John Caylor's Blog

Why Diets Don't Work

2007-09-28T05:23:18Z

If you go "on a diet", what does that mean? That you will eventually go "off the diet". If you haven't changed your eating and physical activity behaviors, what's going to happen? Rationally, you know the answer, but emotionally, you engage in wishful thinking, hoping that this time you will lose the weight and keep it off. What weight are we talking about? When people tell me they lost 12 pounds in two weeks, I ask "12 pounds of what?" On low-calorie diets, about 25 percent of the weight loss may be muscle (Ballor & Polehlman 1994).

Losing muscle is a bad thing. Muscle tissue is very active--it burns a lot of calories. Every pound of muscle burns about 35 calories per day, just staying alive. Using the above example, if you lost 12 pounds, then, you lost three pounds of muscle. You would be burning 105 less calories per day or 3150 per month. Since there are 3500 calories in a pound of fat, you would gain almost one pound of fat per month just from the muscle mass that you lost!

Surprise: "Toxic" Mortgages Are The Best

2007-09-26T09:58:39Z

With all the negative talk and horror stories concerning the Option ARM I thought I would share this article that recently came out in BusinessWeek.

Surprise: 'Toxic' Mortgages Are the Best

The Key To Optimal FAT BURN is...???

2007-09-25T09:02:55Z

The majority of us were taught to believe that cardiovascular training was the quickest and most effective way to shed unwanted pounds. Aerobics, jogging, swimming, running and biking were the primary activities to turn to when we wanted to slim down. The idea was that when you perform low level aerobic exercise your body relied on calories from fat. So far so good, right? Well, there were a couple of major limitations with this method...

First of all you only burn fat calories while the aerobics are performed. If you do thirty minutes, then you only burn for thirty minutes; if you do two hours, then you only burn for two hours.

Secondly, if you are overzealous with aerobics your body actually eats away at lean tissue (muscle), leaving you with lowered calorie requirements. Ever wonder why you eat the same amount but still put on pounds? A loss in lean tissue (muscle) will do that to you every time.

Fortunately for us, we live in a time of great scientific discovery with tools and resources that give us the cutting edge in our quest for a leaner, sexier body. And science has given us the solution for optimal FAT BURN.

The Solution for optimal FAT BURN is: Resistance Training!

You have probably heard about the many benefits of resistance training.

Here are just a few:

1. Muscle strength increase

2. Prevention of injuries

3. Improved bone density

Here are the two reasons that resistance training is the most effective way to BURN FAT:

1. Oxygen Debt

Now I know debt isn't usually a word that we enjoy...but in this case I'm sure you will agree that it's a great thing. Resistance training puts your body into oxygen debt which means you will BURN FAT as you recover from your workout. And this effect can last quite awhile - studies have shown an increase in calorie burning for up to three days following a resistance training workout.

2. Lean Tissue Burns More Calories

The other way that FAT BURN is accomplished with resistance training is through an increase in your resting metabolism. Lean tissue (muscle) requires many more calories each day than fatty tissue. In fact, one pound of muscle burns 30-50 calories each day at rest - compared to a measly 9 calories per pound of fat.

When you perform resistance training exercises your body composition will change to contain more lean tissue, thus resulting in extra calories burned while you sleep.

Celebrate Your Success Every Day!

2007-09-23T05:24:07Z

Celebrate your success every day! Be proud of what you have accomplished while continuing on your weight loss plan to a healthier, happier and more fit you! Also, be sure to tell your friends about how hard you have been working and how great you feel (if they already haven't told you how great you look!). This will probably make them take a close look at themselves and their lifestyles and hopefully encourage and inspire them to begin or to enhance their exercise routines and nutritional plans. All it takes are a few encouraging words and leading by example and you will certainly have a positive impact on others!

Tips For Beginning Your Fitness Program

2007-09-20T05:49:47Z

Proper preparation for a fitness program is essential in order to achieve the best results. The following tips will not only help you when starting a new fitness program, but help you to stay consistent with it over the long term.

Following is a list of general principles:

•1. Prior to beginning an exercise program, speak with your physician, especially if you have a medical condition such as diabetes or high blood pressure, are overweight, sedentary, over 35 years old, have any heart problems, or have a history of heart problems in your family.

•2. Set achievable, measurable, attainable, realistic goals. Write them down and keep them someplace visible.

