Author: bmadmin

7 Personal Finance Questions Most People Can’t Answer

I’ve come to realize that a vast majority of us share the same goal in life. We want to commit, work, face and take responsibility for as little as possible, yet still be comfortable. In schools today, the child that makes B’s and C’s with little or no effort is met with more admiration than the child who devotes hours to their task to receive an A. Although in school one can make an argument that it is overall better to be “well rounded”, when it comes to life and especially to finances only those who are committed reach the highest levels of success.

People Aren’t Lazy, They Are Simply Uninspired

During my nearly two decades in business, I have observed people at virtually every stage of commitment and I have seen many climb through the various stages. Initially most people hesitate for a variety of reasons to really put forth a full effort. Sometimes it is because they are afraid of failure and can use the lackluster effort as their excuse. Other times it is because of a lack of confidence or understanding and sometimes it is simply because they don’t want to exert themselves. I used to refer to them as lazy but now I truly believe there is no such thing as a lazy person. It’s true. I’ve seen people who everyone would agree is very lazy, get up at 4am and hike miles into the woods to a location that they had scouted out weeks and months in advance simply to try to kill a deer that they will then have to cut up into smaller pieces and carry back out. That is commitment. People aren’t lazy, they are simply uninspired. You need to know what inspires you.

I am beginning to understand that the most important role I play is in helping people comprehend what it actually takes to achieve the level of success that they say they wish to achieve. For example, my 11 year old son wants to grow up and become the greatest golfer to ever play the game. To him, this will be measured by beating Jack Nicklaus and Tiger Woods for number of tournaments and major tournaments won professionally. I would never discourage any of my children from trying to reach an honorable goal, but in this case we must all admit this is a monumental task. Would it be fair to my son if I didn’t explain to him that if he really wants to achieve his goal, he will have to devote a majority of his time every day from now until he is 45 years old to improving his golf game? It will alter what he eats on a daily basis, how he exercises, who he is friends with, his grades, and virtually every other aspect of his life. At work, it is very similar. You must first determine what a person’s goal is and then help them develop a REAL understanding of what it will take for them to get there.

Why Are We Like This?

Probably the biggest observation I’ve had during my career is exactly how little time and effort people invest into their personal finances. Most of us go through life driving from home to work and hoping that the direct deposit is enough to pay the bills or “make ends meet”. We don’t really think much about savings or investments other than to do what everyone else does at work by contributing a small percentage to our retirement plan. When it comes to borrowing money, we are even worse. We simply search the internet and make a few calls and usually select a person with less financial experience than we have to advise us on how we should structure financing our new home. Why are we like this? Is it because it might be painful to face where we stand? If that’s the case, trust me, it will be a lot more painful down the road when you are forced to face it.

Properly managing your personal finances is almost exactly like growing your business and reaching any other goal. It doesn’t take that much more time or energy. It simply takes a consistent effort and a little focus. Take the time to review the basics.

Ask Yourself the Following Questions:

How much life insurance do I need?
How much do I spend each week?
How much do I take home each week?
Do I have the right kind of auto and home insurance?
What would happen if I were in an accident and injured someone else?
What would happen to my family if something happened to me?
What will my income and lifestyle be like when I retire?

These questions are so basic yet the truth is very few of you know the answers to them. If you are in your 20’s or older and have started your career, it is critical that you get a game plan for your personal finances and that you do it sooner rather than later.

As I stated earlier, I am beginning to understand that the most important role I play is in helping people comprehend what it actually takes to achieve the level of success that they say they wish to achieve. Virtually every day I meet with a client and ask them what their plans are financially for their home, family and finances. Helping them figure out the best interest rate option is easy. The real value comes in helping them figure out what they want financially and creating a game plan to get it. If you don’t have one, please get with someone and figure it out. It will help you and your family tremendously and I’m personally convinced it will go a long way toward bringing our country back as well.

Marty Preston, Branch Manager of Benchmark Mortgage in Lexington, Kentucky, is a consistent Top Producer and one of the country’s premier mortgage lenders. Marty is also a nationally known speaker and a major force in the national mortgage banking scene.

