$8,000 homebuyer credit: What you should know

A change to the tax-credit program for first-time homebuyers means that money is more readily available when it's needed. Find out if it can help you.

As the historic housing plunge rumbles on, Uncle Sam is offering a fresh incentive to get first-time homebuyers off the sidelines. U.S. Housing and Urban Development Secretary Shaun Donovan unveiled a policy change in late May that would provide homebuyers with quicker access to a recently enacted first-time homebuyer tax credit. Buyers would be free to put the funds toward closing costs and a portion of their down payment. The federal government hopes that the measure will stimulate housing demand, something desperately needed to help mop up the glut of unsold inventory.

Here are five things you need to know about the policy change:

1. Less waiting: President Barack Obama's $787 billion economic stimulus plan — which was signed into law in mid-February — included a tax credit worth up to $8,000 for qualified first-time homebuyers. These buyers, however, couldn't get their hands on the cash until after tax season. The new HUD initiative would enable these borrowers to obtain short-term loans allowing them to tap the tax credit before going to closing. "Families will now be able to apply their anticipated tax credit toward their home purchase right away," Donovan said in a news release. "What we're doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing."

2. Initial 3.5 percent: The measure, however, comes with several key limitations. First, it applies only to Federal Housing Administration mortgages. More importantly, the short-term loans can't be used to pay for the minimum 3.5 percent down payment that FHA loans require. Instead, the loan can be used for closing costs and to finance the portion of the down payment that exceeds the 3.5 percent threshold. The administration opted to have borrowers come up with the initial 3.5 percent themselves to ensure that buyers have "some skin in the game," which may reduce the likelihood of default, says Howard Glaser, a mortgage industry consultant and a former HUD official. In so doing, federal officials had to strike a delicate balance. "On the one hand, you want to make sure that homes are affordable to first-time homebuyers, but you don't want to set the bar so low that people who can't afford homes are buying homes," Glaser says.

3. Closing costs: Despite these limitations, the benefits of the program should not be overlooked, says Guy Cecala, publisher of the trade publication Inside Mortgage Finance. "The down payment is probably the biggest chunk of change you have got to pay (when purchasing a home), but it is not the only thing," Cecala says. "Even with a typical FHA loan, there are probably $3,000 to $4,000 in closing costs, title, insurance and (additional fees)." By chipping in toward such costs, the program "could just grease the wheels for a couple more people to get into FHA," says Keith Gumbinger of HSH.com. At the same time, borrowers who use the short-term loan to increase the size of their down payment could obtain a lower mortgage rate.

4. Impact? Cecala doesn't believe the new measure is a game changer for the battered real-estate market. "I think it will be helpful to a first-time homebuyer," he says. "Is it going to generate a lot more housing activity? No." Cecala argues that would-be buyers remain on the fence largely out of a concern that a home will lose value after the purchase. Such concerns will continue with or without the policy change.

Glaser, however, is more optimistic. "This is the missing piece," he says. "Home prices are coming down significantly in some markets, interest rates at historic lows, and now, by addressing cash on the table at closing, I think that borrowers who wouldn't have otherwise been in the market are going to feel more confident about investing in a home."

5. State efforts: The details of the HUD initiative come after several states have enacted similar programs. Missouri, for example, has had a program in place since January that enables homebuyers to put the tax credit toward closing costs or their down payment.

****This article was written by Luke Mullins for U.S. News & World Report.

How to get the best mortgage rates in the country? Buy new

As mortgage rates fall to near historic lows, some homebuilders are offering even lower interest rates in an effort to lure buyers during the slow spring selling season.

The latest sales promotion: Lennar Corp. is offering a fixed 3.625% rate over the life of a 30-year fixed rate mortgage. The deal is besting average rates that have fallen below 5% nationwide, but it comes as other builders are reporting mixed results from similar incentives.

Hovnanian Enterprises Inc.'s recent offer of a 3.99% rate sparked "underwhelming" interest from homebuyers, says Dan Klinger, president of the builder's mortgage operation. "It wasn't like we needed crowd control," Klinger says.

Earlier this year, luxury builder Toll Brothers Inc. was offering a 3.99% interest rate in many of its developments nationwide, but today that rate is no longer available nationally. Toll executives said that the promotion boosted traffic to its Web site, but the low rate alone hasn't been enough to break weak consumer confidence that is still weighing on the market.

Bargain mortgage rates are the latest sales strategy from builders struggling to sell homes. Mounting unemployment continues dogging the sector, because people without jobs, or those afraid of losing one, are unlikely to purchase, no matter how low the rate.

Since the downturn began, builders have tried everything from free tropical vacations to subsidized closing costs in order to move inventory. They then cut costs and even offered layaway plans for down payments.


For homebuyers, the low mortgage rates from the builders represent significant savings. But be wary of the fine print: Lennar is offering the 30-year rate "on select homes," and the loan amount cannot exceed $417,000. The minimum credit score is 700, which is a relatively high score in the current environment. In addition, it could be hard for buyers to come up with the minimum 10% down payment that Lennar requires to qualify for the 3.625% rate.

The builders' low rates may help first-time homebuyers, "but it's not going to goose the trade-up market," says Thomas Lawler, a housing economist. "That's because most trade-up buyers use the equity from their previous home for a down payment, and that equity often doesn't exist anymore."

KB Home is one builder that isn't chasing buyers with low mortgage rates, for now. Instead, the Los Angeles-based builder is focusing on offering smaller houses that are competitively priced with foreclosed houses. The strategy seems to be helping KB, which reported last month that its sales improved more than some analysts expected.

While some builders acknowledge that price cuts are the most effective way to move inventory, such cuts could cause buyers who have already bought a house at a higher price to walk away from their deposits.

It can be costly for builders to offer the low rates because the companies typically pay mortgage investors cash upfront in exchange for the low interest-rate loans. Federal regulations limit how much the builders can contribute to buy down mortgage rates. Currently, if a homebuyer puts down 5% or less, the builder is limited to incentives worth 3% of the sales price, Klinger says. For down payments of 10%, the limit climbs to 6%.


*This article was written by Michael Corkery and Dawn Wotapka of The Wall Street Journal.

Pending home sales rebound in April due to first-time buyers

Les Christie CNNMoney.com staff writer
On Tuesday June 2, 2009, 11:02 am EDT

The number of home sales contracts signed in April continued to bounce back from record lows hit last winter, according to a widely watched industry report. This is the third consecutive month of gains.

The Pending Home Sales Index from the National Association of Realtors rose 6.7% in April after jumping 3.2% in March. That was far above the forecasts of experts surveyed by Briefing.com, who predicted a 0.5% increase. The index was 3.3% higher than 12 months earlier.

Pending home sales are a forward-looking indicator since many of the contracts don't result in completed deals for many weeks or months.

"Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market," said Lawrence Yun, NAR's chief economist in a prepared statement. "Since first-time buyers must finalize their purchase by Nov. 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers."

The credit allows many homebuyers who have not owned a home in the past three years to claim up to an $8,000 refund on their taxes. The result has been a flood of first-time homebuyers even into lukewarm markets like Indianapolis, according to Glenn Bill, an agent there for Century 21 Sheetz.

"Our first-time homebuyer market is exploding," he said. "That's one good thing to come out of the stimulus package."

Low prices

Also driving sales is falling home prices. The national median home price is down more than 30%, according to the S&P/Case-Shiller Home Price Index. That has drawn many bargain-hunting homebuyers back into the market.

Mortgage rates in April were also very favorable, averaging well under 5% for a 30-year, fixed-rate loan. However, rates have risen recently.