•3. Wear comfortable clothing that will absorb perspiration. Choose clothing that won't restrict your movement, and remember that this is about fitness, not fashion. Wear good athletic shoes that provide plenty of arch support. Dress for the climate.

•4. Choose and schedule times to work out that fit your daily routine. There really isn't a time of day that is any better than another, but it helps to pick a time when you usually feel energetic and your schedule allows for consistency. If you have a busy lifestyle, put your workouts into your schedule just like any other appointments or responsibilities that you have.

•5. Track your workouts in a log or notebook. This helps ensure that you consistently challenge yourself to do more in your program, allows you to see the progress you are making, and gives you a record to monitor so you know when to build variety and progression into your program.

•6. Warm up for 3 - 5 minutes with a light activity that targets all the major muscle groups prior to beginning your fitness program.

•7. After your workout, finish with a cool down phase of 5-10 minutes. This is also a good time to incorporate any stretching into your fitness program.

•8. Consistency is the key with any fitness program designed to achieve lasting, long term results. Start with small steps, but keep moving forward with your program consistently.

•9. Do not go overboard with your fitness program. Exercise is like anything else, and too much of a good thing can be detrimental. Give your body adequate rest, not only by getting a good night's sleep on a consistent basis, but by varying your exercise routine so that you do not suffer from repetitive use injuries.

Do You Keep a Training Journal?

2007-09-19T06:16:16Z

Always make sure to keep a detailed training journal. By keeping a journal of your training sessions, you will have a detailed log of your every exercise you perform along with reps, sets and how much weight you lifted. It's also great to document how you felt before, during and after your training session along with any food/supplements you took before and after you trained. By keeping an training journal, you will have access to a wealth of information and be able to detect specific areas in your current training routine which can be changed or improved upon.

One of the biggest mistakes most people make is to continue on with a training routine that simply does not work well for them. As the old saying goes, "Insanity is doing the same thing over and over again, and expecting different results". Don't let exercise insanity set in. Make sure to always switch up your training routines and document each one of them into your training journal. When you look back on your training journal, you will see specific patterns where you are succeeding and also where you're falling short. One of the most important pieces of exercise advice is to figure not only "what to do", but more importantly "what not to do". When you know the areas to avoid, your progress will skyrocket!

Counting Calories For Losing Weight

2007-09-16T09:28:36Z

It is not recommended to lose more than 1 pound per week for healthily weight loss. The reason for this has do to with the issues which quick and drastic weight loss can have on your body's metabolism and muscle mass. When you lose a lot of weight quickly, you really need to strictly monitor where this weight is coming from. Is it water weight, body fat or muscle mass? The majority of the time, it unfortunately comes from lean muscle mass and this is exactly what will cause serious issues with your metabolism. Muscle is your body's most potent and active tissue for burning calories and body fat. Its basically your body's "furnace" which you want to always keep burning hot. When someone loses a lot of weight, which usually comes from crash dieting or some other unhealthy way of dropping the weight, the body's lean muscle mass is cannibalized and you lose some of your biggest "power" tissue for keeping a lean body.

The worst thing is when the person finally decides to get off the diet and start eating again. Their calories go back up, but since their BMR (basal metabolic rate) is lowered and they have lost muscle mass, the end result is they pack on the body fat very quickly! Ever heard of the term "yo-yo" dieting. This is the reason why tons of people have issues and hard times with their weight loss plans.

Try and focus on creating a max 500 calorie deficit per day which equates out to an overall 3,500 calories per week (1 pound of body fat). Create this overall 500 calorie deficit through a 250 calorie drop in your diet and another 250 burned with an exercise routine. This is the healthiest way to lose body fat while keeping your muscle mass and having your body run at an optimal level. It will also provide you with a much better plan to permanently keep the weight off forever!

The Oldest And Shortest Written Constitution Of Any Major Government Belongs To The U.S.

2007-07-03T15:30:27Z

In honor of Independence Day, here are 13 little-known bits of trivia about the United States constitution, courtesy of constitutionfacts.com:

