Saturday, December 31, 2011

How To Help Your Kids Buy A House


Be sure you are helping out for the right reasons and don't dip into your nest egg.

By Michele Lerner of Bankrate.com

Traditionally (and when they could afford to), parents have provided cash to their offspring for down payments on homes. But in these days of tightened credit guidelines, some parents take bigger steps to help their kids become homeowners at today's low interest rates.

Three factors determine whether it's financially smart for parents to help adult children buy homes: the parents' finances, the kids' finances and the real-estate deal itself.

"The first rule of thumb is that parents should never get financially involved with their adult offspring unless they are adequately prepared to address their own needs and pending retirement, which may not be far down the road," says Guy Penn, principal and founder of G.M. Penn Wealth Management in O'Fallon, Mo.

Penn says while there's no one-size-fits-all answer to whether parents should help their offspring buy a home, it definitely is a bad idea to pull money from a retirement account to give assistance.

Jeffrey Ivory, a partner with Stonebridge Financial Partners in Bingham Farms, Mich., says, "If parents are giving their kids down payment money, they should be willing to lose that money and not get it back. If they are helping their kids by buying a home and renting it to them or by co-signing their loan, they need to have not only the liquidity for the down payment, but they also need to be certain they can pick up the mortgage payments if the kids cannot pay them."


Adult offspring finances
Parents should make sure they are helping their kids for the right reasons, Ivory says.
"If the kids can't get a loan on their own, the parents really need to know why not," Ivory says. "If the scenario is that your kids are going through a divorce or a job loss and you want to help them, tying them to a permanent location may not help. If they are dealing with the financial consequences of credit problems, helping them pay off their credit card debt may be more important than buying a home. But if you are helping a young couple with stable jobs who just haven't had time to save for a down payment, and you can easily afford to help, this could make sense."


Ivory says parents should ask their kids to pull their credit scores and show it to them, and ask to see their paychecks and credit card debt.

"If your kids are already struggling, then you are setting them up to struggle more if you get them into a house they can't afford," Ivory says.

Educating your kids
Ivory says parents should talk to their kids about the rules of thumb of homeownership, including keeping all total debt including housing costs to less than 38 percent of monthly income before taxes. Housing costs, including taxes, homeowners insurance, homeowners association dues, and principal and interest on the mortgage, should be less than 28 percent of gross monthly income.

"The No. 1 way a parent can help their children is to offer them the gift of knowledge," Penn says. "Parents rarely have serious money discussions with their children, and throwing money in their direction now may be doing more harm than good. Parents should be talking to their kids realistically about the hidden costs of homeownership such as utility payments, maintenance and repairs."


The real-estate deal
The simplest way parents can help their kids financially is with down-payment money.

"Lenders want to know if the money is a gift because if the parents are treating it as a loan, it will be considered a second loan on the home," says Dan Kruse, broker and president of Century 21 Affiliated in Madison, Wis.

Individuals can give $13,000 tax-free to another individual each year, Ivory says, so if two parents each give their offspring and their offspring's spouse the maximum, they can give a total of $52,000 tax-free.

Kruse says parents often buy a house as an investment and have their kids pay rent.

The parents can then sell the home to the kids when they are ready, keep it as an investment property or sell it to someone else," Kruse says. "You can do this with two separate transactions, or you can make a rent-to-own arrangement with the parents giving the kids a rent credit toward the purchase."


Ivory says a lease-to-own arrangement requires consultation with a tax professional as well as a lender, and must include a written contract.

Even within the family, financial planners say it is crucial to have everything in writing to make sure there are no misunderstandings in the future about repayment plans or the consequences of a loan default.

Parents with enough cash can lend the entire mortgage to their offspring, but this too should be in writing and include a reasonable interest payment. "Everyone needs to pay attention to the law and to the tax consequences of any financial arrangement," Ivory says.

Most financial planners view co-signing a loan as the worst option because of potential damage to the parents' credit and cash flow if the kids cannot make the payments.