All those factors have raised NAR's index of affordability to near record highs. It went up to 174.8 in April from an upwardly revised 171.9 in March, its second highest monthly reading ever. This index measures the relationship between home prices, mortgage interest rates and family income.

Regionally, the biggest improvement in home sales came in the Northeast, where they shot up 32.6%. Sales ramped up 9.8% in the Midwest, inched up 1.8% in the West and cooled 0.2% in the South.

Also boosting sales, according to NAR president Charles McMillan, a Coldwell Banker broker in Dallas, is that some states and non-profit agencies are helping first-time homebuyers come up with down payments.

"Some states are offering bridge loans that allow first-time buyers to use the tax credit for down payment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location," he said.

The Department of Housing and Urban Development announced last week an additional program that enables homebuyers to add the tax credit to their down payments on FHA mortgages at closing, which should also help to enhance affordability and give a push to home sales.

Health Care Reform, Realized?

Health care costs more in the United States than it does anywhere else in the world. Many Americans don't have insurance at all. Others break their budgets paying for health care. A recent study found that millions of Americans actually put off care for chronic issues. If you haven't confronted this issue personally, chances are someone in your family or circle of friends has.

Against that backdrop, the health care industry surprised many who follow reform efforts this week by offering to put the brakes on health care costs over the next few years. The projected monetary impact: $2 trillion in savings over the next decade. The policy impact: While officials in Washington continue to weigh health care reform, they've now got a lot of financial wiggle room.

Or do they? There's nothing yet concrete about the $2 trillion figure from hospitals, insurers, doctors and pharmaceutical companies floated on Monday—many skeptics have a "I'll believe it when I see it" approach. And health care reform, despite strong support from the American public, is still a knotty, contentious issue, and there will be plenty of debating, bickering and deal-making if President Obama's goal of signing a bill later this year is to be realized.

Still, the gesture by the health care industry is significant.

As health care journalist Jonathan Cohn writes at The New Republic's "The Treatment" blog, these same industry groups fought health care reform the last time it was on the table, in 1994. Now they're sitting at that same table; as Cohn says, "This time, the industry groups aren't promising to control costs as an alternative to reform. They're promising to control costs as part of reform."

Indeed, 15 years ago, health care industry lobbyists rolled out their notorious "Harry and Louise" ads that featured a middle-class couple sitting at its kitchen table fretting over the idea of "government bureaucrats" meddling in their medical issues.

This time around, industry representatives are offering to help—not block—health care reform efforts. Is it because of a desire to help reform along, or because they see a train heading toward them and would rather climb aboard than get run over? Or a combination of both? And, if the result is a revamped system that offers more protection to more Americans, does it matter?

Oh, one more thing. For an idea of just how astronomically big the health care industry is in the United States: $2 trillion represents only about 1.5 percent of the health care spending growth rate in the coming 10 years.

****Provided courtesy of Bob@MSN Health

Can You Afford To Buy?

When you decide to buy a house, one of the hardest things to figure out is how much you can afford. The important thing is only to spend as much as you can comfortably afford.

What Do You Need To Know about Home Loans?

Most people bxorrow money to buy a home. If you take out a home loan, then you will have a monthly mortgage payment. This payment has several components. These parts of a mortgage payment are called PITI – principal, interest, tax and insurance.

Principal. The principal is the loan amount remaining unpaid.

Interest. The interest is the amount charged for borrowing money.

Real estate taxes. The real estate taxes are collected each month by the lender until the annual property tax bill comes due, and then the lender pays the tax bill.

Homeowner’s insurance and mortgage insurance. Lenders often require homeowner’s insurance and mortgage insurance as part of your payment. Homeowner’s insurance provides protection if something major happens to your house such as a fire, and the mortgage insurance protects your lender in case you don’t make your payments.

What Are Other Costs of Home Ownership?
Too often people consider only the monthly mortgage payment when deciding if they can afford to buy a home. Other costs are also very important such as loan costs, new housing expenses, and current living expenses. When you borrow money, a lender may charge fees such as an application fee. Another initial cost can be points.

Points are a one-time charge by the lender to increase the loan yield. A point is one percent of the mortgage loan amount. These are some possible closing costs. Closing costs are expenses (above the property price) paid by the buyer and the seller.

You can’t borrow all the money you need to buy a house. You will need some cash for the closing costs and the down payment. A down payment is a percentage of the home’s purchase price.

The percentage depends on the type of loan you get. Lenders usually require 20 percent down payment for a conventional mortgage. Some lenders will finance for as low as 10 percent down payment, but require the buyer to purchase mortgage insurance. FHA (Federal Housing Authority) and VA (Veterans Administration) financing requires even a smaller percentage down payment.

What are the additional costs you will have with home ownership? Use
Table 1 to list your current housing expenses and to estimate your future housing expenses. For example, what is your utility bill now and will it increase if you buy a new home?

Consider changes in the cost of your insurance, taxes, commute, tools, and fees such as condo fees.

You may want a "reserve fund" to cover initial new home expenses such as decorating, window coverings, furniture, lawn care equipment, and unanticipated repairs. Try not to do any major remodeling during the first year. If you stretch yourself too far and you can’t pay your monthly mortgage payments, you may lose your home.

Don’t forget to keep in mind your non-housing expenses. Non-housing expenses include food, clothing, entertainment, education, car expenses, medical expenses, childcare, savings, etc. These expenses are important to consider as you look at the mortgage payment figures. Can you comfortably afford the monthly mortgage payment if one of your other expenses (such as medical or childcare) increases?

****Provided courtesy of http://urbanext.illinois.edu/housing/afford.html

Seven worthwhile energy-efficient products

There's no shortage of gadgets designed to help you use less energy. Yet some of the most effective energy-efficient products lining store shelves are also the simplest.

The following low-tech items will save energy and money with minimal effort and investment.

1. Power strips can help put an end to vampire power. There's a wide range of choices from simple to sophisticated, but the general concept is the same. If you plug your electronic devices into one and turn it off when you're not using, you'll reduce standby power consumption and save more than $100 a year according to the Natural Resources Defense Council. Some, such as the Smart Strip, have the ability to know when your computer powers down and can then cut power to the peripherals. You can find strips with motion sensors or even a remote control. The Kill A Watt identifies the biggest energy drainers in your home, but try borrowing one from a friend or neighbor since you only need to use it once.

2. Indoor drying racks allow you to air dry your clothing in the winter and in places where hanging clothes to dry outdoors is difficult or even illegal. Abandoning the dryer in the summer can save you $43.60, so imagine how much you'll save if you air-dry your clothing all year round (although even just bypassing the dryer sometimes will save energy and money). While you're at it, wash your clothes in cold water for additional savings.

3. Installing efficient showerheads and faucets will save water and the energy it takes to heat it. The result: You'll spend less on water and electric bills.

4. Compact fluorescent light bulbs use about 75% less energy than incandescent bulbs and last longer so you'll buy fewer bulbs. There's no need to sacrifice quality since some CFLs outperform traditional bulbs. You'll save at least $30 in electricity costs over a bulb's lifetime. Click here to learn about mercury and disposal issues. Environmental Defense Fund offers buying tips and a tool to calculate cost savings.

5. If you use a programmable thermostat properly you can save as much as 15% a year on your heating bill. In the winter, keep your thermostat at 68 to 70 degrees when you're at home or awake (the summer guideline for those with central A/C is 78 degrees). Whether you choose to upgrade your thermostat or not, turn it back (or raise it in the summer) when you're away or asleep.

6. Wrapping your water heater in a "blanket" is an easy way to save about $15 a year. Lower your water heater thermostat to 120 degrees for more painless savings.

7. Sealing large air leaks in your home can save you a bundle. Try installing door sweeps to stop air from escaping from underneath your doors.


