Ilyce's Views You Can Use

EXTENDED THRU MARCH: $25 CASH Just for Signing Up!

2008-02-26T09:21:04Z

I’d to share with you the details regarding a new online payment company similar to PayPal - but better! They have just launched an incentive program to gather new members and if you move quickly, you can get some F*REE MONEY - Up to $525!

The company is backed by a bank out of SD and is FDIC insured. It was founded by Steve Case - Former CEO of AOL Time Warner. Just as PayPal did when they started, Revolution Money Exchange is PAYING new customers to open accounts. ANYONE WHO OPENS A F*REE ACCOUNT GETS $25! NO C*OST OR OBLIGATION.

When you open an account, you will also be allowed to refer new customers. With each new referral, you get an additional $10. (up to a maximum of 50 referrals - $500)

THIS PROMOTION IS ONLY GOOD THROUGH THE END OF FEBRUARY, so if you would like some F*REE money, let me know and I will refer you. I recently opened my account (it takes just a couple of minutes) and am now referring others.

BOTTOM LINE: You are paid $25 just for opening an account and up to $500 in direct referral commissions.

We have performed due-diligence on this program and we are satisfied that this is legitimate. To avoid spamming, the only way you can refer others is via the "Invite a Friend" link at the website. All you have to do is enter their email address. Then, the system will follow up with a message on your behalf.

But you've got to be quick about it. The promotion ends Feb 29, 2008.

============

TO RECEIVE AN INVITATION:

1. Send me an email.

2. Write in the subject line: "Invitation Info, Please . . ."

3. Tell me the email address you would like to register with. Please avoid using Comcast and AOL email accounts.

4. Then watch for the invitation email. The subject line will be "You are invited to sign up for RevolutionMoneyExchange.com"

============

Note: All account holders must be a citizen or resident alien of the United States (U.S.) with a valid U.S. taxpayer identification number.

FEES

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Add Money Electronically from Bank Account *FREE
Send Money *FREE
Receive Money *FREE
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Withdraw Money Electronically to Bank Account *FREE
Withdraw Money by Check *$2.50 per check
Paper Statement *$5.00 per statement

You've Been Pre-Approved -- Now Get RE-Approved

2007-12-19T10:21:40Z

Even if you've been recently pre-qualified (or pre-approved) for a mortgage, it may be prudent to get "re-approved".

The mortgage industry is changing quickly; being prepared beats the alternative.

Recently, mortgage lenders have made adjustments in what they will lend, and to whom. This shrinks the pool of eligible mortgage borrowers.

Some of these guideline changes include:

Low or no downpayment loans may require more income and/or assets
No income verification (i.e. stated) loans may not be available
Higher credit scores may be necessary to qualify

In addition to tighter guidelines, many mortgage lenders are now required to pass higher fees and/or mortgage rates along to their clients as well.

The burden of these mandatory extra costs will be the difference-maker in a mortgage approval for some mortgage applicants.

Getting re-approved can give home buyers a realistic sense of how mortgage financing may shape up in the changed mortgage environment. It's important to make sure that the mortgage plan still fits into your short- and long-term financial goals.

But, if nothing else, getting re-approved gives you the opportunity to speak with your real estate and loan officer about changes to the industry, and how it impacts you on a personal level.

Ilyce N. Powell is a Certified Mortgage Planning Specialist (CMPS) with the Carteret Mortgage Corporation. A member of the National Association of Responsible Loan Officers (NARLO) and the Financial Planning Association (FPA), she is also affiliated with the National Association of Mortgage Brokers (NAMB) and the National Association of College Funding Advisors (NACFA). Her goal is to educate as many consumers as possible in the hopes of stamping out financial illiteracy across the nation.

How to Squeeze Extra Tax Deductions from Your Mortgage In 2007

2007-12-18T16:55:51Z

For most Americans (but not all), mortgage interest is tax-deductible in the year in which it was paid.

With some advance planning, therefore, a homeowner can increase his 2007 tax deductions by paying additional mortgage interest while the calendar still reads 2007.

The key is to make the mortgage payment due January 2008 a few days early.

Because mortgage interest is paid in arrears, a mortgage payment due January 1, 2008 accounts for interest that accumulated throughout December 2007.

