Fed Cut is Good News for Those Who Act Fast

Fed Cut is Good News for Those Who Act Fast
Today the Fed announced its second consecutive decrease in rates, cutting another 0.25% from the Fed Funds Rate. This change could directly impact millions of American borrowers.

Are you one of them?

Adjustable Rate Mortgages
If you currently have an ARM that is scheduled to reset in the next 14 months, then today's news is good for you. Now is the time to investigate your options. Even if you have a pre-payment penalty or you're behind in your payments, don't delay. There may still be options available to get you out of your ARM and into a mortgage you can afford, including FHA or the new FHASecure program introduced by the President.

Important: The FOMC does not meet in November, so ask yourself this: Can you really afford to roll the dice until its next meeting in mid-December?

Buying at the Bottom of the Market
If you're looking to invest in real estate in the next six to twelve months, and recent rate cuts have inspired you to start taking action, now is the time to prepare yourself for intense credit scrutiny. There are a lot of great real estate deals to be had today. But if your credit doesn't stand up in today's tight-fisted credit environment, then you could easily miss out on an exceptional opportunity.

What's the point of taking advantage of discounted home prices if you can't qualify for the right mortgage or interest rate that makes it all worthwhile? Get pre-approved now and know exactly what you can afford. And with the right REALTOR® on your side, you can have incredible negotiating power in a buyers' market!

Refinancing – Know Your Options
While rate cuts often spark ideas of refinancing, this may not be the best choice for everyone. In some cases – especially in a market where home values are declining – refinancing may be impossible or disadvantageous. Call me today for a free mortgage review. Based on your individual goals and financial needs, we can explore every available option for you and your family.

I look forward to hearing from you soon.

Wow what a week

Wow what a week! I hope you are continuing to see an increase in activity this week! This week the stock markets lost some ground, but remember that’s good for anyone looking for a mortgage. We reduced interest rate by about .125% basically across the board. Mortgage bonds are touching their highest levels in months and it’s a GREAT TIME TO LOCK IN before losing ground!

I continue to look forward at the next fed meeting on October 31st where we’ll learn what the fed decides to do: lower rates or keep them the same. Economists think rate cuts are still to come in the next 3 meetings!

Need helping getting buyers off the fence? Call me today to give you one of my strategies to help you open more escrows!

Practical Financial Tips Q3 2007

Oil Prices Heat Up
Despite oil's recent rally into record highs, the U.S. Energy Information Administration (EIA) predicted that "increased supply and lower seasonal crude demand in the United States" will likely lead to "crude prices easing slightly over the winter" in its monthly Short-Term Energy Outlook report.

While the EIA's research seems to suggest lower prices for consumers at the pump, the report was far less positive for consumers of U.S. heating oil. Prices for this commodity are expected to increase sharply due to "colder winter" conditions predicted by the government. Americans who utilize natural gas to heat their homes should anticipate increases as well.
Opt for a Better Deal
Cars these days have a dazzling array of extra bells and whistles that really add nothing but zeros to the car's price tag. Following are a few expensive extras that most drivers could probably do without.

Automatic Stick Shift: Beyond adding $1,000 or more to the price, this useless feature allows the driver to "shift" gears without a clutch. The car, however, has an automatic engine and will shift on its own either way. Purely for show, this feature quickly loses its appeal.

Individual Climate Control: This expensive feature claims to allow the driver and passenger to control the temperature of his or her own "zone". But how much more effective is this feature than individually controlling the vents and windows?

Keyless Ignition: With this $300 to $500 feature, a driver can start the engine with the push of a button. For this to work seamlessly, however, a key fob must be on the driver at all times. At least with a key, you can always call a locksmith if you lose it.

Power Folding Seats: Up to $700 or more! Enough said.

Navigation System: You can save $1000 or more by skipping the factory-installed system and purchasing a quality portable one that you can use in any car.