****Provided courtesy of Environmental journalist Lori Bongiorno product reviews with Yahoo! Green's users.

Improve your financial health during tough economic times

Don't let the recent economic downturn affect your money management practices. By paying close attention to your spending activities and keeping a reliable budget, you put yourself in the driver's seat to stay afloat during these difficult times. These three tips below can assist your efforts. Take a few moments to review these pointers and gauge your own financial health.

Live within your means to keep your debt level low. There are good reasons to keep your debt level low. In the worst cases, high debt can have a significant negative impact on your lifestyle. Most students are on a limited budget. Check out some strategies to help you avoid the pitfalls of excessive debt.

Maintain a good credit rating. Your credit score can affect many aspects of your life. Whether you need a loan to buy a home or if you apply for a credit card, your credit score is used to judge your reliability and risk. Learn more about the ins and outs of your credit score.

Recognize the warning signs of financial difficulty. Financial problems, once started, tend to get worse if they are left unsolved. Pay attention to the warning signs. If you spot trouble, start turning things around — the sooner the better. Recognize the signs and take action early.


Provided courtesy of SallieMae.com

Top 10 mistakes of first-time buyers

Buying a home may seem a daunting task, but a little preparation will ease the way. Check out these 10 common pitfalls of first-time homebuyers before starting your search.

By SmartMoney

The declining home values that are plaguing homeowners are just one of the factors creating an opportunity for prospective homebuyers.

Standard & Poor's latest Case-Shiller index, which tracks home prices across 20 major U.S. cities, reported that values dropped 19% in January from a year earlier.

Those depressed values, combined with near-record-low mortgage rates and government incentives (an $8,000 first-time homebuyers' tax credit included in the stimulus bill), are luring more first-time home buyers into the market. Indeed, a recent Century 21 Real Estate survey found that more than three-quarters (78%) of potential first-time homebuyers say now is a good time to buy.

If you agree, be aware that buying a home comes with plenty of potential missteps. Here are 10 all-too-common mistakes first-timers make.

1. Not knowing how much house you can afford.
Many novice homebuyers spend a lot of time researching homes — comparing kitchen layouts and backyard square footage — but very little time researching their financing options. One of the first things buyers should do is talk to a qualified lender and get preapproved for a mortgage, says Claire Clark, senior vice president of business development at Prudential California Realty. Without first figuring out how much house you can afford, you risk falling in love with one you can't.

2. Assuming foreclosures are great deals.
Just because the previous owner owed $450,000 on a house before the bank took it over doesn’t mean it’s worth that much now. Values have slipped significantly, says Jay Michael, partner at Estate Property Group, a Chicago real-estate brokerage, so you may not be getting the bargain you think with a foreclosure. Also, most homes owned by lenders or banks have been sitting vacant for months and may have been vandalized. That could require extensive renovation or repair. Weigh the costs of fixing up the property against the savings you’ll likely reap by buying a lower-priced foreclosed home.

3. Letting your true feelings show.
No matter how much you've fallen in love with a house, don’t let the seller’s agent in on it. Otherwise, he will gain the upper hand in negotiations.

4. Failing to find a good buyer's agent.
Landing a mortgage is tough these days. So buyers should rely heavily on knowledgeable agents to help them get their finances in order, says Michael. After all, buyer’s agents have a fiduciary responsibility to the buyer exclusively — and should be looking out for his best interests. Start your search at the National Association of Exclusive Buyer Agents, a nonprofit representing buyers. Or consider using an agent recommended by a relative or friend. Interview the candidates about their experience; ask if they’ve worked with first-time buyers before and what kind of service you’ll get from them.

5. Underestimating the costs of owning a home.
Whether it’s a rusty pipe or a leaky roof, things go wrong and need to be fixed. Many homebuyers don't anticipate the additional costs for repair and maintenance, or for an increase in utility costs, says Erin Baehr, a certified financial planner and president of Baehr Family Financial. Consider the age of your new home and how well it’s been treated by the previous owners in your budget. Be prepared to set aside a small percentage (1% at most) of the home’s purchase price annually for repairs and upkeep.

6. Failing to budget for property taxes.
Property taxes — and the likelihood that they’ll climb over the course of your time in the house — should be factored into any homebuying budget, says Baehr. To get an idea of how much you’ll be paying, call the local assessor’s office or talk to people in the neighborhood.

7. Assuming your first offer will get accepted.
As home prices get even more affordable, competition is bound to heat up. “You can’t assume you’ll walk in there, make the offer and get it,” says Clark. Try not to get discouraged if you lose out on the first — or second — house you make an offer on.

8. Skipping the inspection.
Before signing anything, hire a professional inspector, says Justin Lopatin, a mortgage planner with American Street Mortgage Co. The seller isn’t likely to tell you there’s mold in the basement or the walls are poorly insulated. Lopatin advises buyers to find and hire their own inspector — independently of the real-estate agent — to ensure there’s no conflict of interest. (You can find inspection companies in the phone book, or by doing a simple Web search with your ZIP code.)

9. Doing too much too fast.
Some buyers want to make the house their own right away, says Baehr. They overextend themselves on credit to do so, and assume the improvement will pay for itself by increasing the home's value. But that’s not always the case — especially in today's market. Instead, buyers need to exhibit patience and make changes over time.

10. Failing to include a contingency clause in the contract.
A mortgage financing contingency clause protects you if, say, you lose your job and the loan falls through or the appraisal price comes in over the purchase price. Should one of these events occur, the buyer gets back the money he used to secure the property. Without the clause, he can lose that money and still be obligated to buy the house, says Lopatin.

*Provided By Lisa Scherzer, SmartMoney

How To Clean Up Your Credit Report

Whether you are trying to buy a house, a car or get a personal loan, your credit is the first thing that the lender will look at. You can clean up negative information on your file, yourself. Here's how...


Things You'll Need
A copy of your credit report from all three credit bureaus (Experian, TransUnion and Equifax).
Persistence
Patience



Step One
Get a copy of your credit report from the 3 credit bureaus; Experian, TransUnion and Equifax. You can obtain a free report from each credit bureau once a year at annualcreditreport.com. You may also get a copy if negative information has been recently added or you had an application for credit denied.

Step Two
If you find any inaccurate information on your report, you may dispute it, either online or by writing a letter to the credit bureau that provided the report. If you have any proof of the inaccuracy you should send it along with the dispute letter.

Step Three
Once you have disputed the negative information, the credit bureau will contact the creditor regarding your claim and the credit company has 30 to 45 days to provide the requested information or the negative item has to be removed from you credit file.

Step Four
Negative items on your credit report may also be removed even if they are correct. If you have otherwise maintained good standing with the creditor that reported the information, you can write to them and request that they remove the item from your credit report.

Tips & Warnings

• There are companies that offer credit repair services, for those who don't want to go through the process of disputing their credit reports themselves.



• Whether or not your credit report needs to be disputed, you should monitor your credit reports from all three bureaus.



• If you are the victim of identity theft, you can write to the credit bureaus and request that a fraud alert be placed on your credit report.



• A fraud alert does not change your credit rating! You will have to verify your identity whenerver you apply for new credit, making the online credit application process more timely.



• Collection items will remain on on your credit report 7 years. Bankruptcy remains on your credit report for a 10 years.

*Provided courtesy of eHow by Sounique.

Pros and cons of paying down a mortgage

Q: I’m considering making extra payments on my mortgage. I like the idea of not being in debt. What do you think of this idea?

A: Paying off your mortgage quicker may make sense. This financial move isn’t as clear as paying off high-interest consumer debt because mortgage interest rates are generally lower and the interest is generally tax-deductible. When used properly, debt can help you accomplish your financial goals and make you more money in the long run.

