Decent news on the housing front, as New Home Sales came in better than expectations, and while Existing Home Sales were slightly less than expected, both enjoyed improved paces of inventory. Looking at last year, 2006 represented the 3rd best existing home sale market on record. But the media is already putting a doom and gloom spin on the story, making a buzz about the steep drop from 2005 to 2006, and the fact that sales haven’t fallen off this much year-over-year since the early 80’s. But some important considerations: first, 2006 is coming off a record year in 2005, so to see a drop off in record levels is not unexpected. Second, the media is comparing the drop in year-over-year sales to the early 80’s - but in 1982 the national unemployment rate was 9.7%…more than double the current unemployment rate. Many experts believe that we will look back at August 2006 as the bottom of the housing market.

BUT IF YOU’RE ON THE MARKET TO FIND A NEW JOB…AND ALSO ON THE MARKET FOR A NEW LOVE…BETTER THINK TWICE ABOUT YOUR ONLINE IMAGE BEFORE TURNING IN YOUR RESUME. BE SURE TO READ THIS WEEK’S MORTGAGE MARKET VIEW.

The most recent reports seem to indicate that inflation is cooling, and responding to the Fed’s long string of rate hikes during 2005 and 2006. But they know they need to keep an ever-vigilant eye open. Some Fed members have felt that more hikes are needed - most notably, Fed President Jeffrey “the Dissenter” Lacker, whose next turn to officially vote won’t happen for a few years. Will new voting members voice the same concerns? We’ll soon find out as the news unfolds this week. If the reports of the week show inflation moving higher, or if Friday brings a hot jobs number - Bonds could move lower and cause home loan rates to move higher.

But…one technical factor in favor of Bonds and home loan rates holding their ground is a nice floor of support, just underfoot present levels, as seen in the chart below. Although Bond pricing and home loan rates have worsened slightly since the beginning of the year, this level might just help stop the bleeding if the upcoming news does indeed come in hot.

Many people go online to look for love, friendship and camaraderie, advertising themselves to be found by the interested or like-minded. But be careful…employers are now jumping into the “Googling” game to see what you might have left out of your resume.

CareerBuilder.com recently released some findings that might make you rethink and retool your online image. This popular site for job hunters surveyed hiring managers, and found that 26% of them say they use internet search engines such as Google or Yahoo to research job applicants. Further, 12% say they use “social networking sites” to do the same. Most interestingly, a whopping 51% percent of the employers who did this type of diligence on job applicants admitted they did not hire the candidates based on what they found!

A potential employer doesn’t need - or want - to know that a job applicant likes candlelit dinners and horseback riding in the nude. And while hobbies might provide a creative outlet that helps manage stress, finding out a candidate is the President and founding member of the National Toilet Paper Roll Artists Organization…well, it could cause a hiring manager to wonder if your interests and skills really match the job being interviewed for.

So be picky about what you post! Use pseudonyms if you need to interact with others who collect plastic spoons or engage in dog barking competitions. Don’t put anything on a dating site that you wouldn’t want your grandmother to read about you. The internet has become the online equivalent of that place where “everybody knows your name”. All a potential employer or client has to do is “Google You”. Depending on what they find, your chances of success could change…and you might never know why.

Economic Calendar for the Week of January 29 – February 02

Whew! With all this strong economic news, it’s surprising that Bond prices and home loan rates just stood there. Despite some midweek bouncing around on the news, Bonds and home loan rates ended up the week only slightly worse than where they started.

AND WHILE BONDS MAY NOT HAVE MOVED MUCH, YOU OR SOMEONE YOU KNOW MAY BE ABOUT TO BUST YOUR OWN MOVE. A CHANGE OF RESIDENCE IS SURE EXCITING, BUT THERE IS ALSO MUCH TO DO. READ THIS WEEK’S MORTGAGE MARKET VIEW FOR SOME TIPS ON HOW TO MOVE ON UP WITH A LOT LESS STRESS.