Rather than make January's mortgage payment on January 1, 2008, a homeowner can send payment this week or next -- while it's still 2007 -- and increase the amount of mortgage interest paid in 2007. This can increase 2007's tax deductions.

Tax planning can be a complicated issue and not all homeowners qualify for mortgage interest tax deductions. Be sure to consult your tax professional before making any tax planning decisions. If you are without a tax professional, call or email me; I would be happy to make a trusted recommendation to you.

Mortgage Rates are Going Up -- But Not for the Reason You'd Expect

2007-12-13T12:16:02Z

Conforming mortgages are getting more expensive -- but not because of mortgage rates.

To protect against further weakness in the housing sector, Fannie Mae and Freddie Mac are instituting "delivery fees" on all conforming mortgages, effective March 2008.

Fannie Mae's Adverse Market Delivery Charge and Freddie Mac's Market Condition Delivery Fee will add a one-time, quarter-percent fee to every home loan purchased from mortgage originators.

This means that on a $100,000 conforming mortgage, the borrower could:

Pay a $250 fee out-of-pocket
Accept a slightly higher interest rate that "finances in" the higher fee

Because the fee is in percentage terms, as the loan size increases, so does the fee. A $300,000 mortgage will carry a $750 fee, for example.

Unfortunately, mortgage borrowers may not get to choose on how they pay the extra cost. Many mortgage lenders are just adding it to their rate sheets.

Be aware, the 0.25% fee does not apply to all loans -- only to loans sold to Fannie Mae and Freddie Mac. This specifically excludes portfolio loans and sub-prime loans.

If you're not sure for what type of loan you are applying, be sure to ask.

Why Credit Card Holders May Benefit from The Fed's Actions Today

2007-12-11T12:28:40Z

The Federal Open Market Committee meets today and will release a public statement at 2:15 P.M. ET.

It is widely expected that the FOMC will lower the Fed Funds Rate by at least 0.250%.

When the FOMC lowers the Fed Funds Rate, it is trying to "loosen" credit for American businesses and consumers. When credit is "looser", it is cheaper, and easier to procure.

Looser credit promotes spending and propels the U.S. economy forward.

By contrast, when the FOMC raises the Fed Funds Rate, it is trying to "tighten" credit which, in turn, slows down the U.S. economy.

The FOMC does not control mortgage rates, but it does have a direct impact on Prime Rate because (Prime Rate) = (Fed Funds Rate) + (3.000%).

Credit cards, construction loans and home equity lines of credit are all tied to Prime Rate and so interest rates are expected to fall on these loan types this afternoon.

The Week in Review (December 10, 2007): What to Watch For

2007-12-10T14:13:09Z

Among lingering doubts about housing and credit markets, and a general uncertainty about the U.S. economy, the mortgage bond market tanked towards the latter part of last week.

As investors moved away from mortgage bonds, mortgage rates forcefully bounced off their two-year lows.

A major factor behind last week's run-up in rates is the market expectation for Tuesday's Federal Open Market Committee meeting.

Those expectations sharply shifted after Friday's strong employment report from the Census Bureau and dragged rates along with them.

Prior to the jobs report, markets were expecting that the FOMC would lower the Fed Funds Rate by a half-percent. After the report's data showed inflationary hints, though, that expectation changed to a quarter-percent.

This is important to mortgage rate shoppers because inflation is the enemy of mortgage bonds. Typically, as inflation rises, so do mortgage rates.

The FOMC adjourns from its one-day meeting Tuesday and will make an announcement to the markets at 2:15 P.M. ET. Expect volatility before and after the press release.

Currently, the Fed Funds Rate sits at 4.500%.

Also hitting the wires this week is the Consumer Price Index (Wednesday) and the Producer Price Index (Thursday). These two reports are closely tied to inflation, too, so if the readings come in hotter than expected, mortgage rates will move higher in response.

CPI is also known as "The Cost of Living" index. PPI is its "business" counterpart.

Appraisals are As Much Art as Science

2007-10-25T06:26:38Z

The number of home valuation websites continues to grow.

A simple Google search for "How much is my home worth?" shows 118,000 results and seems to get larger month after month.

For home sellers, these programs can give a false sense of security (or insecurity!) about at what price a home should be listed for sale.