Six Ways to Go Back to School on a Budget

by bmadmin

The summer is coming to a close and the 2012-2013 school year is upon us.

The seemingly endless list of school supplies and clothes has to be handled now. It’s time to get the backpack and supplies. The kids need new clothes and shoes.

This year the average family with students from Kindergarten to 12th grade is expected to spend $689 on Back-to-School items. It’s up from $604 last year according to the National Retail Foundation.

“When it comes to their children, there’s nothing more important to a parent than making sure their children have everything they need, even in a tough economy—and especially when it comes to back-to-school shopping,” said NRF President and CEO Matthew Shay.

Here are six ways you can save a little money and go back to school on a budget:

1. Know the Dress Code – Before you go out shopping for school clothes make sure you fully understand the dress code. We want to ensure the clothes we buy can all be worn to school.

2. Buy Supplies for the Whole Year – August is typically the cheapest month for school supplies. Many of the big office stores even price items below cost. Look for notebooks, paper, pencils, and other items on super discount and stock up.

3. Break Down Bulk Snacks – Save some money by purchasing larger packages and divide it up into individual portions.

4. Know When It’s Not a Deal – Tax free weekend, back to school sales, semi-annual clearance. You will hear plenty of creative names for sales. Check the prices and make sure it really is a deal.

5. Wait For The Clearance -Stores will begin marking down school supplies right after the rush. You can get some great deals if you can hold out a few more days.

6. Give Them a Budget – Let your kids get involved in the process by giving them a budget for school supplies and clothes. They will appreciate learning how to stretch the dollar and get the most out of their budget.

How do you handle this time of year to make sure you go back to school on a budget?

Avoid Becoming The Stagnant House When Selling By Staging It Properly

by bmadmin

Home staging is preparing your home for sale, inside and out, focusing on design and overall appearance to make it as desirable as possible to potential buyers. However, many homeowners believe that in order to sell their home, they will have to spend big bucks to get it into shape.

It’s time to debunk that myth. Not everyone can afford to do the major makeovers you see on home improvement shows.

There are many ways to set the stage for a smooth and quick purchase of your home on a shoestring budget, with a little time and creativity.

Learn the benefits of staging your home and the ways you can do so without having to tap your retirement fund!

New Perspective

The home staging process makes you think like a home buyer, which is a valuable tool when trying to present your home from the outside looking in. Ask yourself, “would I buy my house again as is?”

Cleanliness and Organization

Staging forces you to clear out cabinets, clean shelves, go through closets and pack up knick-knacks. You’ll have to do this anyway when you move, but now it serves a dual purpose – saving you last minute stress and enlarging your rooms by removing clutter.

Reduced Market Time

Staging makes it more likely that your house won’t get stale on the market. Staging makes the home more desirable and less personalized, which allows you to move on faster.

Opportunity to Showcase Worth

If you are selling your home in a buyer’s market, it’s easier to defend your asking price when your home stands out. Proper home staging can help you display all the reasons why your home should become theirs at a price that’s agreeable for everyone.

Home staging is not just reserved for the inside!

Otherwise known as curb appeal, the outside of your home should make potential buyers want to see the inside.

Here’s where the outside-looking-in perspective kicks in – Start by standing at the curb and jotting down what you see.

If this wasn’t your home and you were simply walking by, what is your first impression?

Do you want to see the inside? Does it feel welcoming? Are the flowers and plants well taken care of?

Do you see shutters with chipped paint?

Are there updates and repairs that need to be made or does the house seem in good condition?

Does the area around the porch look dull and in need of some color?

What could you do to make the house more appealing to potential buyers when they first drive up?

Remember, home staging is about presenting your home in a way that appeals to the most people so that you can sell your home quickly and for a price that makes you happy!