Tuesday, December 27, 2011

Things are looking up for your Real Estate Market

   

Sales ticked up for existing homes and new homes, several real estate market indicators revealed last week, pointing to a housing market that may finally be entering recovery mode. 
In the most recent report, the Census Bureau reported that the new-home market continued its rebound, with sales of new houses once again inching up last month. New-home sales rose 1.6 percent from October to November to an annualized rate of 315,000, and sales were up nearly 10 percent compared to November 2010. 
The median sales price of a new home in November was $214,100, the Census Bureau reported, and the inventory of new houses nationwide decreased to a six-month supply at the current sales pace. 
"Inventories of new homes are very low: There's nothing on the shelf, so any increase in new home sales will translate directly into new housing starts," Bob Denk, senior economist at the National Association of Home Builders, told CNNMoney. "That means putting people back to work."
Other recent good news for the housing market: November sales of existing homes increased 12 percent year-over-year, new-home building starts were up nearly 21 percent year-over-year, and mortgage rates reached new record lows last week, pushing housing affordability even higher. 
Source: “New Home Sales Edge Up,” CNNMoney (Dec. 23, 2011)


Monday, December 19, 2011

Truth Test: $5 power bills?

By Stephanie Grimes



SALT LAKE CITY -- A Utah developer states home-buyers can "enjoy power bills as low as $5 per month," but is the claim too good to be true?
Garbett Homes' $5 power bill campaign began in 2009, after the company began collecting power bills from residents of the solar- and geothermal-powered Solaris development in Daybreak. One homeowner reported seven straight months of $4.48 power bills.
The homeowner, a single woman, had generated more energy with her home than she had used during those months. Rocky Mountain Power allows customers participate in a net- metering program on a first-come, first-serve basis. A net-metering program measures the difference between the electricity supplied to the homeowner by the company and the electricity generated by the customer and fed back onto the electric grid. Customers pays for any electricity use over what they generate.
The $4.48 charge was a minimum fee Rocky Mountain Power charges customers per month to remain on the electric grid, according to company spokeswoman Margaret Oler.
But is a surcharge the only expense a couple or a family can expect to pay in one of Garbett's solar-powered homes? Probably not, said company spokesman Rene Oehlerking.
"For couples or families of four, bills average $30 or $40, sometimes $50," Oehlerking said. "The average utility cost for electricity and natural gas is $180, so our homes are, on average, 110 percent more energy efficient than new homes built to code today."
The energy efficiency of Garbett homes is due to their construction and the inclusion of renewable energy resources in that construction, according to Oehlerking.
The resources, such as solar panels, are included in the cost of the homes, which sell from the low $200,000's.
Oehlerking said Garbett is "eating the cost" of installing the environmentally friendly features in order to remain competitive in a difficult market. "Green" features do not earn any credit with appraisers, so on paper the homes are not worth any more than their more traditional counterparts.
"It's unfortunate, really, that these features don't add value," Oehlerking said. "It's good news for buyers, though, who are essentially getting these things for free."
"What we're doing is pretty cool," he continued. "Businesses can continue with business as usual and go bankrupt, or they can innovate. We decided to innovate, and it's given us a competitive advantage."
The difference in price between Garbett homes and other Salt Lake area homes without the additional features is, in fact, negligible. The average price per square foot of a home in Utah was $110 in the first quarter of 2011, which for an 2,000 square foot home comes to $220,000. Homes in Garbett's TerraSol development range from 2,100 to 2,400 square feet and start between $220,000 and $250,000.
They do not cost anything extra, but is the electricity savings worth it? Oehlerking thinks so.
"Our buyers are getting energy-efficient, high-producing homes," he said. "All at a time that electricity rates are going through the roof."
In fact, the average American paid $300 more for electricity in 2010 than they did in 2009, marking the fifth-consecutive year of an increase above the inflation rate. Fifty dollars per month on energy costs, or $600 per year, is less than half of the $1,419 the average American family paid for electricity last year.
So, is there truth in Garbett's claim to $5 energy bills?
The $5-bill campaign was a clever marketing tactic that did not represent the savings an average family would see in a Garbett home, but the homes are no more expensive than a traditional house, and home-buyers will likely see drastic reductions in energy costs.
Image credit: Garbett Homes

