt to get mortgage interest rates down further in an effort to stimulate home sales and to reduce inventory.