5 Ways to Recession Proof Your Holiday

By Ashlei Jackson, Qlixite

Worried about funding your holidays because of the recession? Thinking about cutting back? While saving for the rainy day might be smart in a tough economy, it definitely doesn't make for a fun holiday season. Therefore, it's important to take action now and learn how to recession proof your holidays so you can enjoy them.
• Tip #1  Potluck your holiday meals - When getting together with family, friends or co-workers for holiday meals and parties, don't take on the burden of paying for the entire meal. Let your guests bring their favorite holiday dish. Make it fun by having a contest or making it a recipe swap.
• Tip #2  Raid the Local Dollar Store or Goodwill - You will be surprised by the kinds of holiday items they sell including wrapping paper, wreaths, ornaments, table runners and stocking stuffers. These small items can really add at major retailers so saving here can allow you to spend more on bigger presents for your loved ones.
• Tip #3  Cash in those Coupons - Stores like Safeway and Walgreens are really into giving out coupons that are based on your shopping habits. These could be printed on the bottom of your receipt or emailed to you so be sure to look before you shred. Stock up on dry goods as they go on sale ahead of time to spread out the expense of holiday meals and treats.
• Tip #4  Budget now, Enjoy later - Figure out what you plan on spending for gifts, parties and events now and figure out how much you need to save between now and then. Use this extra time to cut back on Starbucks trips, lunch outings, movies or excess purchases. The  .............money you save by cutting a few things over the next few weeks will add up and feel less like a sacrifice.
• Tip #5   Sell your junk on eBay - Ebay is like a garage sale that reaches every corner of the earth  someone might want your stuff! This is the perfect time to get rid of that stuff you keep but never use. You'll get the best bang for your buck if you do a little research to see if people are looking for your particular items by searching eBay. All the money you make can go towards funding your holidays or paying the credit card bills.
• Bonus Tip   Focus on the Positive of the Holidays - Whatever you do, don’t focus all of your thoughts on the negativity of the recession. Doing so will cause you needless worry and self sabotage. Approach any money saving efforts with a light heart. If you take them too seriously, it will make it feel like a “dreaded” chore. Spend time talking with your family and visualizing a happy holiday season so that everyone is working together. Prepare your kids and family members if there are gifts or parties you won’t be able to participate in or make it a group goal to save now to be able to enjoy later. Good Luck (You can do it!)

Mortgage Trends: Rates Going Lower?

By Toni Ryan, First Priority Financial

Rates are low and there are many programs to allow homeowners the opportunity to lower their monthly payments and buyers to buy homes.  So that's good right?  Yes, but be prepared to spend some time to get the rate you want especially if you are refinancing.
 You are not alone, many borrowers are trying to accomplish their dream of a rate in the 3+% range  lenders, title companies, appraisers, inspectors, etc are all busy.  It is important to note that the priority is to close the loan for a purchase above the loan for a refinance.  Having said that, many of the low rate lenders are quoting 20 day turnaround  times  that is 20 business days.  The file must be complete and have the finished appraisal to be submitted.  Turn times change daily as the work load changes so be patient.
 The fear is often that rates will increase and one will “miss out”.  Most experts are predicting lower rates or no change in rates until mid 2013.  Often times, files placed in underwriting are seeing lower rates than they would have, if they had locked loans at two to three weeks ago so “time is on their side”.
 It is important to note the trends over the years.  Just like gas prices go up right before Memorial Day and Labor Day, rates go down in the fall and early winter.  The best advice  Now is the time to complete the loan file to be prepared to take advantage of the trends as well as the daily lows that occur each week.  Good things come to those who are patient and observant.

Using a Mortgage Broker vs Bank

By Toni Ryan, First Priority Financial

If you are in the market to buy a home, chances are you'll need a mortgage. Who offers the best option – the bank or the mortgage broker? There are distinct differences to be aware of when making a choice.
• The Bank
The bank offers a variety of programs that they have created based upon their financial return.  Their loan officers are employees who sell those specific mortgages to you. There programs are priced based upon the bank’s costs, ie overhead, etc. If your circumstances fit the specific guidelines, then you will be granted a loan.  This works for clients with great credit, money for down payments and low risk factors. If you do not fit into the guidelines set forth, then there are no options to offer. Special income issues, unusual properties and personal loan requirements are often not considered.
• Mortgage Brokers
Mortgage brokers bring together lenders and borrowers. They usually work with dozens or even hundreds of lenders, not as employees, but as a kind of scout.
They find and evaluate home buyers, analyzing each person's credit situation to determine which lender is the best fit for that person's needs. The broker has choices of lenders so they can search for the most competitive pricing.  They are not tied to one ratesheet. If there are unique circumstances, the broker can fit a lender to those needs. A good mortgage broker can find a lender for just about any type of credit or situation.
 Make your choice based upon your personal needs.  While the best loan terms are important, service is critical. Both a bank and the broker are held to the same laws so always ask for a quote in writing to compare fees and costs. Ask questions about expected time-frames and the loan process. Check with family and friends who have recently bought a home, for lender and broker referrals.  Taking out a home mortgage is an important part of your financial picture – find an expert to fit your needs.

