Consider a Vacation Home for Fun Times, Investment Returns

by admin on May 31, 2011

Glorious summer days at the lake…the grandkids frolicking at the shore…or a warm fireplace as you wait for the perfect powder at your ski retreat. A vacation home builds memories and it can be a great investment.

In most vacation hot spots, second-home prices are at five-year lows. Some in California and Florida can be had for 47 percent below their 2006 price. Bargains are likely to be available within a couple of hundred miles from where you live.

* There’s more to a vacation place than fun and up-front bargains. In the future, the home will be an appreciating asset. Economists say prices are already rising and will continue to rise for at least the next five years.

* The home is a better deal if it’s rentable. The rental potential puts money in your pocket, but it also increases resale value.

* The typical vacation property rents out about 17 weeks a year, according to HomeAway.com. Ask a property management company how much comparable properties rent for by the week. While the rent won’t pay all your expenses, it will help with the mortgage, utilities, taxes and maintenance.

* You will meet and become friends with an entirely new group of people when you own a vacation home. Lifelong friends are made with neighbors and in the community.

* You’ll have tax benefits. Rent it out for less than two weeks, and you won’t have to report the income to the IRS.

* If you rent the home for two weeks or more, you can deduct operating costs, such as maintenance, cleaning, mortgage interest and property tax. You allocate the write-off between personal and rental use.

* As with any rental property, distance is important. Less than 200 miles from your primary home is best.

Finance
* When the property is classified as a second home, you’ll get about the same interest rate and terms as on a home loan, according to HSH Associates.

* If you need the rental property income to qualify for a mortgage, it will be classified as an investment property. The down payment will be higher and the interest rate will be about 1 percent more.

Six Unobvious Reasons to Recycle

by admin on May 26, 2011

1. Protect your home from hazardous waste. The average American home accumulates up to 20 pounds of hazardous waste each year. Even more frightening, usually 100 pounds of waste is stored in cabinets, the garage, closets, basements, and other storage spaces in the average home.

2. Help the community and local job options by donating to the Goodwill, which collects electronics as well as most other things, to recycle or sell. They use the profits to help fund job training and employment opportunties in the local community.

3. You can hold a recycling event as a fundraiser for one of your favorite causes (a local school, sports league, church, etc.) with the help of www.recyclingforcharities.com

4. According to the Environmental Protection Agency, American households own an average of 24 electronic products that could be potentially donated or recycled. 85% of them end up in landfills instead.

5. Recycling is less expensive than sending trash to a landfill. According to www.ecocycle.org, recycling instead of landfilling saves $55 per ton, saving you money, along with the environmental benefits.

6. Stimulate the economy by creating jobs. Eco-Cycle states that “or every one job at a landfill, there are ten jobs in recycling processing and 25 jobs in recycling-based manufacturers. The recycling industry employees more workers than the auto industry.”

Tagged as: cleaning, energy, environment, recycling, resources

This Week’s Market Commentary

This week brings us the release of four pieces of relevant economic news in addition to the minutes from the most recent FOMC meeting.

None of the economic reports are considered to be highly important to the markets or mortgage rates, but they do carry enough significance to influence mortgage rates if they show a wide variance from forecasts.

Nothing of importance is scheduled for today, so look for the stock markets to be a major influence on bond trading and mortgage pricing. If the stock markets open the week with sizable gains, bonds will likely suffer and mortgage rates will probably move higher tomorrow. However, more stock weakness could translate into slightly lower rates tomorrow. The mortgage market took a small turn for the worse Friday afternoon, so unless your lender revised pricing higher late Friday you may have a slight increase in rates waiting for you.

The week’s first data comes early Tuesday morning when April’s Housing Starts will be posted. This data measures housing sector strength and mortgage credit demand by tracking newly issued permits and actual starts of new home construction. It is expected to show an increase in new starts from March’s readings. Since this report is not considered to be of high importance to the bond market, it likely will have little impact on mortgage rates unless it varies greatly from forecasts.

The second report of the day is April’s Industrial Production at 9:15 AM ET. It measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.5% increase in production, indicating that manufacturing activity is growing.

A smaller than expected increase in output would be good news for the bond market and mortgage rates because it would indicate that the manufacturing sector is not as strong as thought. This report is equally important to the markets as the earlier housing report, so they both will likely need to show unexpected strength or weakness for them to cause a sizable movement in mortgage rates.