Of most interest on this week’s calendar will be New and Existing Home Sales data. From all recent reports, it appears that the housing market at large is stabilizing, so the numbers on average sale prices, inventory and volume of sales will be closely analyzed and dissected. Most feel that the housing market hit a bottom in August of 2006, and home loan rates remain very low - so if you or someone you know has been considering the purchase of a home, now may be an excellent time to make a move forward. Contact me for questions or to learn how to get this process started right away.

If you want to change your current provider, simply hit the icon for phone, cable, or internet, select “switch provider”, complete the requested information and a list of providers in the local area will appear. Choose the new provider and the service will be changed.

Additionally, on the site you can complete a change of address form, subscribe to local newspapers, and order magazine subscriptions. Moving to a new home should be enjoyable and exciting. Using this tool can help remove a bit of the stress of moving and will also help save valuable time.

Economic Calendar for the Week of January 22 – January 26

Remember that “good” economic news tends to be “bad” for Bond prices and home loan rates for two reasons. First, because Stocks and Bonds compete for the same investor dollar - and good economic news would cause many investors to pull money out of Bonds and place it into Stocks, which generally benefit from a healthy economy. Second, good news for the US economy can also mean inflation, which is the arch-enemy of Bond prices and home loan rates, since inflation erodes the true value of a fixed return such as a Bond provides.

So back to the news - unexpectedly positive news for the housing sector arrived in the form of the Mortgage Applications Index, showing the largest percentage increases in home loan applications for purchasing and refinancing since the middle of 2005. Why was this bad news for Bonds and home loan rates? Because Bonds react poorly to potentially inflationary news, and the increase in home loan applications point to a healthier housing sector and economy - which could lead to inflation. But the real good news is that this also indicates that home loan rates are favorable, and most markets are stabilizing in terms of home values. In fact, many experts feel that August of 2006 was the bottom for the housing market. So if you have been thinking about investigating a purchase or refinance, now may be the time - give me a call or email and let me know how I can help.

More hot economic news - Retail Sales in general were on fire, and when factoring out vehicle purchases, it was the best number in over a year. Again, more good economic news, but not good for Bond prices or home loan rates.

As if that weren’t enough, another unexpected event arrived when the Bank of England (like our Federal Reserve Bank) surprised international financial markets by raising its benchmark interest rate (like our Fed Funds Rate) by .25%, sparking a sharp drop in their markets as investors became rattled. The sharp sell-off in Great Britain quickly spilled over to the US, as their rates are on par with ours, and will now become more competitive investments as compared to our own US Bonds.

HERE’S SOME MORE GOOD NEWS - IT’S TAX TIME! OH…YOU MEAN YOU DON’T ENJOY GATHERING ALL YOUR FINANCIAL AND TAX DOCUMENTS? OK, MOST PEOPLE DON’T - BUT THE TIPS FOUND IN THIS WEEK’S MORTGAGE MARKET VIEW WILL HELP YOU GET THROUGH THE PROCESS QUICKLY AND EFFICIENTLY, AND GET TO THE REAL GOOD NEWS - A COMPLETED 2006 TAX RETURN.

Remember that Bonds and home loan rates hate inflation…and some big inflation news is in store with the Producer Price Index (PPI) on Wednesday and the Consumer Price Index (CPI) on Thursday. There will also be news from the Manufacturing sector sprinkled throughout the week, and Housing will gain some attention on Thursday with the latest Housing Starts and Building Permits data. If the economic data comes in suggesting a slower economy and lower inflation, Bonds will likely regain their legs and help home loan rates improve. But if the news has that familiar scent of inflation…Bond prices will head lower and home loan rates will worsen.

The chart below shows the “floors” that can help to support Bonds from falling too far down on Bond and home loan rate unfriendly news…but also shows that Bond pricing fell right through two floors last week, causing home loan rates to rise.

It’s that time again…time to start gathering all of that dreaded documentation for your tax preparer to send to good old Uncle Sam! And even though this may seem like a very painful process, taking just a few simple steps right now will make your tax planning far less painful than you think.