Special Edition Tax Tip 2012

By J.C. Harrison, Simplified Business & Tax

The tax deadline may have just passed but planning for next years start now. The IRS reminds taxpayers that being organized and planning ahead can save time, money and headaches in 2013. Here are six things you can do now to make next April 15 easier.
1.  Adjust your withholding - Why wait another year for a big refund? Now is a good time to review your withholding and make adjustments for next year, especially if you'd prefer more money in each paycheck this year. If you owed at tax time, perhaps you'd like next year's tax payment to be smaller. Use IRS's Withholding Calculator at http://www.irs.gov/ or Publication 919, How Do I Adjust My Tax Withholding?
2.  Store your return in a safe place - Put your 2011 tax return supporting documents somewhere secure so you'll know exactly where to find them if you receive an IRS notice and need to refer to your return. If it is easy to find, you can also use it as a helpful guide for next year's return.
3.  Organize your recordkeeping - Establish a central location where everyone in your household can put tax-related records all year long. Anything from a shoebox to a file cabinet works. Just be consistent to avoid a scramble for misplaced mileage log or charity receipts come tax time.
4.  Review your paycheck - Make sure your employer is properly withholding and reporting retirement account contributions, health insurance payments, charitable payroll deductions and other items. These payroll adjustments can make a big difference on your bottom line. Fixing an error in your paycheck now gets you back on track before it becomes a huge hassle.
5.  Prepare to itemize deductions - If your expenses typically fall just below the amount to make itemizing advantageous, a bit of planning to bundle deductions into 2012 may pay off. An early or extra mortgage payment, pre-deadline property tax payments, planned donations or strategically paid medicals bills could equal some tax savings. See the Schedule A instructions for expenses you can deduct if you're itemizing and then prepare an approach that works best for you.
6.  Strategize tuition payments - The American Opportunity Tax Credit, which offsets higher education expenses, is set to expire after 2012. It may be beneficial to pay 2013 tuition in 2012 to take full advantage of this tax credit, up to $2,500, before it expires for more information, see IRS Publication 970, Tax Benefits for Education.
The IRS emphasizes that each household's financial circumstances are different so it's important to fully consider your specific situation and goals before making large financial decisions.

New IRS Fresh Start helps Taxpayers

By J.C. Harrison, Simplified Business & Tax

The Internal Revenue Service has expanded its “Fresh Start” initiative to help struggling taxpayers who owe taxes. The following three items explain the expanded relief for taxpayers.
 Penalty relief Part of the initiative relieves some unemployed taxpayers from failure-to-pay penalties. Penalties are one of the major factors a financially distressed taxpayer faces on a tax bill. The Fresh Start Penalty Relief Initiative gives eligible taxpayers a six month extension to fully pay 2011 taxes. Interest still applies on the 2011 taxes from April 15, 2012 until the tax is paid, but you won't face the failure-to-pay penalties if you pay your tax, interest and any other penalties in full by October 15, 2012.
1.  PENALTY RELIEF
 *Wage earners who have been unemployed at least 30 consecutive days during  2011 or in 2012 to this year April 17 deadline.
 *Self-employed individuals who experienced a 25 percent or greater reduction in  business income in 2011 due to the economy.
 TO QUALIFY for this penalty relief, your adjusted gross income may not exceed $200,000 if married filing jointly or $100,000 if filing status is single, married filing separately, head of household or qualifying widower. Your 2011 balance due can not exceed $50,000.
2.  INSTALLMENT AGREEMENTS
 An installment agreement is a payment option for those who cannot pay their entire tax bill by the due date. The Fresh Start provisions give more taxpayers the ability to use streamlined installment agreements to catch up on back taxes and also more time to pay.
3.  OFFER IN COMPROMISE
 Under the first round of Fresh Start in 2011, the IRS expanded the Offer in Compromise (OIC) program to cover a larger group of struggling taxpayers. An Offer in Compromise is an agreement between a taxpayer and the IRS that settles the taxpayer's tax liabilities for less than the full amount owed.
 Generally, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer's income and assets to make a determination regarding the taxpayer's ability to pay.