Computer programs can never replace the role of licensed home appraisers and that's because valuing a home is not as simple as providing some inputs (traits) in order to get some output (value). There is a "fuzzy logic" that computer programs just can't produce in the same way that appraisers and real estate agents can.

Even with tax records, recent sales data, and a full description of a property, valuing a home is as much "art" as "science".

There are "human" considerations that include neighborhood quality and curb appeal that a computer can't measure. Nor can a program take into account how a kitchen may require $20,000 worth of work to bring it "up-to-date" or inline with neighbors' homes.

Besides, the real value of a home is what somebody is willing to pay for it. Therefore, you can never truly know what a home is worth until it has sold.

So, while automated valuation tools are a good start to finding a home's value, they're not equipped to finish the job.

How the Stock Market is Directing Traffic for Mortgage Rates

2007-10-24T02:22:31Z

As we talked about Monday, the stock market appears to be directing traffic for the bond market.

Monday was a flat day for stocks, and it was a flat day for bonds, too. Mortgage rates idled.

Tuesday, with no economic data hitting the wires, market participants looked for direction elsewhere.

Some likely candidates include:

The price of oil. If oil prices continue to rise, it will place inflationary pressure on businesses and consumers. That is bad for mortgage rates.
The value of the dollar. A recent rally in the dollar should attract foreign investors to the U.S. markets. That is good for mortgage rates.
Corporate earnings statements. Apple and American Express both showed well in Q3. A rally in the broader stock market will pull money from the bond markets. This is bad for mortgage rates.

Mostly, markets are taking very few risks in advance of the Federal Open Market Committee meeting next week. Momentum rules.

The Week in Review (October 22, 2007) : What to Watch For

2007-10-23T06:23:19Z

Rising oil prices, weak housing data, and ongoing credit concerns pushed mortgage rates lower last week as investors sought safety for their dollars. Stock markets took losses and bond markets -- including mortgage bonds -- booked gains. Remember, when mortgage bonds go up in price, mortgage rates come down.

To understand why mortgage rates tend to drop when stock markets have a sell-off, we should look at the situation from an investor's perspective.

When lots of investors are selling stock positions, stock markets fall. The investors get cash in return for their sold securities. But cash doesn't offer much of a return on investment. So, investors look for "better" places to invest their cash.

The bond market usually fits the bill.

As more dollars enter the bond market, the relative demand for each type of bonds increases. With the higher demand, bond prices move higher, thereby pushing yields down. And mortgage bonds are just one type of bond that benefits like this -- there are municipal bonds, corporate bonds, and treasury bonds/notes, too.

This week, the biggest news will be Wednesday's release of the Existing Home Sales report, and Thursday's New Home Sales. Both are expected to show relative weakness from August's figures but because the weakness is expected, the news shouldn't move mortgage rates.

The biggest threat to mortgage markets this week will be changing expectations about the Federal Open Market Committee's meeting next Tuesday and Wednesday. If markets believe that the Fed will try to spur economic growth, expect money to flow back into stocks (at the expense of bonds) which will pull mortgage rates higher.

Just Because You Can Borrow From a 401(k) Plan Doesn't Mean You Should

2007-10-19T09:15:37Z

According to the Wall Street Journal, the number of Americans taking loans against their 401(k) plans is increasing because most plans allow participants to borrow funds to purchase a home or to avoid foreclosure.

But just because the avenue is there, though, doesn't mean that borrowing from a 401(k) is a good idea.

Here's why: When you put money into a 401(k) plan, you use pre-tax dollars but when you repay a 401(k) loan, you use post-tax dollars.

Therefore, if your tax rate is 28%, it takes $1,388 of income to repay each $1,000 increment of your loan. Then, when you withdraw the funds at retirement, the money is taxed again.

Double-taxation is costly, but the other less-well-known impact of a 401(k) loan is that you can lose the long-term power of compounded interest on your entire portfolio.

This isn't to say that a 401(k) loan is bad, it just may not be right for you. So, if you're planning to withdraw from your 401(k), be sure to talk with a qualified financial professional first.

How Terrible Housing Data Can Actually Help Push Home Values Higher

2007-10-18T18:45:59Z

Once again, the headlines may be misleading you. It's a good thing that Housing Starts dropped last month -- despite what the papers say.