STEP ONE: Start by reviewing a copy of last year’s tax return, and make a quick list of all the documents or statements that were needed to complete the return. Examples would be W2 forms from employers, 1099 forms for income earned but with no withholding for taxes, 1098 forms documenting all interest paid on a mortgage, interest and dividend income from banks and other financial institutions, a statement for stocks and bonds that were sold during the year, donations that were made to charities, and property tax statements. Many tax accountants will provide a checklist for you, but if you do not have access to one, simply hit this hotlink: TAX PREP CHECKLIST and use this generic checklist as a guide.

STEP TWO: In the coming weeks, you’ll be receiving tax documents in the mail. Some will be easy to identify, as many institutions use envelopes marked “Important Tax Document”, but others do not - so check all your incoming mail very carefully. When a tax document arrives, grab your checklist, mark the item as received, and keep it all in one place like a file or large envelope marked “2006 TAXES”. That way, when it is time to meet with your accountant, all documents will be stored in one location.

NOTE: the IRS rules require that most tax documentation like W2’s be mailed out to you by January 31st. If you do not receive all needed tax documentation by February 15th, contact the company that was supposed to send it out, and request the documentation be mailed immediately. If the company fails to comply, contact the IRS at 1-800-829-1040 for help. Additionally, if a statement is received and the amount reported appears to be incorrect, contact the company who sent it to you right away, and ask that the form be corrected. Within a few days a new form should be mailed, and when received it will be marked “Corrected”.

With the tax laws constantly changing and the complexity of filing taxes increasing every day…having a great tax accountant will save you time and money. In fact, most tax accountants find enough missed deductions or changes to more than cover their nominal fees. And, working with a professional can help ensure that your return is as accurate as possible, and may help avoid a painful audit. During 2006, audits for individuals increased by 6% across the board. Business owners need to be on their toes too, as audits for Partnerships increased by 15%, and S-Corporations by 34%!

It pays to invest in working with a tax professional. If you are in need of a referral, contact me - I’d be happy to help provide one to you.

Economic Calendar for the Week of January 15 – January 19

Late in the day on Thursday, economists reduced their official estimate for Friday’s Jobs Report number from 115,000 to 100,000, clearly indicating much lowered expectations in new job growth. This was largely based on ADP - the nation’s largest payroll processor - coming out earlier in the week saying that their numbers indicated net job losses for the previous month, no gains at all! Additionally, the Fed Meeting Minutes showed the Fed believes that US job growth is cooling. So…when Bond traders saw the late change in analysts formal expectations, they gobbled up even more Bonds ahead of the Jobs Report - figuring that the number would likely come in low, Bond prices would rally, and home loan rates would improve.

But this was not to be. When the actual numbers from the Jobs Report hit, Traders were stunned to see an unexpectedly high December Jobs number of 167,000, with the Unemployment Rate holding steady at a very low 4.5%. Additionally, the Average Hourly Earnings in December shot 8 cents higher or 0.5%, far ahead of the 0.3% rise expected. This brings the average US hourly rate of pay to just over $17. And a deeper look at the hourly earnings figure showed year over year wages increased by 4.2%, which is the highest in four years!

Traders quickly realized they were positioned on the wrong side of the market and began to sell, sparking a move lower in Bond pricing, and giving back some of the gains made previously in the week. But after the smoke cleared, Bonds still ended up on the plus side for the week overall, with home loan rates improving by about .125% across the board.

JUST LIKE THE PROGRAMMING OF VCR’S IN YEARS PAST…THE YOUNGER GENERATION IS BYPASSING MANY OF US WITH THEIR NEW LINGO AND ABBREVIATIONS NOW FOUND EVERYWHERE, IN EMAILS, TEXT MESSAGES, INSTANT MESSENGER, MESSAGE BOARDS. AND IF YOU AREN’T ON BOARD WITH TSL (TEXTING AS A SECOND LANGUAGE), YOU MIGHT BE SOL (SORELY OUT OF LUCK). SO IF YOU’RE TRYING TO COMMUNICATE WITH SPEED AND EASE IN TODAY’S TECH-SAVVY WORLD, READ THIS WEEK’S MORTGAGE MARKET VIEW…AND BECOME PART OF THE ABBREVIATION NATION.

