February 3, 2012 6:34 am
From losing your job to being confronted with unexpected medical bills, there are many factors in today’s world that can lead to falling behind on your mortgage payments. While it may be tempting to ignore the problem, taking proactive steps is the best way to protect your credit and avoid losing your home. The longer you wait to call, the fewer options you will have.
According to the Federal Trade Commission, many loan servicers are expanding the options available to borrowers in an effort to stem the foreclosure crisis. So try calling your lender again even if your request has been turned down before. And keep in mind that lenders are most likely swamped with such calls, so be prepared to be patient and keep trying .
The FTC says that you may qualify for a loan modification under the Making Home Affordable Modification Program (HAMP) if:
- Your home is your primary residence
- You owe less than $729,750 on your first mortgage
- You got your mortgage before January 1, 2009
- Your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues, if applicable) is more than 31 percent of your current gross income
- You can’t afford your mortgage payment because of a financial hardship, like a job loss or medical bills
If you meet these qualifications, have the following documentation ready and call your lender:
Source: Federal Trade Commission
- Information about the monthly gross (before tax) income of your household, including recent pay stubs
- Your most recent income tax return
- Information about your savings and other assets
- Your monthly mortgage statement
- Information about any second mortgage or home equity line of credit on your home
- Account balances and minimum monthly payments due on your credit cards
- Account balances and monthly payments on your other debts, like student loans or car loans
- A completed Hardship Affidavit describing the circumstances responsible for the decrease in your income or the increase in your expenses
February 2, 2012 6:34 am
People taking care of an elderly family member might be eligible for tax deductions they are not even aware of, from hearing aids, walkers and dentures to the cost of transporting an elder to the doctor. Furthermore, if they pay over half of the elder's expenses for food, housing and medical supplies, the caregiver might be able to claim the elder as a dependent, a deduction worth thousands of dollars. However, caregivers often don't know the tax laws and short-change themselves come tax time.
According to AgingCare.com, caregivers should be aware of the following potential tax deductions:
- Medical Expenses. Nearly 100 medical costs can be deducted, related to the diagnosis, treatment, cure or prevention of disease or costs for treating any part of the body. Those include equipment, services and supplies, ranging from glasses to eye surgery to acupuncture to prescriptions.
- Long-term health care costs. An often-missed expense is the amount paid for long-term care services and long-term care insurance (that's a more limited deduction, depending on age). Rehabilitation, therapeutic, preventative and personal care services are among those that qualify as long-term care services, if your family member is chronically ill and if it's part of a plan set by a health care practitioner. Someone is considered chronically ill if they can't perform at least two activities of daily living (such as eating, toileting, bathing and dressing) without substantial assistance from someone else.
- Mileage. From weekly doctor's appointments to out-of-town visits with a specialist or for a procedure, the miles you log for your parents' medical needs can be deducted. You can qualify for this deduction if your parent is considered a dependent. You can take 19 cents a mile for 2011, for medical mileage. If you're staying overnight for a medical purpose, deduct $50 per night, for each person, for lodging.
- Home improvements for aging adults. Investing in ramps for a wheelchair-bound parent, handrails and grab bars in the bathroom or a stepless shower can be part of a deduction. It doesn't matter if the improvements are in your home or your parent’s home, as long as it doesn't add value to the house. According to the IRS, the cost of the improvement is reduced by the increase in your property value. Other changes, such as widening doorways and hallways, lowering kitchen cabinets and installing lifts, also typically do not add value to houses.
- Mortgage interest. If you are paying interest on your or your parents' home loans, construction loans or home equity lines of credit, it's deductible. There are some limitations, though, so you need to discuss with your accountant.
- Estate tax on an inherited IRA. This is not as easy as deducting medical expenses or charitable contributions, but it is worth checking out. If you inherited an IRA from your parents, you could take a deduction for the federal estate tax paid on IRA income.
February 2, 2012 6:34 am
This just in: One-third of Americans would choose their dream home over their dream significant other! These and other interesting statistics come from a recent survey conducted by Rent.com about love in order to better understand renter habits about relationships and moving in together. Here are a few other highlights from the survey data:
- 28 percent of men have delayed a break-up with someone they were living with because they didn’t want to look for a new place to live, while in comparison, 21 percent of women have done the same.