The first constitution was not known as the Declaration of Independence. It was called the Articles of Confederation.
The U.S. Constitution has 4,400 words. It is the oldest and shortest written Constitution of any major government in the world.
There are spelling errors throughout the Constitution, but the misspelling of the word "Pensylvania" above the signers' names is a notable one.
Thomas Jefferson did not sign the Constitution. He was in France during the Convention, where he served as the U.S. minister.
The Constitution was "penned" by Jacob Shallus, a Pennsylvania General Assembly clerk, for a fee of $30.
The entire Constitution is displayed in public just one day a year -- September 17. This is the anniversary of the day the framers signed the document.
Patrick Henry was elected as a delegate to the Constitutional Convention, but declined, because he "smelt a rat."
The oldest person to sign the Constitution was Benjamin Franklin (81). The youngest was Jonathan Dayton of New Jersey (26).
When the Constitution was signed, Philadelphia was the nation's largest city, with 40,000 inhabitants.
Because of his poor health, Benjamin Franklin needed help to sign the Constitution. As he did so, tears streamed down his face.
The first time the formal term "The United States of America" was used was in the Declaration of Independence.
There was initially a question as to how to address the President. The Senate proposed that he be addressed as "His Highness the President of the United States of America and Protector of their Liberties." Both the House of Representatives and the Senate compromised on the use of "President of the United States."
The word "democracy" does not appear once in the Constitution.

Have a safe and happy July 4th, everyone.

Source
Fascinating Facts about the U.S. Constitution
http://www.constitutionfacts.com/index.cfm?section=constitution&page=fascinatingFacts.cfm

Making English Out Of Fed-Speak (June 2007 Edition)

2007-06-29T17:16:49Z

The Fed left the Fed Funds Rate unchanged again today for the eighth time in a row after 17 consecutive hikes. None of this is news to us.

The Fed's press release, though, highlights a key theme about our country's economy: inflation may be moderating, but we are far from in the clear.

In other words, there are still a handful of outside factors that could push the Fed back out of their "comfort zone" and force them to raise the Federal Funds Rate.

Mortgage rates were up only slightly after the Fed's remarks which were neither tough nor soft on inflation and the economy.

Source
Parsing the Fed Statement
The Wall Street Journal Online
June 28, 2007
http://online.wsj.com/mdcapp/public/page/2_3024-info_fedparse_shell.html

Is Your Child's Social Security Number at Risk?

2007-06-27T08:11:42Z

You know you should check your credit report to see if your identity has been stolen. If a thief obtains your Social Security number, they can establish credit cards in your name, borrow money and make purchases - all without you realizing it.

And yet, millions of people have never checked to see if their identity has been stolen. You know why? Because they can't read, have no access to a telephone and don't know how to use the Internet.

I'm not talking about immigrants. I'm talking about three-year-olds. In fact, I'm talking about your three-year-old. Your teenagers, too, and your grandchildren.

All the pundits offer advice on how you can safeguard your Social Security number. But what about your kid's Social Security number? Most every child gets a Social Security number shortly after birth, which means every child is a potential victim. And if you were a thief, whose number would you prefer to steal: a corporate executive's, or her child's? After all, children won't use their Social Security number for years - not until they apply for a job, a driver's license, or open a bank account. If a thief steals your child's or grandchild's number, the theft may go unnoticed for years.

So here's how you can protect your child's Social Security number:

1. Call 877-322-8228 or visit http://www.annualcreditreport.com/ to see if you can get a free copy of the child's credit report. You shouldn't be able to; since the child probably hasn't applied for credit, there should be no credit report. Therefore, if the child has one, it is likely that someone is illicitly using his or her Social Security number. (Note: if the child is under age 13, you must request a copy of the child's credit report via letter. The Web site provides further information.)

2. Monitor the mail that is addressed to your child. A collection notice, or even an offer for a pre-approved card, is a tip off that something is likely wrong.

3. Don't give anyone your child's Social Security number. When doctors, hospitals, schools, cell phone providers or others request the number; see if they will accept some other identification number. Ask how they will share the information and who has access.

4. Keep the child's Social Security card in a safe place. A bank safe deposit box is a good idea because the card is rarely needed. Remember that most identity thieves are friends or family members of the victims.

5. When the child is old enough to understand, explain why he or she must never disclose any personal data (including the Social Security number) without your prior permission. Warn them that identity thieves are active on the Internet, often offering enticing gifts such as iPods and free music downloads in exchange for the child's birth date, name, address and Social Security number.

6. Shred documents that contain the child's information, but keep the shredder away from the child as some machines shred more than paper.

If you think someone has stolen your child's identity, check with one of the credit bureaus (Experian, TransUnion or Equifax), and talk with a police officer who specializes in juvenile identity theft.

Be as vigilant with your child's data as you are with your own.

By Ric Edelman
From Inside Personal Finance

How To Protect Yourself From Becoming A "Trigger Lead"

2007-06-26T09:23:19Z

From the CBS News Video Web site, an interesting story for anyone who's recently applied for credit.

