More Smart Year-End Tax Moves for 2012

Everyone needs help with tax strategies. Earlier in the week I posted a few ideas. Now I am continuing with some additional tips. If you haven't read the earlier post, I hope you will go back and read it for more ideas.

Review Your Portfolio Allowing taxes to dictate your investment strategy is rarely a good idea. But if you’re already considering selling appreciated securities or other assets -- even if you don’t have losses to offset them -- cutting them loose by year-end could save you money (you can harvest losses to offset investment gains, plus shield up to $3,000 of ordinary income from taxes).

Unless Congress extends the Bush tax cuts, the top rate on capital gains will rise to 20%, and the top rate for dividends will jump to 39.6%. Even if Congress extends current rates, the new 3.8% surtax on unearned income, levied on singles with adjusted gross income over $200,000 (over $250,000 for married couples), will boost the top rate for long-term capital gains and dividends to 18.8%.

If you think you’re going to need to sell some of your investments to raise cash next year, do it before December 31. And if you're an investor in the two lowest income tax brackets, 2012 is the last year you will pay zero tax on capital gains and dividends.

To take advantage of the 0% capital-gains rate for 2012, your taxable income can't exceed $35,350 if you are single; $47,350 if you are a single head of household with dependents; or $70,700 if you are married filing jointly.

Convert Your IRA to a Roth If you think your tax rate is going to rise sometime in the future, converting to a Roth makes a lot of sense. Withdrawals from traditional IRAs are taxed at your ordinary income tax rate, while all withdrawals from Roths are tax-free and penalty-free as long as you're at least 59½ and the converted account has been open at least five years. You do have to pay taxes on any pretax contributions and earnings in your traditional IRA for the year you convert. That's why converting before New Year's Eve is smart: You'll pay taxes at current tax rates, which are unlikely to go any lower.

If you're an upper-income taxpayer -- with modified adjusted gross income of at least $200,000 if you're single or $250,000 if you're married filing jointly -- you have an even greater incentive to convert in 2012 because converting next year could trigger a new 3.8% surtax on unearned income. (The surtax was enacted to pay for some of the costs of the health-care reform law.) Withdrawals from an IRA aren't subject to the surtax, but they're counted as adjusted gross income and could lift your AGI above the threshold.

There is a major caveat, though. We think a major tax reform package could be enacted as early as next year that would lower overall tax rates, while eliminating tax credits and deductions. If that happens, you'd be better off converting after December 31.
Fortunately, when you convert to a Roth, you can change your mind. If it looks like tax reform is going to lower your tax rate, you have until October 15, 2013, to undo the conversion and turn your Roth back into a regular IRA.

Give to Charity This is a great time of year to clean out your closets and garage, but you can write off donations to a charitable organization only if you itemize deductions. A few bags full of gently used clothes and household items can add up to hundreds of dollars in tax deductions, but valuing those donations can be difficult. (Try Turbo Tax's free tool).

If you donate a used car worth more than $500 to charity, your deduction will be limited to the amount the organization receives when it sells it. But you may be able to claim a bigger deduction based on the vehicle's fair-market value if the charity uses it to deliver meals, for example, or gives it to a needy individual. The charity will list the vehicle's sale price, or whether an exception allowing a higher deduction applies, on Form 1098-C, which you must attach to your tax return. Because of previous abuses, donations of used cars and other noncash items may attract extra scrutiny from the IRS. So keep scrupulous records.

Send cash donations to your favorite charity by December 31 and hang on to your canceled check or credit card receipt as proof of your donation. If you contribute $250 or more, you'll also need an acknowledgment from the charity.

Spend Down your Flex Plan (If You Need to) If you're thinking of cleaning out your 2012 flexible spending account to avoid the "use it or lose it" rule, remember that you can no longer use flex funds to pay for over-the-counter medicines, such as aspirin, ibuprofen or allergy meds, without a prescription (except for insulin).

But that restriction does not apply to other nonprescription medical items, such as crutches, contact-lens solution or bandages. (For a list of what is allowed by law, see IRS Publication 502.) The same rules on eligible purchases apply to health savings accounts.

In most cases, you have until March 15, 2013, to use your 2012 funds, but some employers still adhere to the December 31 deadline for using the money or forfeiting the balance. Check with your employer to verify your plan's deadline. 

Source: Kiplinger Magazine


Smart Year-End Tax Moves for 2012

Year-end tax planning is stressful under ordinary circumstances, and this year is anything but ordinary. Unless Congress reaches an agreement by December 31, tax rates on wages and investments will rise, the exemption from the estate tax will shrink, and dozens of tax breaks will disappear. Without a compromise, nearly 90% of Americans will pay higher taxes next year, and the average household’s tax bill will increase by $3,500, according to an analysis by the Tax Policy Center.

The most likely fix is a temporary extension of the current tax rates, but the odds that a lame-duck Congress will reach a deal are fading. With that in mind, focus on these year-end tactics that will trim your tax bill no matter what Congress does.
1. Pay into your 401(k) or similar employer-based retirement plan. Money you contribute to your plan (if it's not a Roth) is excluded from your income, lowering your tax bill.  If you're not yet on track to max out your contributions by year-end, you can direct some extra dollars to your retirement plan during your last few pay periods -- or, if you get a year-end bonus, use it to fatten your savings.

This year, workers can contribute up to $17,000 to employer-based plans. Workers 50 and older can contribute up to $22,500.

2. Cut your tax refund The majority of Americans are addicted to refunds. More than 75% of U.S. taxpayers give Uncle Sam an interest-free loan year after year, with an average refund of about $3,000 -- that's $250 per month. Wouldn't you rather get your money when you earn it instead of waiting a year for a refund? What’s more, that fat refund represents a security risk -- identity thieves have been filing fraudulent returns and stealing the refund.

There's an easy fix. Just file a revised Form W-4 with your employer. The more "allowances" you claim on the W-4, the less tax will be withheld. If your current financial situation is similar to last year's, just use our Tax Withholding Calculator. Answer three simple questions (you'll find the answers on your 2011 tax return), and we'll estimate how many additional allowances you deserve -- and how much your take-home pay could rise.

3. Boost Your 2012 Income Deferring discretionary income, such as year-end bonuses, is a popular tax strategy when tax rates are expected to remain the same or decline. This year, though, high-income taxpayers may want to accelerate discretionary income to avoid a tax hike created by the health-care reform law. Starting in 2013, taxpayers will pay an additional 0.9% Medicare tax on income from wages over $200,000 ($250,000 for married couples.) Of course, if tax reform leads to lower rates, deferring income would still make sense. But that may not happen right away: rate cuts in the Tax Reform Act of 1986 didn’t take effect until 1987 and 1988. 

4. Plan Your Itemized Deductions If tax rates increase next year, deductions will be more valuable. That would seem to argue in favor of postponing your charitable gifts until 2013. Much depends, though, on your personal situation. If you expect your income to drop next year -- you plan to retire, for example -- the deductions will probably be more valuable this year, no matter what happens with tax rates.

And for high earners, there’s another twist. Before 2001, the tax code limited itemized deductions and personal exemptions for taxpayers whose income exceeded a certain threshold. The Bush tax cuts phased out those limits and repealed them in 2010. The reductions are scheduled to be reinstated in 2013. If Congress doesn’t act, high-income taxpayers could lose up to 80% of their itemized deductions. For that reason, a charitable gift made in 2012 may produce greater tax savings than one made in future years, even if tax rates increase.