- While 39 percent of respondents aged 18-34 have delayed a break-up with someone they were living with because they didn’t want to look for a new place to live, only 22 percent of respondents aged 35-54 and 17 percent of respondents aged 55+ have done the same.
- 37 percent of those who delayed a break-up waited one year or more to end ties with their significant other, while 35 percent waited six months and 28 percent waited 3 months.
- 40 percent of females who delayed a break-up waited one year or more to end ties with their significant other, while 32 percent of males waited one year or more.
- 29 percent of females would choose their dream home over their dream significant other, while 32 percent of males would choose their dream home over their dream significant other.
- 25 percent of respondents aged 55+ would choose their dream home over their dream significant other, while 44 percent of respondents aged 18-34 would choose their dream home over their dream significant other.
February 2, 2012 6:34 am
For many Americans, tax season opens the door to an organizational nightmare as they sort through bank records, track down receipts, and figure out what financial information is needed and what can be discarded.
According to financial planner, Rick Rodgers, author of “The New Three-Legged Stool: A Tax Efficient Approach To Retirement Planning,” tax time is the perfect time to get organized and put a system in place for managing your finances moving forward. Here are five steps he recommends for a stress-free, streamlined financial life:
- Know what to get rid of. Discard the records you no longer need, including: tax returns older than seven years; bank records and credit card statements that are not related to the tax returns you’re keeping; brokerage statements that aren’t related to purchases of current holdings. Of course, make sure such private documents are shredded before throwing them out.
- Create digital files. Convert the documents you plan to save into digital images that are stored on your hard drive. Invest in a good scanner and scan as you go through your paperwork, shredding and tossing the hard copies. On your computer, file by tax year, so your 2011 folder will contain your tax return for 2011 and all pertinent bank records and receipts. Organize the previous six years the same way. Next year, you can delete the oldest folder when you add the 2012 folder.
- Go paperless. Stop receiving paper statements from your financial institutions—they’d prefer to send you documents electronically, anyway. Instead, download your statements electronically and store them in your new filing system. Most banks and credit card companies keep at least a year’s worth of statements available. You need to download these files only once a year to complete the year’s file.
- Back-up your files. Make backup copies of your files on CD. Choose a CD-R (recordable) as opposed to a CD-RW (rewriteable), because CD-R cannot accidentally be overwritten. Depending on your computer operating system, you may be able to continue adding data to a CD-R each year, until the CD is full. However, some operating systems won’t allow that, so you’ll need a new CD for each year.
- Apply your new system to all critical documents. Your new electronic filing system can be expanded to include all your financial records, from car maintenance receipts to pay stubs. Wills and insurance policies can also be scanned and stored but, of course, keep the originals in a safe deposit box or fireproof safe.
February 1, 2012 6:34 am
Textile and leather suppliers showcased their newest looks at the trade show “Showtime” held in High Point, N.C., this past December. Showtime is a semi-annual textile market produced by and for the members of the International Textile Market Association (ITMA). The internationally acclaimed market is said to offer one of the most thorough fabric, leather and trimmings presentations in the western hemisphere. Showtime provides retailers with a preview of key looks they can expect to see from upholstery manufacturers at the High Point Market furniture market this April.
Keep the following design trends from Showtime in mind for adding some cutting-edge style to your home:
- Teal and burnt orange were strong color contenders, closely followed by apple green and bright lemon.
- The neutral grays are morphing into driftwood or raffia tones.
- Botanicals are back, particularly in silhouetted prints of trees, ferns, or gingko leaves. Figurative florals are also key.
- Prevalent patterns included paisleys, cabana stripes, suzanis (a type of embroidered and decorative tribal textile made in Tajikistan, Uzbekistan, Kazakhstan and other Central Asian countries), toiles, lace, and Florentine tiles.
- Menswear designs inspired leather looks, including a houndstooth pattern on a hair-on-hide.
- Crocodile featured strongly on fashion runways this fall, and it’s back in a very big way for leather suppliers.
- Novelty patterns included folk-art birds, postcards, scientific equations, china plates, round chickens, and hamsa (a palm-shaped design).
- In trims, look for tassels to start appearing again, particularly Deco-inspired designs that step away from the traditional shapes.
February 1, 2012 6:34 am
Remodeling sentiment rose to the highest level in five years, according to the National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) for the fourth quarter of 2011. The RMI increased to 46.6 in the fourth quarter from 41.7 in the third quarter.
