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Save Big Money When Buying A House

The U.S. title-insurance industry faces increasing pressure from regulators to justify the fees charged to consumers for ensuring they have clear ownership of their homes, Title insurance can range from several hundred to several thousand dollars!

So here is what you do. Early in the process of buying a home or refinancing, let your real-estate agent and lender know you will select your own title insurer. Research title-insurance costs online and check whether there are fees on top of the premium (in many states, consumers pay separate fees to the agents for that research, on top of the premiums).

How to Negotiate Home Repair and Improvements

Comparing bids from several contractors will give you some leverage with the one you’d like to hire.  Get three to five bids, and be clear about the products you want to use. If your preferred contractor is at the high end, say so and offer to show him the other bids. He may adjust his price.

When hiring a plumber or a tradesman for a small job, ask him to break down his price into labor and materials. About 35 percent should be materials and 65 percent labor, says Al Paxton, a construction estimator in Malibu, California. If the ratio seems wrong, say so. But be diplomatic. “If you squeeze him too hard, he might give you less than first-class workmanship and use less expensive materials,” Paxton says.

Behind The March Non-Farm Payroll Number

"Real income declined month-over-month in the latest report, which is very much at odds with the job creation figures unless that job creation reflects extraordinarily low-paying jobs. Real disposable income growth has now dropped to just 0.3% year-over-year, which is lower than the rate that is typically observed even in recessions." It wasn't quite clear what was going on until I read a comment by David Rosenberg, who noted that much of the recent growth in payrolls has been in "55 years and over" cohort.

Since the recession "ended" in June 2009, total non-farm payrolls in the U.S. have grown by 1.84 million jobs. However, if we look at workers 55 years of age and over, we find that employment in that group has increased by 2.96 million jobs. In contrast, employment among workers under age 55 has actually contracted by 1.12 million jobs.

Combine this with the bursting of two Fed--induced bubbles - one in stocks and one in housing, and the over-55 cohort has suffered an assault on its financial security: a difficult trifecta that includes the loss of interest income, the loss of portfolio value, and the loss of home equity. All of these have combined to provoke a delay in retirement plans and a need for these individuals to re-enter the labor force.

Homeowner's Insurance Highway Robbery

I got my homeowners insurance and the premiums rose 20%. My dwelling figure (replacement cost) went up despite lower copper and lumber prices. State Farm bases everything off this number as a percent. Personal property is 75% of the dwelling for example. The Insurance Information Institute said personal property should be 50% - 70% of the dwelling.

So I called and said I have no intention of rebuilding the exact same house in the exact same location, I was able to name my own replacement cost for the dwelling!

 

If you are ever in this situation, you can try what I did and raise your deductible at the same time.

How To Live on Practically Nothing

Spend Less TV - The Free Video Service About Saving Money

Pre Pay Your Mortgage

I used an Excel based mortgage spreadsheet to see how the life of my mortgage would change if I paid a little more each and every month to the principal. It amazed me! By paying just an extra fifty dollars a month, I was able to shorten the length of my loan by five years and ten months and save more than $18,000 in interest!

 

The Best Bailout Plan Would Have Been To Rescue Homeowners

How? By simply paying off their mortgages. Since 2/3 of GDP is consumer spending, the savings would have gone to buy products/services. That would have kept the unemployment rate from rising.

The government could have financed this bailout by creating a line on your 1040 called housing debit. It would have worked exactly the opposite of the mortgage deduction. Each year, a percentage of that paid off mortgage would add to your taxes.

Here is what me research shows:

The quarterly survey published by the Federal Reserve, called the Flow of Funds Report, shows the total value of all home mortgages in the U.S. was $11.2 trillion through the third quarter of 2008.

According to a team at Bloomberg News, at one point last year the U.S. had lent, spent or guaranteed as much as $12.8 trillion to rescue the economy.

What if I can't sell my house?

#OWS Misses Mark on Derivatives

Here is an article I published back in August.  A few updates:

1. Estimates of the notional value of the worldwide derivatives market go from $600 trillion all the way up to $1.5 quadrillion.  Keep in mind that the GDP of the entire world is only somewhere in the neighborhood of $65 trillion.
2. Today, the notional value of all the derivatives held by Bank of America comes to approximately $75 trillion.  JPMorgan Chase is holding derivatives with a notional value of about $79 trillion.
3. Back in 2002, the top 10 U.S. banks controlled 55 percent of all U.S. banking assets.  Today, the top 10 U.S. banks control 77 percent of all U.S. banking assets.

And Congress/Obama have done nothing to curtail the use of OTC derivatives or stop "too big to fail"!

Why Doesn't PMI Cover Foreclosure Losses?

PMI protects up to 90% of the loan amount with proceeds payable to the lender.Indirectly, it allows banks to loan money when prudence might dictate otherwise.

PMI companies ARE paying out billions of dollars to lenders, but again, the lenders must foreclose first, and then file a claim to collect 90% of their losses. This is still not enough to stem the tide.

Keep in mind that a lender might only make 2-4% of the loan amount as profit, after selling the loan. If the loan goes bad, the lender has to buy it back, while making your missed payments. Then, the lender has to go through all of the expense of foreclosing or otherwise settling your case before trying to collect from the PMI firm.

If this was on a loan-by-loan basis, it might not be so bad, but that is not how it works. A lender will package $100 million worth of loans in a single offering. They might sell that bundle for $103-104 million. If the default rate goes over a certain amount, say 3-5%, then the lender has to give back the $103-$104 million all at once.

If a lender has a 5% default rate, they are out of business, because they had to pay all of their profits out to buy back those bundles. That's without even taking into account any of the lender's expenses of marketing, salaries, and operations.