Energy Audit: Worth the $100?

by Lynn B. Johnson on July 18, 2013

Energy AuditMy husband and I bought a 1950s-era home last year and sank quite a bit of money into updating it. Even though our contractor and my husband have added rolls and rolls worth of insulation to our home, our utility bills have been higher than reasonable: particularly our gas bill in the winter (for heating) and our electric bill in the summer (for air conditioning).

We’ve gone through parts of our home squirting “Great Stuff” insulating foam sealant into the visible cracks but what more could we do? At our wits end to determine just where the heat/AC was leaking from our attic and sunroom, we contacted our electric utility supplier for a home energy audit.

Home Warranties: Worth the Price?

by Lynn B. Johnson on April 10, 2013

Home WarrantyA home warranty/home protection plan is a service contract that protects many of the appliances or systems (heating, plumbing, air conditioning) in your house in case they fail. They can serve as a security blanket of sorts to homeowners, particularly if you’re purchasing a home that is older or hasn’t had much in the way of upkeep over the past number of years.  Plans are often offered on an annual basis and can cost much less than it otherwise would to fix a home system or replace a home appliance should one of those cease to function.

There are many, many home warranty companies, and you can read reviews about them as well as request a free quote online. Some warranties only cover appliances, and some only cover systems. If you want both areas covered, be sure to note that when you ask for your quote.

Cutting Your Costs Around the Home

by Guest on November 17, 2012

A dollar doesn’t go as far as it used to. With food and gas prices rising, instability in the job market, and national debt looming like a dark cloud, many Americans have been wracking their brains to make every dollar count.

Your own home is a great place to start. I’m not talking about making drastic changes or contemplating unusual alternatives for powering your home. Rather, just take a closer look at your home spending habits and it can go a long way toward cutting overall costs and bringing some peace of mind. If you dread opening your monthly bank statement, try implementing some of these easy steps to financial frugality.

Is the Housing Market On Its Way Back?

by John Kiernan on October 31, 2012

mortgage recoveryAmidst all of Hurricane Sandy’s destruction, there is actually some good news when it comes to the housing market.  Foreclosures are down in more than 60% of the nation’s largest cities, according to RealtyTrac, and experts are pointing to that as a sign of stabilization in the housing market.

Not only did foreclosure rates fall by more than 25% in major cities such as San Francisco, Detroit, and Los Angeles during the third quarter of the year, but they actually dipped below 2007 levels for 58% of the country’s major metropolitan areas.  That’s undoubtedly good news for the economy in general and those of us who work in fields tied to the housing market, but things aren’t quite so peachy everywhere.

Why are Small Businesses Still Paying for the War of 1812?

by John Kiernan on September 19, 2012

As a small business owner, it’s easy to use a given state’s low corporate tax rate as a reason to base your operations there.  By doing so, however, you’ll be failing to take into account taxes assessed on a local level, which can cost you big time.

Take Virginia, for example, which has a tax rate of 6% that the state proudly showcases on its website as being one of the lowest in the nation.  What you won’t find in this glowing write-up is information about how you’ll also be footing the bill for a war long since concluded.  You see, the Virginia Business, Professional and Occupational License (BPOL) tax started as a way to raise money for the War of 1812, but now this tax on the gross receipts of Virginia-based companies serves primarily as a thorn in the side of small businesses and a way to fill the coffers of local municipalities.

Is Mortgage Tax Relief On Its Way Out?

by John Kiernan on September 5, 2012

The Republican National Convention is now behind us and the Democratic version is set to conclude Thursday, and while this might have you thinking there will be an entertainment void in the coming weeks, the truth is that the real fun starts when these idealistic celebrations are in the rear-view mirror.  I’m referring to the beginning of the debate season (though I would have accepted the start of the NFL regular season as well), when we can hear the candidates mix it up and offer retorts to each other’s grandiose claims.

The debates usually give ordinary citizens like you and me a chance to ask the candidates questions as well, and one question that I’m sure a lot of people would like answered is what will become of the mortgage forgiveness tax break that has helped lower the financial burden on so many people since 2007.

Get Screwed During Foreclosure? Time is Running Out to Get Even

by Odysseas Papadimitriou on May 30, 2012

independent foreclosure review programIf your home was foreclosed upon during the Great Recession, not only do you have company – there were 6.6 million foreclosures in 2009 and 2010 alone, according to RealtyTrac – but you may also be entitled to compensation under a government program that will run through July 31 (that’s only two months away, so get a move on!).

The Federal Reserve and the Office of the Comptroller of the Currency are requiring that 27 major lenders let independent consultants review foreclosures that were initiated, pending, or completed between January 1, 2009 and December 31, 2010 because (surprise, surprise) these lenders didn’t always do things by the book.