You may want to pay other deductible expenses before year-end, such as your January mortgage, 2013 real estate taxes and fourth-quarter estimated state income taxes. Be careful, though: If you're a candidate for the Alternative Minimum Tax, some of those deductions could be disallowed.

To take advantage of the 0% capital-gains rate for 2012, your taxable income can't exceed $35,350 if you are single; $47,350 if you are a single head of household with dependents; or $70,700 if you are married filing jointly.

Source: Kiplinger Magazine


Commercial Real Estate Vacancies Slowly Declining, Rents Rising

Most of the major commercial real estate sectors show gradually improving fundamentals and are easily absorbing the relatively small amount of new space that is coming online, with a full recovery already in the multifamily market, according to the National Association of Realtors® quarterly commercial real estate forecast.

Lawrence Yun , NAR chief economist, said the market has been slowly building momentum. "Job creation is the key to increasing demand in the commercial real estate sectors," he said. "The economy is expected to grow 2.5 percent next year, and with modest job creation, assuming there is no fiscal cliff, the demand for commercial space will gradually rise. The greatest friction that remains is a tight credit environment, notably for smaller properties."

Vacancy rates over the next four quarters are forecast to decline 1.0 percentage point in the office market, 0.6 point in industrial, 0.2 point for retail and 0.1 point in multifamily; however, multifamily has the tightest availability and is experiencing the strongest rent increases, well above the rate of inflation.

"The primary factor holding back greater job creation has been uncertainty over regulations and associated costs," Yun said. "With the elections behind us and Washington apparently resolved to prevent a fiscal cliff, it's hoped that ambiguity over regulatory issues will clear relatively soon so employers can understand the rules of the game and the layout of the field."

NAR's latest Commercial Real Estate Outlook offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc., a source of commercial real estate performance information.

Office Ma​rkets 

Vacancy rates in the office sector are projected to fall from an estimated 16.7 percent in the fourth quarter to 15.7 percent in the fourth quarter of 2013.

The markets with the lowest office vacancy rates presently (in the fourth quarter) are Washington, D.C., with a vacancy rate of 9.6 percent; New York City, at 10.1 percent; and New Orleans, 12.9 percent.

Office rent is expected to increase 2.0 percent this year and 2.5 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is likely to total 21.7 million square feet in 2012 and 49.0 million next year.

Industrial Markets

Industrial vacancy rates should decline from 10.1 percent in the fourth quarter of this year to 9.5 percent in the fourth quarter of 2013.

The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 4.3 percent; Los Angeles, 4.4 percent; and Miami at 6.5 percent.
Annual industrial rent is forecast to rise 1.7 percent in 2012 and 2.2 percent next year. Net absorption of industrial space nationally will probably total 93.4 million square feet this year and 89.6 million in 2013.

Retail Markets

Retail vacancy rates are expected to ease from 10.8 percent in the fourth quarter to 10.6 percent in the fourth quarter of 2013.

Presently, markets with the lowest retail vacancy rates include San Francisco and Fairfield County, Conn., both at 3.9 percent; Long Island, N.Y., 5.1 percent; and Orange County, Calif., 5.4 percent.
Average retail rent should increase 0.8 percent this year and 1.4 percent in 2013. Net absorption of retail space is estimated to be 9.1 million square feet this year and 19.8 million in 2013.

Multifamily Markets

The apartment rental market - multifamily housing - is projected to see vacancy rates decline from 4.0 percent in the fourth quarter to 3.9 percent in the fourth quarter of 2013; vacancy rates below 5 percent are considered a landlord's market with demand justifying higher rents.

Areas with the lowest multifamily vacancy rates currently are Portland, Ore., at 2.1 percent; New York City, 2.2 percent; and Minneapolis, 2.3 percent.

Average apartment rent should increase 4.1 percent in 2012 and another 4.6 percent next year. Multifamily net absorption is likely to be 219,700 units this year and 234,600 in 2013.
Source: National Association of Realtors

Changes In Using SEC Rule 506 For Commercial Property Investment

With lender credit to commercial property remaining shy and sluggish years after the housing bubble, it’s more important than ever to be aware of investment capital options for commercial property transaction finance.  The act of raising capital by the offering of securities for such transactions or projects is highly regulated and rightly so, but changes are afoot in key regulations and might provide ways forward for property deals that would otherwise be held up for lack of access to capital markets.

What is Rule 506?
Under the Securities Act of 1933, any offer to sell securities in the US must either be registered with the United States Securities and Exchange Commission (SEC) or meet certain qualifications to exempt them from such registration.  These exemptions for registration requirements are described in SEC Regulation D, or “Reg D”.  Some companies are allowed under Reg D to sell securities without having to register the offering with the SEC, which can make access to capital markets a possibility for companies not able to bear the costs of SEC registration.

A reading of the Reg D text spells out what the purpose behind the regulations are – to ensure, among other things, that offers to sell securities are limited to investors meeting certain criteria of “sophistication” and “wealth” and “accreditation”.   These and other key terms have specific meanings in the regulations and need to be very well-understood before offers of securities are made.  Further, such offerings have been historically prohibited from being “general solicitations” announced with “general advertising”.  It’s these prohibitions concerning communications and solicitations that are changing.

The JOBS Act Relaxes Regulations For The First Time In 80 Years
On April 5th, 2012, President Obama signed into law the Jumpstart Our Business Startups (JOBS) Act, which is the first relaxation in Reg D in its over eighty years as a law. In response, SEC has proposed amendments to offerings under Rule 506  that include:

To implement Section 201(a) of the JOBS Act, we are proposing to amend Rule  506 to provide that the prohibition against general solicitation contained in Rule 502(c)  shall not apply to offers and sales of securities made pursuant to Rule 506, as amended,  provided that all purchasers of the securities are accredited investors and the issuer takes  reasonable steps to verify that the purchasers are accredited investors. In addition, we are  proposing to amend Form D, which is a notice required to be filed with the Commission  by each issuer claiming a Regulation D exemption, to add a check box to indicate  whether an offering is being conducted pursuant to the proposed amendment to Rule 506 that would permit general solicitation.

Broadly speaking, private placement just got easier.  Could this relaxation of regulation open up capital markets in significant amounts? A study of SEC’s own data and that of Thompson New Issues says that in 2011, the estimated amount of capital (including both equity and debt) raised in Rule 506 offerings was $895 billion, compared to $984 billion raised in registered offerings.  The answer appears to be a qualified yes.

[DISCLAIMER: Reprinted from "The Source" - This article is not to be construed as legal advice!  Obtain experienced securities counsel before using any technique regulated hereunder.]

Mortgage Rates Rise after Fed Announcement

With little progress on the fiscal cliff talks and few surprises in this week's economic data, the Fed meeting was this week's big story. Policy changes announced in Wednesday's Fed statement raised investor concerns about higher future inflation, and resulted in mortgage rates ending the week a little higher. 

The Fed announcement contained two major policy changes. The first, which was widely expected, is that the Fed will purchase $45 billion per month of long-term Treasury securities beginning at the start of 2013 to replace the Operation Twist program which expires at the end of this year. This will be in addition to the $40 billion of mortgage-backed securities (MBS) that the Fed now purchases monthly. The second change from the Fed was not expected. For the first time, the Fed announced that it will keep the fed funds rate at very low levels until certain economic targets are reached. Specifically, the fed funds rate will remain low until unemployment falls below 6.5% and inflation tops 2.5%. 