A "housing start" is a new residence on which construction has started. Yesterday, the government released September 2007's Housing Starts data for the country.

There was a 10.2% drop in Housing Starts versus August 2007
There was a 30.8% drop in Housing Starts versus September 2006

The headlines are trying to tell us that this is bad news for the U.S. economy. On the contrary -- this is excellent news!

Determining a home's value is mostly based on Supply and Demand for that particular home. In its own neighborhood, an over-supply of like homes can be a significant drag on the value of all homes in the neighborhood This is a concept many people understand.

So, when builders stop adding new supply to the housing market -- on a neighborhood-by-neighborhood basis -- the existing demand for homes can "catch up" with the existing supply of homes. This can rebalance the Supply and Demand equation and place upward pressure on home values.

Many homeowners (and future homeowners) can agree that rising home values is a good thing. Rising home values creates wealth and opportunity.

So, just because the headlines read that the news is bad, that doesn't mean that it really is bad. Housing Starts are down and that is a good thing.

(Image courtesy: The Wall Street Journal Online)

How Japan and China Can Impact the Mortgage Rate on Your Home

2007-10-17T09:33:42Z

Mortgage rates are determined by the prices of mortgage bonds; this, we've covered before. As bonds prices go up, bond rates come down.

And the price of a mortgage bond is a matter of Supply and Demand.

The greater the demand for a bond, the higher its price. High demand for bonds is one reason why mortgage rates remained relatively low for the period spanning the last few years.

That period may be ending soon.

In August 2007, for the first time since 1998, foreign nations sold more long-term U.S. securities in a month than they bought, thereby increasing the market supply. This happened for a number of reasons including:

The Federal Reserve lowered the Fed Funds Rate
Fear of a U.S. credit market collapse
General uncertainty about the strength of the U.S. economy

When the supply of securities outweighs its demand, there is a downward pressure on the price of that security. This is one reason why mortgage rates trended higher in August and September; the excess supply of mortgage bonds pushed mortgage bond prices drop and that, in turn, pressured mortgage rates higher.

Worth noting is that the top two holders of U.S. debt -- Japan and China -- trimmed their holdings in August by 4.1% and 2.2%, respectively. If Japan, China and other nations continue this trend of selling U.S. debt in the months ahead, mortgage rates should continue their feel the pressure to move higher.

If all of this sounds "foreign", remember that, like the price of a stock, mortgage rates are not divined from thin air. Rates come from the price of mortgage bonds -- nothing else. And those prices are determined by simple Supply and Demand.

Source
Bond Market Update
Briefing.com
October 16, 2007

(Image courtesy: Directopedia)

The Week in Review (October 15, 2007) : What to Watch For

2007-10-16T22:35:36Z

The economy appears to have shrugged off August's credit market turmoil and is continuing to expand. This pushed mortgage rates higher last week as market players move money into stocks and hope to capitalize on the Dow Jones rally.

After the Fed's last meeting, the central bank lowered the Fed Funds Rate by 50 basis points, or 0.50%.

At the time, the economy was widely viewed to be in, or entering, a recession.

The August jobs report showed a net loss of jobs
Billions of dollars in value were wiped each day in the credit markets
General economic indicators showed weakness

Since the last Fed meeting, though, the data is showing the same signs of explosive growth that it did from 2004-2007.

The August jobs report was revised to a net gain of 89,000 and showed 110,000 new jobs in September
Consumer spending grew by three times the expected amount in September
Consumer confidence surveys show that the average consumer is optimistic

Could the Fed have reduced rates too far, too fast? Some traders think so because these "strength" points are causing the stock market to rally and retake its position north of 14,000.

Some of that money is coming from the bond market.

This is bad for mortgage rates, of course, because mortgage rates are determined by the price of mortgage bonds. As demand falls for mortgage bonds, so does the price. And, as price falls, the rate of return increases.

The American economy's strength is causing mortgage rates to rise.

This week, government groups will release data to give insight on the nation's manufacturing strength, housing growth, and "cost of living" increases. The stronger these data points are, the more money that will flow to stocks. That should pressure mortgage rates to move higher.

If the data shows weakness, expect mortgage rates to fall.

(Image courtesy: Wall Street Journal Online)

How Mortgage Calculators Can Be Misleading

2007-10-16T21:38:25Z

Mortgage calculators are ubiquitous on real estate-related Web sites but that doesn't mean that they're helpful.