Whether paying down debt sooner makes sense for you depends on a number of factors, including your other investment options and goals. Financially, what matters in deciding whether to pay down your mortgage faster is your mortgage interest rate versus your investments’ rates of return.

Suppose you have a fixed-rate mortgage at an interest rate of 6 percent. To come out ahead financially, if you’re making investments instead of paying down your mortgage more quickly, your investments need to produce an average annual rate of return before taxes of 6 percent.

While mortgage interest is usually tax-deductible, remember that you must also pay taxes on investments held outside retirement accounts. While you can purchase tax-free investments, such as municipal bonds, over the long haul, these investments won’t typically earn a higher rate of return than the cost of the mortgage.

And don’t assume that those mortgage interest deductions are that great. You automatically qualify for the so-called standard deduction on your federal tax return. If you have no mortgage interest deductions — or less than you used to — you may not be missing out on as much of a write-off as you think.

Paying off your mortgage faster has no tax benefit. Putting additional money into a retirement plan, however, can immediately reduce your federal and state income tax burden.

In order for you to have a reasonable chance of earning more on your investments than it’s costing you to borrow on a mortgage, you must be aggressive with your investments. Notwithstanding their horrendous slide in 2008-09, stocks have produced annual average rates of return of about 9 percent to 10 percent.

Paying down a mortgage ties up more of your capital, reducing your ability to make other attractive investments. Some people feel uncomfortable paying off debt more quickly if it diminishes their savings and investments. You probably don’t want to pay down debt if it depletes your financial safety cushion. Make sure that you have access — through a money-market fund or other sources, a family member, for example — to at least three months’ living expenses.

*Provided courtesy of Eric Tyson, author of "Let’s Get Real About Money!" and "Investing for Dummies''

Spring-Cleaning? 8 Major Hot Spots You Shouldn't Miss

Get a jump on spring-cleaning this year by focusing on these essentials.

Ready to give your home a top-to-bottom buffing? Start by focusing your efforts on the big pieces and on the places that make the most difference to you: furnishings, appliances, and carpeting. Once you've covered these major tasks, you'll have your home spring-cleaned in no time.

1. Make doormats welcoming. Shake 'em, wash 'em, swat 'em with a broom. Give them the toughest cleaning they can take. They're your front line against tracked-in dirt -- so keep them clean enough to function at peak efficiency.

2. Clean carpets and upholstery. Fabrics that have absorbed a winter's worth of dirt, body oil, and germs will need a deep cleaning to get them ready for another year of wear -- and for that close inspection by your relaxing guests.

When you're shampooing carpets or cleaning or cleaning upholstery with a rented carpet cleaner, practice first in an unobtrusive area to make sure you have the knack of the machine and that the treatment won't discolor fabrics or cause dyes to run. Save time by moving furniture just slightly -- not out of the room or against the wall, as the old rules dictated -- and place the legs of each piece back on top of small wax paper squares after shampooing. The wax paper will protect your carpet and keep the furniture legs from getting wet as the carpet dries. Open the windows to speed the drying process, which can take a day or more. If you're not the furniture-shifting and machine-renting type, make it easy on yourself. Call in a professional carpet and upholstery cleaner to do the work and take the morning off.

3. Finish your floors. To protect the floors in your kitchen from another year of wear and tear, wax or apply a sealer following label directions. The simplest method: Use a combination wash-and-wax floor cleaner. Don't feel guilty about saving time!No-wax floors don't need a polishing treatment, but an occasional makeover will keep them looking fresher -- and add a protective buffer that could help them last longer. Use a floor cleaner that cleans, shines, or both. It's best to follow label directions for proper use of each product. If you have wood floors, move furniture and rugs aside, then apply a wood cleaner and either liquid or paste polish to clean and add a new wax coating.

4. Wash walls, cabinets, baseboards, and woodwork. The walls may not look as if they need a bath -- after all, dust and soot fall to the floor, right? Most of it does, but just enough clings to vertical surfaces to warrant a seasonal or preholiday bath. Use a sponge and hand dishwashing detergent, washing the surface in sections. A sponge mop makes it easier to reach higher spots. Use two buckets: one for dishwashing detergent solution and another for wringing your sponge. Dry the walls and woodwork with a clean cloth.

5. Vacuum with intelligence. The old rules mandated that you go through the labor-intensive task of dragging every stick of furniture off the carpet, just so the vacuum cleaner could cover every nook and cranny. The new rules will save you time, and you'll still get the corner-to-corner cleaning done: Simply move those big items a little to the left or to the right. Vacuum the area previously occupied by the furniture and then move it back into place.

6. Clean ceiling fixtures. Remove dust and dirt from ceiling fans and air-conditioner vents with a cloth and a vacuum with a soft nozzle attachment.

7. Clean your light fixtures. A few minutes with a stepladder, all-purpose cleaner, a sponge, and a polish cloth will give new light to your life. If your home has skylights or tall ceilings, consider investing in a stepladder and extended-reach dust-and-dirt-removal tools, all of which are available at your local hardware store and at home -- and janitorial -- supply stores.

8. Check your coils. You should clean the refrigerator's condenser coil, usually found behind the toe grille, with a long-handled bottle brush and a vacuum cleaner with an attachment hose to remove dust and lint. Built-up dust can shut down the unit by causing it to overheat.

To remove dust from coils attached to the hard-to-reach back side of the fridge, carefully pull the refrigerator out several feet (newer models roll on casters) and vacuum thoroughly; finish by sweeping or vacuuming the floor area you've revealed. Expect to rediscover coins, bottle caps, and twist ties that you and the cat knocked over the past year.

*Provided courtesy of Reader'sDigest.com

5 best money-saving tips

TIP NO. 1: Clip coupons! Sure, it sounds old school, but you’d be surprised how many people skip it these days. Every Sunday, take a few minutes to scour the newspaper for coupons. You’ll find savings on everything from household cleaning staples to breakfast cereal.

TIP NO. 2: Cruise the clearance racks regularly. If you make it a habit to check out the bargain-bin areas (even at the grocery store), you’ll be less likely to miss out on the stuff you actually want when it goes on sale. Note: they often put clearance merchandise at the back of the store, so you have to pass the full-priced items first. Just keep moving!

TIP NO. 3: Don’t pay full price for seasonal items. Bathing suits and Christmas decorations don’t tend to go out of style year in and out, so wait until the end of the season to stock up, when they’re discounted―sometimes by as much as 90 percent!

Learn How to Feed Your Family for Less at Real Simple.

TIP NO. 4: Resist the good deals that aren’t really good deals. When you see those two-for-$5 signs, you may not actually need two of that item…ever. Find out if you do actually have to buy in multiples to get the savings; sometimes stores use this tactic to trick you into getting more than you need, when the items are actually the same price per unit.

TIP NO. 5: Put your storage space to work. When you come across a bargain on something like a generic birthday gift or a case of good wine, go for it. As long as you know it’s an item you’ll want down the road, it makes sense to buy it now. Besides, when an occasion arises, it’s so much less stressful to “shop” your own home.

*Provided Courtesy of Real Life Magazine

Final score: $8,000 for homebuyers

First-time purchasers get a tax credit windfall if they buy before December.

By Les Christie, CNNMoney.com staff writer
Last Updated: February 17, 2009: 12:13 PM ET

NEW YORK (CNNMoney.com) -- There's a nice windfall for some homebuyers in the economic stimulus bill awaiting President Obama's signature on Tuesday. First-time buyers can claim a credit worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes.

A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of witholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision. Adam Billings of Knoxville, Tenn. wrote to CNNMoney.com asking:

"I will qualify as a first-time home buyer, and I am currently set to get a small tax refund for 2008. Does that mean if I purchased now that I would get an extra $8,000 added on top of my current refund?"