Despite four years of extraordinary levels of Fed stimulus, the economic data released this week revealed that inflation is not a problem right now. This week's data showed that Core CPI, the most widely followed measure of inflation, was only 1.9%. The concern for investors after the Fed statement is that the Fed appears to be willing to tolerate a higher level of inflation in its efforts to boost the economy, and inflation is negative for mortgage rates. 
Source:Marshall Moody at Bluebonnet Capital Mortgage 

Better Homes and Gardens Real Estate Enters 26th State

 Better Homes and Gardens® Real Estate recently announced the expansion of its network into its 26th state, Kentucky, with the addition of Better Homes and Gardens Real Estate Bluegrass Connection in Lexington. The brokerage is led by owners Richard Towner and Ronald Perry and serves the greater Lexington area. This marks the 14th U.S. brokerage to join the brand’s growing network this year.

“Richard and Ronald have an exceptional team that knows the home-buying process has evolved into a more engaging practice, which involves understanding the consumer’s lifestyle and community preference,” says Sherry Chris, president and CEO of Better Homes and Gardens Real Estate LLC. “The agents at Better Homes and Gardens Real Estate Bluegrass Connection recognize that a strong relationship with the client and community is necessary in ensuring consumers find homes that best suit their lifestyle. We are excited to add a brokerage that directly parallels our brand mission.”
According to the company, Better Homes and Gardens Real Estate Bluegrass Connection was founded on the principles of honesty, knowledge and innovation. The owners note that they strongly believe that it is the responsibility of the agent to keep the consumer informed, and help them make the best possible decision.

“We are excited to bring a new vision to the Bluegrass real estate market area,” says Towner. “The Better Homes and Gardens Real Estate philosophy of empowering the informed consumer resonates with today’s homebuyers and sellers. Our agents are eager to use the unique tools provided by Better Homes and Gardens Real Estate to bring this new model to our market.”

“Beyond the exceptional brand Better Homes and Gardens Real Estate offers, there are additional service and marketing benefits to our clients and our agents, thanks to the brand’s other listing programs and tools, including commercial, urban, and luxury programs,” Perry adds. With the new tools provided by Better Homes and Gardens Real Estate, our agents will be able to strategically identify new consumers and not have to rely on a reactive approach to marketing their home. Additionally, we are thrilled to offer our clients relevant real estate market insights through the brand’s social media efforts, as well as videos for first-time buyers developed by the national brand.”

The company notes that corporate citizenship is a key tenant of the brokerage’s philosophy. Better Homes and Gardens Real Estate Bluegrass Connection plays an active role in the Lexington community. The organization partners with Habitat for Humanity and RCHF – Real Community Housing Foundation, a non-profit group that works with low income and elderly families to refurbish their homes.

Disaster Relief Options for FHA Homeowners

Was your home or your ability to make your mortgage payments harmed by an event that the President declared a disaster? You may qualify for relief to help you keep your home. Much of the mortgage industry and The United States Department of Housing and Urban Development is committed to assisting borrowers whose lives and livelihoods are thrown into turmoil by a disaster.

If you can't pay your mortgage because of what happened, your lender may be able to help you. If you are at risk of losing your home because of the disaster, your lender may stop or delay initiation of foreclosure for 90 days.

Lenders may also waive late fees for borrowers who may become delinquent on their loans. Just follow the four steps below to see if help may be available to you. You are strongly encouraged to contact your lender for further information, and to see if you are eligible for relief.

Step One - Answer Four Basic Questions

  1. Did my expenses rise or income fall?
  2. Were these changes in my finances caused directly or substantially by the disaster?
  3. Have I missed any mortgage payments?
  4. Am I without other resources, such as insurance settlements, to catch up?
If you answered "yes" to all of these questions, and you have a conventional or VA mortgage, contact your lender. If you have an FHA-insured mortgage, please continue reading.

Step Two - See If and How You Can Participate in FHA Disaster Relief

The next step is to determine if you are one of the affected borrowers as described below. You must be in one of three basic groups in order to qualify for a moratorium on foreclosure:
  1. You or your family live within the geographic boundaries of a Presidentially declared disaster area, you are automatically covered by a 90-day foreclosure moratorium.
  2. You are a household member of someone who is deceased, missing or injured directly due to the disaster, you qualify for a moratorium.
  3. Your financial ability to pay your mortgage debt was directly or substantially affected by a disaster, you qualify for a moratorium.

If Your FHA Loan Was Current before the Disaster but Now You Can't Make Your Next Month's Payment

This special program is designed to help borrowers who are at risk of imminent foreclosure, so a moratorium won't apply to your situation. However, if your inability to pay your loan resulted from the disaster, your lender may waive any late fees normally charged and let you know about other options. Also, if you foresee ongoing problems in making your mortgage payments resulting from changes in your financial status, you should contact your lender immediately.

How Can This FHA Disaster Relief Help Me?

HUD has instructed FHA lenders to use reasonable judgment in determining who is an "affected borrower." Lenders are required to reevaluate each delinquent loan until reinstatement or foreclosure and to identify the cause of default. Contact your lender to let them know about your situation. Some of the actions that your lender may take are:

  • During the term of a moratorium, your loan may not be referred to foreclosure if you were affected by a disaster.
  • Your lender will evaluate you for any available loss mitigation assistance to help you retain your home.
  • Your lender may enter into a special forbearance plan, or execute a loan modification or a partial claim, if these actions are likely to help reinstate your loan.
  • If saving your home is not feasible, lenders have some flexibility in using the preforeclosure sales program or may offer to accept a deed-in-lieu of foreclosure.

Step Three - Take Action to Qualify for Foreclosure Relief

A foreclosure moratorium applies only to borrowers who are delinquent on their FHA loan. If you are current on your loan payments, then you should continue to make them. When contacting your lender for further instructions, please be prepared to provide them information about disability or other insurance that may be available to assist you in making your payments.
FHA lenders will automatically stop all foreclosure actions against families with delinquent loans on homes within the boundaries of a Presidentially declared disaster area.
If you were physically or financially impacted by the disasters and are in default or foreclosure, contact your lender immediately to request assistance.

Borrowers who were injured or whose income relied on individuals who were injured or died in the disaster will be asked for documentation such as medical records or death certificates, if available. Your lender will ask you for financial information to help evaluate what assistance can be provided to you to reinstate your loan.

FHA Loans Already in Foreclosure

It is very important that you notify your lender to be sure that they realize you are an affected borrower. Your lender may request supporting documentation and use it to determine if you meet the relief criteria. Once identified as an affected borrower, foreclosure action may be stopped for the duration of the moratorium period.

Step Four -If Your Lender Is Unable to Assist You

HUD is confident that your mortgage lender will make every attempt possible to assist you. If you are not satisfied after discussing possible relief actions with your lender, please call a HUD-approved counseling agency toll free at (800) 569-4287 or contact HUD's National Servicing Center.

De-Stressing Tips for the Holidays

It’s easy to get caught up in overspending during the holidays from Thanksgiving to New Year’s Day, but if you want to make it less stressful and more merry, here’s some tips to save money.

Christmas CardsLimit the mailed cards and you send. Instead send eCards that you can personalize and send to each person. To me they add more impact as they have music and are interactive. Plus, think of the trees you are saving by not mailing cards!

If still want to mail a card, make it a postcard instead, remember they require less postage than a regular card!

For friends and family that live out of the area make a brief phone, they would probably much rather hear your voice than receive a card in the mail.

Wrapping Paper & Gift TagsBe creative! Wrap the gift for the individual. Use magazine pages for small gifts. If it’s for a ‘foodie,’ wrap it in sheets from food catalogs. If it’s for the fashion conscious use something from a style magazine. Old magazines can be bought at thrift stores or libraries for usually 50 cents or less.
Make your own gift tags by cutting a small piece of matching wrapping paper and folding it in half.  This way you won’t waste the scraps of paper that are too small to wrap a gift, but too large to toss away.

