Ilyce Glink Show Notes – February 28, 2010
Investing, Home Buyer Tax Credit, Tax Questions
This Week’s Housing News:
The news wasn’t that great for housing this week. New home sales fell 11.2 percent in January, to 309,000 units. That’s the lowest number on record, and records go back decades, and well below the 350,000 units sold that economists were expecting. This is on top of a huge drop in December’s new housing sales.
At the peak of the housing book in the summer of 2005, new homes were selling at an annualized rate of 1.5 million homes per year.
There wasn’t much good news on existing home sales either. The National Association of Realtors reported that existing home sales fell 7 percent in January to 5.05 million (annualized). That was about 20 percent below economists prediction of 5.5 million in annualized sales. That was also the second biggest decline (second only to December 2009, in which existing home sales fell 16.2 percent) in the 11 years the data has been collected, Barron’s noted.
The looming issue of shadow inventory (homes that have been foreclosed on but haven’t been released yet for sale by the banks or Fannie Mae or Freddie Mac) makes real estate observers wonder about the true level of housing inventory. It’s rising, but no one really knows by how much.
Legendary investor Warren Buffet said in his annual letter to shareholders this week that he believes the housing industry will largely be back by 2011 in terms of supply and demand. I guess he means that supply will roughly equal demand.
We’ll see. As far as I’m concerned, if you don’t have a job, you’re not buying a house. And, if you’ve been delinquent or foreclosed upon or completed a short sale, you’re not buying either. It will be interesting to see where demand comes from.
LAST TWO DAYS FOR BIG DISCOUNTS ON HOW TO INVEST YOUR MONEY IN 2010
Join us March 27, 2010 at the Gwinnett Center for our next event: How To Invest In 2010
Use This Discount Code To Get 40% Off The Ticket Price: clint
Read my new Investing Blog at our RealWorldSeminars.com site and be sure to check our who are our speakers – we’ll be uploading their photos and bios all week. So, check back often or follow me on Twitter.com/Glink to find out who is speaking and when.
Department of Labor – COBRA Continuation Legislation
We had a call about qualifying for a COBRA tax credit. According to the Dept. of Labor’s website: Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. To qualify, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee’s employment. The involuntary termination must occur during the period that began September 1, 2008 and ends on February 28, 2010. The premium reduction applies to periods of health coverage that began on or after February 17, 2009 and lasts for up to 15 months.
The DOL’s website has video and a host of explanations about the COBRA tax credit.
Unemployment Insurance Extension Hits A Wall In the Senate
There are more than a million unemployed Americans whose unemployment benefits will run out this week unless Congress passes another extension. On the show this morning, I said that I didn’t see any way this would pass before the benefits ran out but that I thought not passing another extension was lunacy.
Unless you want some sort of civil uprising brought about by people who simply can’t feed themselves or their children, Congress needs to get their act together and pass an extension.
It isn’t as though people aren’t trying to get a job. It’s that the JOBS SIMPLY DON’T EXIST AT THE MOMENT. There are still about 6 people applying for every job.
After the show, I found this story on Daily Finance about how the Senate was trying to pass an extension of unemployment benefits, only to be thwarted by Sen. Jim Bunning (KY-R):
“Kentucky’s Republican Sen. Jim Bunning managed to stop passage of a measure that includes a 30-day extension of unemployment benefits. Bunning demanded that the Senate find $10 billion worth of cuts to pay for the larger package of government programs that includes loans for small businesses, money for highway projects, an extension of the National Flood Insurance Program and subsidies for health insurance premiums made through the COBRA program.”
Apparently, the House passed a resolution extending unemployment benefits on Thursday. The Senate’s version is being held up only by Sen. Bunning.
New ThinkGlink Ebooks About Investing in Real Estate Are Now Available at The ThinkGlink.com Store
We created five new ebooks that together provide you with more than 100 pages of important, money-saving information about investing successful in real estate. here are the five topics:
1031 Tax-Deferred Exchanges. Everything you need to know about 1031 Exchanges (also known as Starker Trusts) and how to use them to defer capital gains and recapture taxes.