And the technicals are on our side, in terms of seeing Bond pricing and home loan rates stabilizing, and perhaps even seeing more improvement in the coming days. Take a look at the chart below, which shows how Bonds have used the 50-day Moving Average (which is basically the average of where Bond pricing has been for the past 50 days) as a floor of support. This 50-day Moving Average is rising underneath Bonds feet, helping pricing move higher, meaning home loan rates move lower. And even after Friday’s decline, Bonds clawed their way back above the 50-day Moving Average…and if they can hold their ground during the coming week, the improving trend appears to be good news for Bonds and home loan rates.

Bottom line: in the absence of any surprises during the week, Bond pricing and home loan rates should stabilize and perhaps improve slightly, due to the positive technical picture currently in place.

“What You See Is What You Get?” Whoa…not when it’s loaded into a long acronym like the above. And unless you have a teenager or tech-savvy kid - or are a text-messaging junkie in your own right - these acronyms can leave you scratching your head and feeling very “out of the loop” when someone hits you with one. The good news? You’re not alone, and there’s an answer.

Speed and ease are the names of the game, and messages with jumbled letters have now become a part of our everyday lives. Everywhere you turn, codes, abbreviations and acronyms are being used…but these quick methods of communication can leave you frustrated, confused and unable to respond if you just can’t break the code.

So where do you turn if you need to find a solution in a hurry? Pulling out the dusty Webster’s dictionary won’t help…but visiting www.stands4.com will.

With a few clicks of the mouse, you can access acronyms and abbreviations, and even search by industry, like medical, internet, computing, business, international and more. Simply enter the confusing phrase in the search engine, or search from A to Z by clicking on the first letter of the acronym or abbreviation…and voila…a list will appear with the most likely answers to your query. And, if you want to start including a few acronyms or abbreviations into your own emails or text messages, but do not know the secret codes, perform a reverse lookup. Just enter the phrase, hit search, and a list will appear.

With the increased demand for text and instant messaging, expanding your tech vocabulary and learning a few codes will allow you to communicate with confidence and ease. And if you really want to be a hip parent, the next time you receive a message from your child loaded up with CUL8R (See You Later) and BRB (Be Right Back)…log onto the site, grab a few codes in response, and send your own abbreviated message…you will leave them #:-) and LOL (Shocked and Laughing Out Loud)!

Economic Calendar for the Week of January 08 – January 12

The MORTGAGE MARKET GUIDE WEEKLY is the industry’s leading publication of this type, and I am pleased to provide this valuable resource to you. If you feel any of your family, friends, clients or associates would benefit from keeping up-to-date on market and economic trends in this easy to read format, please let me know, and I would be more than happy to add them free of charge.

Best wishes to you, and please do not hesitate to contact me if I may be of any assistance to you at this time!

Business credit comes with good news and bad news. The good news is more times than not it does not get reported on your personal credit report…and the bad news is also that it does not get reported on your personal credit report. That is why it is so important that you have established personal credit before heeding this advice.

Unless you’re Microsoft, chances are good that you have to sign personally in order to qualify for a business credit card. But other than the inquiry that shows up on your credit report when you apply for the business credit card, 90% of all business credit cards do not get reported on your personal credit report unless you default on the payment. If you do, then the account will get reported to your personal credit report and your credit score will be affected negatively.

Now why is this good for your credit score?

Well, the credit score only analyzes what it sees on your personal credit report. And given the fact that 30% of the credit score is derived from the ratio between your credit balance and limits on your report, not having a “maxed-out” business credit card showing on your credit report can be a very helpful thing for your score.

For example, let’s assume you have $50,000 in revolving credit available to spend. Let’s also assume that your credit score is a 730. If you were to go and max out these credit cards the next day, once the balance reflects on your credit report, your 730 credit score may drop to a 650. Now let’s look at the same situation where you have a 730 credit score but the $50,000 you spend is on business credit cards that do not report to your credit report. Your 730 credit score will remain a 730 credit score, and you will be able to get favorable financing even though you are carrying the same debt load as the previous example where the score dropped to 650. The credit score only scores what it can see; business credit that is not being reported on the personal credit report does not affect the score whatsoever.