Housing Market Turns Corner; U.S. Home Values Post First Annual Increase In Nearly Five Years

by bmadmin

Zillow’s second quarter Real Estate Market Reports, released today, show home values increased 2.1% from the first to the second quarter of 2012 to $149,300 (Figure 1). On an annual basis, home values rose 0.2% from June 2011 levels (Figure 2), marking the first annual increase in U.S. home values since 2007. In addition to showing both quarterly and annual appreciation, national home values also rose for the fourth consecutive month, increasing 0.7%. Notably, home value appreciation in the second quarter was the highest since the fourth quarter of 2005.

Nationally, home values reached their bottom in February of 2012 and have since appreciated at very robust monthly growth rates. Despite encouraging monthly growth, we do not believe that this monthly rate is sustainable and expect it to taper off towards the end of the year. According to the Zillow Home Value Forecast, we expect national home values to appreciate by 1.1% over the next year (June 2012 to June 2013).

The housing market’s recovery continues to show tremendous variation market by market. Sixty-nine of the 157 markets covered by the Zillow Home Value Forecast are expected to see increases in home values over the next year, with the largest increases expected in the Phoenix metro (9.9%) and the Miami metro (6.1%). We believe that ninety-six out of the 157 markets have already hit a bottom in home values, including Boston, Miami, and Phoenix. In some of the hardest hit markets, the bottoming process has been quite different than we had initially expected. Due to very low inventory levels paired with greater consumer and investor appetite and low mortgage rates, home values have appreciated faster than anticipated in markets like Phoenixand Miami, creating a V-shaped recovery in home values.

Home Values

The Zillow Real Estate Market Reports cover 167 metropolitan areas (metros) of which 98 showed quarterly home value appreciation. Five metros remained flat, while 64 metros show home value losses. Nearly one-third of metros covered by the Real Estate Market Reports posted annual increases in home values. The largest annual increase was in Phoenix, where home values rose 12.1% from the second quarter of 2011 to the second quarter of 2012. Phoenix is benefiting from high demand for homes from investors looking to convert them into rentals, high demand from mainstream buyers pulled back into the market by historical affordability (almost 43% below the historical average) and constrained supply due to high negative equity (55.5% of Phoenix homeowners with a mortgage were in negative equity in 2012 Q1) and natural resistance of sellers to sell at market bottom.

Overall, national home values are back to January 2004 levels, having fallen 22.9% since their peak in May of 2007.

Rents

The June Zillow Rent Index (ZRI) is up 5.2% from year-ago levels, and 68% of the 293 metropolitan areas covered by ZRI in this report experienced year-over-year gains. The rental market remains strong even as home values start to once again appreciate in many markets. Markets that saw extremely strong year-over-year rent increases include Philadelphia (11.9%), Chicago (11%),Baltimore (11%), and San Francisco (9.5%). Continually rising rents will increase consumer demand for home purchases, especially in this low mortgage rate environment.

Foreclosures

The rate of homes foreclosed continues to decline in June with 5.8 out of every 10,000 homes in the country being liquidated (Figure 4). This is the lowest foreclosure pace we’ve seen since December 2007 when 5.5 out of every 10,000 homes were being liquidated. Nationally, foreclosure re-sales also continued to slow, making up 15.6% of all sales in June, down from 16.4% in May (Figure X). The decreasing prevalence of foreclosures in the monthly transactional mix is due to both seasonality (more non-foreclosure sales in the spring and summer) combined with the much slower pace of foreclosure liquidations over the past year. This lower level of foreclosure re-sales is contributing to home value appreciation, as these are usually sold at a discount and influence surrounding non-distressed sales. With foreclosure starts again increasing now that the National Foreclosure Settlement has been approved by the courts, we do expect some increase in foreclosure liquidations in the back half of this year, although lenders are being more aggressive in pursuing foreclosures alternatives for homes in the pipeline.

Outlook

Nationally, we believe that housing has finally turned a corner, and our forecast calls for U.S. home values to increase by 1.1% over the next year. In general, we continue to believe that high levels of negative equity paired with higher than normal unemployment will keep foreclosure rates higher than normal for at least the next 2-3 years. In some markets, we believe this combination will temper near-term price appreciation and lead to a U-shaped recovery in home values.