Mortgage: What is FHA Financing?

By Toni Ryan, First Priority Financial

Do you  have questions about FHA….but didn't know where to ask.  The question “What is FHA?” was searched on the internet 235,000 times nationally last month so 'wondering minds want to know'.
 FHA stands for the Federal Housing Administration which is part of HUD (Department of Housing and Urban Development).  FHA has been helping people to purchase homes since 1934 by insuring the loan which allows lenders to offer the homebuyer better terms.  The FHA insured loan offers low down payments, low closing costs and often easier credit qualifications thus allowing more people to purchase a home. There is an initial insurance premium payment which is added to the loan and then a monthly premium payment included in your monthly mortgage payment.  This “insurance” covers the lender if the homeowner cannot make their loan payments and defaults on the loan.
 Buy Your First Home - FHA loans have programs for the first time homebuyer with a down payment as low as 3.5% of the purchase price.  Closing costs can often be financed in the loan. FHA rates are extremely competitive and the insurance can be dropped when the loan on the property reaches approximately 78% of its total value and after 60 months.
 Buy a Fixer-Upper  FHA has loan programs referred to as a 203K which will allow a buyer to purchase a home, fix it up and include all the costs in one loan.  If you own a home and you want to remodel or repair it, you can refinance what you owe and add the cost of repairs in one loan. Financial Aid for Seniors  If you are age 62, live in your home and either own it outright or have a low balance, a reverse mortgage may be an answer. A reverse mortgage (HECM) is a special type of home loan that lets you borrower the equity in your home and convert it into cash. But unlike a traditional home equity loan, no repayment is required until the borrower(s) no longer use the home as their principal residence or fail to meet the requirements of the mortgage. You can also use this type of loan to purchase a primary residence if you are able to use cash on hand to pay the equity requirements. A large down payment may allow you to own the home with no monthly payment.
 FHA also has programs that allow homeowners to make their homes more energy efficient as well as mobile homes and manufactured housing financing.  Options are available to allow homebuyers to take advantage of the current housing market and low rates.  Check with an FHA loan specialist and find out how you can use this program to reach your goals.

Legal: Plan to Protect Your Assets

By Eric Meadow, Esq., The Meadow Law Group

In my practice, I'm often asked for advice on how to protect or preserve assets.  The primary challenge with this inquiry is its timing.  People often wait until they are facing an actual or potential loss, either through law suit or other claim.  There is very little which can be legally and effectively accomplished once the asset has been lost or you are on notice as to a law suit or claim against your assets unless they have already been properly protected from reach of others.  In this article, I will lay out some of the basic forms of asset protection which is available to those seeking to protect what they've acquired over the years.  This article touches on the two most basic; in fact there are many other forms of more complicated manners which generally require the advice and assistance of a lawyer. 

• Insurance- Although often required by law or by a creditor, insurance is a very effective asset protection tool.   Insurance can be purchased to protect specific assets or assets generally.  It can protect assets in the event something happens to the asset or in the event an insured under the policy acts in a manner which puts your assets in jeopardy of loss.   It is contractual, provides very little limitation on your ability to use and enjoy the asset, and is relatively inexpensive.  However, not all insurance is created equal.  Rarely does cheaper ever mean better and insurance is no exception.   My advice to is make sure the quality of your insurance matches your desire to protect the quality of your assets.  The downside to insurance is that you are relying on the good faith of the insurance company to protect your assets under an insurable event.  You must fully understand those events and the exceptions to coverage. 

• Qualified Retirement Accounts- Aside from the benefit associated with taxes, your 401k/IRA or other qualified plan offers substantial asset protection from creditors.  As a way to encourage people to save for retirement, the Government has by statute made the money in these accounts unreachable from creditors in the event of bankruptcy, car accidents, contract disputes, and multiple other circumstances when you might face liability to a creditor.  However, while the assets in these accounts are protected, there are pretty restrictive rules about an individual's ability to reach these assets personally before they qualify for retirement distributions.   Again, the Government's way to encourage retirement planning.