Credit repositories now sell the contact information of people applying for new mortgage loans to other mortgage lenders that want to compete for the business.

Called "trigger leads", an unsuspecting mortgage applicant can have his credit checked by a mortgage lender, and then discover that the credit bureaus have sold the rights to his personal information to countless other credit firms across the country.

Because trigger leads identify a person making a lending decision right now, one marketer of trigger leads calls them "the best leads in the business". It's no wonder that the credit bureaus are marketing them, and that some lenders are salivating over them.

As the family in the CBS video learned, though, it's difficult to make the phone stop ringing. Some of the calls bordered on harassment.

For consumers, there is a very low-tech opt-out Web site called http://www.optoutprescreen.com/ that is sponsored by the three major credit bureaus (and are also the ones that sell trigger leads). You can opt out for five years, or submit a form by mail to opt out forever.

Watch the video and then go protect yourself.

(Image courtesy: CBS News Video)

How to Become a Master Networker

2007-06-25T08:47:00Z

by Dr. Ivan Misner

Adopt these 10 traits, and you'll have people knocking down your door trying to do business with you.

Networking is more than just shaking hands and passing out business cards. Based on a survey I conducted of more than 2,000 people throughout the United States, the United Kingdom, Canada and Australia, it's about building your "social capital." The highest-rated traits in the survey were the ones related to developing and maintaining good relationships. For years I've been teaching people that this process is more about "farming" than it is about "hunting." It's about cultivating relationships with other business professionals. It's about realizing the capital that comes from building social relationships. The following traits were ranked in order of their perceived importance to networking. They're the traits that will make you a "master networker."

1. Follows up on referrals. This was ranked as the No. 1 trait of successful networkers. If you present an opportunity, whether it's a simple piece of information, a special contact or a qualified business referral, to someone who consistently fails to follow up successfully, it's no secret that you'll eventually stop wasting your time with this person.

2. Positive attitude. A consistently negative attitude makes people dislike being around you and drives away referrals; a positive attitude makes people want to associate and cooperate with you. Positive business professionals are like magnets. Others want to be around them and will send their friends, family and associates to them.

3. Enthusiastic/motivated. Think about the people you know. Who gets the most referrals? People who show the most motivation, right? It's been said that the best sales characteristic is enthusiasm. To be respected within our networks, we at least need to sell ourselves with enthusiasm. Once we've done an effective job of selling ourselves, we'll be able to reap the reward of seeing our contacts sell us to others! That's motivation in and of itself!

4. Trustworthy. When you refer one person to another, you're putting your reputation on the line. You have to be able to trust your referral partner and be trusted in return. Neither you nor anyone else will refer a contact or valuable information to someone who can't be trusted to handle it well.

5. Good listening skills. Our success as networkers depends on how well we can listen and learn. The faster you and your networking partner learn what you need to know about each other, the faster you'll establish a valuable relationship. Communicate well, and listen well.

6. Networks always. Master networkers are never off duty. Networking is so natural to them that they can be found networking in the grocery store line, at the doctor's office and while picking the kids up from school, as well as at the chamber mixers and networking meetings.

7. Thanks people. Gratitude is sorely lacking in today's business world. Expressing gratitude to business associates and clients is just another building block in the cultivation of relationships that will lead to increased referrals. People like to refer others to business professionals that go above and beyond. Thanking others at every opportunity will help you stand out from the crowd.

8. Enjoys helping. Helping others can be done in a variety of ways, from literally showing up to help with an office move to clipping a helpful and interesting article and mailing it to an associate or client. Master networkers keep their eyes and ears open for opportunities to advance other people's interests whenever they can.

9. Sincere. Insincerity is like a cake without frosting! You can offer the help, the thanks, the listening ear, but if you aren't sincerely interested in the other person, they'll know it! Those who have developed successful networking skills convey their sincerity at every turn. One of the best ways to develop this trait is to give the individual with whom you're developing a referral relationship your undivided attention.

10. Works their network. It's not net-sit or net-eat, it's net-work, and master networkers don't let any opportunity to work their networks pass them by. They manage their contacts with contact management software, organize their e-mail address files and carry their referral partners' business cards as well as their own. They set up appointments to get better acquainted with new contacts so that they can learn as much about them as possible so that they can truly become part of each other's networks.