Decorations Go old school. Pop some popcorn and some dried cranberries to string up on the tree or throughout the house! Just don’t eat it all while you are stringing it.

Decorate your house by bringing the outside in using pine cones and pine branches.  Sprinkle with a few drops of pine scented oil if you have it on hand to keep the scent fresh.

Buy tree ornaments that have meaning to you, not just because they are in bulk at a great price. Our Christmas tree is a memory tree covered in items from past vacations or special times with family. Some are actual ornaments, others are small items that we’ve glued ribbon to like sea shells or unique key chains that show the name of the place we visited. .

FoodWe’re all busy during the holidays, so maximize your cooking time. If you make a casserole make two and freeze the second one. 

Use the grocery ads when you shop and save by buying what’s on sale. Remember the key to shopping at markets, never shop when you are hungry as you’ll tend to buy junk you don’t need for your health or for your wallet.

Entertainment - Relax at home with a good movie instead of going out. Rent something with a holiday theme at one of the DVD movie kiosks or any of the online services. You’ll save on the snacks as well and may even try something a little more healthy.

Get to know your town. Take a drive around your town, or nearby neighborhoods to see their Christmas lights. Play Christmas music in your car to add to the festivity.  

Sing a song!  Many churches and groups even have caroling get-togethers join in!

Sit around a warm fire, or cozy up in the living room with blankets and hot cocoa.  Have everyone take turns saying how they have been blessed throughout the year. Being thankful shouldn’t end in November, keep the spirit going!

All the Best for a Merry Christmas and a Happy New Year!

Fall is Here and Winter is on the Way. Are you Ready?

Tips to Help You Save Money

Having survived a hot summer, you’re probably looking forward to cooler days. But winter can also be a real drain on your energy dollars if you’re not careful. So as you soak up the pleasures of autumn, take a few moments to prepare your home for the inevitable visit from Old Man Winter. Follow these guidelines so you can hang on to more of those hard-earned dollars.

Get some help from Mother Nature.
One of the cheapest and most effective heaters is right outside your window: say hello to Mr. Sun. Make a habit of opening drapery on your south-facing windows during the day and let the sunlight warm things up for you. Just make sure to close your curtains at nighttime and on cloudy days to avoid the chill from those cold windows.

Dial in the savings with your thermostat.
You might be surprised how much cooler your home can be without causing discomfort. Experiment by turning down the thermostat a couple of degrees and see if anyone in your family really notices. When you’re asleep or away from the house, turn down your thermostat. Dialing it back 10 to 15 degrees per day for eight hours can save 10% on annual heating bills. If you don’t have a programmable thermostat, installing one can make this task a whole lot simpler and probably pay for itself within the first year.

Don’t pour money down the drain or send it up the chimney!
Up to 25% of home energy bills go to heating water – before it goes down the drain. Turn your water temperature down to the “warm” setting (120┬║) and save money while reducing the risks of scalding someone. Also, close the damper when your fireplace is not being used. Leaving it open is like opening a window in the middle of winter. All that warm air you’re paying for goes right up the chimney.

If you have any other money savings tips, let me know. I'll be happy to pass them on.

Changes in Credit Risk Scoring

Evidence is growing that more borrowers will be approved for a mortgage without increasing risk to lenders through more sophisticated credit risk scoring that uses alternative data, such as unsecured credit and property history in consumer credit report analysis, according to a new report by the CEB TowerGroup.

“Traditional credit data and analytics continue to be relevant, but are not sufficient to satisfy the consumer credit reformation of today,” says the CEB TowerGroup’s senior research director, Craig Focardi. “As a result of the changes in consumer behavior, lenders cannot revert back to their prior mortgage underwriting policies. Too much damage has already been done to the market, consumers, shareholders and investors.”

CEB TowerGroup evaluated data from a joint analysis conducted by CoreLogic and FICO that compares the FICO® Score used by most lenders today with a new score launched in July that evaluates the traditional credit data from national credit data repositories and the unique alternative credit data contained in the recently launched CoreScoreTM credit report. The analysis of 300,000 mortgage applications found that 3,100 more applicants would receive a qualifying credit score of 700 and approximately 70 percent of a sample population saw their credit score improve.

The report included a joint analysis by CoreLogic and FICO that found that enhancing the process of determining risk with new alternative data and analytics would allow lenders to approve loan applications that might otherwise be denied, or deny problem loans that might otherwise be approved. Both outcomes would help consumers and the market itself, says Tim Grace, senior vice president of Product Management at CoreLogic.

The report, titled “Enhanced Credit Data and Scoring: Deeper Insight into Mortgage Applicants,” notes that consumers used to pay mortgage debts first, but because of the recent financial crisis some consumers now treat paying other debts, such as credit card bills and car payments, as a higher priority to maintain personal financial liquidity.

Key findings in the CEB TowerGroup report include:
• Alternative credit information can support loan applicants with newly established credit files with good credit, those with minimal information in their traditional credit files but with good alternative credit payment histories, and long-time renters with no serious payment issues.
• More complete loan applicant, property and related information will bring greater transparency and efficiency to the mortgage lending markets and help reduce risk.
• The new FICO/Corelogic score is more accurate than the prior FICO® Score in identifying the riskiest loans improving lenders ability to discern consumer credit risk at origination. For applicants identified as the riskiest 10 percent of the lending population (those most likely to become past due on their mortgage loan), it identified 10 percent more seriously delinquent mortgage loans – loans 90 days or more past due.
For more information, visit [2].

Repeat Buyers Driving the Real Estate Market

Across most of the country, home prices remain affordable and rents continue to rise. And while today's investors are helping the housing recovery, they're not completely responsible. Data from the National Association of Realtors (NAR) suggests that traditional repeat buyers are driving today's market.

According to a recent joint survey by and Memphis Invest, 39 percent of investors plan to buy more properties over the next 12 months than they did over the last year. Twenty-six percent of investors plan to purchase the same number of properties.

"Though housing markets are changing across the nation, investors are still seeing great opportunities. Hundreds of thousands of foreclosures and short sales are coming to market and rents are continuing to improve in most markets, creating a positive environment for the nation's 2.81 million residential real estate investors," Joshua Dorkin, founder and CEO of, said in a press release.
"They will certainly continue to be major player in the nation's housing economy for the foreseeable future," he added.

According to the survey, one out of eight -- or 28.1 million Americans -- either consider themselves to be residential real estate investors or own residential investment properties today, according to the survey. That high number is not surprising when you consider many homeowners are renting out properties they'd rather sell.

NAR data shows investors accounted for an average 22 percent of the market share from 2003 to 2011.
There are perks to investors taking an active interest in today's real estate market. With millions of Americans actively investing in real estate, billions of dollars are being poured into repairs. The results of the survey reveal that real estate investors are spending more than the Department of Housing and Urban Development (HUD) to rehabilitate neighborhoods.

Recent NAR data suggests that investors absorbing the over-supply of inventory helped stabilize the housing market. Residential real estate investors have spent more than four times the amount of money HUD's Neighborhood Stabilization Program has to repair foreclosed and short-sale homes, according to the Invest survey.

At a median expenditure of $7,500 per property owned, investors are spending a total of $9.2 billion per year to repair the damage caused by foreclosures. By comparison, Congress has authorized a total of about $7 billion for the Neighborhood Stabilization Program over the past four years.