The short answer? Yes, Billings would get back the $8,000 plus what he'd overpaid. The long answer? It depends. Here are three scenarios:

Scenario 1: Your final tax liability is normally $6,000. You've had taxes withheld from every paycheck and at the end of the year you've paid Uncle Sam $6,000. Since you've already paid him all you owe, you get the entire $8,000 tax credit as a refund check.

Scenario 2: Your final tax liability is $6,000, but you've overpaid by $1,000 through your payroll witholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.

Scenario 3: Your final tax liability is $6,000, but you've underpaid through your payroll witholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.

To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as "first time" buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.

Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)

Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.

Lukewarm reception
The housing industry is somewhat pleased with the result because the stimulus plan improves on the current $7,500 tax credit, which was passed in July and was more of a low-interest loan than an actual credit. But the industry was also disappointed that Congress did not go even further and adopt the Senate's proposal of a $15,000 non-refundable credit for all homebuyers.

"[The Senate version] would have done a lot more to turn around the housing market," said Bernard Markstein, an economist and director of forecasting for the National Association of Homebuilders (NAHB). "We have a lot of reports of people who would be coming off the fence because of it."

Even so, the $8,000 credit will bring an additional 300,000 new homebuyers into the market, according to estimates by Lawrence Yun, chief economist for the National Association of Realtors.

The credit could also create a domino effect, he said, because each first-time homebuyer sale will lead to two more trade-up transactions down the line. "I think there are many homeowners who would be trading-up but they have had no buyers for their own homes," Yun said.

Who won't benefit, according to Mark Goldman, a real estate lecturer at San Diego State University, are those first-time homebuyers struggling to come up with down payments. The credit does not help get them over that hurdle - they still have to close the sale before claiming the bonus.

One state, Missouri, is trying to get around that problem by creating a short-term loan on the tax credit of up to $6,750. The state would loan borrowers the money so they could use it at closing as part of the downpayment. Then, when the buyers receive their tax credit from the IRS, they pay back the state. Other states may follow with similar programs, according to NAHB's Dietz.

Many may look at the tax credit as a discount on the home price, according to Yun. A $100,000 purchase effectively becomes a $92,000 one. That can reassure buyers apprehensive about purchasing and then watching prices continue falling, he added.

And it provides a nice nest egg for the often-difficult early years of homeownership, when unexpected repairs and expenses often crop up. Recipients could also use the money to buy new stuff for their home - a lawnmower, a rug, a sofa - and, in that way, help stimulate the economy.

*Provided courtesy of CNNmoney.com

Save Energy and Money Today

Did you know that the typical U.S. family spends about $1,900 a year on home utility bills? Unfortunately, a large portion of that energy is wasted. And each year, electricity generated by fossil fuels for a single home puts more carbon dioxide into the air than two average cars. And as for the road, transportation accounts for 67% of all U.S. oil consumption. The good news is that there is a lot you can do to save energy and money at home and in your car. Start making small changes today (see sidebar). To cut your energy use up to 25%, see the Long-Term Savings Tips throughout this booklet.


The key to achieving these savings in your home is a whole-house energy efficiency plan. To take a whole-house approach, view your home as an energy system with interdependent parts. For example, your heating system is not just a furnace—it's a heat-delivery system that starts at the furnace and delivers heat throughout your home using a network of ducts. Even a top-of-the-line, energy-efficient furnace will waste a lot of fuel if the ducts, walls, attic, windows, and doors are not properly sealed and insulated. Taking a whole-house approach to saving energy ensures that dollars you invest to save energy are spent wisely.


Energy-efficient improvements not only make your home more comfortable, they can yield long-term financial rewards. Reduced utility bills more than make up for the higher price of energy-efficient appliances and improvements over their lifetimes. In addition, your home could bring in a higher price when you sell.


Tips to Save Energy Today
Easy low-cost and no-cost ways to save energy.

• Install a programmable thermostat to keep your house comfortably warm in the winter and comfortably cool in the summer.
• Use compact fluorescent light bulbs with the ENERGY STAR® label.
• Air dry dishes instead of using your dishwasher's drying cycle.
• Turn off your computer and monitor when not in use.
• Plug home electronics, such as TVs and DVD players, into power strips; turn the power strips off when the equipment is not in use (TVs and DVDs in standby mode still use several watts of power).
• Lower the thermostat on your hot water heater to 120°F.
• Take short showers instead of baths.
• Wash only full loads of dishes and clothes.
• Drive sensibly. Aggressive driving (speeding, rapid acceleration and braking) wastes gasoline.
• Look for the ENERGY STAR label on home appliances and products. ENERGY STAR products meet strict efficiency guidelines set by the U.S. Department of Energy and the Environmental Protection Agency.
• Visit http://www.energysavers.gov/ for more energy-saving ideas.

Provided Courtesy of The U.S. Department of Energy

7 Ways to Make Extra Money

With lay-offs and dropped benefits causing more workers to get nervous about the security of their next paycheck, some people are hustling up extra cash on the side. Through websites, handcrafted products, and other creative endeavors, anyone with a few spare hours a week can give their bank account a boost.

Here are seven ways to generate additional dough:

Launch a brand. When Kimberly Seals-Allers, former senior editor at Essence magazine, was expecting her first child, she discovered that black women face higher risks during childbirth and pregnancy. "I realized we were a special group, and I wanted to write a book about everything in black women's lives. Not just pregnancy, but money, men, and myths in our community? [I wanted] to create a new way forward."

Her first book, The Mocha Manual to a Fabulous Pregnancy, turned into a series (the next book, The Mocha Manual to Turning Your Passion Into Profit, is out this month) as well as an online magazine, maternity line, and consultancy. Seals-Allers also licensed use of the Mocha Manual name to create an instructional DVD that's sold at Walmart and supermarkets.

Seals-Allers, who started working on the Mocha Manual concept before leaving her full-time magazine job, says one of the hardest parts was giving up that regular paycheck. "I had a great job, but I wanted something more for my life," she says. One of the biggest misconceptions about going solo, she says, is that it provides more leisure time. "You will work harder than ever before, but it's more rewarding because it's for yourself," she says.

Start a blog. Barbara Saylor, 37, started her blog, Capitol B, after working in communications to give herself another outlet for writing. "I always wanted to share things with my friends and the DC community," she says. She uses Wordpress.com, the free blogging site, so her costs are minimal, and she partners with local businesses and charities to give them publicity. While she's still in the beginning stages, she plans to eventually make money through those partnerships. While she doesn't want to run banner or pop-up ads on her site, companies may pay for the publicity of being listed as partners, for example.

The key, Saylor says, is to find a niche. "How are you going to do something that's different from the millions of blogs out there?"

Create a website. Building up content and an audience are the two keys to making money from a website, says Paul McFedries, author of The Complete Idiot's Guide to Creating a Website. Then, there are three ways to make money off of it: First, by running advertisements through a program such as Google AdSense, which matches up ads with the content on your site. A website about dogs, for example, might feature ads for shelters and dog food. Second, through affiliate programs such as Amazon.com, which share book sale profits with websites that refer customers. Third, by selling products related to the website, such as a T-shirt designs or arts and crafts. By using third-party sites including Amazon Marketplace or Etsy.com, you don't even have to run the e-commerce side of things yourself.

Write for another website. Maria O'Brien, 27, earns about $1,500 a month by writing articles for eHow.com, a site that posts contributions and then shares revenues from online ads with the writers. O'Brien, who writes about personal finance, nutrition, and careers, says, "If you can string together coherent sentences, you can write for eHow." Building up enough traffic to earn as much as O'Brien can take time; some newcomers earn just a few dollars a month when they start out.