Wednesday’s only relevant release is the minutes of the last FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy and economic growth. The goal is to form opinions about when the Fed may make a move to key short-term interest rates. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during afternoon trading.

The National Association of Realtors will give us their Existing Home Sales report late Thursday morning. This data tracks resales of homes in the U.S. during April, giving us a measurement of housing sector strength. This type of data is relevant because a weakening housing sector makes a broader economic recovery less likely. Current forecasts are calling for a small increase in home sales between March and April. Ideally, the bond market would prefer to see a decline, indicating further housing sector weakness. A large increase in sales could lead to bond weakness and a small increase in mortgage rates Thursday morning.

The last data also comes late Thursday morning with the release of April’s Leading Economic Indicators (LEI). This Conference Board report attempts to measure economic activity over the next three to six months. It is expected to show no change from March’s reading, meaning that economic activity is likely to remain flat over the next few months. A decline would be good news for the bond market and mortgage rates, while an increase could cause mortgage rates to inch higher Thursday.

Overall, it looks like we may see a fairly calm week in mortgage rates unless something unexpected happens or the stock markets make a big move upward or downward. I can’t really label one particular day as the most important one. If the stock markets remain fairly calm, I would guess the middle part of the week will probably be the most active for mortgage pricing. However, sizable gains or losses in the major stock indexes could influence bonds and mortgage rates more than this week’s economic data can.

Tagged as: market commentary

How to Get Finances Back on Track After Being Unemployed

If you are back in the workforce after a layoff, you might be wondering how to address financial issues.

 

For many re-employed people, a new paycheck might not solve all money problems. According to a survey by CareerBuilder, among workers who were laid off in 2010 and found new jobs, 61 percent took pay cuts.

With money tight, pay attention to urgent expenses first.

Attend to maintenance on your home and car. If you put off medical care for yourself and your family, that should be attended to. Advisors for Money magazine say it’s important to get the basics back on track.

The next priority is paying off credit card debt you have accumulated, paying more on the card with the highest interest rate first. Big credit card debt can harm your credit rating.

Paying off a home-equity line of credit is less urgent. The interest is tax deductible. Since the debt is secured, it won’t affect your credit score very much.

Since you have probably used all or most of your cash reserves, it’s important to rebuild them at the same time. If you have $500 a month in discretionary money, advisors recommend that you put $300 toward debt and $200 toward savings.

Next comes your retirement fund. Even if you can only manage a very small amount, contribute to your new company’s 401k plan right away.

If you don’t have enough cash to save and pay down debt, plus put a small sum into your retirement plan, it might be wise to refinance your mortgage. Especially if you have significant home equity, it will be easier to do now that you are employed.

Once you have met these goals, you will have more money to put into living life instead of playing catch-up.

Tagged as: budget, finance

5 Things to Think About When Looking for Your Dream Home

While on the hunt for a perfect home, it can be immensely helpful to create a wish list of sorts. This can help you and your real estate agent obtain a clear picture of what type of home would best suit you.

Some things to consider:

1. Move-in ready or fixer-upper?

Making a home “your own” can make fixer-uppers an attractive option, along with the lower cost. Making a mark on your new home via renovations. Take some time to think about what homeownership means to you, and whether you are interested in renovation.

2. Upgrades
Certain upgrades in a home, such as marble or granite counters, are often coveted by buyers. Consider what type of upgrades are important to you – energy-efficiency, professional grade appliances, luxury tiling? Make a list and show your Realtor.

3. The Yard
What type of backyard are you looking for, and how important is it to you? Think about low versus high maintenance yards, the amount of space you’d like, and what kind of yard would best suit your lifestyle.

4. Swimming Pools
For some homebuyers, having a swimming pool can be a dealbreaker. If this is something that you really desire in your dream home, make that clear to your real estate agent so that they can narrow the search for you.

5. Schools in the Area
Last but certainly not least, the quality of the schools in the area of a dream home should be an important thing to research. Ask your Realtor for information about schools in the area of your search, and comparisons between them. This information is easily obtained, and real estate agents will be more than happy to show you school scores and more. Also consider private schools, if that is an option for your family.

Tagged as: home ownership, homebuyers, real estate