Mistakes to Avoid When Purchasing a House

by Guest on August 31, 2011

HouseholdBuying a house is a big (and exciting) step. But regardless of whether you’re a first-time home buyer or have bought before, there are some mistakes to avoid when purchasing a house. Here are a few to watch out for.

Getting in over your head

If there’s one mistake you want to avoid for sure when purchasing a house, it’s getting in over your head. You don’t want to buy more house than you can comfortably afford based on your current situation — not on some improved situation that you think you’ll probably be in down the road.

15 Items that Impact the Cost of Homeowners Insurance

by John Kiernan on May 2, 2011

home-insurance-tipsNo more than once a year, most people will repeat the insurance ritual. When it comes time to renew your homeowners insurance, you’ll likely do one of the following:

  1. Write a check and renew the policy.
  2. Do some research to compare insurance rates.

Number two is the better choice as it helps you to be sure you are going to be getting the best insurance rates. Don’t worry. It doesn’t necessarily mean you’ll be switching insurance companies every year or two. If you find a better rate, call your current insurance provider and let them try to match the rate.

5 Reasons You Should Only Pay Cash For Rental Properties

by Guest on April 14, 2010

rental-apartmentThis is a guest post written by Erik Folgate, an editor at Money Crashers.

Yes, you read the title right. You’re probably thinking that it’s ridiculous to suggest that you pay cash for a rental property (which I’m defining as a property you buy for the purpose of renting it out), because it’s unrealistic to think that someone has enough cash to pay for a rental property outright.

Cash For Caulkers

by Brian Johnson on March 13, 2010

cash-for-caulkersThere has been some talk about a ‘Cash for Caulkers’ program that would refund homeowners 50% of their costs to renovate their properties in order to make them more energy efficient.  The program,officially called Home Star,  is unofficially being dubbed ‘Cash for Caulkers,’ and represents another effort in getting us out of the recession.

The program is obviously trying to emulate the Cash for Clunkers program, which helped stimulate the auto industry.  While I agree that Cash for Clunkers was a great idea, it was not without its faults.  Most notably, though it put people into new cars, it did nothing at all to make America more competitive on the global market.  What Cash for Clunkers did, essentially, was to tell the American people, “don’t worry about the recession; buy a new car!”  The day after buying their new car, however, Americans saw more unemployment, more banks failing, and more homes going into foreclosure.  It didn’t solve the real problem.  The money set aside for the Cash for Caulkers program will likely have the same effect:  it will make Americans spend money, but it won’t do anything to really end the recession we’re in.

To Foreclose or Not To Foreclose

by Odysseas Papadimitriou on January 13, 2010

foreclosureA recent article in the San Francisco Chronicle offered an interesting opinion by Brent T. White, a law professor at the University of Arizona.  He advises homeowners to allow their home’s to go into foreclosure when they find that their home is worth less than what they owe on their home loan.  His argument is that foreclosure is a smarter economic decision and that it is only the social stigma of losing one’s home that is keeping homeowner’s paying their bills when it would be in their best interest to cut their losses and run.

I agree with White that there are times when it is in a homeowner’s best interest to simply walk away from their loan.  However, I also feel that he grossly misrepresents the repercussions of a foreclosure. White’s suggestion completely downplays that, in most cases, creditors can still legally pursue you.  He also suggests that one’s credit score after going into foreclosure is likely to recover in two years.  The truth, however, is that you will have bad credit for the next 5 to 7 years, which means limited access to credit and increased costs on anything that relies on your credit history (e.g. renting an apartment).  Finally, White’s suggestions ignores the human cost of this stressful process.  Going through foreclosure creates a great deal of anxiety.  It is not something you can simply do without feeling the effect on your own well being.

The Mortgage Relief Plan is a Failure

by Brian Johnson on January 12, 2010

failureOur government suffers from a naivete with some of its plans to resuscitate the economy which consumers simply cannot afford.  To be more specific, the current administration needs to come to terms with the fact that business practices are dictated by laws and potential for profit.  Businesses cannot, and should not, be counted on to change their policies out of the goodness of their hearts.

Last March, the Obama administration put into place its Mortgage Relief Plan to help homeowners stay out of foreclosure by urging banks to institute loan modifications for borrowers.  Renegotiation of their loans would allow borrowers to make payments on a more affordable rate, allowing them, in theory, to keep homes that would otherwise go into foreclosure.  Since its launch last March, the plan has provided permanent loan modifications to only 4% of those who have attempted to sign up.  Lenders like Bank of America have helped only .06% of the people who’ve requested a modification.