Candace Crockett, a 24-year-old stay at home mom in Seattle, started writing about parenting, health, beauty, and other topics for eHow.com after her daughter was born. She made $4 the first month and is learning how to earn more by writing articles that are more easily found through search engines. This month, she's made over $200, which covers her student loan and credit card payments. She estimates she spends about an hour a day working on the articles.
For O'Brien, who has been supporting her family more as her husband's construction business has suffered with the economy, it's been what she calls "a blessing for our family."

Design t-shirts. Companies such as CafePress.com allow people to design and sell their T-shirts for a cut of the profits. According to the company's website, some users earn over $100,000 a year. But it's not always easy: Jen Goode, who earns enough through CafePress to pay her mortgage each month, found success after a year and a half of long, sometimes 16-hour days. Her time is spent creating designs and then uploading them. She has uploaded about 2,500 designs, many of which are cartoon oriented, including the popular penguin-series. For her, she says, the secret has been to make many different images that are steady sellers, as opposed to creating one or two megahits. Now, she says she doesn't need to put as much time into her shop because she has such a large inventory of designs.

Make films. Glenn Pieper, 45, teamed up with DemandStudios.com (owned by Demand Media, along with eHow.com), to produce Spanish language videos. He earns $3,000 to $4,000 a month working around 40 hours a week. He says he didn't have a film background, but learned by practicing. "It's always a different subject, and I enjoy the freedom and creativity," he says. Plus, Piper adds, "There are no deadlines, no stress, and the pressure just comes from myself. You can't get laid off."

Sell other people's products. Make-up companies such as Avon and Mary Kay are always looking for new sales representatives, as are other companies such as kitchen products seller Pampered Chef. "If you don't have to make a big investment to get into it, it's probably not a bad idea," says Marcia Brixey, author of The Money Therapist. But she warns people to stay away from businesses that require sellers to make significant up-front purchases that they might not be able to unload.

Provided courtesy of Yahoo! Buzz

Tax Credits Worth Pursuing This Year

The very factors that have many consumers worried about affording this year's tax bill could actually work in their favor this tax season.

Taxpayers whose wages were slashed in 2008 -- or worse, who were laid off -- may be eligible for tax credits that weren't within their reach in previous years. In addition, first-time home buyers and parents of children under age 17 may also be able to save a little money on their tax bill thanks to some new credits and thresholds.

“These overlooked credits are relevant in the current economy and could mean the difference in hundreds or even thousands of dollars in your tax refund,” says John Evans, Northeast tax director at BDO Seidman.

Here are four credits that can help boost your refund.

Recovery Rebate Credit
Feel like you got shortchanged last year when the government doled out its Economic Stimulus Act rebate checks? Well, if you didn't qualify for the rebate before or didn't receive the full amount ($600 per taxpayer and $1,200 if married and filing jointly) because your income was too high (or too low), you may now be able to collect.

The rebate checks that were sent out last year were based on information on your 1040 for 2007. This second chance to collect will be based on your 2008 1040. So if your income took a hit last year, it may be worth a shot. You can also qualify for this credit if you had a child in 2008, among other reasons.



First-Time Homeowner Credit
For those who bought a home last year or want to in the months ahead, Uncle Sam has a little present for you. This tax credit, essentially a temporary, no-interest loan, is being offered to those who bought -- or will buy -- a home between April 9, 2008, and June 30, 2009, and who didn't own a home during the three years preceding the purchase.

The maximum amount of the credit equals either 10% of the home’s price or $7,500 ($3,750 if you are married, but filing separately), whichever is less. One hitch: Homeowners will have to repay the credit over 15 years by either owing more in taxes or receiving a smaller refund. So, if you claim the credit on your 2008 tax return, you’ll have to start repaying it when you file your taxes for 2009. (The 2009 tax return will include an extra line for this credit.)

Child Tax Credit
Many parents will be eligible to receive a tax credit of up to $1,000 per child this year as long as that child was under the age of 17 at the end of 2008. (This credit is in addition to the regular $3,500 exemption that you can claim for each dependent.)

The child tax credit begins phasing out for filers whose modified adjusted gross income is above $110,000 if they are married and filing jointly, above $75,000 for single filers, or more than $55,000 for married filing separately. In addition, the child (who can also be the filer’s sibling, stepchild, grandchild, niece or nephew) must have not provided more than half of his or her own support and, in most cases, must have lived with the filer for more than half of 2008.

The one catch: The amount you receive from the child tax credit is partly based on your income so you may not receive the full amount -- or possibly anything. If you don't qualify for any or all of the $1,000 child tax credit you're still in luck. Try applying for the additional child tax credit, which also offers up to $1,000 per qualifying child. (Taxpayers who qualify for parts of both credits can only receive a maximum of $1,000 per eligible child.) Typically, this credit is reserved for low-income taxpayers, but a recent change in the way the IRS computes eligibility for this credit, will allow more middle-income taxpayers to qualify this year, says Eric Smith, a spokesman for the IRS.



Earned Income Tax Credit
This credit is typically geared toward low-income taxpayers, but given the rise in the unemployment rate and wage cuts, more people are likely to qualify for it this year, says Evans. (According to the IRS, one in six taxpayers currently can claim this credit.)

To qualify, families with two or more children must have made less than $41,646 in 2008, and those with one child must have earned less than $36,995. Also, individuals without children who make less than $15,880 are eligible.

The maximum credit for each of these groups is $4,824, $2,917 and $438, respectively.

Taxpayers who qualify to claim this credit on their federal income tax return may also be eligible for a similar credit on their state or local income tax return. Twenty-two states, including New York, Maryland and Iowa, offer residents an earned income tax credit.


Provided by Smartmoney.com

5 ways to avoid an audit

Whether you're facing an audit or simply want to avoid one, here are steps to take to deflect attention or get you prepared.

By Jeff Schnepper

Why me? You just got the invitation to a "party" that you hoped you'd never attend -- an IRS audit.

How did this happen and how can you prevent it from happening again? We'll get to the how when we answer how to minimize the chances of an audit and how to survive one.

Rule 1: Check your arithmetic

Few audits are generated by mathematical mistakes alone. The Internal Revenue Service computers automatically correct both mathematical errors and mistakes where you have claimed deductions that exceed limits set by the tax code itself, such as the 7.5% adjusted gross income limitation on medical deductions. However, too many of these kinds of errors indicate a sloppy return, and that could lead to a full audit.

While the advice may seem obvious, don't give the IRS any additional reasons to look at your return.

But how do you get picked?An IRS computer program compares your deductions to others in your income bracket and weighs the differences. This secret IRS formula, called the DIF Score, is used to select returns with the highest probability of generating additional audit revenue.

For example, a taxpayer with a $50,000 salary would rarely have $10,000 in charitable contributions. This doesn't mean that, if you have only $50,000 in income and actually have $10,000 in charitable contributions, you shouldn't claim those deductions. It only means that if that is the case, be prepared to prove those deductions. The DIF formula considers not only your income and deductions, but where you live, the size of your family and your profession as well. Rarely will a family of five living in the Hamptons have an income of $30,000 or less. It may happen, but if it does, the IRS will want to know how. This leads to . . .

Rule 2: Arrange your finances so they don't stand out

If you think you may be audited, see if your situation is likely to attract the tax man's attention. Here are groups that often do invite inquiries:
The self-employed If you are self-employed, you have more opportunity to either "hide" your income or "create" deductions by converting personal expenses into business expenses. If so, be prepared to substantiate your expenditures as deductible expenses. The IRS is aware of the myriad "business vehicles" that go away to college every September, and the probability of your being audited is enhanced.

