REMAX 440/Central Blog

Financial Literacy: The No.1 Tool for Consumer Financing

March 31, 2011 11:31 am

RISMEDIA, March 31, 2011-After a couple years of tight credit and rising identity-theft rates, financial literacy may be the greatest tool for consumers struggling with their personal finances.

Some federal agencies are taking action to help Americans understand their rights, and the director of student retention at one Minnesota university launched a financial literacy program to educate young people about money management.

The rules are changing

Last year, Congress signed the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009. This established new protections for consumers against unfair credit card practices, like sudden interest-rate or penalty hikes. A tracking study conducted by showed that over 50% of American consumers are unaware of the effect that the new law will have on them.

The Federal Reserve Board launched a website to help consumers better understand what this law meant for their credit. PDFs and interactive pop-ups walk consumers through some of the Credit CARD Act's protections.

"These online tools and resources will help consumers make well-informed decisions about their use of credit," said Federal governor Elizabeth A. Duke. "We will update the site regularly to provide the most useful and current information."

Parts of the website, including the "5 Tips" guide on responsibly maintaining credit, are available in Spanish and a glossary of credit-related terms and laws on the website may further clear up credit questions. The site also provides links and information about contacting the Fed.

After noticing that debt derailed many a student's education, St. Catherine University's Ellen Richter-Norgel launched a financial literacy program. According to a report in the Minneapolis-St. Paul Star Tribune, the school hosted a series of speakers and sparked dialogue about debt and budgeting.

"Sometimes, I think you have to be in a crisis to get the help you need," Richter-Norgel told the newspaper. "Once you go, you're empowered by the information you get."

Trade commission takes action

Starting April 1, the websites advertising "free credit reports" will be required to include a disclosure from the Federal Trade Commission (FTC). This disclosure will direct visitors to the government-endorsed and away from websites that often charge monthly fees for monitoring.

The FTC also launched a new animated video to educate consumers about filing a complaint. The video, which is available in Spanish, identifies various types of scams and directs consumers to to file a report.

Identity theft-and credit card fraud in particular-topped the list of consumer complaints last year, according to the FTC. This crime accounted for 21% of total complaints, with the highest incidence reported in metropolitan areas.

According to a recent report by Javelin Strategy & Research, more than 11 million Americans-one in every 20 adults-were victims of identity fraud last year. The report also showed that consumers reported such crimes more quickly than in previous years.

The FTC suggests that those suspecting they are compromised place a fraud alert on their credit reports as soon as possible. The next steps include closing any concerned accounts, filing a police report and reporting the fraud to the FTC.

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Vacation- and Investment-Home Shares Hold Even in 2010

March 31, 2011 11:31 am

RISMEDIA, March 31, 2011--The market share of vacation- and investment-home sales held steady in 2010, although the sales volume declined with the overall market, according to the National Association of REALTORS .

NAR's 2011 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2010, shows vacation-home sales accounted for 10% of transactions last year while the portion of investment sales was 17%, both unchanged from 2009.

NAR Chief Economist Lawrence Yun said, "Despite extraordinarily tight credit conditions for purchasing a second home, the market share for vacation and investment homes held steady," he said. "A sizeable number of buyers made deals with all-cash offerings."

All-cash purchases have become prevalent in the second-home market in recent years: 59% of investment buyers paid cash in 2010, as did 36% of vacation-home buyers.

With an overall decline in home sales during 2010, the volume of 543,000 vacation-home sales was down 1.8% from 553,000 in 2009. Investment purchases fell 7.8% to 867,000 in 2010 from 940,000 the previous year. Primary residence sales declined 5.6% to 3.81 million from 4.04 million in 2009.

Foreclosure or trustee sales accounted for 17% of investment purchases and 11% of vacation-home sales in 2010, compared with 5% of primary purchases. "Second home buyers purchased more distressed homes at discount than did buyers of primary residences," Yun said.

The median vacation-home price was $150,000 in 2010, down 11.2% from $169,000 in 2009, while the median investment-home price was $94,000, which is 10.5% below the $105,000 median in 2009. By contrast, the median primary residence price declined a relatively modest 4.5% to $176,700 last year from $185,000 in 2009.

The typical vacation-home buyer in 2010 was 49 years old, had a median household income of $99,500 and purchased a property that was a median distance of 375 miles from his or her primary residence; 31% of vacation homes were within 100 miles and 41% were more than 500 miles.

Investment-home buyers had a median age of 45, earned $87,600 and bought a home that was fairly close to their primary residence - a median distance of 19 miles.

"The fall in home prices has opened opportunities for more families to enter the second-home market - the median income of investment buyers today is lower than it's been in recent years," Yun said. While the median income of vacation-home buyers in 2010 is slightly above 2007 when it was $99,100, the median income of an investment-home buyer is 5.7% below $92,900 in 2007.

"Even if purchases are delayed due to economic circumstances, the underlying long-term demand - the desire for purchasing second homes - remains because people in their 30s and 40s will reach the prime age for buying and will drive the second-home market in coming decades as conditions permit," Yun added.

Currently, 40.7 million people in the U.S. are ages 50-59 - a group that dominated sales in the first part of the past decade and established records for second-home sales. An additional 43.8 million people are now in the primary buying demographic of 40-49 years old, while another 40.4 million are 30-39.

Lifestyle factors continue to be the primary motivation for vacation-home buyers, with the desire for rental income driving investment purchases. Vacation homes were more likely to be located in a rural area, while investment homes were more likely to be in a suburban location.