Citibank's Gift for the Holidays

by Brian Johnson on December 21, 2009

giftCitibank is suspending foreclosures and evictions for the holiday season.  For 30 days, from December 18th through January 17th, Citibank is offering a reprieve to borrowers whose loans are owned by Citibank Corporation.  The company reports that it will help about 4,000 borrowers who are either scheduled to be evicted, or scheduled to receive notice of eviction during this period.

Citibank deserves to be commended for this act.  In the general state of the American economy as it stands right now, lending institutions are placed in a precarious position where they have to implement tough policies to keep their businesses afloat.  It seems that Americans are increasingly turning to lending institutions as a solution to this recession as well as a scapegoat for this nation’s economic troubles.  All too often we hear that either our economic crisis was the result of banks giving out bad loans (which it was), or that economic recovery depends on lenders lowering the minimum requirements for loan qualification (which it does not).

Do Not Wait to Refinance

by Brian Johnson on December 10, 2009

mortgage-refinanceIn order “to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally,” (according to their own FAQ on the subject) the Federal Reserve Bank has been buying up $1.25 trillion in fixed rate Mortgage-Backed Securities otherwise guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae.  The result has been a drop in the mortgage rate for 30 year mortgages.  The duration of this program is limited, however, and is set to expire by the end of the first quarter, 2010.

At the end of the Fed’s purchase program next Spring, the market will be ripe for a mortgage rate increase and a reduction in purchasing power for consumers looking for low monthly mortgage payments.  Experts are estimating that when the Fed steps out of its current purchasing position, 30 year mortgage rates are likely to rise to 6% despite government incentives for first time home buyers as well as current homeowners.

Taxpayers paid once for subprime mortgages and soon they will pay again

by Odysseas Papadimitriou on October 28, 2009

Finance AnyoneThe Federal Housing Administration will be the next financial disaster to fall on the shoulders of American taxpayers.  Created in 1934 to help low income and first time buyers get housing loans, the agency was designed to guarantee a relatively small percentage of mortgages, for instance, two percent in 2005.  Since its inception, FHA’s budget and operational infrastructure have followed this low-ratio model, and have been designed to absorb losses without having to ask for money or help from the Federal Government.  However, the GAO is now projecting taxpayer funded subsidies for the FHA of half a billion dollars over the next three years, if no changes are made to the agency’s program.

With the housing and credit markets in dire straights, private lenders are asking for better credit scores and higher down payments.  This means fewer people are able to qualify for conventional loans.  According to the website for Housing and Urban Development (the parent organization for the FHA), the FHA’s restrictions on the kinds of loans it will guarantee are more lenient relative to conventional loans, and as such, the FHA is being called into service more and more frequently in this particular economic climate.  Up by over 1200 percent since 2005, the FHA is now expected to back one quarter of all new U.S. mortgages.

No More Economic Bubbles - Let's Focus on Fundamentals

by Odysseas Papadimitriou on July 23, 2009

economic-bubbleOur country’s economy has been operating from bubble to bubble.  From 1996 until 2000, we were in a tech bubble.  Our faith in the financial potential of the dot com industry was boundless, though it ultimately proved ill placed.  From 2000 until 2006, we were in a housing bubble which, when it burst, laid the foundations for the current recession.  During these periods, the country placed its economic hopes on new, seemingly plentiful, frontiers that promised new means by which to make money.  Older values were made to seem, by comparison, out of touch and out of date.  As a result, we, as a nation, allowed ourselves to slip further and further away from the fundamentals necessary for a healthy economy.

Now, we stand on a precipice.  We could create another of these economic bubbles to put our financial hopes into – an option as illusory as ever – or we could find some way to return to the fundamentals that have, historically, made our nation’s economy strong.  Over the last decade, we allowed our exports to slip and made our economy deeply reliant on imports from the rest of the world.  We have let the trade deficit grow too wide without finding new products or new technologies to export, and as a result have found ourselves without a significant industry to insure future success in the global economy.

Lenders Need to Become Proactive Instead of Reactive

by Odysseas Papadimitriou on July 21, 2009

home-foreclosureAccording to realtytrac.com, 300,000 homes went into foreclosure last month.  Bloomberg reports that the U.S. delinquency rate rose to 9.4% and foreclosures rose to 1.37%.  According to Moody’s Investor Service, 42 percent of outstanding 2006-vintage subprime loans are at least 60 days delinquent, in foreclosure, or held for sale.  As we all know, the housing crisis and rising unemployment rates have served to make it difficult for many Americans to pay their mortgages on time, and the result is that many of the nation’s home owners are in dire straights.  The problem is bad, and banks need to change the way they modify mortgages if they hope to provide adequate assistance.  They are now concentrating on fixing disasters as they arise rather than preventing them in the first place.