Those who get their income in cash. The IRS has specific audit programs aimed at specific professions and occupations. Because they receive much of their income in cash, people who work in the gaming industry, waiters and even doctors are prime audit targets. The more cash you receive and the higher your income potential, the more likely the IRS is to find additional tax dollars by reviewing your return.

There are a number of areas of potential abuse that attract the IRS. In recent years, the IRS has been targeting these areas for audit:

Offshore credit card users

High-risk, high-income taxpayers

Investors in abusive schemes and promotions

High-income non-filers

Unreported income

Rule 3: Substantiate, substantiate, substantiate

In the audit itself, the IRS will focus on those items for which taxpayers have historically failed to keep the required substantiation. Traditionally, auto, travel, meals and entertainment have been the areas most audited. To deduct auto expenses, you must establish the percentage of business use as well as the actual expenses incurred. I ask my clients to keep a mini-cassette recorder in their cars to record the business mileage and purpose. Kept contemporaneously, it is acceptable as sufficient substantiation of business use. Alternatively, a written diary of miles used for business would also be accepted.

You must have a receipt for all expenditures of $75 or more for meals and entertainment. The rule is simple: no receipt, no deduction. If the expense is less than $75, a diary notation is sufficient. However, both the receipt and the diary notation must have all of the following information:

The amount paid

The name and location of the restaurant or entertainment facility

The person you entertained

That person's business relationship with you

The business discussion related to the entertainment

Unless you talk business, before, during or after the meal, your deduction won't be allowed. Remember, with the IRS, paper rules! With any and all expenses, deductions will be more easily allowed if you have a piece of paper to back them up.

Here's another piece of advice: Don't come in with a carton of miscellaneous receipts. The more "organized" your receipts and the more paper you produce, the easier it is for an IRS agent to conclude that you are organized, have full substantiation and owe no additional taxes.One more point about how you're selected for an audit. The IRS computer pulls out many returns for audit on a random basis. Your income, deductions or where you live are irrelevant. Your number just came up -- you won the audit lottery. A student making $3,000 a year is just as likely to be selected as an accountant making $300,000. You just got "lucky."

The IRS can audit you for three years after you file your return. In reality, however, most returns are audited within 18 months of filing. This gives the IRS time to do the review and request the appropriate substantiation before the statute of limitations (usually the three-year period) ends. Once the statute has run out, the IRS normally cannot audit your return, and your expenses are insulated from examination. It has been claimed that the later you file, the less likely it is the IRS will pick your return to be examined. The IRS still insists that agents are not graded or evaluated on the amount of money they collect until -- surprise! -- congressional testimony reveals that policy is not the same as practice.

Rule 4: Know when to file

I recommend that you have your return prepared early. If you have a big refund and are unconcerned with audit issues, file early and get your money back. If you have taxes due, and no penalty for underpayment, don't file until April 15. Don't ever pay a federal tax bill before it is due. It's an interest-free loan to the IRS.

On the other hand, if you are concerned about a potential audit, never file until the last minute. It won't hurt and can only decrease your chances of being selected.

Rule 5: Plan your taxes to pre-empt an audit

I highly recommend the use of pre-audit strategies. If, say, you have a huge medical deduction for a year that you feel would increase your chances of being audited, attach copies of your medical bills to your return.

Alternatively, if you made an unusually large charitable contribution, attach a copy of the check or receipts to your return. The IRS computer will still kick out your return, but when a real person looks at it, the reviewer will recognize that you know the rules. It may actually reduce your odds of a full audit.

Provided courtesy of http://articles.moneycentral.msn.com/

Five ways to cut heating costs

Inman News

If you're thinking it's time to do something about your cold house and your high heating bills, here are five win-win suggestions that will help you do both.

1. REPLACE YOUR FURNACE FILTER
A clogged filter makes your furnace work harder to deliver the same amount of heat, which wastes energy by keeping the furnace on for a longer period in order to bring the house up to the requested temperature.

If you have a central heating system (used for heat only), replace the filter once a year, at the start of the heating season. If you have a heat pump or a furnace with central air conditioning, replace it twice a year, at the start of the heating season and at the start of the cooling season. While replacing the filter, always use a shop vacuum to clean up as much dust and debris within the filter cavity as you can reach.

2. INSTALL A PROGRAMMABLE THERMOSTAT
Programmable thermostats work a whole lot better than your memory. They give you the ability to have a lot more control over your heating and cooling systems, and they will add both convenience and energy savings by raising and lowering the heat at preset times so you don't have to remember to do it.

A programmable thermostat will bring the system on and shut it off based not only on temperature, but on time as well. For example, the thermostat can be programmed to turn on the heat to a certain level at 6 a.m. when you get up, and turn it down again at 8 a.m. when you leave for work. It can also be set for different cycles on different days of the week, and can be overridden with the touch of a single button to temporarily raise or lower the heat.

3. INSULATE DUCTWORK
Since the ducts are running through an unheated space, whether in your attic, crawlspace, basement or garage, duct insulation is a huge part of the system's ability to retain heated air within the ducts until it gets delivered into the house. All of the ducts in unheated spaces should be completely wrapped without any gaps, and the insulation should be of sufficient thickness to provide good insulating value -- typically around R-8, which is approximately 2 1/2 inches of fiberglass.

4. CLEAN WALL AND BASEBOARD HEATERS
As with a central furnace, it's very important that wall heaters and baseboard heaters be cleaned at the start of every heating season. Before cleaning, however, first try to minimize the potential for dust buildup in the heaters. This might be done by rearranging furniture, increasing fresh air in the room, or increasing air flow in front of the heaters.

To clean baseboard heaters, first shut off the circuit breaker that supplies power to the heater. To be certain you have the correct breaker, turn the thermostat up to high for 30 seconds or so and make sure that the heater does not come on. Remove the front cover and use a vacuum to clean out the inside of the heater, being careful not to damage the aluminum fins inside the heater. If you notice that the fins are bent, you can use a fin comb, available through many heating contractors and other retailers of heating equipment, to straighten them out again.

For wall heaters, shut off the circuit breaker for the heater, and verify that it's off as described above. Remove the screws that hold the grill in place, and remove the grill. Wash the grill in hot soapy water, dry it, and set it aside. You can then clean the inside of the heater using a vacuum, taking care not to touch the heating elements, or you can blow out dust using the blower side of your shop vacuum.

Note: Be sure to refer to the instruction book that came with the heater, or check with the manufacturer's Web site for specific cleaning instructions and safety precautions.

5. COVER AND WEATHERSTRIP ROOM AIR CONDITIONERS
If you have a room air conditioner that sits in a window or mounts into an opening in the exterior wall, they have the potential to leak a lot of air. If the air conditioner is in a window and is easy to remove, your best bet is to remove it, clean it and then store it for next summer.

If it's not easily removed, then examine the unit carefully to see if there is any daylight coming in around it. You can use foam tape, expandable spray foam or other weatherstripping materials to close up the gaps around the case. Finally, buy or build a cover that will slip over the unit from the outside and prevent cold air from coming through it and into the house.

Provided courtesy of Inman News and Yahoo.com

What Makes a Good Mortgage Broker?

by Jack M. Guttentag

Last week I brought you some tips on how to know a good mortgage broker when you see one. Here are some more points to consider when you are in the market for a broker.

Good Brokers Will Not Quote Low-Ball Prices
Accurate pricing depends on a number of borrower, property, and transaction characteristics. If these are not known or used, the price cannot be accurate. Loan originators who quote the best prices possible -- and sometimes even better than the best possible -- with the intent of roping in the customer are low-balling.

Avoid any broker who quotes a price without first quizzing you about loan size, down payment, loan purpose, type of property, use of property, state, credit score, and documentation of income and assets.

