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Lenders look at other factors, not your credit score alone, before approving a condo loan.

Some lenders can make condo buyers with pristine credit feel like rejects. Blame it on the building.

Before making a loan to a would-be buyer, lenders comb through the building’s financial statements to see if too many condos remain unsold, or if units are mostly rentals instead of owner-occupied. Lenders also look to see if the building’s cash reserves, which help cover maintenance costs, are too low.

These factors — which have nothing to do with a potential buyer’s finances — can put a chokehold on a loan.

A lot of condo buildings don’t make the grade. At national lender EverBank, for instance, roughly 30% of condo mortgage applicants encounter a roadblock due to the building’s finances. “A perfect borrower can’t fix a bad project,” says Tom Wind, executive vice president of residential and consumer lending at EverBank.

Shaky condos have been popping up more frequently over the past two to three years, even in luxury buildings, says Zeke Morris, president of the Chicago Association of Realtors. Real-estate agents say they’re also prevalent in other markets, including Houston and Miami.

In general, lenders say they view condos as riskier purchases than other homes. Much of that stems from condo-association fees. If existing owners are behind on those payments or many units remain unsold, monthly fees are likely to rise to help cover costs.

At some point, lenders argue, those expenses could rise to a level where an owner can no longer afford to pay the fees and walks away from the property, leaving the lender with the outstanding mortgage. That’s why, currently, it is almost impossible to get a mortgage — regardless of your wealth — if more than 15% of condos in a building are behind on dues, says Jeff Gennarelli, president of Bridgeview Bank Mortgage Co., based in Lombard, Ill.

But luxury buyers have alternatives besides paying all cash for the condo. One is private mortgages, loans that lenders hold on their books rather than sell to the government. They tend to be larger than traditional loans, require larger down payments and are often offered only as adjustable-rate mortgages. Rates are also generally higher than traditional mortgages.

Private loans are sometimes the only source of financing for condos sold in luxury hotels and in buildings where more than 20% or 25% of the units consist of commercial space, like restaurants and shopping malls. They’re also common for a condo in a new building where a certain percentage of the units are still owned by the developer.

To find such a loan, borrowers should consider a community bank or other local lending institution where they have a lot of assets or where they have been banking for years, though an existing relationship isn’t always required. Or they can ask mortgage brokers who may know a lender willing to fund such a loan.

The opportunity for profit is partly why these lenders take on the risk when others won’t. Whatever leniency they offer on a building’s finances they often make up for by imposing strict lending requirements, including high credit scores, says Eddie Hoskins, president of First Florida Financial Group, a Fort Myers, Fla.-based mortgage broker that arranges such loans.

Some points to consider when applying for a condo loan:

Get an early start: Buyers should ask lenders for the list of criteria the building will need to meet; then real-estate agents can provide those answers when potential buyers shop for properties.

The type of building: Some condo buildings have a greater risk of not being approved for financing. Jonathan Cherry, senior mortgage banker at Wyndham Capital Mortgage based in Charlotte, N.C., says buyers who want to avoid financing complications might want to stick to mid- to larger-size buildings that are mostly owner-occupied.

Large down payments: With a private mortgage, borrowers often need to make at least a 20% to 30% down payment if it’s a primary residence. If it’s a second home, they could need to put down at least 40%. For investment purposes, cash is among the few options, since a mortgage may be impossible to get.

Rising costs: With adjustable-rate mortgages, rates could be low now but rise in a few years, thereby increasing the monthly mortgage payment. And borrowers could still end up with rising condo dues if the other owners in the building hit hard times.

 

Compliments of: Martha Small | Austin Portfolio Real Estate | 512.587.0308

Original Article by: AnnaMaria Andriotis of The Wall Street Journal

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How much will the first pope to retire from the job in nearly 600 years collect each month?

What kind of retirement package do you give to someone who’s spent 60-plus years on the job, including almost eight as chief executive? If you’re the Roman Catholic Church, and that someone is Pope Benedict XVI (the once and future Joseph Ratzinger), you give him a monthly pension worth 2,500 euros, or about $3,340.

The Italian newspaper La Stampa broke the story this week, reporting that the 85-year-old Benedict — the first pope in nearly 600 years to retire from office — will receive the pension that the church typically offers to retired bishops. (Don’t speak Italian? Neither do I: Britain’s Independent has the story here.)

 

Coincidentally, the pope’s pension is almost identical to the maximum Social Security benefit a U.S. retiree could earn if she retired this year — $3,350 a month, according to the Social Security Administration’s benefits calculator. To receive a check that size, that hypothetical retiree would need to retire at age 70 or later after having earned the taxable maximum salary throughout her career — the equivalent of $113,700 this year.