In the fourth quarter, the RMI component measuring current market conditions rose to 48.4 from 43.0 in the previous quarter. The RMI component measuring future indicators of remodeling business was also positive, increasing to 44.8 from 40.4 in the previous quarter.
An RMI below 50 indicates that more remodelers report market activity is lower (compared to the prior quarter) than report it is higher. The overall RMI averages ratings of current remodeling activity with indicators of future activity.
NAHB attributes this increase in remodeling activity to the growing number of homeowners choosing to stay put as opposed to putting their homes on the market in today’s economy.
Current market conditions improved significantly in all four regions of the country over the third quarter of 2011. The RMI reported higher market activity in two important categories: major additions 52.3 (from 45.2) and minor additions 50.1 (from 45.7).
February 1, 2012 6:34 am
While managing your credit is a critical task for every consumer and would-be homebuyer today, credit card companies often make that difficult to do. The average credit card agreement is a sea of confusing legalese with essential information, such as costs, features, and terms of the product, virtually impossible to discern.
To combat this issue and prevent consumers from heading into detrimental credit card contracts, the Consumer Financial Protection Bureau (CFPB) has created a prototype credit card agreement that is shorter, written in plain language, and explains key features upfront. This agreement is part of the CFPB’s broader effort to protect consumers, Know Before You Owe.
According to the CFPB, there are an estimated 514 million credit cards in circulation in the United States. Americans used their credit cards to spend an estimated $1.9 trillion in 2010, and credit card debt is estimated at $700 billion dollars. While the Credit CARD Act of 2009 helps protect consumers from unsavory cost practices, two-thirds of cardholders still say they don’t completely understand how their cards work. And, as indicated in a recent CFPB report on credit card complaints received by the Bureau from July 21 to October 21, 2011, difficulty understanding the terms of their cards is a contributing factor in many consumer complaints.
The CFPB’s prototype is based on four key areas of improvement within credit card agreements:
- Length: The industry average for a credit card agreement is currently about 5,000 words; the CFPB’s prototype comes in at a substantially reduced 1,100 words.
- Language: The draft credit card agreement has an easy-to-read layout and is written in plain language. It is organized into three simple sections: costs, changes, and additional information.
- Consumer Appeal: The simplified agreement explains the prices, risks, and features of the credit card upfront, as opposed to burying it in fine print.
- Consistency: The prototype establishes standard definitions for legal terms like “card” and “balance transfer” that are contractually necessary but largely uninformative to consumers. These definitions are based on standard industry usage and practices and will be housed online where consumers can readily access them. For consumers who do not have Internet access, the definitions will be available from their issuer in printed form. According to the CFPB, doing this allows for a plain language document that clearly explains to consumers how the credit card works.
January 31, 2012 6:34 am
American workers spend an alarmingly high amount of their hard earned cash on somewhat average daily expenses, according to a new Workonomix survey by Accounting Principals, a finance and accounting staffing firm. The survey found that 50 percent of the American workforce spends approximately $1,000 a year on coffee, or a weekly coffee habit of more than $20. And the spending doesn't stop there. Two thirds (66 percent) of working Americans buy their lunch instead of packing it, costing them an average of $37 per week – nearly $2,000 a year.
Despite these high costs, the survey suggests workers are unclear about the biggest drain to their wallet. When asked which work expense they most want to be reimbursed for by their employer, 42 percent of employees chose commuting costs and only 11 percent chose lunch expenses. However, the average American's commuting cost is $123 a month or approximately $1,500 a year, which is well below the average annual lunch tab of $2,000.
This is especially true for young American workers. The survey found that younger professionals (ages 18-34) spend almost twice as much on coffee during the week than those ages 45+ ($24.74 vs. $14.15, respectively). They also shell out more for lunch, spending an average of $44.78 per week on lunch compared to their older colleagues who spend $31.80 per week.
However, it seems American workers of all ages are starting to realize the effect this incremental spending has on their personal bottom line. According to Accounting Principals' survey, one-third (35 percent) of employees have made it a financial goal to bring lunch instead of buying it in 2012.
Other survey findings include:
- Better food and coffee in the office might help cut back personal spending. Perhaps because of how much they're spending outside the office, American workers would like companies to invest in better food and drinks in the office. One-quarter (25 percent) of Americans wish their company would invest in better vending machine snacks and 22 percent of American workers would like their company to invest in better coffee in the office.