4 Utah cities make top 25 list for business

By Jasen Lee



SALT LAKE CITY — The Milken Institute Friday announced that three of Utah’s large metro cities — Salt Lake City, Provo and Ogden — all ranked among the nation’s top 25 locations for business.
Among small cities, Logan ranked No. 1.
The Best-Performing Cities index ranked the nation's 200 large metropolitan areas on measures including job, wage and technology performance.
In the Institute's index, employment growth was weighted most heavily due to its critical importance to community vitality. Wage and salary growth measured the quality of jobs created and sustained, a release stated.
Utah metro areas made an impressive showing, with three metros in the Top 25 compared to only one metro recognized last year. Salt Lake City ranked sixth, Provo ranked ninth and ranked 15th, Ogden climbed 32 positions.
“This new research by the Milken Institute is further evidence that Utah continues to be the most impressive economy in the country,” said Gov. Gary Herbert. “Our work ethic, our skilled labor force, and our business-friendly environment — exemplified by these four cities — continue to fuel expansion and job growth in Utah.”

Thursday, December 15, 2011

Job market brightens as unemployment claims sink

By Christopher S. Rugaber December 15th, 2011 @ 10:55am

WASHINGTON (AP) - The outlook for the job market is looking brighter.

Far fewer people are seeking unemployment benefits than just three months ago _ a sign that layoffs are falling sharply.

The number of people applying for benefits fell last week to 366,000, the fewest since May 2008. If the number stayed that low consistently, it would likely signal that hiring is strong enough to lower unemployment.

The unemployment rate is now 8.6 percent. The last time applications were this low, the rate was 5.4 percent.

The big question is whether fewer layoffs will translate into robust hiring. It hasn't happened yet, even though job growth has increased in recent months.

The four-week average of weekly unemployment applications, which smooths out fluctuations, dropped last week to 387,750. That's the lowest four-week since July 2008. The four-week average has declined in 10 of the past 12 weeks.

"Labor market conditions have taken a turn for the better in recent weeks," Michael Gapen, an economist at Barclays Capital, said in a note to clients. "Payroll growth should improve in the coming months."

Separately, the prices companies pay for factory and farm goods rose 0.3 percent last month. The figure was pushed up by higher food and pharmaceutical prices. But energy prices barely rose, keeping inflation in check.

In the 12 months ending in November, wholesale prices have increased 5.7 percent, the Labor Department said Thursday. It's the smallest year-over-year increase since March.

The department's producer price index measures price changes before they reach consumers.

A mixed picture of manufacturing emerged from other reports Thursday. Factory output fell in November for the first time in seven months, according to the Federal Reserve. Manufacturers made fewer cars, electronics and appliances.

But some economists noted that auto sales rose in November, suggesting that production will rebound.

And the Federal Reserve Banks of Philadelphia and New York said manufacturing expanded in their regions. Manufacturing has been a key source of growth this year.

Still, the U.S. manufacturing sector could weaken in 2012. Growth is slowing in Asia. Europe is likely already in recession. And U.S. companies are reducing their investment in machinery and other large equipment.

The downward trend in applications suggests that companies are cutting fewer workers as the economy picks up. It also comes as Congress is wrangling over whether to extend emergency unemployment benefits, which are set to expire at the end of this year.

Growth may top 3 percent in the final three months of this year, according to many economists. That would be up from 2 percent in the July-September quarter.

Other recent reports suggest the job market is improving a bit. In the past three months, net job gains have averaged 143,000 a month. That compares with an average of 84,000 in the previous three months.

In November, employers added 120,000 jobs, and the unemployment rate fell to 8.6 percent from 9 percent. That was the lowest unemployment rate in 2 1/2 years. But about half that decline occurred because many of the unemployed gave up looking for work. When people stop looking for a job, they're no longer counted as unemployed.

Employers posted fewer jobs in October than in the previous month, the government said Tuesday, though the decline was modest.