But it is important to pay on time - if you do get business credit that shows on your personal credit report even if you are not late, that credit is treated exactly as if it was personal credit and having the business credit will not yield any benefit to your credit score whatsoever.

I suggest building your personal credit first before you attempt to build your business credit card portfolio because you do have to have good credit being reported to qualify for these business accounts. More good news - the credit card companies do not require that you have a business license or a corporation, and the simple classification of being “self-employed” is typically enough to pass muster.

My two favorite banks for business credit cards are American Express and MBNA. A good start would be to apply for a regular American Express charge card that needs to be paid in full each month and also an American Express revolving business card like “Blue for Business” that you can pay minimum monthly payments on. MBNA has a business credit card called Platinum Plus for business, which affords a low rate and a high credit limit. American Express will not report to your personal credit report regarding your business credit card unless you are approximately 120 days late. MBNA on the other hand will report the account to your personal credit report once you become 30 days late.

The flexibility and control that business credit cards give you with your personal credit score are worth their weight in gold, and in many cases will allow you to save countless thousands in interest on your next mortgage by affording you the highest credit score possible.

Edward Jamison, Esq.

For a limited time, get Edward Jamison’s highly acclaimed Credit Scoring Educational DVD and Book “Credit Savvy” at almost 90% off the retail price. Click here to learn more.

Edward Jamison is a credit scoring expert and concentrates his law practice solely on credit related issues. Since graduating from Duquesne Law School in 1999, Edward Jamison has helped hundreds of clients dramatically increase their credit scores in order to get better rates on their loans. A true master of the credit system, when needed to, he has successfully sued the three major credit bureaus and creditors to obtain results for his clients.

Edward Jamison is the brainchild behind the product Credit Savvy, numerous computer software products, and has appeared on television shows to educate consumers on credit scoring and identity theft. Edward has also written nationally published articles on the Fair Credit Reporting Act and Credit Scoring.

Certified by the State Bar of California to give CLE seminars to California Attorneys, he is a nationally recognized speaker on the issue of credit scoring and identity theft and is the Attorney of choice for credit related issues for contacts at the following companies: Platinum Capital, Washington Mutual, California Association of Mortgage Brokers, Merrill Lynch and numerous law firms.

The MORTGAGE MARKET GUIDE WEEKLY is the industry’s leading publication of this type, and I am pleased to provide this valuable resource to you. If you feel any of your family, friends, clients or associates would benefit from keeping up-to-date on market and economic trends in this easy to read format, please let me know, and I would be more than happy to add them free of charge.

Best wishes to you, and please do not hesitate to contact me if I may be of any assistance to you at this time!

As you probably know, Private Mortgage Insurance (PMI) is required anytime a loan is taken out with a higher “loan to value” ratio of 80%, as the loan is riskier to the lender. Mortgage Insurance allows a consumer to purchase a home with little or no down payment, or refinance at higher loan to values than 80%…but the beneficiary of the Mortgage Insurance is the lender, as it only provides coverage to the lender to protect against financial loss should the homeowner default on the loan.

And historically, these Mortgage Insurance premiums have never been tax deductible, so many consumers turned to the “piggyback” loan strategy. A “piggyback” means the first mortgage is placed at 80% of the value of the home - therefore not requiring mortgage insurance - and the additional funds needed to finance the home were placed on a second home loan, “piggybacked” behind the first mortgage…and providing more tax-deductible interest.

But these second home loan rates have risen dramatically higher in recent years, since most are tied to the Fed Funds Rate…and the Fed has made seventeen .25% rate hikes since June 2004 - a total increase of 4.25%! And although the Fed is currently in a “paused” mode…there is debate as to whether or not the Fed is done hiking rates just yet.

But in their final session hours - Congress just passed a law with a change to the tax code which will allow Mortgage Insurance Premiums to be claimed as tax deductions for households earning less than 100k annually.

What does this mean?