With so many people in financial trouble, mortgage lenders like Bank of America, Wells Fargo, Wachovia, Chase, and Citigroup are finding themselves too understaffed to deal with these excessive defaults.  Given that a bank only has so many resources to extend to their borrowers, the dilemma becomes who to work with first.  Basically, the bank has to perform a kind of triage, like in a hospital, to determine which of their clients demands immediate attention, and which clients can wait.  The lender faces different kinds of repayment problems.  Specifically, they have people who cannot repay and who are defaulting right now, and people who have done everything in their power to repay (tapped into savings, changed their lifestyle, etc.) but who cannot sustain their payments any longer; they have not defaulted yet but soon they will.  According to a survey by ProPublica, it seems that most major lenders have been focusing on borrowers who are most delinquent at the expense of borrowers that are current but will quickly become delinquent unless they get help.

Senate Voted Wisely on Cram Down Bill

by Brian Johnson on May 8, 2009

StimulusOn April 30th, the Senate defeated the “cram down” bill that would have allowed bankruptcy judges to adjust mortgages so as to allow those people going through bankruptcy to keep their homes.  The defeat came as some democrats sided with the bill’s opposition, mirroring a general weariness from within the banking community towards this piece of legislation.

The media balked at this defeat with claims that echoed the bill’s sponsor Richard Durbin (D-Illinois) that the banks essentially controlled congress and that senators needed to vote along with the needs of the American people rather than according to the desires of the banking and mortgage lobbies.  The accusation from Durbin, and from the media following the defeat, was that these senators (particularly the 12 democrats who voted against the bill) were essentially bought out.  The media portrayed the senate as under bank control.

A Government of Zero Accountability

by Odysseas Papadimitriou on April 30, 2009

ZeroThe barbarians, so the saying goes, are no longer at the gates.  They’ve stormed through.  In many cases, they were practically let in by negligence of the regulators whose job it was to protect us from greedy swindlers, inventive accountants, and fraudulent lenders.  The gatekeepers themselves, the various federal regulators, have not been punished for failing in their duty to protect America.  They remain, even now, at their posts as the country reels from the damage it has taken from the various scandals and crimes committed against its economy and its taxpayers.  Those whose job it was to police against these crimes have failed us and we wonder why they have not been made accountable.

Why, for instance, didn’t Christopher Cox, the head of the SEC, not resign after the Madoff scandal?  Surely the crime was glaring enough to call his competency into question.  Shouldn’t he have taken some responsibility as the scheme was carried out on his watch?  Cox offered no public apology and was never taken to task for the calamity that resulted from his oversight.  He just stayed in, despite the very real complaints of his critics, until he was replaced by the next administration.

Companies that still don't get the role of bonuses

by Odysseas Papadimitriou on April 10, 2009

BonusesFannie Mae and Freddie Mac are planning on paying out $210 million dollars in bonuses despite the fact that both these companies had to be seized by federal regulators so as to prevent dire repercussions across the economy.  Their failure has been one of the central low points to the economic devastation of this past year

James Lockhart, federal regulator for Fannie Mae and Freddie Mac, defended these bonuses for two reasons.  First, he suggests that the bonuses are needed because of the destruction wrought upon the company employees’ savings by the crash of their stock.  The scene for such workers is, of course, tragic, but we wonder if bonuses should go out to those who lost money in the stock market, then don’t we all deserve some of that cash?  The plight of the employees at Fannie Mae and Freddie Mac is hardly unique—it is the plight of every American hurt in this recession.  But of course, the average American doesn’t get government bailouts for the money that they’ve lost in the various markets—we pay for them.  When all is said and done, investment is a gamble.  In other words, the people at Fannie Mae and Freddie Mac gambled their life savings, like so many of us, and lost.  We don’t get a safety net, why should they?

Money, TV Shows, & Entertainment

by Brian Johnson on March 30, 2009

CassandraMoney shows should not treat finance as entertainment by turning the buying of stocks into a joke or by turning a discussion of serious economic situations into an occasion for groundless argument.  These shows discuss issues directly involved in the managing of people’s money, pensions, savings, and 401ks. The networks that produce these shows, then, have a moral responsibility to treat the subject matter with the seriousness that it requires. 

To fulfill this obligation, the networks should do two things.  First, the network should only invite experts to discuss financial topics.  Participation should be limited to those who have actually worked in the field that they will be discussing.  All too often, financial reporters who have little or no work experience in a particular field are invited to comment on very serious economic issues and their presence drowns out the founded insights of real experts who should be listened to.  Second, the networks should see themselves as obliged to foster a healthy debate founded on factual evidence and cogent argument, and not gut feeling.  The moral obligation of these networks should be a constant pursuit of the truth.

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