See, Internet-based mortgage calculators take three figres into consideration when determining "how much home can you afford".

Income
Debt
Downpayment/Equity

Next, the calculator figures in your downpayment, multiplies your income by a factor of .38 and spits out an answer: "You can afford x amount of a home."

By contrast, a true mortgage approval takes twenty-six factors into consideration.

Mortgage calculators like the one above specifically don't ask about:

Credit score
Recent bankruptcies
Collection items
Outstanding judgments or liens
Intended use of property (i.e. investment property)
Type of property (i.e. non-warrantable condominium, 6-unit)

And this is why mortgage calculators are dangerous and misleading.

Even assuming a person's credit history is "perfect", mortgage calculators can still steer you wrong. That's because mortgage calculators ignore "compensating factors".

A "compensating factor" on a home loan application is an exceptional strength that cancels out an exceptional weakness that would otherwise cause the loan to be denied.

One example is a person whose monthly debts are relatively high versus their income. This person can be still be approved for a loan if the equity position in their home is very strong. The large percentage of equity compensates for the relatively low income and, thus, a loan that may have otherwise been denied can now be approved.

Compensating factors are an important part of the mortgage approval process and the online calculators just can't account for it.

The best alternative to Web-based mortgage calculators is to speak with a human mortgage calculator -- otherwise known as "a trusted loan officer". Only a human can tell you both how much home you can afford, and for what loan amount you would be approved.

Jumbo Mortgage Rates Shed Some of Their Risk, Rates Fall

2007-10-10T11:41:49Z

As a sign that some normalcy is returning to mortgage markets, the premium attached to jumbo mortgage rates is getting smaller.

A "jumbo"-sized loan is one that exceeds $417,000 on a single-family residence, among other criteria.

Conforming 30-year fixed rate mortgages and jumbo 30-year fixed rate mortgages tend to move in the same direction over time. You can see that illustrated on the left-side of the graph.

But, as we move towards the right, we can see how, beginning in mid-August of this year, the general direction of mortgage rates for these two products diverged.

In mid-August, you'll remember, is approximately when the bottom fell out of the credit risk markets.

Since late-September, though, jumbo loan risk appears to be declining. The chart above from Bankrate.com shows that while conforming rates have remaining relatively flat, jumbo mortgage rates have dropped by about 0.125%.

In mortgage markets, the credit pendulum tends to swing too far in both directions. Getting approved for a home loan may have been too easy last year, and it may have been too tight last month.

Today, though, the pendulum appears to be moving towards the middle once again.

NOTE: Bankrate.com publishes rates based on advertising, and not market conditions so the chart does not reflect actual mortgage rates. It does reflect a trend, however. The chart is meant to show how jumbo, 30-year fixed loans are moving lower with respect to conforming, 30-year fixed rate home loans.

The Week In Review (October 9, 2007) : What to Watch For

2007-10-09T15:58:46Z

As expected, the big news last week was the Non-Farms Payroll report. What wasn't expected, though, was the strength of the report. Mortgage rates ended the week on a large up-tick.

110,000 jobs were created in September, according to the Bureau of Labor Statistics. This exceeded Wall Street expectations by 10% and -- in isolation -- shows that the economy may be stronger than economists think.

But the monthly jobs report also included a major revision to August's data, too.

Originally, the government had reported that 4,000 jobs were lost in August. In Friday's report, though, that figure was revised to 89,000 jobs gained. Suddenly, the economy didn't look so weak.

Investors pulled their money from the safe-haven of bonds and into the stock market in hopes of catching a higher return.

When there are more sellers than buyers of mortgage bonds, the rate of return goes up and this is why mortgage rates were higher Friday.

Friday's revision to August's numbers also introduced questions about the Fed and whether they lowered the Fed Funds Rate too soon. To many observers, it was August's supposed job loss that was the catalyst for the first decrease to the FFR since 2003.

This week, there will be some good data for markets to chew on, starting with today's release of the Fed's minutes from their September meeting and ending with Friday's Retail Sales report and Consumer Sentiment survey.