Loophole for Telemarketers
Thanks to the Federal Trade Commission's Do Not Call Registry, 150 million Americans have enjoyed far fewer unwanted sales calls over the last few years. It hasn't been perfect, but progress has clearly been made due to this important program.

But, just when you thought it was safe to eat dinner with your family, the telemarketers may be back in your life for good when your 5-year Do Not Call Registration expires in June 2008.

The good news is, you can always re-register for another five years, and continue to enjoy the peace and quiet. Simply call 1-888-382-1222 or visit www.donotcall.gov to register any or all of your home and cell phone numbers. Don't forget. Telemarketing companies are counting on millions of Americans to drop the ball. Don't be one of them.

Home Sweet Deals
When it comes to real estate, foreclosures aren't the only big story in the news. Builders and sellers are reportedly offering huge savings and massive incentives in order to pull in buyers and compete in today's marketplace.

Business Week recently revealed that some big builders have been auctioning homes discounted by as much as 50% in selected markets, while other large builders have been providing up to $100,000 in savings and incentives. Many individual sellers are getting in on it, too, by offering incentives like special financing, plasma TVs, vacations, and even motorcycles, cars, and boats.

But, be wary. While there are many sweet deals to be found in today's market, there are also scams, lemons, and unreliable builders, sellers, and industry professionals. Make sure that any deals or incentives you're receiving or providing make sense for your own financial goals and needs. For home buyers and home sellers, this means working with knowledgeable, experienced real estate agents and mortgage professionals you can trust.

Credit Industry Cracks Down By Linda Ferrari, President, Credit Resource Corp.

Credit Industry Cracks Down By Linda Ferrari, President, Credit Resource Corp.

With just a click of a mouse or a touch of a screen, technology has put the world at our fingertips. Not too long ago, the technology revolution even marched its way into instant credit improvement. For a large fee per account, an individual with a bad or nonexistent credit history could immediately be added to the account of a stranger with a good credit history, helping to boost the score of the high-risk borrower. Now the high-risk borrower appears to be a far better credit risk than they actually are. This is a far cry from the traditional authorized user strategy that families and spouses have been using for years.

It was an easy fix for those who needed it, but just recently, Fair Isaac Corporation, the early developer of the credit report and scoring system, determined that they will no longer allow credit points that come from "piggybacking" on another person's credit score. Their key decision deals a knockout blow to consumers and lenders who rely on instant credit building to boost scores for a home purchase or refi.

A Little Background
The instant credit building industry exploded in popularity as homeowners and buyers scurried to wriggle free from the subprime mortgage fallout. Individuals with good credit made instant cash by "renting out" their credit lines to those with inferior credit.

Fair Isaac has unceremoniously pulled the plug on allowing the inclusion of any credit history that relies on the credit histories of any parties beyond those being considered. The ruling also applies to parents who want to help their children establish a stellar credit history by hitching a ride on their parents' good credit.

I have never been a proponent of this new instant credit-building approach of buying a stranger's credit history, and I have viewed it as a Band-Aid approach, at best. I have always been a supporter of the traditional concept of the basics of credit education and improvement.

Piggybacking can be a bad idea, and here are the reasons why:

1. It's potentially dangerous.
When you become an authorized user on someone else's card, you do so because you are in desperate need of a credit boost. But what will happen to your credit if the owner of that credit has a late pay or runs up a huge balance? That will sabotage your score, and it is completely out of your control. Just as their good score can boost yours, their subsequent recklessness can sink you deeper than ever – and it's just not worth the risk.



2. It's unnecessarily expensive.
Under this new scam, piggybacking on someone else's credit requires that you pay a percentage of the credit limit of the card. People could pay thousands based on the limit. However, we all know that this makes no sense because the dollar amount of the credit limit does not factor into the scoring system. Rather, it's the percentage ratio between the balance and the limit. It's important to keep your balances below 30% of their limit when trying to improve your credit score, and under 50% when trying to maintain.