Chris Clothier, a partner with Memphis Invest, believes investors are improving neighborhoods and driving local economies. They are purchasing properties that would otherwise sit vacant for months, dragging down area home prices, and using local electricians, plumbers and labor to update the homes. "Those dollars provide jobs and put money into local economies. It's clear that investors are the ones who are risking their own money to improve and stabilize neighborhoods for new owners or tenants," Clothier said in a press release.

Investor activity has benefited the housing market, but there's a downside too. "Investors have been largely purchasing with all-cash, which puts first-time buyers at a significant disadvantage," Walter Molony, a NAR spokesman, said in an e-mail. "Both investors and entry-level buyers have been focused on low price ranges, with investors winning the deals since they don't have a need for financing."
So while the Invest survey shows investors planning to continue purchasing and rehabbing property, NAR data shows the overall investor market share is on the decline. The drop started in March, and since April investor market share has averaged 18 percent -- below its long-time average of 22 percent.

Investors certainly help fuel the housing recovery, but NAR data shows they aren't the driving force. "First-time homebuyers are also below their long-term average with housing shortages in the low price ranges and a headwind of tight credit," notes Molony. "At present, the market is being driven by an increase in traditional repeat buyers."

Source: MoneyWatch

Commercial Real Estate Outlook in 2013

The commercial real estate outlook for 2013 is looking brighter, with modest gains in leasing, rents, and pricing forecasted in PwC US and the Urban Land Institute’s latest report, “Emerging Trends in Real Estate 2013.”

The commercial market is moving forward “bit by bit,” says Stephen Blank, ULI’s senior resident fellow for real estate finance. “Nothing indicates a quick turnaround for commercial real estate, but it is improving. Those who are patient and willing to rethink their expectations and adapt to market realities are expected to come out ahead this year.”

According to the report, recent job creation will likely increase absorption and push down vacancy rates in the office, industrial, and retail sectors. The apartment sector is forecasted to continue to have strong demand, according to the survey.

“With the outlook for commercial real estate continuing to improve in 2013, investors are expected to allocate substantial sums of capital to the real estate asset class, according to our survey respondents,” says Mitch Roschelle, U.S. real estate advisory practice leader with PwC. “As yield in bonds and other financial instruments tighten in a still-volatile market, commercial real estate’s income producing and total return attributes offer investors potentially attractive risk-adjusted returns.”

The five markets with the best commercial real estate outlook for 2013, according to the report, are:
  1. San Francisco
  2. New York
  3. San Jose, Calif.
  4. Austin, Texas
  5. Houston
Source:  RISMedia

Is a Foreclosure Purchase a Good Idea?

No matter where you live, the topic of purchasing a foreclosed home is bound to come up in social settings. That’s because there are so many right now, and there are so many people promoting the foreclosure investment opportunities. But are foreclosures really a good deal?To determine if buying foreclosures is for you, you have to understand the process as well as the pros and cons of this type of sale. So let’s begin.

What are the benefits?

How much of a bargain you are getting on the home depends on local conditions. In many instances foreclosed properties are being directly compared to other properties that are in foreclosure which means the foreclosed properties are actually setting the market value.Even so, buying foreclosures intrigues many.

Richard Geller, CEO of says "There’s little risk and can be great rewards if you purchase the property in a short sale." A short sale is when a home is sold in the pre-foreclosure phase. The lender agrees to the sale and ends up taking less than the amount owed to the lender. Basically, the lender is letting the homeowner out of the mortgage in order to have the home be sold to a third-party buyer.

There are several other benefits to buying foreclosures, whether it’s a short sale or in any other phase of the foreclosure process. Lower purchase price equals a lower required down payment. Of course, foreclosures typically have motivated sellers who are eager to climb out from beneath the debt, and with that there can be motivated lenders who are hoping to not end up owning a property and then trying to sell it. However, don't expect any negotiations for repairs to be done to these properties as they truly are sold  in "as is" condition.

The disadvantages

Here’s what you should consider before you leap with both feet and your wallet into this marketplace.Some foreclosures have what is called a “cloud on title”. In other words, there are liens or judgments against them. Some buyers get what they think is a “steal” at an auction, only to find out later that the property has significant liens attached to it and now must be paid by the buyer which can result in taking a loss on the property.

Keep in mind, especially with properties sold at auctions, you will be taking the property sometimes “sight unseen” and “as is”. Both of these should make you think before you slap down the money to buy a foreclosure. There can be a considerable amount of work to rehabilitate the property.

Foreclosed-on homeowners may sell fixtures out of the home before they are evicted. “So you may find a foreclosure home without air conditioners, dishwashers, light fixtures — anything they can sell  to get some extra cash.  Buyers should be prepared to do out-of-pocket work on the home to get it to the condition they want.

Your best bet is to go into the foreclosure market knowing that while the properties may not be perfect, the end result can be the best for all — a discounted property for you, the investor, and helping a neighborhood to reduce potential blight.


Is a New Home the Right Fit for You?

The real estate market is full of a great variety of homes for potential buyers to choose from. One of the first decisions a potential buyer must consider is their preference for finding an existing home or building a new one. Here's some things to consider about buying a new home:

Aggressive incentives are alluring. The common consumer urge to “never pass up a deal” can blur objective reasoning in this very important decision-making process. But, while many buyers would be good candidates for a brand new home, incentives are just gravy and shouldn’t be a major factor in weighing housing options. There can be more costs and stresses tied to acquiring a new home versus an existing one.

For example, a spike in driving can mean a drain on the wallet. Generally, existing homes are closer to town with better access to jobs, shopping and schools. New construction subdivisions tend to be on the outskirts of town, which may make for a longer compute or further drive for shopping.

Making a house a home. The feeling of a brand new house can be intoxicating. But once that feeling subsides and the new homeowner begins decorating, the need to start from scratch can be overwhelming. While interior design can be fun, it can turn expensive and stressful.

Buyers can often find an existing home to live in while accomplishing the decorating and/or remodeling changes. And many sellers have already neutralized and made the necessary repairs in order to sell more quickly.

Surprises on actual costs. Existing homes usually cost less per square foot due to escalating land costs in new subdivisions. New homes are often built in outlying areas where the municipalities need to charge higher taxes, as there are fewer families to pay for basic services. Additionally, newer homes are often subject to assessment fees for amenities the family may or may not use.

Rome wasn’t built in a day. Owners in a new construction subdivision must be prepared for the daily noise and dust of construction crews, trucks, neighbors moving in, streets changing and traffic increasing.
Source: Monica O’Neil / Warranty of America.

Study Finds Gaps in Online Listing Information

Some home shoppers may not be getting a full or accurate picture when they view listing information on some popular real estate Web sites, suggests a study conducted by the WAV Group on behalf of Redfin. 

The study evaluated the accuracy of information contained in more than 6,000 listings among 33 ZIP codes on five sites: Zillow, Trulia, Redfin, and two regional real estate brokerages — Windermere and Long & Foster.

The Redfin study found that 36 percent of the agent-listed homes shown as active listings on Zillow and 37 percent of those on Trulia were no longer for sale on the local multiple listing service.

“Zillow and Trulia do not dispute that their listings have some gaps and inaccuracies, though they dispute some of the particulars of the Redfin study,” The New York Times reports. “There’s a simple reason they don’t have everything their rivals do: Neither of them belongs to the local MLSs, which provide the most complete set of agent-listed properties.”