The Baltimore Women's Film Festival

2007-10-07T09:47:21Z

What: A celebration of cinematic creativity, art and innovation that you do not want to miss. Films by women, for women. Great parties, a chance to hear from the film makers, and a nice way to support the fight against breast cancer. 50% of all proceeds from ticket sales at the festival will be donated to The Johns Hopkins Avon Foundation Breast Center to further breast cancer research and treatment.

When: October 13 and 14, 2007

Locations: The Baltimore Museum of Art Meyerhoff Auditorium and Red Emma's "2640" in the historic St John's Church.

For more information and tickets, please visit http://www.bwfilmfestival.com.

Need $$ for Downpayment? Think About . . . (4 of 4)

2007-10-06T02:17:22Z

Option 4: Lease-To-Own

With a lease-to-own, you essentially lease a home, but make larger payments in order to begin accumulating a downpayment. For example, if a house would normally lease for $800, you might lease it for $1,000/month, with $200/month going into a special account. At the end of a specified period, you buy the home using the money in that special account as your down payment. However, if you decide somewhere along the line not to purchase the home, all of the money in the special account then goes to the seller. Think of this option as renting with a forced savings account. If you can find someone willing to do this, it’s not a bad option. However, most people who are selling their homes need their money out of it in order to buy their next home, so finding someone who is willing to lease to you may prove more difficult.

Need $$ for Downpayment? Think About . . . (3 of 4)

2007-10-06T02:15:14Z

Option 3: Owner Financing

Owner financing means exactly that: the owner (or seller) finances a portion of your home purchase. For example, you might borrow 80% of the value of a home from a lending institution, and "borrow" the other 20% from the owner. In this situation, the owner "carries back" a second mortgage. Owner financing can be advantageous, especially to investors who buy up properties and then rent them out. For the average homebuyer, however, owner financing is difficult to find and requires some tricky negotiating. Even after successfully negotiating a deal, it requires some detailed work by qualified attorneys in order to protect the interests of all parties involved. While you shouldn’t rule out owner financing, keep in mind that by looking for someone who is willing to help finance your purchase, you severely limit your choices. There are a lot of houses for sale today, but not a lot where owner financing is an option.

Need $$ for Downpayment? Think About . . . (2 of 4)

2007-10-06T02:13:16Z

Option 2: Special Loan Programs

Special loan programs come and go quickly. There is many available right now that will allow the seller to provide up to 6% towards the down payment and/or closing costs required for a home loan. That means no money out of your pocket if you know how to negotiate with the seller! So, how do you find out what type of loan programs are available for you right now? The best way is to work with a great mortgage lender who keeps up to speed on these special programs. I’ll be available when you’re ready.

Need $$ for Downpayment? Think About . . . (1 of 4)

2007-10-06T02:10:08Z

Option 1: FHA Loans

Although there isn’t a "No Money Down" option yet, the FHA loan is by far one of the best alternatives for people who want to buy a home and don’t have much money to put down. With an FHA loan, you could put down as little as 3%. Plus, FHA loans are easier to qualify for. Now, 3% may seem like a lot to come up with, but many people find that when they put their minds to it, 3% is actually possible. While you can’t "borrow" the 3%, you can get a "gift" from a family member, borrow from your 401k, or sell some "stuff" you have lying around. FHA loans do have requirements and restrictions. For example, not all townhomes and condos qualify, and there is a maximum loan amount you can get. But if you’ve been dreaming of a new home and think you might be able to "scrounge up" 3%, this is a great way to go.

Simple Ideas for Raising Money for a Down Payment…

2007-10-06T02:02:05Z

With all the credit tightening going on, many programs will require that buyers come up with at least some small downpayment. Even if you are able to secure 100% financing, you will still need to pay closing costs (if the seller does not agree to pay for you). So, here are some ideas that may help you get the money you need.

Have a garage sale. You’ll be surprised how much money you can raise this way, especially if you’re willing to give up some of the junk you’ve been hoarding for years!

Raid your savings. Even if you’ve been trying to keep a little stashed away, this is important! If your kids have a savings account, ask them if you could borrow from theirs as well!

Borrow from your retirement fund. Many retirement funds (401k, IRA, etc.) have provisions for you to borrow from them for important reasons. This counts as an important reason! Check with your plan administrator or your financial advisor about this option! The nice part about this is that as you repay your loan, you pay the interest to yourself!