Job openings have risen by about 35 percent since the recession officially ended in June 2009. But they're still about 25 percent below pre-recession levels.

More than 7.4 million people are receiving unemployment benefits, according to Thursday's report. About 2 million will lose their benefits by mid-February if the emergency program expires.

Lawmakers differ over how long benefits should last. The House passed a Republican bill Tuesday that would renew emergency aid but reduce the maximum duration to 59 weeks from the current 99 weeks.

Democrats want to keep the full 99 weeks. The measure is part of broader legislation in the Democratic-led Senate that would also extend a Social Security tax cut.

Wednesday, December 14, 2011

4 Tips to Help Potential Buyers Refine Their Home Search


Are you having a tough time wading through the inventories of homes to find your right home? Offered here are some of the following tips in a recent article edited from RISMedia to help you home buyers narrow your search when looking for properties:

1. Make a list of all the must-haves for your future home, such as the number of bedrooms and school district you must have.

2. Make sure you get pre-approved for a mortgage by a lender before you meet with your REALTOR. This will help ensure that you only look for homes that are within your budget.

3. Make Sure your REALTOR encourages you to research available homes on the Internet so you get a feel for what’s available. He can help you sort for properties within your price range and locate homes that fit their criteria. He will have you review photos and videos of multiple homes on the Internet to help you narrow your search before you view the homes in-person.

4. Make sure your REALTOR does not let you get sidetracked when viewing homes at aesthetics that can be changed out easily, such as paint colors and light fixtures. Let him help you see past any bad decor and focus in on items in the home that can’t easily be changed, such as the home’s location and lot size.

Source: “How to Lead a Refined Real Estate Search,” RISMedia (Dec. 12, 2011)

Monday, December 5, 2011

It just wouldn't be Christmas without watching these 5 films










SALT LAKE CITY -- Christmas just wouldn’t be the same without the movies that embody the spirit of the season and help us laugh our way through this crazy time of year. They can bring you back to your childhood, when the stress of the holidays was your parent’s headache and all you knew of Christmas was the magic. Watching certain films may even be a tradition for some families. And sometimes a Christmas flick is the best way to remind even the biggest Scrooge that there indeed is something special about this time of year.

There are many standout holiday movies, but it just wouldn’t feel like Christmas without enjoying at least one of the following five films.

A Christmas Day tradition

I triple-dog-dare you not to watch “A Christmas Story” in December. If you own a television, it’s almost impossible not to revisit Ralphie and the tacky leg lamp with the “soft glow of electric sex in the window.” Devoid of any Hollywood gimmicks, “A Christmas Story” gets it’s charm from the nostalgic story line and a boy’s simple Christmas wish for a Red Ryder, carbine action, two-hundred shot range model air rifle. There are few, if any, Christmas movies with as many memorable scenes and quotable lines as this film, which strangely flopped in theaters and found mega success as a television staple on Christmas day.

An old classic

It’s hard to believe that “It’s a Wonderful Life” was released more than 55 years ago. In 2011, the story of a man struggling to live the American dream in a nation trying to recover from economic turmoil may be more relatable now than ever. George Bailey, played by the incomparable Jimmy Stewart, is a family man and small-business owner overwhelmed by debt and failed dreams. Convinced that the world is better off without him, he comes to his breaking point only to be rescued by an unconventional angel. Even though the main events of this film occur on Christmas Eve, the story is poignant and moving no matter what time of year you watch it.

A new classic

If you’ve ever poured syrup over your spaghetti and smiling is your favorite, you’re probably a fan of “Elf”. It may not move audiences to tears or convey a mind blowing holiday message, but it scores points for being original. It’s goofy, immature and all together ridiculous, and that’s exactly why so many people love it. Will Ferrel is endearing as Buddy, the elf, who moves to New York City from the North Pole after discovering he’s actually human. Trying to adapt to life outside of Santa’s workshop leads to slapstick antics and silly encounters. “Elf” doesn’t take itself seriously, and reminds us that this time of year is supposed to be fun!