A Superior Alternative
There is a far better alternative to piggybacking credit that you can put into action right now. That alternative is a secured credit card account. (Note: A secured credit card means that you put up your own money as collateral. The amount of the limit does not matter to the scoring system, only that you use it and pay it on time.)

The only real difference between piggybacking and secured cards is that those who use the piggybacking approach will have an instant credit history of a few years or even more. Don't let this stand in your way of getting the secured card, however. While you do not have an instant credit history with it, you do establish a credit rating. The length of credit history is ONLY a part of the 15% that makes up a credit score.

Secured credit cards are helpful to new credit users, those who have filed bankruptcy, or for those who have closed all of their credit cards. Secured cards are beneficial when you have credit challenges because they enable you to have active tradelines. Remember, 30% of your credit score is made up of how you use and manage your credit card debt, so you MUST have active credit card tradelines to maximize your credit score.

Secured credit cards can have a wonderful impact on lower scores. In fact, I have seen scores increase by as much as 50+ points in the first two months when a client implements and uses a secured account. For new credit users, a score can be generated in 3-6 months.

There are hundreds of secured credit card companies on the web, but the ones to look for are the type of accounts offered by Orchard Bank. Orchard guarantees to report to all three credit bureaus every 30 days, which is important to improving your scores quickly.

If you would like to obtain a list of credit card companies who work with less than perfect credit, you may do so here.

Kids and Credit
One unfortunate fallout of Fair Isaac's crackdown on authorized users is that it makes it tougher for kids to establish credit. It used to be that kids and spouses could establish credit by becoming an authorized user on a spousal or parental account. The credit-selling scam ruined that opportunity, especially for students who are trying to build credit. The secured credit card is a perfect alternative. An equally-inviting opportunity for students is one of the many student credit cards offered. Click here for a list of companies that offer cards for students.

Long-term Credit Improvement is Easier Than You Think
If your credit score is lower than you would like, you can improve both your score and your credit for good. Improved credit management is not complicated. In fact, it's really quite simple.

Everyone can better their credit score by taking exacting and specific steps, and although it doesn't happen overnight, generally speaking, it takes 3-6 months for lasting credit improvement to start taking place. With that, it's time to get serious and to get started.

Simple Steps to Credit Improvement:
1. Start with the basics.
Order all three of your credit reports and all three of your credit scores. You are entitled under the law to a free copy of your credit report from all three credit bureaus each year when you order it from Annual Credit Report Request Service. To order, visit www.annualcreditreport.com, call toll-free 877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

You will have to pay an additional fee for the credit score from each bureau. Scan your report for any errors. Is there an account on there that you didn't apply for? Is there a company reporting a debt that is inaccurate? Are all of your credit card limits reporting? Are your balances up-to-date? Are your name, birth date and Social Security number correct?

If there are any errors on your report, no matter how small, they can lead to big problems. Not only can they inhibit you from obtaining credit, they can also keep you from getting the interest rate you deserve on your mortgage or refinance.

2. Start improving what you can immediately.
Late payments and delinquent accounts will affect your score negatively, so take care of them – the sooner, the better. If you have a good relationship with your creditor, call them to see if they'll work with you on removing a late payment. They do it all the time.

If you have past due accounts, call your creditors to see if you can negotiate a better interest rate, lower payments, or make other arrangements to pay off your debt sooner. Also, don't carry high balances on your credit cards. If you carry more than 50% of your limit every month, this reflects negatively in your score.

3. Dispute errors on your report.
Errors can appear on your credit report. These could be human error in reporting information from a creditor or one of the credit bureaus. They could even be unauthorized accounts set up in your name by an identity thief. Before you apply for a loan, you should verify the information in your credit report. If you find errors, you should correct them immediately.

Here are the 5 rules in sending dispute letters to the credit bureaus:

Rule 1: Make sure that you only send the letter to the bureau(s) that is reporting the derogatory information. Not all creditors report to all bureaus. If you send a dispute letter to one of the three bureaus that is NOT reporting the information, you take the risk of having the derogatory information added to that bureau, and your score will go down.