Do you see the trend with these ten points? They all tie in to long-term relationship building, not to stalking the prey for the big kill. People who take the time to build their social capital are the ones who will have new business referred to them over and over. The key is to build mutually beneficial business relationships. Only then will you succeed as a master networker.

Ivan Misner is co-author of the New York Times bestseller Masters of Networking. He is the founder and CEO of BNI, the world's largest referral organization with more than 2,400 chapters in 13 countries around the world. He also teaches business courses at California State Polytechnic University, Pomona, and resides in Southern California with his wife and three children. Dr. Misner can be reached at mailto:misner@bni.com

Be Wary Of Opinions That Masquerade As News

2007-06-21T10:14:48Z

Is "news" always news, or is it masked opinion?

When doing research on mortgages, it's important to pay attention to the objectivity of your research source.

Often, a writer will deploy key adjectives, phrases, and/or images that distort an otherwise factual story.

The above cartoon from clangnuts.com is a terrific example.

It implies that interest only home loans are for people that can't otherwise afford homeownership.

The truth is that interest only loans are used by all economic classes of homeowners -- not just those that need payment relief.

Many people choose interest only home loans for their flexibility, or as a financial planning tool.

Sure, there are some people that use interest only loans to "get onto the housing ladder", but that is a statement about the homeowner and not the mortgage product.

Our opinions are often formed by the words and images we hear in a public forum. Sometimes, it pays to look a little deeper.

In The Summer, Mortgage Rates Can Change More Swiftly Than Usual

2007-06-21T04:08:59Z

It was another favorable day for mortgage rates Tuesday as average housing data and momentum trading carried bond prices higher.

Bond prices up, mortgage rates down, of course.

All things considered, mortgage bonds should not have moved as much as they did. But, this is the summer season and in the summer, fewer traders show up for work.

Especially during a week like this one in which there is no major data release.

With fewer traders participating, there are fewer bond buyers to match with sellers, and fewer bond sellers to match with buyers.

Therefore, it is much less likely that a person who wants to buy at a certain price will find somebody who wants to sell at a certain price. Therefore, mortgage bonds (and interest rates) tend to move a lot more sharply during the summer than we're otherwise used to seeing.

Today, three Fed presidents take the stump: Janet Yellen (San Francisco), Timothy Geithner (New York), and Richard Fisher (Dallas). Markets will listen to the Fed speaker for clues inflation and the economy.

If the speakers indicate worry over inflation, mortgage rates will rise in response.

6 Rules of Marketing Any Listing

2007-06-20T07:46:10Z

Rule #1: Buying Brain Cells

How do we buy brain cells?

Brain cells are bought in many different ways, whether it be through uniqueness or eliciting emotion. For instance, when you see television commercials that are humorous or that arouse empathy or drama, all of the various emotions elicited by these works buy brain cells. What becomes even more important, however, is repetitiveness. After all, potential home buyers need to hear about your home in order to determine whether to buy it. Hopefully, they will do so again and again and in multiple ways.

Rule #2: Identifying The Need (Pain)

The second rule we need to focus on is identifying and then solving the need of the individuals who are most likely to buy your home. The analogy I like to use is that everyone out there, in some capacity, is in pain. And, if you can be the solver of that pain, if you can be the aspirin that cures their pain, then you're going to be very successful in your marketing strategies.

So, where is the pain of potential home buyers right now?

Well, the candidates who are most likely to purchase your home are first-time home buyers. First-time home buyers, and home buyers in general really, are in a lot of pain for two main reasons. They have two big fears that are weighing on their minds. The first is,'Am I buying at the wrong time? Am I buying at the height of the market, and have I made a mistake?' We'll get into that psychology in a few moments. But we'll need to be mindful in our marketing that the timeliness of this purchase is important to these potential buyers; and we'll need to address this pain to the best of our ability to make sure that they are not fearful.

The second fear of our potential buyers is the payment shock of a new mortgage compared to their rent payments. Let's face it, most loan originators do not do an adequate job of educating the consumer on the after-tax benefits of buying a home.

If we understand and address these pains of the potential buyer in our marketing, we're going to go a long way towards being successful.

Rule #3: Providing Exclusive Information

The third Rule of Marketing, or the third area we'll need to address in our marketing campaign, is the concept of exclusive information. Now, we all know that the psychology of American consumers is that we like to have exclusive access to something that's special. I'm sure there's been someone who has proudly told you about the spectacular interest rate they got when they refinanced their home; a deal that they got, which was way better than any of their friends or family members were able to get. If we can create this kind of exclusivity in our marketing strategy, we're going to be very successful.