After you have reviewed your insurance portfolio and opportunity to utilize qualified retirement accounts, and still feel vulnerable to potential claims or loss, you may choose to consider trusts, limited liability companies, family limited partnerships, re-classifying property ownership, and annuities.  For any of these strategies, you should seek qualified legal counsel.

When Rent Payments Equal Mortgage Payments

By Toni Ryan, First Priority Financial

To buy a house or not to buy a house…that is the question -- To pay rent or own a home. Owning a home is one of the most significant financial decisions many people will make. It is important to look at both the advantages and the drawbacks to know what to expect.
 Home prices are at such historic lows that today most people can own a home for the same monthly payment as their current rent.  Let's look at an example:  Using a USDA loan which allows for 100% financing (no down payment) the total monthly payment including principle, interest, taxes and insurance on a home purchased for $195,000 at 5% interest would be $1315.94 (APR 5.161) With rents in some areas ranging from $1350 to $1500 per month, home ownership is very competitive.
 There is more than just the payment to consider.  On the positive side, the investment potential is great.  Home purchasers are acquiring homes at low prices knowing that the market will cycle and their investment will gain equity.  The homeowner knows that their payment will basically stay the same over the years with a 30 year fixed mortgage with only slight increases for insurance and taxes.  Currently, home interest and taxes provide a large deduction on personal income taxes for home buyers. Lastly, you are purchasing a home you can make your own.
 It is important to note that there are extra costs to home ownership.  At the time you close your loan, you will have closing expenses that include escrow, title insurance, taxes and homeowners insurance just to name a few.  Closing can cost from $3000 to $6000 depending on the loan size and home value.
 Also, a new home buyer should have money in savings for emergency repairs and costs to improve the property.  Many homeowners opt for a home warranty policy at time of close which warrants the appliances, etc. for one year  allowing time to add to a savings account for future improvements. Effectively, the new home buyer becomes his own landlord in that he is responsible to fix any item that breaks or as an example, replace carpeting if desired. 
 It is important to seek the advice of a professional when considering the decision to buy a home.  Make an educated choice whether to continue renting or to purchase a home based upon your total financial picture.
 Home ownership is part of the American dream and at today's low prices and low mortgage rates, that dream is possible for many more individuals.

Home Mortgage: Make an Educated Decision

By Toni Ryan, First Priority Financial

Over 28% of American homeowners are “underwater” on their homes meaning they owe more than the home is worth.  Should you sell for less than it's worth?  Is foreclosure an option?  But you love your home and want to stay  how can you take advantage of the low interest rates and get some relief to wait out the economy?
 To understand the options available for getting help with your mortgage  including the federal Making Home Affordable Refinance Program  it is important for you to know who owns your loan.  Most home loans are owned by Fannie Mae (FNMA) or Freddie Mac (FHMC).  These companies are privately held, government sponsored enterprises who purchase home mortgages from lenders. Approximately 80% of conventional mortgages are owned by these two giants.
 If your loan is owned by Fannie Mae or Freddie Mac, there are programs available to refinance your loan even if you owe up to 125% of the home's value.
 Simply go to the secure websites  listed below and enter your property address, zip code, etc. and find out.  This is the first step to knowing your options. Always double check that you have entered your address and other info correctly.
Http://www.fanniemae.com/loanlookup/   &   https://ww3.freddiemac.com/corporate/
 A mortgage professional can help you access these programs and give you the options available.  With rates so low, you may be able to reduce your monthly payment to allow you to better weather these stressful economic times.

Tax Man News

By J.C. Harrison, Simplified Business & Tax

Be sure to fine-tune your estimated tax payments and withholding for 2011 if you owed a lot of tax for 2010 or you expect you'll be short for this year. You need to adjust estimated tax payments now. But you can wait until year-end to boost withholding, because withheld tax is treated as if paid evenly over the year. Additional income tax can be withheld from a Dec. IRA payout, for example. You needn't prepay all the tax you might owe for 2011, just an amount equal to 90% of it, or 100% of your 2010 tax bill (110% if your AGI exceeded $150,000 in 2010). Doing so avoids the underpayment penalty, even if you end up owing IRS a lot of tax.
 Self-employeds can amend prior year returns to deduct Medicare premiums as part of their income tax deduction for health insurance on Form 1040, IRS says in Pub. 535. Many didn't write off the premiums in pre-2010 years because the instructions for those prior years said the amounts were not deductible. Pub. 535 and the 1040 instructions for 2010 now expressly allow this write-off.

Is there still 100% financing available to buy a home?