 

Of course, most of Benedict’s personal expenses, from food to gardening, will be covered by the Vatican for the rest of his life, so his pension is mostly play money. (Alas: no grandkids to visit.)

 

The pot could get sweeter, too, according to La Stampa: If Benedict’s successor awards him the status of emeritus cardinal — not out of the question, since Ratzinger held various cardinal titles before being elected pope — his pension could double.

 

 

Compliments of: Martha Small | Austin Portfolio Real Estate | 512.587.0308

Original Article by: Matthew Heimer at  MarketWatch.

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Most taxpayers can begin filing their federal income tax returns, and many can file for free through the agency’s Free File program.

Have you filed your 2012 tax return yet? Millions already have filed today.

 

Like racers in the starting blocks, these taxpayers have been poised to send their returns to the Internal Revenue Service for weeks, but had to wait.

 

Because Congress waited until Jan. 1 to approve the American Tax Relief Act, which includes many provisions affecting 2012 tax returns, the IRS needed time to get forms and instructions updated and its computers reprogrammed.

 

The IRS is ready to take returns from most (but not all) taxpayers today. It’s now accepting returns that are filed the old-fashioned way, filled out paper and snail-mailed in, as well as electronic filings.

 

And the tax agency’s Free File option also is open for business.

 

Free File 2013

 

Free File first appeared on the tax-filing scene 10 years ago. Now it is old hat.

 

Sure, there are some tweaks each year. But basically, the filing routine is the same. A group of commercial tax preparation software companies, known as the Free File Alliance, agrees to make a version of their software available to eligible taxpayers via the IRS Free File site.

You can use the IRS Free File program to prepare and file your taxes this year at no cost (just in case you thought the name Free File was just a catchy alliterative title) if your adjusted gross income is $57,000 or less. This income threshold applies to all filing statuses.

 

And you have 15 tax software companies from which to choose. Or you can use the Help Me Find a Free File Company IRS search tool to determine which one best fits your filing needs.

 

Fillable forms for free

 

If you make too much money to qualify for Free File this year, the IRS is once again offering Free Fillable Forms.

 

These are online versions of the most commonly used IRS tax forms. Instead of buying and loading tax software onto your personal computer, you simply open up the forms you need, enter your tax information and e-file the documents at no charge.

 

But since it’s just forms, not software, you get only basic calculations of the data you enter on the forms. You must know what goes where. And you must transfer any amounts to other forms as needed.

 

Still, it is free.

 

So if your return isn’t too complicated, and you’re comfortable filling out the forms, they may be just the ticket this tax season.

 

Happy filing!

 

Compliments of: Martha Small | Austin Portfolio Real Estate | 512.587.0308

Original Article by: MSN Money partner

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Now is the right time to simplify your financial life for 2013. But conventional wisdom on how to do it might be dead wrong.

 

The old-school advice for simplifying your finances boils down to “less is more”: Consolidate your accounts, cancel unused credit cards, and streamline your investments.

In today’s world, however, less is often less. Trying to simplify your financial life can boomerang on you with unexpected consequences.For instance, cutting down to one or two credit cards — or doing without them entirely — can hurt your credit scores. Consolidating your financial accounts could actually cost you more, and even leave you more vulnerable to lawsuits.

Here are some thoughts on avoiding pitfalls as you simplify your finances for an easier 2013.

Start with a purge. Don’t hang on to paperwork “just in case.” You should have a clear reason for hanging on to documents. If it’s tax-related, you typically should store it for seven years. In many cases, you can scan a document and toss the original (but don’t trash official documents such as marriage, birth and death certificates). Financial institutions are required to keep copies of your statements for six years, so you don’t necessarily need to keep hard copies.

Two gadgets can make your paperwork decluttering go faster: a cross-cut shredder and a really fast scanner, like the ScanSnap from Fujitsu.

Streamline your credit cards the smart way. I cringe when I hear people being advised to close credit card accounts, especially if they’re told to do so because “a large number of cards could hurt your credit rating.” The FICO scores used by most lenders don’t punish you for having “too many” lines of credit. In fact, having multiple open accounts is usually a positive factor in your scores.

What can hurt your scores is shutting credit accounts, or piling all your charges on one or two cards. The FICO scoring formula is sensitive to how much of your available credit you’re using. Reducing available credit by closing accounts, or using too much of your available credit on any card, can cause your scores to drop.

The less of your credit limit you use, the better. That’s true whether or not you pay your balance in full every month (which you should, by the way). A good rule of thumb is to use 30% or less of your credit limit at any given time. If you regularly use more than 50% of the limit on any card, consider shifting some charges to a second or even third card to ease the burden on your scores.