Zillow and Trulia are not real estate brokerages. Real estate brokers can provide electronic feeds or add their listings so they appear on the real estate sites. As such, some agents that do provide feeds to the sites don’t take listings down quickly after the property sells, says Glenn Kelman, chief executive of Redfin.
Trulia says it is forming stronger relationships with brokers so that it can improve the accuracy and completeness of its listing information, according to The New York Times. Zillow said it was making a similar effort.

“There is no gold standard for listings data, so comparing Zillow’s MLS-only listings to an MLS isn’t going to give you the whole picture,” says Cynthia Nowak, a spokeswoman for Zillow, adding that Zillow also includes items that aren’t often listed on the MLS, like for-sale-by-owner listings and new construction.
Source: “On Big Real Estate Sites, Study Finds Gaps in Listings,” The New York Times

Mortgage Rates Reach New Record

Fixed-rate mortgages set new all-time lows for the second consecutive week, Freddie Mac reports in its weekly mortgage market survey.
"Fixed mortgage rates fell again this week to all-time record lows due to the mortgage securities purchases by the Federal Reserve and indicators of a weakening economy,” says Frank Nothaft, Freddie Mac’s chief economist.
The Federal Reserve’s move recently to buy up $40 billion of mortgage-backed securities each month until the job market improves is causing mortgage rates to fall.
Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 4:
  • 30-year fixed-rate mortgages: averaged a new record of 3.36 percent, with an average 0.6 point, dropping from last week’s previous record of 3.40 percent. A year ago, 30-year mortgages averaged 3.94 percent. 
  • 15-year fixed-rate mortgages: averaged a new record low of 2.69 percent, with an average 0.5 point, dropping from last week’s previous record, 2.73 percent. A year ago, 15-year rates averaged 3.26 percent.  
  • 5-year adjustable-rate mortgages: averaged 2.72 percent, with an average 0.6 point, rising slightly from last week’s 2.71 percent average. Last year at this time, 5-year ARMs averaged 2.96 percent.
  • 1-year ARMs: averaged 2.57 percent, with an average 0.4 point, dropping from last week’s 2.60 percent average. A year ago, 1-year ARMs averaged 2.95 percent.
Source: Freddie Mac

The Importance of Good Credit

If you’re thinking about buying a home, you need to be aware of your credit. Better credit may mean mortgage opportunities with lower rates.  

What Is Your Credit Report?
Your credit report is a record of money you've borrowed, your history of paying it back and how much open credit is available to you. It consists of a list of debts and a history of how you've paid them, including credit cards, car loans and student loans. Any bills referred to a collection agency, such as utility or medical bills that you did not pay or were significantly late. Public-record information, such as tax liens and bankruptcies that may be linked to you. Inquiries made about your creditworthiness, showing how many inquiries were made for your credit and if you were given credit based on the inquiry.  

What Is Your Credit Score?
Your credit score is a single number that helps lenders decide how likely you are to repay your debts and plays a significant role when securing a mortgage. A score ranges from 300 – 850 points and is based on: Your payment history and ability to repay your debts on time. Late payments will decrease your credit score. The amount of total debt you owe, including credit cards, student loans and car loans. If your credit cards are at their limits, this can lower your credit score - even if the amount you owe isn't large. How long you've used credit and how you’ve managed it.

If you show a pattern of managing your credit wisely, keeping credit card balances low and paying your bills on time, your credit score will be positively affected. How often you apply for new credit and take on new debt. If you've applied for several credit cards at the same time, your credit score can go down. The types of credit you currently use, including credit cards, retail accounts, installment loans, finance company accounts and mortgages.  

What Does Your Credit Score Mean?
Credit scores ranging from 770 to 850 are considered very good, and the best credit rates are usually available to borrowers within this range. Credit scores above 700 are considered good, and most borrowers' credit scores are within this range. The median credit score is about 725. Credit scores below the mid-600s may have difficulty obtaining a loan, and will experience higher interest rates and/or larger down payments.  

You are entitled by law to get a free copy of your credit report:
  • Every 12 months 
  • Every time you find a mistake and want to make sure it's been fixed 
  • If you've been denied credit and in certain other situations, such as fraud 

To get your annual free credit report, go to or call (877) 322-8228. For more information about your rights regarding credit and the Fair Credit Reporting Act, visit the Federal Trade Commission Web site.

To help you build, maintain and protect your credit:
Establish credit if you don't have any. Open a free or low-cost checking or savings account and apply for one or two credit cards but use them carefully. It is important for lenders to verify that you have a credit history to determine your ability to repay your debts Limit your number of credit cards and try to pay the balances in full every month. Using your credit cards responsibly can help you build excellent credit. Honor your promise to pay your debts.

With good credit, you can borrow for other major expenses, such as a home, car, or education, at a lower cost – ultimately saving you money. Seek the guidance of a HUD approved counseling agency for free, confidential advice if you run into problems paying your bills. The sooner you reach out, the more likely they can help you. Be sure to protect your private information. Do not provide any personal information (such as your social security number or credit card numbers) over the phone, online or through the mail unless you know the person or company.

By understanding your credit and the important role it plays with securing a home loan, you’ll be on the right path to realizing your goals. Remember, strong credit will provide you with many financial advantages so it’s worth the effort to maintain it.
Source: Freddie Mac

Tips for Improving the Saleability of your Home - part 2 of 2

Here's the conclusion of the article from yesterday with more tips to help you sell your home quicker and for more money...
  1. Get the house inspected before it’s listed to know its condition and identify any structural issues that could derail sales. Many problems can’t be detected by an untrained eye, including those in a basement, crawl space, or attic, says BillJacques, president-elect of the American Society of Home Inspectors. “There might be roof damage or a plumbing leak. Many inspectors take photos and provide a detailed report,” he says. “And if home owners have repairs made, they should be handled by a qualified licensed contractor, so the home owner can get problems corrected.”
  2. Outfit closets for extra storage to make rooms look larger and less cluttered.Top contenders for redos are an entry closet for a good first impression, kitchen pantries where storage is key, and a linen closet to keep sheets, towels, and other stuff neat.
  3. Tighten a home’s “envelope” to improve energy efficiency and savings. Put money and effort into well-insulated double-paned windows, sealed furnace ducts, energy-efficient appliances, the newest programmable thermostats, LED and compact fluorescent lights, and a smart irrigation box on a sprinkler to cut water usage. If you've already done this, you can show buyers how costs have dropped. Also should put together a "green" manual to show which features have been added.
  4. Improve a home’s healthfulness by using paints and adhesives with low or no VOCs. Point out these changes to prospective buyers in another list or manual.
  5. Use what you have, and arrange each room in a conversational way if possible. Don’t set all furnishings in a family room so they face a TV, since most potential buyers like the idea of an open-room milieu for socializing.
  6. Remove and replaced faded draperies, fabrics, and rugs, or leave windows and floors bare to avoid showing lack of attention. Slipcovers, which can cover worn furniture can also provide an affordable decorative feature, changed for each season.
  7. Replace old, dated, or worn bedding. Before any showing, fluff up pillows and covers, and make all beds neatly. 
  8. Toss out old magazines. You don’t want a People magazine from a year ago; it looks like nobody lives in the house or cares.
  9. Check smells regularly. Besides getting rid of bad odors from pets and mildew, introduce nice fresh fragrances, but don’t go heavy on scents from candles. A light lavender or citrus spray is smart and inoffensive. Open windows before showings to bring in fresh air.
  10. Make rooms lighter and larger for showings with good lighting. If it has minimal windows, make sure you maximize on the lighting.
  11. Go with plants rather than flowers indoors since they last longer, but either choice can add vivacity to a room.
  12. Pay attention to your bathrooms. Specifically, make sure you have freshly laundered towels, new soap in soap dishes, spotless mirrors, and no mildew in view.
  13. Be sure your house is priced competitively with the current market and homes in your area. In most regions, it’s still the No. 1 “fix” to sell quickly. Go a bit under the market price, and you may even bring forth multiple offers that are higher than expected. 
Source: Realtor Magazine