In other markets, however, we believe the trajectory of home values will look more like a step-function characterized by cycles of price spikes and plateaus. In these markets, negative equity-induced supply constraints in combination with mainstream buyer demand and robust investor demand will lead to short-term price spikes (as we’re seeing now in Phoenix and Miami). These price spikes will free some homeowners from negative equity, allowing them to sell, thereby easing supply constraints and dampening prices until the cycle is repeated.

Downside risks to our outlook are that the pace of foreclosures increases more than expected, job growth becomes even more sluggish, or we have a political train wreck on the budgetary and tax issues we face at the end of this year. We, however, remain optimistic that low mortgage rates, high levels of affordability, rising rental prices, and slowly improving conditions in the overall economy will combine to keep the housing recovery on track, and we expect that both existing and new homes sales will continue to increase for the remainder of the year, being tempered only by low inventory levels (versus anemic demand).

See interactive data on Zillow’s Research page here.

7 Home Improvements That Will Lose You Money

by bmadmin

Many homeowners want to make improvements to create their own space. Before you bring out the sledgehammer, make sure you are aware of the return on investment any improvements will make.

Every situation is different, but here are 7 home renovations that may not have much return when it’s time to sell:

1. Home Office Remodel – According to Remodeling magazine, the average cost of a home office remodeling job is about $27,963. On average, 43% of home office remodeling costs are recouped in the resale value of a home. If you want to improve your home office without a large investment, stay away from custom built items.

2. Sunroom Addition – Many people believe sunroom additions are cheaper because they don’t require heating & cooling, are usually smaller spaces and generally don’t have a bathroom. However, all the little extras and unexpected labor costs can easily add up and generally don’t return on the amount invested.

3. Bathroom Addition – Sometimes additional bathrooms are needed, especially if there is a waiting line outside the available bathrooms in your home. However, they tend to require a lot of costly work (think “water”) and generally only return about 51% of your initial investment.

4. Garage Addition – Building a garage is essentially building a house for your car. It often requires a foundation, constructing walls and to build a roof along with many other labor intensive efforts. Homeowners generally recoup only 57% of the average costs, which are around $58,000.

5. Master Bedroom Suite – Master bedrooms can get very elaborate. Adding bedrooms can add value to the house, but the costs are even greater. The average cost per square foot varies, but anyway you look at it – you’re likely to lose money. The average master suite addition runs over $100,000.

6. Fiberglass Entry Door – If you’re going to upgrade your door, don’t choose the higher-cost fiberglass alternative to a heavy steel door. Steel doors will provide greater security and weather-resistance and tend to return 17% more on your investment than fiberglass.

7. Swimming Pools – Pools can be a lot of fun but they shouldn’t be added with the hopes of a huge return. Some home buyers see a pool as a burden when they are shopping and focus on the maintenance costs instead of the benefits.

Before you jump into any home improvement be sure to consider the potential return.

If you decide to move forward with any improvements, you may want to think about refinancing as a way to fund your improvements.

Whatever you decide, the most important thing is that you will enjoy it while you are living in the house.

Picking Up Pennies Pays Off His Mortgage

by bmadmin

A Massachusetts man delivered 62,000 pennies as his final mortgage payment.

Thomas Daigle told The Milford Daily News he wanted to ensure his last payment was “memorable.”

“It was something I wanted to do,” he said. “I always follow through.”

“I was just praying I didn’t die first.”

Thomas moved into his Milford, Massachusetts home in 1977 after receiving a mortgage from Milford Federal Savings and Loan Association.

Shortly after, he began collecting pennies in an old milk crate and eventually had to move his collection into two military grade metal boxes.

When he delivered the two boxes of pennies to Milford Federal on April 24th they weighed nearly 800 pounds.

Luckily he gave the bank a month to prepare for his “memorable” delivery and they were 100% supportive of his idea.