You can switch to cash or debit cards for everyday purchases. For big-ticket or online purchases, however, you’ll probably want to use credit cards, since they offer consumer protections that other methods of payment lack.

If your FICO scores are high (say, 750 and above), and you won’t be in the market for a major loan within the next year, you can consider closing some unused accounts, particularly retail store accounts you don’t use or cards that charge an annual fee. Otherwise, a smarter course is to keep those accounts open.

If you’re having trouble keeping track of all your credit accounts, consider using an aggregation service such as Mint.com. Checking in weekly will help you monitor your balances and spot any fraudulent charges on otherwise dormant cards.

Remember, the only smart way to use credit cards is as a convenience. If you have credit card debt, you need to make a plan to get it paid off as quickly as possible. If it would take you five or more years to pay off this debt, you may want to check with a legitimate credit counselor (find one here) or bankruptcy attorney.

Consolidate, but with caution. It can be tough to monitor multiple retirement and investment accounts. You could pay more in account fees and find it difficult to maintain appropriate asset allocations.

But that doesn’t mean you should lump all your accounts together, or even bring them all under one financial institution’s roof.

Let’s take the common recommendation to roll old 401k accounts into individual retirement accounts, for example. You’ll likely have more investment options with an IRA, but you could end up paying more for them if your 401k gave you access to the lower-cost institutional funds provided by many large-company plans. (There’s a reason financial institutions are so eager for you to roll over into an IRA — they’ll typically make more money by charging you retail rather than investor prices!)

Also, funds in IRAs have fewer protections from creditors, should you be sued or wind up in bankruptcy court, than 401k’s. IRAs are typically protected up to $1 million, while protection for 401k’s is unlimited. That’s not a concern for most people, but if you have a large balance (or are likely to accumulate one) you might want to factor this into your decision.

Another option to consider is rolling your old 401k accounts into your current employer’s plan, if that’s allowed. Again, that will make it easier to keep track of your investments, but you’ll want to make sure you’re not transferring your account away from a really good plan unless your current one is better.

Insurance is another consideration. The chances that you’ll ever need the coverage provided by the Securities Investor Protection Corp. are slim. SIPC pays back investors if a brokerage goes broke or if securities are stolen by a broker. If a failed firm can’t be merged with another brokerage, SIPC divides up the broker’s remaining assets among customers and then uses its own funds — up to $500,000 per account, including a maximum $250,000 for cash claims. If your claim exceeds those limits, which is rare, the broker often has insurance that will make you whole. Still, some people are uncomfortable keeping more than $500,000 at any one brokerage firm. If you have substantial assets, you may want to spread them around.

Simplify your investments. You may need to keep your money in different investment accounts, but you’d be smart to seek simplicity when choosing your actual investments. You can eliminate the hassles of asset allocation and re-balancing by choosing so-called lifestyle or target-date maturity funds. These funds offer broad diversification and regular re-balancing so that your portfolio stays in tune with your long-term goals. The best such funds don’t try to beat the markets, since most funds that attempt to do so fail miserably. Instead, they use low-cost index and exchange-traded funds to match the market returns. If you don’t have access to good-quality lifestyle or target-date funds, look for a good balanced fund (60% stocks, 40% bonds) or build a simple portfolio using low-cost index funds and then re-balance back to your target asset allocations once a year.

Set up savings “buckets.” When I had a single savings account, it was hard for me to keep track of how much of the money was earmarked for various purposes. If I had an unexpected car repair, would there be enough left to pay our property taxes when they’re due, plus cover our insurance premiums and our holiday splurge? Now each goal has its own labeled savings account at an online bank that doesn’t have minimum balance requirements or charge monthly fees. Each month, money is automatically transferred from our joint checking account at a brick-and-mortar bank into each of these savings buckets. Every large, irregular expense — from vacations to car repairs — has its own account, and I can tell at a glance where we stand. If a car or home repair exceeds the amount we have saved, I can shift money from our emergency fund or cut our spending until the bucket is refilled. The system sounds more complicated than maintaining one savings account. In fact, it has greatly simplified our lives, because I know the big expenses are covered.

Automate your payments. If paper checks are still a big part of your financial life, explore the advantages of electronic banking. Direct deposit means no more standing in line at banks to cash your paycheck (plus fewer opportunities for thieves to steal or alter your check). Electronic bill payment typically is safer and more secure than sending checks through the mail. Plus, many bills can be automated. You have several choices: setting up recurring payments through your bank’s bill payment system (a good option if the bill amount is the same every month), having bills charged to a credit card or authorizing billers to take the money directly from your checking account. Even if you’re nervous about ceding control of other bills, you should make sure that minimum payments to credit cards and loans are made automatically, so you don’t run the risk of missing a payment and damaging your credit scores.