A children’s classic

Whether you watch the 1966 cartoon based on Dr. Seuss’ popular book, or prefer Ron Howard’s take on the holiday classic, “How the Grinch Stole Christmas” has a lesson for kids young and old. If your children have a case of the gimmies and you’ve become overwhelmed by crowded shopping malls, it helps to remember the moral of this story. “Maybe Christmas doesn’t come from a store. Maybe Christmas…means a little bit more.”

Home for the holidays

“I don’t know what to say except, it’s Christmas. And we’re all in misery.” If your family puts the fun in dysfunctional, especially during the holidays, than you’ll appreciate “National Lampoon’s Christmas Vacation”. It’s probably one of the most popular Christmas-themed comedies ever, and for good reason. Clark W.Griswold, played by Chevy Chase, is a family man and idealist who attempts to have a “fun, old fashion family Christmas.” His good intentions backfire again and again when his family and in-laws come to stay. There are too many laughs in this movie to mention, and the ensemble of characters may make your own family seem normal.



Nicole Pollard currently resides in Canyon Country, Calif.



Saturday, December 3, 2011

The Perfect Holiday Gift: A Down Payment?

More families may be feeling a little extra generous this holiday season and are offering loved ones help with a down payment on a home.

Coming up with the down payment has become a major obstacle to home ownership, according to a survey by Trulia from September. The survey found that 51 percent of 758 renters surveyed said coming up with the money for a down payment was what was preventing them from buyer and 36 percent said qualifying for a mortgage was holding them back.

But with the holiday season approaching, some lucky family members may find a down payment gift under the Christmas tree.

However, if giving a down payment gift, gift givers must remember that “under federal tax law, each individual is permitted to give away money or valuables worth up to $13,000 to a single recipient in a calendar year,” according to an article at The New York Times. “A married couple could jointly bestow up to $26,000 a year per recipient.” Anything above the maximum annual exemption could be considered a taxable gift and must be reported to the IRS.

Source: “Help With a Down Payment,” The New York Times (Dec. 1, 2011)


Thursday, December 1, 2011

UTAH 6TH BEST STATE IN THE NATION...

By Douglas A. McIntyre, Michael B. Sauter, Charles B. Stockdale, Ashley C. Allen, 24-7 Wall St.

1. Wyoming
> State debt per capita: $2,452 (18th lowest)
> Pct. without health insurance: 14.9% (21st highest)
> Pct. below poverty line: 10.3% (7th lowest)
> Unemployment: 5.8% (6th lowest)

Wyoming comes in first place in 24/7 Wall St.’s Best Run States for the second year in a row. The state has high marks in many categories including high school graduation rate. A whopping 92.3% of state residents age 25 or older have at least a high school diploma — the highest rate in the country. The state also has the fourth lowest rate of violent crimes and the sixth lowest unemployment rate. Wyoming has the smallest population of any state in the country.

2. Nebraska
> State debt per capita: $1,407 (4th lowest)
> Pct. without health insurance: 11.5% (14th lowest)
> Pct. below poverty line: 11.9% (tied for 14th lowest)
> Unemployment: 4.2% (2nd lowest)

The state of Nebraska had the 21st lowest revenue per capita in the country in 2009 yet managed to spend more per capita that year than all but seven states. The state has the fourth lowest debt per capita, and it is one of 13 states with a perfect AAA credit rating. Besides being financially sound, Nebraska also has an unemployment rate of 4.2%, the second lowest rate in the country. The state also has relatively low poverty, high graduation rates and the seventh lowest rate of foreclosures last month.

3. North Dakota
> State debt per capita: $2,721 (20th lowest)
> Pct. without health insurance: 9.8% (9th lowest)
> Pct. below poverty line: 12.3% (17th lowest)
> Unemployment: 3.5% (the lowest)

One of the best measures of North Dakota’s success is its unemployment rate of 3.5% — the lowest in the country and one that has n0t been above 5% in over 20 years. While the state has relied on a stable agriculture sector to keep unemployment low, the booming oil industry has created a $1 billion surplus in the past three years. From 2009 to 2011 Montana was the only other state to report a surplus, according to the Center on Budget and Policy Priorities.