By Toni Ryan, First Priortity Financial

The answer is yes!  The Department of Agriculture, known as the USDA, has home loan programs for the purchase and development in rural areas.  Much of the property in Placer County, from Loomis east to the state line qualifies for this type of financing.
 Rural housing Direct Development Loans are directly funded by the government. This loan program is commonly referred to as Section 502 Loans. This is 100% financing and although the program comes with a 3.5% funding fee, this can be added to the base of the loan amount so no down payment is required.  There is no monthly mortgage insurance premium added to the payment which keeps the monthly cost lower than FHA financing. The term is usually 30 years. Rates are comparable to conventional financing and loans are approved with the borrowers' percentage of total debt to income of 42%.  The house payment consisting of principle, interest, taxes and insurance should be no more than 31% of the borrowers' total income.
 Funds can also be used to build, repair, renovate or relocate a home or to purchase and prepare sites, including providing water and sewage facilities. Homes must be of modest size, cost and design and meet national building codes.  Manufactured housing must be on permanent foundations.
 It is important to note that there are income limits to this program because it is designed to help low income families attain home ownership.  Mortgage payments are based upon the family's adjusted gross income.  The maximum for a family of four in Placer County is $84,100 and the minimum credit score needed to qualify is 640. 
 Use this valuable program to attain your dream of home ownership. For more information, check out: http://www.rurdev.usda.gov/HAD-Direct_Housing_Loans.html.

10 Credit Card Myths by Toni Ryan, First Priority Financial

The best defense against making a credit blunder is to better educate yourself.

Myth #1: Avoid Using Credit Cards FALSE!
This may be a good way to get rid of debt, but it's utter destruction to your credit score. Why? Because of the 5 factors that make up your credit score, one is how you use and manage your credit, a factor that makes up 30% of your score. That's 255 points! Use the cards every month for gas, groceries etc. but pay them off.
Myth #2: Consolidate Debt onto 1, Low-Interest Credit Card FALSE!
Everyone gets the tempting credit offers to consolidate your debt onto one credit card but when you max out that card, your credit score will drop 60-100 points overnight! Do not consolidate your credit card debt UNLESS, the balance will be under 30% of the available limit.
Myth #3: It's Okay If You Go Over Your Credit Card Limit Because The Bank Authorized the Purchase FALSE!
Going over limit, even if it's just by one dollar deals you a double penalty a 50 point lower score and usually a $39.00 fee.
Myth #4: Closing Credit Card Accounts Will Help Your Score FALSE!
Don't close credit card accounts at all, with the exception of closing a joint account after a divorce. You will lose points in two areas: in the Amounts Owed Area which is worth 30% of your credit score, and in the Length of Credit History Area which is worth 15% of your credit score.
Myth #5: Becoming an Authorized User on Someone's Credit Card Makes You Legally Responsible for the Account FALSE!
While the activity on these accounts, good or bad will show up on your credit report if you are an authorized user, but you are NOT legally responsible for terms of the agreement.
Myth #6: The Type of Credit Card Doesn't Matter FALSE!
The credit scoring system does not like third-party finance cards (e.g., department store cards, furniture store cards, etc.) Always try to stick with major credit cards (e.g., Visa®, MasterCard®, etc.)
Myth #7: Your Divorce Decree Protects Your Credit Score FALSE!
Even if your divorce decree stipulates that your ex-spouse is financially responsible for debt that is held in both of your names, you remain financially liable for that debt until it is paid in full.
Myth #8: Marrying Someone Who Has Poor Credit Will Hurt Your Credit Score FALSE!
Although getting married generally means that you'll be combining finances, your credit reports won't be combined.

Myth #9: Making Arrangements to Pay a Charged-Off Credit Card Account Will Help Improve Your Score FALSE!
If you have an old charged off credit card debt and you make payment on it, or make a written or oral promise to pay it, you will renew the 7 year credit reporting statute from that date. The best path to take in this instance is to debt negotiate. Offer the creditor .30 - .40 cents on the dollar as payment in full in exchange for a deletion letter from the creditor.
Myth #10: Those Pre-Approved Credit Card Offers Do Not Hurt Your Score FALSE!
Just because credit is offered to you, does not mean that you should accept it. Your credit report has not been pulled yet, so you are NOT approved for the account but once you call and your credit is pulled, your score will lower 10% due to the inquiry.

The bottom line about misinformation? It's always going to be out there, with tempting offers but remember - if something seems too good to be true, it probably is.