Rule #4: Getting a Good Deal

The fourth Rule of Marketing is based on the idea that everyone likes to feel that he or she is getting a good deal. It's likely that you're going to set an initial price on your home and then you'll be negotiated down simply because the buyer needs to feel like he or she has won and gotten a deal that exceeded their expectations. Honestly, it doesn't even really matter how much money is associated with the deal. I'm sure that there have been many instances in your life where you've felt that you've gotten a good deal; and it didn't even matter whether it was on a $5 or $500 purchase, you still felt great about it. As a rule, we need to keep that in mind in our marketing efforts.

Rule #5: Call To Action

The fifth Rule of Marketing is one that we see every day, in every type of marketing: creating a call to action through the perception of scarcity. This is why limited time offers are so successful. Auto dealerships are the best at this. They always have those exclusive summer clearance deals in which special-lease financing rates are advertised. Of course, you have to buy the car by August 31^st or else you don't get that special deal. Like the auto dealers, we also need to create a call to action to make sure that consumers act quickly and promptly when it comes to the purchase of your home.

Rule #6: Knowing The Buyers Mindset

Finally, the sixth Rule of Marketing - and this is the one that always gets overlooked even though it's probably the simplest and most basic of all the rules - knowing the mindset of your prospective buyer. Who is this buyer? This, of course, goes back to the issue of identifying the need of the buyer and solving it - but do we really know who this person is in terms of their financial situation, what's going to ring true for them, or what's going to be important to them? We need to understand the mindset of the buyer going in. This will be essential to our success.

Gas Prices Dip Below $3.00 But Are Still More Than Double Five Years Ago

2007-06-19T09:16:43Z

For those that spend a lot of time in their car, this is old news.

Since Memorial Day weekend when gas prices touched $3.24/gallon nationally, the cost of filling up dipped below $3.00. According to Gas Buddy, Monday's average cost per gallon was $2.995.

Despite the dip, gas prices are still much higher for late-June than in years prior.

2002: approximately $1.40/gallon
2003: approximately $1.48/gallon
2004: approximately $1.92/gallon
2005: approximately $2.14/gallon
2006: approximately $2.82/gallon
2007: approximately $2.99/gallon

Gas prices change quickly and those changes can be attributable to the price of crude oil, increased demand for gas from road travelers (i.e. summer road trips), or an interruption in the overall production (i.e. supply) of Gulf Coast refineries or from crude oil sources.

Since 2002, all three factors have contributed to the increased cost of gasoline. Over the past three weeks, though, we've all gotten a break.

Quit Waiting!

2007-06-19T09:08:40Z

It's time to quit waiting for:

Perfection

Inspiration

Permission

Reassurance

Houses to start selling

Interest rates to get better

The right person to come along

The kids to leave home

A more favorable horoscope

An absence of risk

Someone to discover you

A clear set of instructions

More self-confidence

The pain to go away

Get on with it already!

Nothing Happens Until You Take Action

The Week In Review (June 18, 2007) : What To Watch For

2007-06-18T09:33:04Z

After a tame Consumer Price Index report Friday, mortgage bonds staged a brief rally and rates retreated slightly.

Earlier in the week, mortgage rates were at their highest point in almost a year.

Unfortunately for rate shoppers, mortgage investors are behaving like Dr. Jekyll and Mr. Hyde right now. One moment, they hate the outlook on inflation; the next, they love it.

What's really confusing is that data points that made mortgage rates move higher or lower 6-9 months ago (i.e. jobs report, crude oil prices, housing stats) are now being discounted.

Broader data points such as CPI seem to have taken center stage.

At least for now.

This week, there are virtually no data points of consequence aside from Tuesday's Housing Starts data. Given last month's seasonable weather across the county, don't be surprised if the number surprises to the hot side.

So, without data, expect mortgage rates to respond to external factors, technical trading factors, and/or irregular weather patterns.

Champagne Wishes and Caviar Dreams

2007-06-18T07:39:27Z

Remember the old tag line from the show "Lifestyles of the Rich and Famous", as Robin Leach wished us all "champagne wishes and caviar dreams"? And sure enough, these days more and more people have the trappings of the rich. But is it the new home, maybe a shiny BMW, or more vacations? No. It's getting hit by the Alternative Minimum Tax (AMT), which was originally designed to hit only the ultra-wealthy. Not really the "you have arrived" feeling you had hoped for.