Primarily, it means that mortgage options that include standard Private Mortgage Insurance will now become much more competitive and attractive, especially as the Mortgage Insurance premium payment can often be later removed with sufficient property appreciation or declining loan balance, assuming timely payments. In fact, hundreds of thousands of 2007 homebuyers or home refinancers will save an estimated total of $91,000,000 when they file their tax returns in 2008.

A few important notes:

This piece of legislation still requires President Bush’s signature, but at this time there is no indication that he will not sign it. Also, the current legislation applies to new loans closed in 2007 only, and as such, will require another act of Congress to be extended to 2008 and beyond.

The full deduction can only be taken if your Adjusted Gross Income is $100,000 or less. There is a rapidly declining proration table for incomes up to $110,000, with no deductibility if your Adjusted Gross Income exceeds that level.

The deduction is only available if you itemize your deductions on your tax return, rather than taking the standard deduction. For most homeowners, itemizing generally makes more financial sense anyways, due to the large amount of home loan interest and real estate taxes paid, but a small mortgage may not generate enough interest charges to itemize. As a rule of thumb, the mortgage normally needs to be around $130,000 to make itemizing make good financial sense.

And of course, whenever the IRS is concerned…it always makes sense to review specifics with a tax professional. We’d be happy to make a recommendation to you or your clients if you like.

Although the initial payment with a Mortgage Insurance premium might be slightly higher when compared to a “piggyback” option - remember that Mortgage Insurance can often be removed in time, with property appreciation or a declining loan balance, assuming payments are being made in a timely manner.

As always, please call me with any questions - I’d be happy to review these changes with you, or anyone who might be looking into a mortgage at this time. I look forward to assisting my clients in making smart decisions on refinancing, and helping even more Americans become homeowners in the New Year!

But typically, strong economic activity like Retail Sales is accompanied by higher inflation. Yet last week’s tame and improving read on inflation via the Consumer Price Index report put a “Goldilocks” spin on the economy - not too hot, not too cool…but getting closer to “just right.” Even though there was quite a bit of volatility during the week, home loan rates ended the week exactly where they started.

So it appears that Ben Bernanke found what he’s been looking for - a healthy economy, along with a better behaved rate of inflation. But Ben isn’t out of the woods yet - because these reports are volatile, there could always be a rat lurking about in one of the upcoming economic releases.

DID YOU LEND YOUR GOOD FRIENDS AT THE IRS A FEW THOUSAND DOLLARS THIS YEAR…INTEREST FREE? YOU DIDN’T NEED TO…AND UNCLE SAM WOULDN’T DO THE SAME FOR YOU. READ THIS WEEK’S MORTGAGE MARKET VIEW TO LEARN A SMART WAY TO KEEP YOUR HARD EARNED DOLLARS WHERE THEY BELONG…IN YOUR OWN WALLET.

In addition, we’ll get a look at Housing Starts, Building Permits, the Producer Price Index on wholesale inflation, third quarter GDP, Personal Income, Personal Spending, the Philadelphia Fed Manufacturing Index, and last but not least, Durable Goods Orders as well. With all that action in store, this week could be volatile - especially if one of the many releases and reports produce any ratty numbers.

The long term uptrend for Bond pricing remains intact, so home loan rates have remained at very attractive rates. But if we get some exceptionally strong economic news this week and see Bonds break below the Lower Trend Line - look out, as Bond prices and home loan rates could worsen quickly.

The IRS can actually help.

When you think about it, getting a refund check means that you let the IRS use your money throughout the year without paying you any interest. Wouldn’t you rather have the money during the year yourself? Here’s how you do it. The IRS allows you to increase the number of dependants on your W-4 withholding form, meaning that less will be withheld for taxes from each paycheck. In the past, if you claimed greater than nine dependants, an explanation and approval may have been required. But the IRS has lifted this restriction, allowing you to voluntarily increase your dependants claimed.

This lets you have more money in each paycheck instead of “loaning” the money to the IRS and having to wait for a refund.