The life-long optician says his wife Sandra laughed whenever he picked up a penny and said it was going to the mortgage.

On average, Thomas collected 2.5 pennies every day.

That’s pretty impressive!

Short Sale Assistance for Military Homeowners with Orders

by bmadmin

Washington, DC – Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco today announced changes to short sale policies that will make it easier for military homeowners with Fannie Mae and Freddie Mac loans to honor their financial commitments when they are required to move as part of their duty.

At a news conference with Consumer Financial Protection Bureau (CFPB) Director Richard Cordray, CFPB Assistant Director of Servicemember Affairs Holly Petraeus, and Deputy Assistant Secretary of Defense for Military Community and Family Policy Robert L. Gordon III, DeMarco announced that military homeowners who receive Permanent Change of Station (PCS) orders will be eligible to sell their homes in a short sale even if they are current on their mortgage. PCS orders often require quick moves and can create hardship for military homeowners who are underwater on their mortgages and therefore cannot sell their home without taking a loss. Previously, many service members felt their only option was either to maintain financial obligations on two residences or to default on their mortgage.

“It is in everyone’s interest for the men and women serving in our armed forces to focus on the important job they are doing defending our country, rather than worry about the maintenance and leasing of a property in another jurisdiction,” said DeMarco. “These Fannie Mae and Freddie Mac policy changes, in combination with related guidance last fall, should now provide military homeowners with access to the immediate and automatic full range of foreclosure alternatives.”

DeMarco commended the CFPB and the prudential regulators – the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, and the Office of the Comptroller of the Currency – for issuing a new interagency guidance that reinforces for mortgage servicers the importance of treating military homeowners with PCS fairly.

Under the new policy Fannie Mae and Freddie Mac will not pursue a deficiency judgment or any cash contribution or promissory note from members of the military with a change in duty station for any property purchased on or before June 30, 2012. Service members must have a Fannie Mae or Freddie Mac loan to be eligible.

Last year Fannie Mae and Freddie Mac issued guidance to mortgage servicers confirming PCS orders as a qualifying hardship for forbearance and loan modifications.

Service members can check Fannie Mae or Freddie Mac websites to see if their loans are held by them or they can call hotlines for military homeowners at 1-877-MIL-4566 or 1-800-FREDDIE.

Five Money Saving Tips for Potential Homeowners

by bmadmin

Before you begin the process of looking for a new home, as a potential home buyer, you will want to carefully inspect your financial situation. Home buyers should be certain their current income and monthly expenses can support a healthy mortgage payment. There are several ways would-be home buyers can maximize the income they have and make certain they can afford a mortgage.

By following these few simple money saving tips, those wanting to purchase a home can make that dream a reality.

Tips for Saving Money:

1. Create a Budget – By determining your fixed and discretionary expenses, families can focus where they have some flexibility in their budget. Keeping a log of expenses will also help families understand how their money is spent each month and can assist them in making necessary changes.

2. Write Down Goals – When goals are written down they tend to become more real. Once goals are in writing, families are more likely to work towards those written goals. Keeping these goals in a plain view will provide the family with a constant reminder as to the purpose of their sacrifices. Consider hanging your goals on the refrigerator.

3. Eat at Home – One of the easiest ways to save money is to eat at home. Eat breakfast at home, and take a sack lunch to work. Preparing dinner at home will not only save money but provide the opportunity for family time as well. Are you currently eating out or cooking at home?

4. Make a Grocery List – Before going to the grocery store, families should have a list of ingredients they need for the week’s meals. This will curb impulse shopping and prevent unnecessary purchases which simply go to waste. Eating something before you go grocery shopping will prevent the “hunger buys” also.

5. Build in Treats – Living on a budget should not mean never eating out, getting a coffee, or going to a movie. Depriving the family of these special treats will make it impossible to stick to a budget. While going out to a movie every weekend or buying a coffee every morning may not be the best money saving ideas, building in opportunities for these occasional treats is crucial.

Mortgage lenders recommend that families seeking to buy a home first consider their financial situation and how this may affect their ability to obtain a mortgage.