The nasty AMT isn't just for the wealthy anymore, as it is trapping an alarming amount of the middle class, especially those who own homes and live in states with high income tax rates. And it's getting worse. Pretty soon, over half those with incomes between $75k-100k will be victimized by the AMT.

So what's the scoop with AMT, and what do we need to watch out for?

The AMT was first enacted nearly 40 years ago to ensure that wealthy taxpayers pay at least some federal income tax versus sheltering their entire income with big write-offs. This strategy worked at the time, but AMT has never been indexed for inflation, resulting in more middle-income taxpayers owing the additional tax.

All of us go through the AMT test each year. Our income is matched up with the tax brackets it falls into and the tax owed is calculated. But we also go through a second calculation: the AMT calculation. Many deductions are eliminated and the tax brackets are reduced. The tax owed under AMT is then compared to the tax owed under the bracket calculation. And guess which one you owe? The higher tax, of course.

More individuals will pay the higher AMT tax since it does not allow deductions such as certain interest on some home loans, property taxes, state and local income taxes, standard deductions, or personal exemptions for children and dependents that are normally deductible under the regular tax brackets. As stated earlier, certain interest on some home loans will be wiped out under the AMT. There are two types of home loans that can be eligible for tax deductibility.

First, there is Acquisition Debt, which allows interest to be deductible on a loan used to acquire or improve your primary or second home, with a loan limit of $1 million dollars. The good news about Acquisition Debt is that it remains deductible, even if you are subject to AMT. This makes Acquisition Debt very valuable. But once you pay off or reduce the balance of your Acquisition Debt, it is gone and only the interest on the remaining portion is deductible. So taking out a new loan at a higher amount will not give you that precious Acquisition Debt back.

The next best thing to Acquisition Debt is Home Equity Debt. Home Equity Debt has a limit of $100,000, which can be used over and above the Acquisition Debt Balance. And Home Equity Debt is flexible in that you can pay it down and pull it back out, which is not allowable for Acquisition Debt. But Home Equity Debt is eliminated under AMT...ouch! And with so many people being trapped by the AMT and also having loan amounts higher than what was used to acquire the property, the lost deduction is significant.

It's always good to check with a tax professional about your own personal scenario, and learn how this impacts you. If you need a referral to a tax pro, I'd be more than happy to make a suggestion, just give me a call!

How Father's Day Got It's Start

2007-06-17T08:22:03Z

With today being Father's Day I thought you might enjoy learning a bit about how this holiday actually got its start. Ok, some people think that Father's Day was invented as an afterthought to Mother's Day... You know, everyone felt sorry for dads since moms had their special day in May, so... along came Father's Day in June! Not true!

The creation of a national day for Dads began back in the 1900s and owes its start to a young widower by the name of William Smart. A civil war veteran, William raised his six children single-handedly on a rural farm in eastern Washington State. When Sonora Louise Smart Dodd, one of Mr. Smart's children, was grown she wanted to show her appreciation for her father. So, in 1909, she proposed a day to honor her father in June, the month of her father's birth (see, it wasn't an afterthought to Mother's Day!).

The very first Fathers' Day followed on June 19, 1910 in Spokane, Washington. In 1924 President Calvin Coolidge showed support of this becoming a national holiday. But it was President Lyndon Johnson who actually proclaimed it a national holiday in 1966, to be celebrated on the 3rd Sunday of June.

To all you dads out there...Happy Father's Day and have a blessed day!!!

Why Square Footage Is A Matter Of Debate, or The Difference Between Guidance and Law

2007-06-16T07:38:42Z

Square footage of a home is a matter of debate -- a homeowner measures it one way, a real estate agent another way, and an appraiser a third way.

The local tax assessor has his own method, too.

So, who is right?

Until 2003, they all were! That's when the NATIONAL ASSOCIATION OF REALTORS® Appraisal Committee defined the term "square footage" to include the following:

Finished square footage on each level of the home, measured from the exterior-facing surface of outside-facing walls.

The committee defined "finished" as an enclosed area that is suitable for year-round use and includes walls, floors and ceilings.

Seems basic enough, but there were some added notes and exceptions:

An opening to a floor below (e.g. vaulted ceiling, open-air living room) is not included.
Stairs are counted as square footage and are added to the floor from which they descend
Finished areas must have a ceiling height of 7 feet to be included (except under duct work or beams in which case the requirement is reduced to 6 feet, 4 inched)
If a room is sloped, at least half of the room must have the minimum 7-foot height in order to be included
"Detached" finished areas are only included if they are connected to the main structure by another finished area. Detached garages, therefore, are excluded.