Tips for Improving the Saleability of your Home - part 1 of 2

Even with rising values and reduced inventory in certain markets, selling a home remains challenging. Buyers who like to watch home improvement shows expect not just a shiny new stainless sink but pruned hedges, freshly painted walls, glistening hardwood floors, and more. Prioritize based on the condition of what’s needed most when you get your home ready to put it on the market. Here’s a list of affordable, easy-to-make changes from top design and real-estate pros:
  1. Add power outlets with USB ports in rooms that lack them, especially in the kitchen, bathrooms, and bedrooms where they’re most needed. Younger, more tech-savvy couples and individuals love them.
  2. Eliminate acoustic popcorn-style ceilings since they look dated.
  3. Remove exposed posts and half walls. Today’s buyers want more space, and partial walls and posts gobble up room. The only walls that should remain are those that offer privacy or conceal electrical wires or plumbing stacks.
  4. Update wiring for the Internet and flat-screen TVs. You don’t have to run CAT-5 through walls, which can be costly and require opening and closing and repainting walls. Instead, find a place to put a wireless router.
  5. Clean carpets and wood floors. This is a must since they’re often the first part of a room that buyers check out; you don’t need to replace them unless they’re in terrible shape. A good carpet steam cleaning or wood floor waxing can be relatively inexpensive, sometimes less than $200.
  6. Expand a small kitchen to make it work better and look larger. Two quick fixes: Change the backsplash by adding mirrors, stainless steel, or paint, which will introduce light and views; and add an island, which requires only 30” between counters and the island to pass through comfortably. If there’s not enough room for an island, bring in a rolling cart with pull-out shelves underneath and a wood top.
  7. Clear out and clean a garage. Power wash the floor or paint it if it’s in bad shape, remove dated cabinets, and remove all junk that’s been stored there, so prospects can see how much space they would have for their stuff.
  8. Change out corroded or dented door knobs and levers. The replacements don’t have to be expensive but they should look new and clean,
  9. Pay attention to landscaping, which can add 7 -15 % to a home’s value, according to Jessy Berg and Bonnie Gemmell of Focus on mowing grass, removing crab grass, and eliminating dead plants and tree branches. If you have extra funds, add lots of seasonal color through blooming annuals and perennial plants and remove problems like too much noise from traffic or neighbors by installing an inexpensive fountain with trickling water.
  10. Paint exterior windows, doors, gutters, downspouts, and trim, then go inside and paint the home’s trim, doorways, and walls that are in need of freshening. Don’t worry about the colors but consider those that veer toward quiet and comfort. Painting rooms lighter colors such as white, yellow, and beige help to bounce and reflect sunlight and use more natural and less artificial light.
  11. Remove outdated wallpaper, replacing it with paint and preferably a neutral color.
  12. Remove, store, or discard excessive accessories on tabletops and walls and in cabinets. Less is more, and you want the house to be seen by prospective buyers without the distraction of too many personal items.Some suggest following the rule of three: Leave out only three things on any surface.
Souce: Realtor Magazine

Tax Tips for Home Sellers

The IRS has recently issued a helpful list of 10 tax tips all homeowners should keep in mind when selling a home:

1. You are usually eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.

2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).

3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.

4. If you can exclude all of the gain, you do not need to report the sale on your tax return.

5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.

6. You cannot deduct a loss from the sale of your main home.

7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.

8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.

9. If you received the first-time homebuyer credit and within 36 months of the date of purchase the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year's tax return.

10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.
For more information about selling your home, see IRS Publication 523, Selling Your Home.

Source: Inman News / Stephen Fishman (tax expert, attorney) 

Rekindling the Love Affair with your Home

5 ways to love your home again

If you've fallen out of love with your home, and you're committed to staying put for years to come, it is a worthwhile endeavor to rekindle that romance, and re-excite the spark that makes coming home, being home, maintaining home, and even writing out the checks that keep the lights on, the mortgage paid and the taxes current, a blessing. Here's how:

1. Spend time in someone else's home. Make more of an effort than you might otherwise to accept your pals' barbecue and dinner party invites. Go on those home and garden tours that are put on locally. When you travel, consider renting someone else's home (or part of it) on a site like or, rather than just getting a hotel room.
And pay attention to the homes' locations, comfort level, amenities, decor and nice touches, or lack thereof. I assure you, one of two things will happen: If you love their space, you'll leave inspired to make tweaks to yours; if you don't love it, you'll be super-grateful for your home, just as it is.
2. Get out of your comfort zone and routine. Following the theme of inspiration and gratitude, seek out experiences entirely outside of your comfort zone. The further outside your comfort zone, the better. Take a trip to a destination unlike the places you normally vacation; if you live in the city, go stay on a working farm. And if you don't have time to take a whole trip, just spend a couple of hours in a part of town that you don't normally go to, or spend an afternoon doing something you've never done before: Take a workshop, go for a hike or take a tour. If you drive, take the bus. If you're always checking your phone, lock it in the trunk of your car for a whole weekend. If you eat out, cook -- and vice versa.
When you have experiences that jolt you completely out of your sense of the norm, it resets your brain in a way that allows you to come home and see things that are familiar in a very different light.
3. Inventory and fix any little glitches. It's easy to get caught up in the day-to-day duties of living and working and raising a family. As time goes on and little things at home break or need repair, many of us fall into the habit of putting them on a list that never gets done. Over time, as the list of doors that creak and handles you have to jiggle grows longer and longer, that can create doldrums and annoyance, as you have to deal with these little glitches on a daily basis and it starts to feel like 'broken' is the normal state of affairs at home.
Once I no longer had little kids on a constant demolition path through my own home, I almost instantly fell back in love with it, in part, by taking meticulous care to log and have fixed any and everything that wasn't working exactly as it should. It's a never-ending battle, mind you; if you keep on living in a home, things will continue to wear out or break, so I have a handyman on call to constantly tend to my ongoing list. And every time I have him fix a wonky cabinet or touch up the wall with the scuffed paint, I am reminded of just how much I love my home.
4. Have a Financial Health Day. Many times, financial hemorrhages and simply feeling like your home is disproportionately draining your bank account can create resentment and anxiety that gets in the way of feeling warm and fuzzy about owning it. Now, every mortgage or home-related financial problem might not be within your power to fix, but rather than letting things spiral without doing anything, the next time you take a personal day off from work, set aside some time to do a deep dive into your home-related financials.
Set an appointment with your mortgage broker to discuss refinancing, if appropriate. Appeal your home's property tax assessment, if you believe it's too high. Check to see if recent increases in your home's value will qualify you to have the private mortgage insurance removed from your mortgage. Figure out what side business or job you can do to pay down your consumer debt or help get you out of the stresses of paycheck-to-paycheck living.
5. Make peace with long-ago compromises. I've met people who have lived in homes for decades, who still have pent-up resentments and anger about compromises they made with their spouse or co-buyer during the house hunt. And that's a terrible way to live, because you spend so much time and money at and on your home -- if you feel that way, you essentially live with a major emotional dissonance. This can also create a grave rift in relationships, as the disgruntled party might wield the fact that she acquiesced on such a big item as a weapon of martyrdom or victimhood.