Rule 2: Make sure that you send everything certified so that you can prove delivery.
Rule 3: Include copies of any supporting documentation you may have to verify your claim.
Rule 4: Keeping a log of activities is very important for successful credit repair. Click here to obtain a sample log you can use.
Rule 5: Mail any disputes to the bureaus at their different addresses. Each bureau has several addresses. If your first dispute comes back without change, send it to another address for that bureau. You may obtain a list of credit bureau addresses here.

4. If you feel that the credit challenges you are facing are too much, or if you don't have the time or stamina to do the homework necessary to get the ball rolling, then it's time to consider using a professional service to help you reach your goals. I recommend that you reach out to the professional who gave you the subscription to YOU Magazine and have a frank conversation about what the next step should be on your path to good credit.

While Fair Isaac's crackdown on the piggybacking of credit may feel like an obstacle in your path to credit score improvement, don't get discouraged. There are specific ways to establish and improve credit that don't involve risky schemes and elaborate shell games. The bottom line is that you don't need to play games to boost your credit score. Real credit history and credit improvement is within your reach. Simply follow the steps I have given you, and you will go a long way toward improving your score – for good!

Setting the Right Price: Selling a Home In a Buyer's Market

Setting the Right Price: Selling a Home In a Buyer's Market

To set the right price on a home, you should combine an objective evaluation of your property with a realistic assessment of market conditions.

In good markets and bad, you are more likely to benefit by determining a fair value and sticking close to it than you are by asking an unrealistic figure and waiting for buyer response to sift out the "right" price. And in a buyer's market, setting the right price from the outset may be the only effective strategy.

You could set a fair price and then refuse to bargain. But that would deter all those people who hate to pay full price for anything and like to feel they're "getting a deal."

Better to leave a little room for negotiation by asking slightly more than you expect to get – 5% to 10% above appraised value could be a good starting point. If sales are brisk in your area, you might just end up getting top dollar.

Don't Overprice
What many sellers don't realize is that overpricing can result in their getting less for their house than if they priced it right to begin with. The reason: Knowledgeable agents and buyers often won't bid on a severely overpriced house. By the time the seller wises up, many of his best prospects will have bought other houses, decreasing demand for the now properly priced property. An overpriced house can end up being sold for less than it would have a few months earlier.

Occasionally, an agent may agree to list a property for far more than it is worth – usually at the owner's insistence. The agent knows that, if the owner is serious about selling, the price will have to come down sooner or later. But sometimes an agent who is competing against other agents for a listing will give a seller an unrealistically high estimate of value, to ensure getting the listing. After the house sits on the market awhile, the agent will suggest a new, lower price more in line with what other agents suggested in the first place.

Some sellers who don't have a deadline for selling ("unmotivated sellers," they're called) will cling for a long time to their overly high asking price – say, 20% higher than it should be. They probably won't get their asking price, and even if they do manage to sell a year later for the original price, it will be because a rising market finally caught up with their price.





They might think that they were smart to hold firm, but in fact they were naive, ignoring the time value of money. In the year (or even six months) that they clung to their high price, the rest of the real estate market probably wasn't standing still. The next home they buy may have gone up in value by at least the same margin, and possibly more.

Study the Comparables
Learn the offering and selling prices of similar properties. Find out how long each took to sell.

To be comparable, a house that sold has to be close to yours in age, style, size, condition, and location. You should also know the terms under which a house was sold. Try to find at least three comparables no more than six months old.

If you are listing your home with an agent, this kind of market research should be prepared and presented to you.

Get an Appraisal
If your idea of what your property is worth and the listing broker's recommendation doesn’t coincide, an appraisal may be in order.