We can work with you to create a plan of homeownership that is best for your long term goals. By adopting the above money saving tips, families can ensure their financial priorities are in order.

Five People That Should Update Their W-4 Tax Withholding Form

by bmadmin

How often do you review your W-4 to ensure you are having the correct amount of taxes held by your employer?

Many tax and financial experts are encouraging taxpayers to review their withholdings because you could be having more tax taken out of your pay than you will be liable for at the end of the year.

The following circumstances should prompt a review of your W-4 Form to ensure you are claiming the correct number of exemptions.

1. Your spouse has been laid off or quit working. Usually, when both spouses are employed the taxpayers tend to increase their W-4 withholdings. The loss of a job for either of the spouses could be reason to reduce the federal tax withholding by claiming the maximum allowable exemptions.

2. Your spouse owns and operates a small business. Couples with an employed spouse and a small business owner may have increased their federal withholdings at the job to ensure they meet the income tax obligation from their spouse’s business profits. However, for the last tax year the profits from their spouses business may have either been eliminated or substantially reduced. These taxpayers might find it necessary to file a new W-4 Form and reduce their federal income tax withholdings to reflect the reduced tax liability from the spouses business.

3. You have recently had a baby or took on elderly parents as dependents. People in this situation may also find they are entitled to additional dependent allowances. Thus, they should consider filing a new W-4 Form to reflect the additional dependent allowances the taxpayer is entitled to claim on their tax returns.

4. You sustained substantial capital losses in the stock market. Capital losses can be claimed against your salary and other ordinary income. These taxpayers could be entitled to claim an additional withholding allowance.

5. You received a salary reduction or making less money now. Taxpayers might find themselves being placed in a lower tax bracket due to a new job or reduced income. Both these factors could entitle the taxpayers to reduce his federal income tax withholdings by claiming additional allowances.

A strategy of overwithholding so you can plan for a tax refund may not be a smart idea if you’re faced with an extremely difficult time meeting your current financial obligations. It’s better not to use credit cards or lines of credit to fund your current obligations and instead, increase your paycheck by maximizing your dependent allowances you are legally entitled to by the IRS.

This article is provided for informational purposes. Always seek advice of a competent financial advisor with any questions you may have regarding a financial matter.

Are Free Credit Score Offers Really Free?

by bmadmin

If you spend any time online, you have surely seen the many ads offering free credit scores. I also get several pieces of junk mail in my mailbox and see a lot of commercials for these different services. It sounds like a good deal, except credit scores are never really “free”. You will pay one way or the other for these advertised businesses.

To get your credit rating from one of these companies, you will have to sign up for one of their services, usually a credit monitoring service. It is not necessarily a bad idea to have one of these services running in the background. It can help protect you from identity theft, and alert you anytime your credit is checked by businesses that want to offer you a pre-approved credit card or loan.

If you do not want to join those credit monitoring programs, you can pay a one-time fee to see your credit score on the official FICO website.

There are two ways to receive your credit report for free:

1. Lender denies you credit. A new law that went into effect in 2011 makes your report available anytime you are denied credit. You will probably have to submit something in writing to receive your report but by law they are required to supply it to you. This is a good thing for consumers put in that unfortunate position, as it will eliminate any mystery surrounding a consumer’s credit rating. You will not see your score but you will be able to verify the validity of the information on your report.

2. AnnualCreditReport.com. This free service from the Federal Trade Commission offers a once-per-year service to help consumers stay abreast of their credit report. This is a great opportunity to verify any new marks and ensure there are no mistakes you need to dispute. Your credit score will not be included in the free report but you will have the opportunity to purchase the score or view your free report.

The very best thing you can do is maintain the finest credit history you can. The higher the credit score, the lower the interest rate in many cases, especially when it comes to credit cards and auto loans.

If you must know your actual credit score, go ahead and pay to get it.

Here are the websites for the Big 3 credit companies:

Experian.com

TransUnion.com

Equifax.com