4. Minnesota
> State debt per capita: $1,790 (8th lowest)
> Pct. without health insurance: 9.1% (4th lowest)
> Pct. below poverty line: 11.0% (10th lowest)
> Unemployment: 6.9% (14th lowest)

Minnesota moved up in the ranking from fifth to fourth due to its improvement in several categories, including violent crime rate and health insurance coverage. In 2010, just 9.1% of state residents were without health insurance coverage — the fourth best rate in the country. The state also continues to excel in the areas it did last year. Some 91.5% of the state’s adult population has graduated high school — the second highest percentage in the country. The state also has the eighth lowest debt per capita.

5. Iowa
> State debt per capita: $2,117 (13th lowest)
> Pct. without health insurance: 9.3% (6th lowest)
> Pct. below poverty line: 11.9% (tied for 14th lowest)
> Unemployment: 6% (8th lowest)

Iowa’s greatest assets are its rates of educated and insured residents. Some 90.6% of residents 25 years and older have at least a high school diploma and only 9.3% of residents do not have health insurance. These are among the best rates in the country. Iowa also has an exceptionally low unemployment rate and the highest credit rating available, demonstrating its healthy economy.

6. Utah
> State debt per capita: $2,274 (15th lowest)
> Pct. without health insurance: 15.3% (20th highest)
> Pct. below poverty line: 11.5% (12th lowest)
> Unemployment: 7.4% (17th lowest)

Utah kept the same rank it had in our last survey. The state has the fifth-lowest violent crime rate in the country, as well as the seventh-highest graduation rate in the country. However, Utah had one of the higher foreclosure rates in the country in October, and 15.3% of the population — an above-average rate — is without health insurance.

7. Vermont
> State debt per capita: $5,514 (9th highest)
> Pct. without health insurance: 8% (3rd lowest)
> Pct. below poverty line: 11.7% (13th lowest)
> Unemployment: 5.8% (5th lowest)

Vermont does extremely well in a number of areas considered for this list. Residents are highly educated. It has the second lowest rate of violent crime in the country. It has the third lowest percentage of uninsured residents. However, the state has saddled its citizens with debt. Vermont’s debt per capita is more than $5,500, which is the ninth highest in the country.

8. Virginia
> State debt per capita: $3,100 (22nd lowest)
> Pct. without health insurance: 13.1% (20th lowest)
> Pct. below poverty line: 10.7% (8th lowest)
> Unemployment: 6.5% (10th lowest)

Virginia is the highest-ranked state in the southern U.S., largely because it does not suffer from many of the problems that plague the rest of the South. The state has a median income of $60,674, the eighth-highest in the country, as well as a poverty rate of 10.7%, which is the eighth lowest. The state also has the sixth-lowest violent crime rate in the country, with just 213 incidents taking place in 2010 for every 100,000 people.

9. Kansas
> State debt per capita: $2,086 (10th lowest)
> Pct. without health insurance: 13.9% (24th lowest)
> Pct. below poverty line: 12.8% (tied for 21st lowest)
> Unemployment: 6.7% (12th lowest)

Kansas has the 10th-lowest state debt per capita in the country. However, the state’s ranking may change as its debt grows. According to The Hutchinson News, borrowing by school districts has increased over 800% since 1990. Kansas has a relatively low unemployment rate of 6.7% compared to the national rate of 9.1%.

10. South Dakota
> State debt per capita: $4,485 (12th highest)
> Pct. without health insurance: 12.4% (18th lowest)
> Pct. below poverty line: 13.8% (25th highest)
> Unemployment: 4.6% (3rd lowest)

South Dakota rounds out our list of the 10 best-run states in the country. While the state is slightly below average in median income and poverty, otherwise things are going quite well in the state. South Dakota has the third-lowest unemployment rate in the country. It is also one of the few states to truly avoid the worst parts of the housing crisis. Just one in 4,352 homes was foreclosed in October — the fourth lowest rate in the country.