Reprinted with permission. All Contents © 2007 The Kiplinger Washington Editors

Practical Financial Tips 3rd Quarter 2007

Practical Financial Tips 3rd Quarter 2007



New Law Encourages Saving
In late 2006, The Pension Protection Act was signed into law, making saving money a whole lot easier for many Americans. Well over 900 pages in length, the law not only protects pensions, it makes permanent many features introduced in the Economic Growth and Tax Relief Act of 2001 (EGTRRA), which were set to expire in January, 2011. This includes enhancements to 403(b), 457(b), and 401(k) plans, IRAs, and 529 college savings plans. With pension plans becoming more and more rare, and the uncertainty surrounding the viability of Social Security, consumers need to take advantage of what many financial experts call "generous" benefits designed to hold Americans accountable for their own retirement planning.

For instance, maximum 2007 contributions to 401(k) plans and IRAs not only increase to $15,500 and $4,000 respectively, these limits will be linked to an inflation index and could increase significantly in the future. For taxpayers fifty years and older, the contributions limits to their 401(k)s and IRAs increased to $20,500 and $5,000, respectively. There's still plenty of time to make the most of the new tax laws for 2007. Schedule an appointment with a CPA or a Certified Financial Planner, and start preparing for your retirement today.


Passport Perplexities
In January, the Western Hemisphere Travel Initiative (WHTI) imposed new passport requirements on American travelers visiting Mexico, the Caribbean, and Canada. In June, the new initiative was revised temporarily, but only for those travelers with passport applications in place. If you think this is confusing, just wait. This was just the first phase of new border security measures the State Department will introduce in the next few years.

If you're planning to travel any time in the near future, save yourself the time, money, and hassle and get your passport application or renewal in early. According to the US Postal Service, applicants can expect to wait at least 10 to 12 weeks to get through the entire process. And, considering the fact that less than 20% of Americans actually have valid passports, this problem isn't likely to go away any time soon. Even expedited service at the Post Office, which adds $60 to the current $97 price tag, may not result in your passport being processed in time to make your flight. Although private expediting services do exist and can produce passports relatively quickly, expect to pay up to $300 or more!


Outrageous Airline Fees
Once your passport finally does arrive and you're ready to book your flight, prepare yourself for a flood of new and increased fees from the airlines − especially if you don't make arrangements online.

According to CNN research, a fee of up to $75 could be added to the price of your flight if you choose a paper ticket over an e−ticket. Buy your paper ticket at the counter, and you can add another $5 to $20 fee just for talking to an agent. While you're there, don't change your flight. Rebooking could cost up to $250, depending on the airline and class of service you use. Do, however, be choosy about where you sit. A fee to reserve an aisle or exit−row seat could add a hefty $15 to $75 in fees before you even check your bag. And, speaking of that, exceed the 2 bag/50 pound bag limit at some airlines and you'll be charged anywhere from $50 to $200 in fees, depending on the price of your flight.

If you're not feeling thoroughly nickled−and−dimed yet, rent a car at the airport in some cities, and not only is insurance mandatory (even if your personal insurance covers rentals), but mandatory excise taxes can increase your bill 2%−5%, depending on which city you visit. According to Travelocity, these taxes are typically higher at airport car rentals as opposed to surrounding neighborhood companies.


Put Your Money Where Your Heart Is
Hurricanes Katrina and Rita sparked a remarkable wave of philanthropy in the U.S. Not only were billions of dollars raised for relief, investors like Warren Buffet and others gave some of the largest single financial gifts in recent history.

While few can afford to give that much away, charity of any amount can not only make you feel rich, it can also pay off in tax deductions against your income if you itemize. Be it money, clothes, furniture, vehicles, or even stocks, donations of all types can benefit you on your tax return. If you'd like more control over how your donations are spent, ask your Tax Specialist about a charitable gift fund. Immediately tax−deductible, your initial gift is liquidated and the resulting "donor−advised" account is invested tax−free and distributed over time. You then, just like Bill and Melinda Gates, give grants to any public charities of your choice! Gift funds start at about $5,000, too, so you don't need to be a billionaire to give like one.