But let’s not go overboard…you should only lessen the periodic tax withholding to match the expected refund. This way you are taking your refund as you go; instead of letting the IRS hold on to it. There is even a nifty calculator the IRS has provided for free, which lets you see how a change in withholding will affect your paycheck.

Here’s the link to the free withholding calculator: IRS Bean Counter

And managing your withholding can also be a great tool if you are currently renting, but are about to buy a home. The new housing expense may be greater than the rent payments, but the new home will give you some important tax deductions. By adjusting your withholding when you buy a home, you can get the benefit of the new home deductions spread into each paycheck…which can make that new home payment a lot more comfortable.

Before you make any changes, you want to be sure you are balancing the amounts carefully and correctly, so it is always a good idea to check with your tax professional. And if you need a referral, just give me a call!

Economic Calendar for the Week of December 18 – December 22

So overall this is a very good picture, although the rate of unemployment crept up slightly to 4.5%, and Hourly Earnings were lower than expected, showing that the average worker in the US earns $16.94 per hour. Now remember that Bond pricing and home loan rates tend to worsen on positive economic news like a strong jobs number - so had it not been for the two factors of slightly worse than expected Unemployment Rates and Hourly Earnings, the damage to home loan rates could have been much worse. But Bonds did fall on Friday afternoon, meaning home loan rates could be slightly higher heading into next week.

RETAILERS SURE HAVE FULL TIME JOBS DURING THIS SEASON, AS HOLIDAY SPENDING REVS INTO FULL GEAR. BUT BE AWARE OF THIS LITTLE TRICK MANY RETAIL STORES USE TO SAVE THEMSELVES A FEW BUCKS WHEN YOU COME TO BUY…AND SAVE YOURSELF A HASSLE AT THE REGISTER.

The Fed has said it remains concerned about the core rate of inflation which is “uncomfortably high” at 2.4% year-over-year and “out of their comfort zone”, which is in a range of 1 to 2%. The Fed is likely to once again remain in a “paused” mode at this meeting, but if the Fed continues to express concerns about inflation in the words of the Policy Statement, Bonds may move lower and cause home loan rates to rise following the statement on Tuesday.

Bonds and home loan rates are hurt by inflation…or even the hints of inflation…since it erodes the buying power of the fixed dollar amount of return that a Bond provides. And speaking of inflation…the Consumer Price Index (CPI) will be released on Friday and this report has been a market mover of late, as inflation takes center stage. If the scent of inflation remains in the air in this release, home loan rates may edge higher at the end of the week. But if inflation appears to ease a bit, home loan rates may improve.

Ever been faced with this dilemma when out shopping? You walk up to the register to pay for an item that costs $8. The cashier rings it up, and when you reach into your wallet to pull out a credit card to pay, the cashier explains that the “store policy” requires a minimum purchase of $25 when paying with a credit card. Frustrated and embarrassed, you realize that you are short on cash, do not have a checkbook, and are forced to either pass on the item or make a mad dash to the closest ATM, pull out the cash, and maybe even get hit with a service charge for using the ATM.

But did you know that retailers cannot require a minimum charge for merchandise? Here is the scoop.

Many of us think that when a retailer refuses to accept a credit card for a small purchase, it is the credit card company that is enforcing this policy. Not true. This is simply a policy that has been put in place by the store. Basically, the store is charged a fee by the credit card company for each purchase that is made by credit card. Sometimes the fee eats into the profit the retailer would make on a purchase and therefore many stores require a minimum charge to ensure that the profit will cover the service charge. But the reality is that any store which accepts Visa or MasterCard cannot require a minimum purchase. Credit card companies want their customers to use credit cards, no matter how big or small the purchase may be.

So what does a consumer do to overcome this obstacle when shopping?

Ask to speak to the manager, and explain that credit card companies do not require a minimum purchase and stores have to accept a credit card as form of payment, no matter what the amount of the charge. If the store still insists on a minimum purchase, contact the issuer of the credit card and report the merchant. Small purchases add up, and with more and more people using credit cards to rack up miles or earn points for cash or rewards, knowing the facts about what you can charge could payoff big in the long run!