Ask your family. This is probably the hardest thing for some to do, but you might be surprised at how willing a family member would be to help you buy a house, even if they’ve said "no" to you before when you tried to borrow for other things! If you do this, you’ll need a form for your banker stating that this is a gift and not a loan. (Yes, you can still repay your family member. It just can’t be a formal loan!)

Sell something. If you look around your house, you might find items that have pretty good value, but that you haven’t used in a long time. An old coin collection; an old musical instrument that no one plays anymore; an extra freezer you don’t really need; a second (or third) car you could do without. Often, the cash from selling these items can add up quickly!

Win the lottery. Hey, somebody’s got to win! Might as well be you!

How Today's Employment Data is Hurting Mortgage Rates

2007-10-05T09:32:45Z

On the first Friday of each month, the Bureau of Labor Statistics releases its employment report for the United States.

Last month, the jobs report showed that the economy actually lost jobs for the first time since 2003. The total loss of jobs equaled 4,000 and contributed to the Federal Reserve's decision to lower the Fed Funds Rate for the first time since that same year.

Of course, today is the first Friday, so a new employment report hit the wires earlier this morning. The news was good for the economy, but not so good for people in the market for a new home loan.

The employment report showed that 110,000 new jobs were created in the United States, reversing the negative trend from August. More employed workers means more money earned means more money spent. That's why the news is good for the economy.

Now, for the bad news.

An important detail about the employment report is that it quantifies the number of jobs created in the month prior, and it also revises its calculations for the two months prior to that. These revisions are necessary because by the time First Friday arrives, there just isn't enough time to survey enough companies to make data 100% accurate.

Well, August's data was revised from a 4,000 job loss to an 89,000 job gain.

Psychologically, this is major because the job loss in August was a huge reason why markets screamed for the Fed to lower the Fed Funds Rate. Now, it appears, that move may have been premature.

Wall Street is frenzied on this holiday-shortened trading day. Could the Fed reverse its course now that it has new data? Mortgage rates are soaring higher as expectations adjust for the Fed's next meeting October 30-31, 2007.

Have You Ever Wondered Where the Money Goes?

2007-10-04T09:55:38Z

Where does your money go? If you're like most Americans, more than half of it goes towards housing and transportation alone.

This is according to the Consumer Expenditure Survey performed by the Bureau of Labor Statistics.

The most recent study shows American household spending habits from 2005, but the percentages change little from one year to the next.

The largest expenditures by household are:

32.7% for housing
18.0% for transportation
12.8% for food
5.7% for healthcare
5.1% for entertainment
4.1% for apparel
2.0% for education
1.2% for personal care products/services
0.8% for life and personal insurance

With this industry-by-industry breakdown, we can see how changing where you live and how long you commute can be the best ways to keep your household budgets in check.

Saving money on haircuts, clothing, and food can make an impact, too; but not nearly as much as living in less expensive home or changing driving habits.

FHA Bans Seller-Financed Downpayment Assistance Programs

2007-10-03T15:45:17Z

Effective November 7, 2007, the Federal Housing Administration is expected to ban home buyers' use of most seller-financed Downpayment Assistance programs. The Nehemiah program has been granted an exception through March 31, 2008.

DPAs are (were?) very popular in FHA mortgage circles as a way to help buyers finance their new homes.

FHA loans currently require a downpayment of at least three percent on a home purchase. That three percent, however, is not required to come from the buyer's own funds; it can come from a "gift" as long as the gifter is a family member or a non-profit organization.

Downpayment assistance programs are the latter, incorporated as non-profit organizations.

Typically, DPA programs works like this:

Buyer makes an offer for a home
Seller accepts the offer
Seller contributes the necessary three percent to non-profit organization
Non-profit organization "gifts" the three percent to the buyer while keeping a $500 service fee
Buyer buys home with three percent gift as downpayment

The main reason cited for the ban is that downpayment assistance programs push home sale prices three percent higher than they otherwise should be. The extra three percent is not "home value" -- it's "help" and is repaid over time in the form of a higher loan amount.

One study cited by FHA and used to pass the ruling said that home buyers participating in downpayment assistance programs go delinquent with two times the frequency of home buyers that don't.

According to the Washington Post , there are more than 200 charities nationwide currently offering such programs.