Even with the standard defined, the Appraisal Committee's approach to square footage is still just a guideline; no states have formally adopted it as a standard for appraisers, tax assessors and other real estate industry players.

Until then, the debate will continue. Despite the "official" guidance.

(Image Courtesy: Gables at Copper Creek)

Are You Climbing The Ladder Of Success?

2007-06-15T06:20:34Z

Are you climbing the ladder of success or are you a few rungs short? Is making it to the top your goal or just a passing thought? How are you measuring your success? Is the next rung just out of your grasp?

The ladder is comprised of several rungs. Mastering the lower level is easy. Achieving the next level takes a bit more skill and as you perfect your skills, the rungs come more easily. So as professionals how are you measuring your climb?

For some it is the money. For others, it could be more time with your family, and for others it could be on a more personal level.

Even if you have been in the real estate industry for years, there is no magic bullet. The industry is ever changing. Just as we perfect one aspect, something new comes along. There is always something to be learned. Continually educating ourselves helps to make us better. Better loan officers, better Realtors, better employees, and more importantly, better people. We are growing, which is what helps us to become that special person we are entitled to be. Constantly evolving, changing, learning. What new thing have you discovered about yourself recently?

Reaching the top of the ladder is never easy, but don't ever give up, because you never know if success might be right around that next bend in the road.

Desire + Dedication + Discipline = SUCCESS!!

Have a great day!!

The Two Methods To Generate Home Equity Are Not Equal

2007-06-15T06:15:55Z

Home equity is created in one of two ways (assuming increasing home value and a non-negatively amortizing first mortgage).

In the first method of creating equity, the homeowner pays down the principal balance on the mortgage. This increases the difference between what is owed on the home and what the home is worth.

In the second method of creating equity, a home's value increases over time. This increases the difference between what is owed on the home and what the home is worth.

Because both methods create equity, homeowners often confuse the two.

In Method #1, the homeowner takes dollars from a paycheck that have already been taxed and places them "on deposit" with the home. The money can only be recaptured when the homeowner sells the home or refinances.

In Method #2, the home itself creates value. The extra "dollars-on-paper" can be paid as real dollars when the homeowner sells the home or refinances.

The differences are subtle, but important. Method #1 depletes the homeowner's personal funds to "create" equity and that means that no new wealth is created. Method #2 uses no personal funds at all.

When considering your personal mortgage plan, remember that principal paydown and home appreciation are not equals with respect to building equity.

Moving To A New Town Means Adjusting To A New Cost Of Living

2007-06-14T06:36:47Z

For the budget-aware, buying a new home involves calculating how new PITI payments will impact the household budget.

For in-town moves, the math is fairly simple -- consider your existing budget and replace your old housing cost with your new housing cost.

For non-local moves, however, the budgeting grows more complicated because each city has a distinct Cost of Living.

Bankrate.com makes an interesting calculator available that -- while not perfect -- does a fairly good job of helping a home buyer plan for a new life in a new town, complete with estimated heating bills and grocery tabs.

(Image Courtesy: Calendars and More)

Would You Have Answered The Mortgage Type Quiz Correctly?

2007-06-14T06:32:10Z

The pie chart above comes from a Bankrate.com survey, sampling 1,000 adults about their current housing situation.

The question asked: What type of mortgage do you currently have?

While the 34% "Don't Know" figure is troubling, even more frightening is the 6% "ARM" figure.

The sample size was small, but far more than 6% of homeowners carry adjustable rate mortgages. Some of the survey responders may have mistaken their "5-year fixed rate mortgage" for a true fixed rate mortgage -- even though they are aware that the rate can change after 60 months.

According to the Federal Reserve, ARM holders tend to be unaware of how often their home loan can adjust, the maximum interest rate to which it can adjust, or even the rules by which the new, adjusted interest rate is calculated. That all can lead to financial stress in a household.

If you own a home, you need to understand the basic structure of your own mortgage the same way that you need to balance your checkbook each month. Even if you have a fixed rate mortgage -- you may be mistaken, after all.

It's never too late to look over your mortgage statement or reviewing your closing documents. If you don't know how to interpret what you're reading, get help from a professional.

(Image Courtesy: Bankrate.com)