Economic Calendar for the Week of December 11 – December 15

Durable Goods Orders - which are simply items that are expected to last longer than three years, such as appliances, electronics and furniture - were reported much lower than the economists had forecast. Then several key manufacturing reports came in weak - in fact, the weakest numbers in three years. News on housing was mixed, but showed home sales continue to cool from the overheated levels of recent years. Initial Unemployment Claims were higher than they’ve been in a year. And on the heels of all that - one of the most important measures of inflation showed that it still remains higher than desired by the Fed.

So the debate on what the Fed should do next continues…some experts say that the Fed should consider a rate cut to support a rapidly cooling economy, while others say more hikes are needed in order to slay the inflation “dragon”. The Feds primary concern is inflation - and protecting not only us, but our future generations, from runaway prices of goods and services - so until inflation moves closer to their desired target, a rate cut is not likely to be in the cards in the very near future.

BUT IF MAKING SOME YEAR END INVESTMENTS IS IN YOUR CARDS FOR THE END OF THE YEAR…HO-HO-HOOOOLD ON THERE BEFORE YOU INVEST IN A MUTUAL FUND IN DECEMBER. WHY? TO AVOID A POTENTIAL TAX TRAP THAT MOST PEOPLE WANDER INTO COMPLETELY UNAWARE. READ THIS WEEK’S IMPORTANT MORTGAGE MARKET VIEW TO LEARN WHAT YOU SHOULD BE WATCHING OUT FOR, BEFORE YOU BEEF UP YOUR SAVINGS.

On a technical level, Bonds have been in a nice strong trend higher since the end of June, meaning home loan rates have moved lower. Remember that as Bond prices go higher or improve, home loan rates (which are hand in hand with Bonds) go lower and improve.

So looking at the chart below, you can easily see the improvement Bonds and therefore home loan rates have gained in recent months. But historical levels play a big part in predicting future action. You can see the strong levels that were reached by Bonds in late January, early February before they started to worsen. There is still some room to go before the Bond touches these same lofty levels, but once they hit a level that in the past proved to be a high…they may begin to back down as Traders typically bet on history repeating itself. The Jobs Report on Friday will likely be the determining factor.

If the Report is a real stinker and shows very weak employment, this would be good for Bonds and home loan rates, and we could see more improvement, moving closer to and perhaps breaking those past historic levels. On the contrary, if the Report is strong, Bonds may well begin a retreat and home loan rates could worsen slightly.

But if you invest in a Mutual Fund that is about to pay a distribution before the end of the year, you could get caught in a tax trap…a trap that many innocent investors fall victim to.

Be sure to research the fund you are about to invest in and find out if it’s planning to have a year end distribution. Here is how a distribution from a Mutual Fund typically works. If the price of the fund is $10 per share and the fund does a $1 taxable distribution just before the year is over, the share holder gets the $1 either in cash or the equivalent amount in additional shares. But the value of the fund drops by that same $1, which would bring it down from $10 to $9 in this example. The net value is the same to the shareholder, but the $1 distribution is now taxable.

So let’s say someone invests $10,000 in a fund that is about to pay a year-end distribution. They get a statement showing a $1,500 distribution, and typically the money is re-invested right back into additional shares. The value per share declines to account for the distribution, but the additional shares received still keep the value of the account at $10,000…but now the shareholder has a $1,500 taxable gain, which could mean a $500 tax bill for some. Talk about a Bad Santa.

To avoid this unpleasant surprise, visit the websites of the Mutual Funds that you may be considering and determine if the fund will be paying distributions in December. If you do determine that the distribution will occur in December, and you need to avoid a big taxable gain, wait until the fund’s “ex-dividend” date (after the money has been deducted from its share price), and then make the investment into the mutual fund. Or, consider investing the money in the same Mutual Fund, but buy the Mutual Fund as an IRA, or see if you can invest additional funds into your 401K - and then the distributions will be tax deferred.

It’s so important to add to your savings…but take just a few minutes to understand and determine the dividend date on Mutual Funds, so you can ring in the New Year without having to give Uncle Sam an unnecessary present.

Economic Calendar for the Week of December 04 – December 08