Source:  Tara-Nicholle Nelson / Inman News

How to Rebound from Setbacks

Today I'm including a book review that is from a business standpoint that can also be helpful to anyone no matter what your field. The review is done by Tara-Nicholle Nelson from Inman News.
Markets crash. People die. Scary diagnoses are issued. Jobs are lost. Homes are lost. And for many Americans, it feels like the last few years have hit them with more than their fair share of these sorts of traumas, proving true the adage, "When it rains, it pours."

I've certainly been through a number of my own, personal worst-case scenarios, but have come out the other side with a vastly expanded understanding of my own inner resources and a great appreciation for life's possibilities.

Once you prove to yourself what you're really made of, as often happens in recovery from a crisis, you take that confidence, that knowledge and those problem-solving skills with you as you face life's incessant stream of incoming challenges.

That's resilience... And this quality -- resilience -- is precisely the subject of U.S. News and World Report journalist Rick Newman's new, hopeful and useful book, "Rebounders: How Winners Pivot From Setback to Success."

The book starts out with Newman's own transparent tale of his own life, family, financial and career struggles in the aftermath of his divorce, just as the traditional newspaper industry was being derailed by the advent of online news -- and the takeaways he gleaned from the experience, including that hard work doesn't always pay off without a strategic plan also in place.

But the meat of "Rebounders" is a series of detailed stories of figures in business, politics, philanthropy and culture -- stories of rebounders who experienced and recovered from all manner of devastating failures and traumatic disasters on their paths to achieving an assortment of heroics, from becoming our national heroes, like Ben Franklin and Thomas Jefferson, to helming companies such as Pandora and Netflix.

Newman vividly tells these stories, then deftly uses them to surface dozens of nuanced insights with the power to spark and call forth the individual flavor of resilience within every reader. That said, there are also some overarching themes around what it takes to be resilient that Newman sets out at the very start. Here are the four most pervasive insights he provides:

1. "Setbacks can be a secret weapon." Newman relates that the unanimous message of his interview and research subjects was that the lessons and skills they had acquired in the process of overcoming their setbacks were much more pivotal to their success than the moments when everything finally came together. In fact, in providing the precise definition of resilience, Newman points to the strength, smarts and durability that develop in the process of pushing past fear, failures and "quit points."

2. "Small adversities matter, just like big ones." Small disappointments and frictions, like getting stuck in traffic or having a chronic, but relatively mild, illness, can seem unworthy of our attention especially when compared to all the tragedies and chaos we witness on news reports. However, Newman argues that we can harness small failures and dramas to build our resilience muscles, giving ourselves what he calls a "stress inoculation" that will allow us to recover from much larger life upsets whenever they do inevitably arise.

3. "We're all addicted to alluring shortcuts and incomplete slogans." Newman points to example after example in which people get or stay on the wrong, failure-prone course because of their belief in pithy, partly true, but incomplete motivational slogans like "Do what you love, and the money will come." He points out that there are potential pitfalls to this reasoning, like that the work you love might be work many people love, rendering the field an uber-competitive one in which to make a living. Ultimately, these magical slogans are simply not enough to point you in the direction of success.

4. "Optimism is overrated." Optimism lives in the same bucket, in Newman's book, as these incomplete slogans, in that they both oversimplify what it will really take for most people to find success. Newman suggests that you trade both the slogans and overconfidence or optimism in for a strategic action plan that accounts, in advance, for pitfalls that are likely to be encountered, and is both heavy on the problem solving and flexible enough to allow for the adaptation and course correction you may need to do if things don't work as planned.

In this vein, Newman advocates something called "defensive pessimism," in which you envision your worst-case scenarios and prepare for them, in advance. Ultimately, this point of view is empowering and even calming, as it results in complete preparedness and, fortunately, our worst-case scenarios don't actually materialize the vast majority of the time.

What You Should Consider Before Taking out a Reverse Mortgage

Approximately one-third of all Americans own their homes free and clear. Nevertheless, many seniors can end up losing their homes because they don't have the money to pay their property taxes, or they get hit with high medical bills or encounter a situation in which they need the equity from their home but can't qualify for a loan.

For many, a reverse mortgage may be a great way to avoid losing their home.
Over the last few years, reverse mortgages have gained a somewhat negative reputation in the real estate community. In some circumstances, however, these can be a tremendous blessing to seniors who may be at risk of losing their homes.

How reverse mortgages work

"A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you. However, unlike a traditional home equity loan or second mortgage, HECM (home equity conversion mortgage) borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage.
"You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

"To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home."

You could choose to receive your payout as a lump sum, a lifetime monthly payment, a monthly payment for a limited term, a line of credit, or a combination. You would never owe more than the value of the home, regardless of the amount paid out.

Reverse mortgages require points and fees, which often run about 5 percent of the property value. On a $400,000 property, that's $20,000. The homeowner must occupy the property as his or her primary residence. If the homeowner becomes ill and is away from the home for more than 365 days, the reverse mortgage becomes due and/or the property must be sold.

When the homeowner dies, the property goes to the lender upon the death of the borrower. In some cases, the property may be sold, provided that both the interest and principal paid by the lender can be reimbursed. If this is the case, then the balance could go to the deceased's estate. As a rule of thumb, the younger the borrower is (minimum age is 62), the smaller any monthly payment would be. For more information on reverse mortgages, visit the Federal Trade Commission website.

A reverse mortgage retirement plan: reality or pipe dream?
I recently had a conversation with one of my former colleagues from Southern California who is eagerly awaiting his 62nd birthday so he can get a reverse mortgage. He is a sophisticated investor who has owned (and lost) multiple properties over the years. His game plan for retirement is to do what most investors love to do: work with someone else's money. Here's what his plan is:

1. When he turns 62, he will purchase a four-unit building where he will put 40 percent down, owner-occupy one unit, and rent out the other three units.
2. He will then obtain a reverse mortgage, which he will use to pay down the principal as rapidly as possible.
The result: The reverse mortgage refunds his down payment each month while he collects the cash flow from the building. If he lives long enough, he has paid zero for the property since the rents and reverse mortgage will cover the cost of the property plus covering all his living expenses. Since he has no heirs, he's not concerned about what happens after he dies. While all of this sounds great, there are a host of issues that this individual is not taking into consideration that could spell disaster.

1. Is the mortgage lender reputable?
HUD/FHA is one of the legitimate reverse mortgage lenders. It's important to verify that any reverse mortgage lender the borrower uses is reputable.
2. Lump sum payments can be dangerous.
A report by the Consumer Financial Protection Bureau found that about 70 percent of all borrowers elect a lump sum payment, oftentimes to handle bills or other emergencies. The challenge is that once the money is gone, the reverse mortgage continues to deplete the borrower's remaining equity. The result is that if the owners are unable to keep up with property tax increases or their insurance, they can still lose their home.

In fact, the report says that about 10 percent of all homeowners with a reverse mortgage are now facing foreclosure, largely due to the fact that they took lump sum payments. Part of the reason so many people take this option is that the lump sum payment (at least for the HUD/FHA product) is at a fixed rate, while the monthly payment option is at an adjustable rate.

3. A little-known dirty secret.
In many cases where people have remarried, the house may be in one person's name. In that case, if the person who is on the mortgage dies, the surviving spouse could be evicted from the property.
The bottom line is that reverse mortgages can be a tool to help an owner stay in his property, but they should be considered more as a last resort when all other options have been exhausted.
Source: Bernice Ross, CEO of, and author of the National Association of REALTORS®' No. 1 best-seller, "Real Estate Dough: Your Recipe for Real Estate Success."