LLCs, Corporations, And Other Ways Of Holding Title To Real Estate. The time to start thinking about you’re going to hold title is BEFORE you buy an investment property. This ebook walks you through the different ownership options and what you need to know.
How to Profit From Foreclosures: 9 Top Tips From Investors. Avoid the most common and most devastating mistakes real estate investors make by reading this ebook.
Finding Great Tenants And Profitably Managing Real Estate Investments. If you don’t have good tenants, you’ll wind up with losing money with your real estate investment – or perhaps destroying your credit. This ebook tells you how to find great tenants, how to price your unit to rent, and how to manage your property effectively and efficiently.
The Successful Real Estate Investors Guide: Top Tax Tips. Investing successfully means you’ve got to keep your expenses low. That means, watch what you pay in taxes. This book walks you through the major tax areas you’ll encounter with real estate investing.
We also have FREE BOOKS and other ebooks in the ThinkGlink.com store.
You can get a FREE copy of my book 50 Simple Steps You Can Take to Disaster Proof Your Finances” or “The REALLY Useful Guide to Working Smarter Not Harder” at the ThinkGlink.com store. You pay the shipping and we’ll send you any number of books for free!
Order Your ThinkGlink Ebook or Free Book Today!
Buy 3 Ebooks and Get 1 Free Ebook DEAL!
If you select 3 ebooks from our store and enter the discount code “freeebook” (no quotes), you’ll get one of those ebooks for free. It works with all of our ebooks. Just use the code to get the discount. It will show up when you check out of the ThinkGlink store.
Lynn’s Question on Refinancing
Lynn called the show today. She’s 18 months into a 15/1 adjustable rate mortgage at 4.75 percent. She’s wondering if she should refinance again to a 5/1 ARM at 3.5 percent and try to pay off the loan in the next 5 to 7 years.
I told her I’d run the numbers for her using the Tools and Caluators at ThinkGlink.com:
Let’s assume that 18 months ago, Lynn got at 15-year loan for $150,000 at 4.75 percent. Her monthly payments would be $1,166.
Now, let’s assume that Lynn is looking to refinance her loan for the remaining balance, which would be $138,716. She has 13.5 years left on the loan so let’s assume she amortizes to pay off the loan in that time, so she isn’t adding to the loan term.
She’s going to save $58 per month. Assuming it costs her $2,000 to pay for her refinance, it will take 40 months, or more than 3 years, to pay off the costs of the refinance. But she would save a lot in interest on refinance. on her current loan, she has nearly $50,000 in interest left on the loan. But on the new loan, she’d pay just $35,000 in interest, a savings of $15,000.
However, there is a risk that the interest rate won’t hold steady at 3.5 percent over the entire 15 year term. In fact, I can promise you it will go up.
As you’ll recall, Lynn said she thought she could pay off the loan entirely in maybe 6 to 10 years, which is when she’s planning to retire. If that’s the case, then there’s very little to lose by refinancing. While taking 3 years to recoup costs isn’t great, Lynn will save anywhere from $15,000 to $20,000 in interest, depending on how quickly she can pay off the loan.
Lynn – go for it.
Do you want to learn how to invest your money? Join us March 27, 2010 at the Gwinnett Center for our How To Invest Your Money in 2010 event.
It’s the last two days for you to save 40 percent off the full ticket price. Use the discount code: clint
My Most Popular Blog and Articles this week:
11 Kitchen And Bath Trends For 2010
George Clooney Selling His Italian Villa?
How to Sell Your Home to the Current Tenants
Lender Will Require these Docs From You When You’re Buying Your First House
IRS.GOV: Saver’s Credit
Ted wrote in to ask about the tax credit I mentioned for lower-income Americans who put away some cash in qualified retirement accounts. It’s called the *Saver’s Tax Credit. *
Leave A Comment