- Employers should focus on the "simple pleasures" to keep employees happy. Although better food and drinks would be a plus, employees most want to see their companies invest in better office equipment (46 percent) and more comfortable office chairs (32 percent) in 2012.
- Corporate discounts do not factor into employees' purchase decisions. Companies looking to attract new candidates shouldn't focus on corporate discounts as a selling point. The majority (82 percent) of employees say corporate discounts matter little or not at all when buying a new product or service.
January 31, 2012 6:34 am
In 2011, U.S. consumers were much more diligent in paying against their debts, resulting in significant declines in delinquency rates among the majority of tracked lending sectors, according to Equifax's December National Credit Trends Report.
The data also reflects a cumulative decline in total consumer debt, which now stands at $11.1 trillion. This represents a nearly 11 percent decline in debt from its peak of $12.4 trillion in October 2008.
Equifax's national analysis is sourced from data on more than 585 million consumers and 81 million businesses worldwide. Conducted on a monthly basis, the research provides detailed levels of consumer credit information from various vertical markets including, mortgage, automotive, student loans and bank and retail credit cards.
Most tracked lending sectors reported double digit declines in delinquency rates for 2011. Key findings from the report include:
Bank Credit Cards
The greatest improvement year-over-year (versus 2010 levels) was within the bank credit card lending sector, where 60+ days past due delinquencies declined by 29 percent. As delinquency rates continue to improve, bank credit card issuers have loosened lending standards and from January-October 2011, there was a 48 percent increase in new bank credit cards issued to subprime borrowers (those with Equifax credit scores below 660). In October 2011 (headed into the holiday retail season), monthly subprime bank credit card originations were up 22 percent over October 2010 levels.
Sixty-plus days past due rates declined by 19 percent in the auto finance category and in the auto bank category, 60+ days past due rates declined by 23 percent in 2011. Auto loan-amount totals were also on the rise with more than $30 billion in new auto loans originated in October 2011. That total is almost equally split between auto finance ($15.9 billion) and auto bank ($15.7 billion).
2011 first mortgage 30+ days past due rates declined by 13 percent and home equity installment 30+ days past due rates declined by 10 percent. While not quite as large a decline, the home equity revolving 30+ past due category demonstrated improvement as well, with a 7 percent reduction in 2011. While home equity delinquency rates were better for the year, home equity origination rates continue to be down, with declines recorded for both the number of home equity loans originated and average loan amount, extending a 5-year slide.
Retail Credit Card
In the retail credit card category, the (60+ days past due rates were down 15 percent) for 2011 and on the origination side, a 4-year declining trend was reversed as the number of new retail credit cards originated between January-October 2011 (26.8 million cards total) increased by 7 percent.
The exception among 2011 lending sectors was in the area of student loans that are 60+ days past due, which did not decline, but actually increased by 1 percent over 2010 delinquency levels. However, through October 2011, the industry is experiencing 3 consecutive years of increases in the number of student loans originated.
January 31, 2012 6:34 am
According to a recent report in Real Estate Economy Watch, nearly one out of three home sales in December 2011 went to buyers who paid all cash, adding credence to the belief that investors are key to the recovering real estate market.
The report was based on the findings from the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, which surveys approximately 2,500 real estate agents nationwide each month. According to the survey, in December, the overall proportion of cash buyers in the housing market surged to a record 33.2 percent, up from 29.6 percent a year earlier, and 74 percent of investors used all cash to buy homes. Investors accounted for 22.8 percent of home purchases in December 2011, up from 22.2 percent a month earlier.
The combination of all cash and shorter closing timelines convinced many sellers to accept lower bids. The survey found that cash buyers are able to bid significantly lower—and successfully—on many properties because they offer a shorter and more reliable closing timeline. This is particularly true for bids on distressed properties, because mortgage servicers selling foreclosed properties generally prefer transactions that can settle within 30 days.
The total share of distressed properties in the housing market in December, as represented by the HousingPulse Distressed Property Index (DPI), continued at a high level of 47.2 percent, using a three month moving average. This is the 24th month in a row that the DPI has been above 40 percent.
While investor bids may not be the first offers accepted, they often end up winning properties after other homebuyers are eliminated because of mortgage approval or timeline problems.
Source: Real Estate Economy Watch