Rethink consumerism. Buying less leaves more money in your pocket for saving and investing. Buying less also means less hassle. The less stuff you buy, the less stuff you have to maintain, insure, repair and replace or donate when you’re done with it. Breaking the habit of shopping and spending can be a surprisingly powerful way to simplify your life.

Compliments of: Martha Small | Austin Portfolio Real Estate | 512.587.0308

Original Article by: Liz Weston, MSN Money

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You might see some holiday deals on these items, but you’ll likely get much better prices if you wait a bit.

 

With all the Black Friday ad leaks and sneak peeks unearthed in the past few weeks, this season’s shopping extravaganza is looking ripe with deals and discounts for all. But even though many product categories will see new all-time low prices, not everything will be a good purchase on Black Friday.

In some cases, you would be better off skipping certain deals and waiting for a better offer later on. Here are 10 items that are not worth buying this Black Friday.

Toys

We’ve said it many times already, and we’ll say it once more: Black Friday is not the best time to buy toys for the holidays. Many will likely still be discounted for Black Friday, and it may feel pretty good to get your shopping done early, but you won’t love that sinking feeling you’ll get when you see bigger discounts on those toys about two weeks before Christmas.

Game consoles without a bundled item

Speaking of toys, if you’re looking to buy any of the major video game consoles this holiday, you’re likely to get more bang for your buck by opting for one that comes with a few extras. While we’ve already seen a few choice Xbox deals in the leaked Black Friday ads, in years past the vast majority of Editors’ Choice console deals went to holiday bundles that included premium accessories and two or three game titles. These were frequently discounted 30% to 40% off their retail prices.

Brand-name HDTVs

Black Friday is an excellent time to invest in a new HDTV, as we predict a variety of size categories will hit their lowest price points. But don’t expect the best deals to be tagged with name brands. Typically, the rock-bottom prices will mostly apply to third-tier manufacturers. Instead, brand-name TVs tend to see their best price of the year in January and February as manufacturers look to clear stock in preparation for new models in the spring.

The latest digital cameras

There’s no shortage of digital camera deals around Black Friday, but keep in mind that the premium current-generation models are just a few months away from being replaced by a new line of 2013 options. If you’re eying a brand-new digital SLR, we recommend waiting until February or later when it becomes an “old model,” resulting in more aggressive discounts from retailers.

Christmas decorations

While not typically on anyone’s “To Buy on Black Friday” list, Christmas decor tends to end up in-cart as impulse buys. Sure, that string of lights or holiday wreath might be on sale, but deals on Christmas items get better the closer we get to the holiday itself — and of course are the best after the holiday.

Office supplies

For some, it may seem silly to advise against office supply deals on Black Friday, as it’s not typically a category associated with the shopping event. But for several years running, office supply stores like Office Depot and OfficeMax have released Black Friday ads in the hopes of encouraging an uptick in business. Unfortunately, these deals are generally no better than those we see throughout the rest of the year. In fact, during the entire Thanksgiving through Cyber Monday stretch in 2011, we only found a measly three Editors’ Choice deals in this category.

Jewelry and watches

We’re flagging this accessories category “do not buy” for the entire holiday season. Much like Christmas items, there will be lots of sales advertising shiny, metallic objects perfect for him or her. But the discounts on jewelry around the winter holidays are no better than those around Valentine’s Day, when baubles are at peak demand. And instead of buying a watch now, consider holding off until the spring and summer when we see more Editors’ Choice deals.

Winter apparel

During Black Friday, we’ll likely see some of the best apparel coupons of the year from a variety of retailers. However, if winter apparel is on your list, it’s smarter to hold off until January, when those items are added to clearance sales that take much deeper base discounts. We will inevitably find additional stacking coupons then too, to make those stronger sales even better for your wallet.

Apple iPad Mini

The long-awaited iPad Mini will set you back at least $329, and if it follows the price pattern of its distant predecessor, the first generation iPad, it won’t see a discount until several months from now. While there’s an off-chance that an attention-seeking retailer could offer an iPad Mini promotion — the latest full-size iPad is included in the Target Black Friday ad, after all — the bottom line is this: The iPad Mini features essentially the same innards as the iPad 2, and we’re predicting that the latter will fall to $299 this Black Friday. Therefore, the iPad 2 will offer more screen real estate at a lower price.

While we advise against purchasing the above products around Black Friday, keep in mind that nothing is written in stone, and we may still see some stellar deals within these categories. However, it’s more likely that we’ll encounter so-so offers, so it’s best to temper your expectations.

Compliments of: Martha Small | Austin Portfolio Real Estate | 512.587.0308

Original Article by: MSN Money partner

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