Don't tempt a broker to low-ball by requesting a price on the telephone.

Good Brokers Try to Find the Best Price Available
You can't take this for granted because it can be tedious work. Brokers get their prices from wholesalers in the form of very complicated price sheets, all of which are formatted differently, making comparisons difficult. Further, while pricing the loan, the broker must also be mindful of getting the loan approved.

There isn't any very good way to monitor this, but you can ask the broker to show you rate sheets from the lenders he checked. This is not so that you can compare prices -- that would require a lot of instruction -- but simply to verify that the information is there.

Good Brokers Are Masters of Detail
Mortgages have many details that must be attended to before a loan can close. Overlooking even one can delay the closing, which could be costly to the borrower.

Good brokers avoid this danger using the same tool that is standard for airplane pilots about to take off, and increasingly in hospital intensive care units: a checklist. This is a low-tech device that has been shown to save lives, and it can also save a mortgage.

Ask the broker to show you her checklist, but don't expect to be able to keep it.

Good Brokers Keep Their Clients Informed
Failure to keep a borrower informed is one of the most frequent criticisms of brokers that I hear from borrowers, especially on purchase transactions where borrowers are faced with a firm closing date. Brokers often fail to let borrowers know that, while there is no news to report, matters are proceeding on schedule.

Negotiate an agreement with the broker on both the type and frequency of communications.

Good Brokers Attend Closings When Needed
Having a broker attend a closing may not always be feasible because the closing is too far away, and sometimes it isn't necessary because the borrower has been through the drill before. But if the borrower is a novice, having the broker available to help explain things is a major source of comfort.

If relevant to you, ask the broker if she will attend the closing.

Good Brokers Get Documents From Lender Prior to Closing
Obtaining all documents from the lender provides the borrower with an opportunity to read them at their leisure and clarify any issues. This may be more useful to the borrower than having the broker at the closing.

Ask the broker if you will have access to the final documents at least two days prior to closing.

Good Brokers Are Experienced
Mortgage transactions are complicated; there is much to learn, and brokers learn most of it by doing it. While more states are moving toward required examinations as a condition for licensing, the rules are spotty and not to be relied on. It is still possible for a borrower to be confronted with a broker who, a week earlier, was flipping burgers.

Ask the broker to summarize his work experience over the past 10 years.

Good Brokers Communicate Effectively With Borrowers
Poor brokers frequently slip into trade jargon, because they are accustomed to it, and insensitive to the client's lack of comprehension. I never fail to be amazed at mail I receive from borrowers asking me to explain something they were told by their broker. A broker who can't communicate well combined with a borrower afraid of looking stupid is a recipe for trouble.

Don't let a broker assume you understand something when you don't. Mortgages are complicated, but they are not beyond the comprehension of the average borrower, provided they are explained properly. If you don't understand what you are being told, it is because of the poor communication skills of the broker. Try another one.

Good Brokers Are Straight With Their Clients
Here are some broker statements that indicate your broker is not being straight. If you hear any of these, head for the door:

"I have a 1.5 percent mortgage for five years."

"Don't worry about the rate increasing in two years -- I will be there to refinance you into a lower rate before that happens."

"Don't worry about my fee. It's being paid by the lender."

Provided Courtesy of Yahoo Finance.

Obama's top priority: the economy

Aides say the President-elect's first full day in office will include several executive orders, push for stimulus.

By Ed Henry, CNN Senior White House Correspondent
Last Updated: January 19, 2009: 9:14 AM ET

WASHINGTON (CNN) -- Senior aides to President-elect Barack Obama say he will convene a meeting of his top economic advisers on Wednesday, his first full day in office, as the incoming president immediately tries to put the financial crisis at the center of his agenda.

Three aides said the incoming president is planning an ambitious first week that will include several other high-profile moves: a Wednesday meeting with military brass to map out a change to the mission in Iraq, appointing at least one envoy to quickly deal with the Mideast crisis, and issuing several executive orders that could spark controversies on issues ranging from the environment to detaining terror suspects.

But the Obama aides said the bulk of the executive orders are not likely to be issued on Tuesday because the incoming administration, in the words of one top aide, "does not want to cloud the first day" by overshadowing the historic swearing-in of Obama as the first African-American president.

That's why aides are pointing to Wednesday as a key marker. Obama is planning to bring together his top economic advisers to map out how to step up his own personal lobbying efforts to get Congress to pass his stimulus plan, which now has a price tag of $825 billion in the House.

"We have got to get an economic recovery and reinvestment plan in place quickly to turn the economy around," said one senior aide, citing the financial crisis as the top priority.

And on Wednesday Obama will also meet with top military commanders to discuss the war in Iraq and move to begin implementing his campaign promise of removing all combat troops within 16 months, according to aides. That is part of an effort to reassure Obama's liberal supporters that despite his heavy focus on the financial crisis, he will stay focused on changing the mission in Iraq, the stance that first propelled his presidential campaign at the grassroots level.

The Obama aides also revealed the Mideast crisis has shot to the top of the incoming president's immediate agenda. The aides said Obama himself has been pushing behind the scenes for quick, decisive action on the matter, overriding the advice of some aides who believe getting active instantly may unrealistically raise expectations for Mideast peace.

The aides told CNN one option under serious consideration is naming at least one high-profile envoy this week to help dig into the long-term problems in the region beyond just the crisis in Gaza, a move that Obama hinted at last week in an interview with USA Today.

On Sunday's "State of the Union with John King" on CNN, incoming senior White House adviser David Axelrod said the president-elect "has said repeatedly that he intends to engage early and aggressively with diplomacy all over the world and using the men and women, the professionals who are in place, who are great, and - where appropriate - special envoys."

Pressed on whether this meant moving to deal with the Mideast crisis as soon as Tuesday, Axelrod said, "I think that the events around the world demand that he act quickly, and I think you'll see him act quickly."

Executive orders

Aides say the incoming president is also mulling several high-profile executive orders that can change U.S. policy with the simple stroke of a pen, particularly major changes to the approach in the war on terror. In addition to an executive order closing the U.S. military prison at Guantanamo Bay, aides say the incoming president is considering another executive order that would specifically ban the use of torture on terror suspects.

CNN has learned that another option under consideration is an executive order raising fuel efficiency on automobiles, a move that would please environmentalists but put more pressure on the struggling U.S. auto industry.

For now, however, aides are being tight-lipped about specifically which executive orders will be issued.

Incoming White House Chief of Staff Rahm Emanuel told reporters on Saturday that "there are a number of things we're looking at" based on campaign promises the president-elect made on domestic and foreign policy.

Focus on economy


Meanwhile, aides say Obama is strongly considering an economic speech to a joint session of Congress just weeks after taking office in order to communicate directly with the American people that the financial crisis is likely to continue for a long time - even if his economic recovery plan is passed into law during the first 100 days.

Aides are expecting the speech to be delivered the week of February 23, after Congress returns from the Presidents' Day recess. Democratic leaders are aiming to get the economic recovery plan to Obama's desk for his signature before that recess.

Obama has been trying to downplay expectations for quick results from his stimulus plan in recent public speeches, which could give him some political breathing space to try and let the plan work.

"We're going to have a tough year, 2009," Obama told CNN in an interview Friday.

"I don't think that any economist disputes that we're in the worst economic crisis since the Great Depression. The good news is that we're getting a consensus around what needs to be done. We've got to have a bold, aggressive reinvestment in a recovery package. It's working its way through Congress. That's going to help create three to four million new jobs," he said.

Aides say the speech to a joint session of Congress is part of a broader strategy by the incoming president to "engage with the public" about the financial crisis to try and build trust with the American people.

Provided courtesy of CNNmoney.com