"Vacation-home buyers want the property for their own personal use, with 84% saying the primary reason for buying was to use for vacations or as a family retreat," Yun said. "Rental income generation was the primary motive for investment buyers. At the same time, nearly half indicated they sought to diversify their investments or saw a good investment opportunity."

Thirty-four percent of vacation-home buyers said they plan to use the property as a primary residence in the future, as did 10% of investment buyers.

Twenty-one percent of investment buyers and 14% of vacation buyers purchased the property for a family member, friend or relative to use. "Some of these buyers purchase a home for their son or daughter to use while attending school," Yun explained.

Vacation-home buyers plan to keep their property for a median of 13 years while investment buyers plan to hold their property for a median of 10 years.

Thirty-six percent of vacation homes purchased in 2010 were in the South, 27% in the West, 19% in the Northeast and 15% in the Midwest; 3% were located outside of the U.S.

The distribution of investment properties differed from vacation homes: 32% were in the South, 24% in the West, 21% in the Northeast and 20% in the Midwest; 3% were purchased outside the U.S.

NAR's analysis of U.S. Census Bureau data shows there are 7.9 million vacation homes and 41.6 million investment units in the U.S., compared with 74.8 million owner-occupied homes.

NAR's 2011 Investment and Vacation Home Buyers Survey, conducted in March 2011, includes answers from 1,895 usable responses about home purchases during 2010. The survey controlled for age and income, based on information from the larger 2010 NAR Profile of Home Buyers and Sellers, to limit any biases in the characteristics of respondents.

The 2011 Investment and Vacation Home Buyers Survey can be ordered by calling 800-874-6500, or online at

NCOA Offers Free Reverse Mortgage Counseling for Older Adults Seeking to Use Their Home Equity Wisely

March 30, 2011 11:31 am

RISMEDIA, March 30, 2011--As older adults continue to face financial challenges in the sluggish economy, the National Council on Aging (NCOA) will offer free counseling for seniors through its Reverse Mortgage Counseling Services (RMCS) Network.

RMCS counselors are waiving the usual $125 counseling fee in order to help more homeowners understand how reverse mortgage loans, along with community programs and other options, could help them remain in their homes. Consumers age 62+ can schedule a free reverse mortgage counseling session by calling 1-800-510-0301.

"Many homeowners are struggling in this economy, and with the looming budget cuts in senior services on Capitol Hill, its may make things more difficult for those in need," says Barbara R. Stucki, Ph.D., vice president of Home Equity Initiatives for NCOA. "With this in mind, we are happy to offer free counseling so that older adults can learn how to make smart decisions about using their home equity at a time when other resources may be decreasing."

Generally, NCOA RMCS counselors do not charge a fee for counseling upfront, only at the time of closing, if the client decides to take out a reverse mortgage. RMCS counseling is always free for clients with annual incomes of less than $20,000 for individuals or $30,000 for couples.

NCOA also offers a consumer booklet on reverse mortgages, entitled Use Your Home to Stay at Home. The booklet, and additional information on Reverse Mortgages, can be downloaded for free at

February Pending Home Sales Rise

March 30, 2011 11:31 am

RISMEDIA, March 30, 2011-Pending home sales increased in February, but with notable regional variations, according to the National Association of REALTORS .

The Pending Home Sales Index, a forward-looking indicator, rose 2.1% to 90.8, based on contracts signed in February, from 88.9 in January. The index is 8.2% below 98.9 recorded in February 2010. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, says it's important to look at the broader trend. "Month-to-month movements can be instructive, but in this uneven recovery it's important to look at the longer term performance," he said. "Pending home sales have trended up very nicely since bottoming out last June, even with periodic monthly declines. Contract activity is now 20% above the low point immediately following expiration of the home buyer tax credit."

Yun notes there could have been some weather impact in the February data. "All of the regions saw gains except for the Northeast, where unusually bad winter weather may have curtailed some shopping and contract activity."

The PHSI in the Northeast fell 10.9% to 65.5 in February and is 18.4% below a year ago. In the Midwest the index rose 4.0% in February to 81.1 but is 15.9% below February 2010. Pending home sales in the South increased 2.7% to an index of 100.3 but are 5.3% below a year ago. In the West the index rose 7.0% to 105.6 and is 0.6% higher than February 2010.

"We may not see notable gains in existing-home sales in the near term, but they're expected to rise 5 to 10% this year with the economic recovery, job creation and excellent affordability conditions providing confidence to buyers who've been on the sidelines," Yun said.

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Distressed Homeowners' Top Priorities: Food Assistance and Help with Heating Costs

March 30, 2011 11:31 am

RISMEDIA, March 30, 2011-As the economic downturn continues, more homeowners lagging on their mortgage payments are looking for help with basic needs.

These are the findings of MortgageKeeper Referral Services, Inc., the developer of a unique database that connects users with more than 6,000 qualified nonprofit and government agencies. More than 1,500 homeowners connect with the database every day to find local assistance in 20 different service categories-from child care to prescription assistance, from employment services to income tax help.

Recent data shows that 20% of homeowners who access the database are searching for heating/utility assistance and 18% need food assistance.

"Once basic needs like food and heating are satisfied, homeowners can focus their energies on job searches and housing," says Rochelle Nawrocki Gorey, president of MortgageKeeper. "Our database gets answers to homeowners fast, getting to the root cause of their loan delinquency. Hopefully, the end result is a homeowner that has both their financial and personal needs met so that they can stay in their home."

Counselors and servicers who subscribe to MortgageKeeper's database provide homeowners with a list of nonprofit and government agencies, often located just a few miles from the homeowner.

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Consumers Agree - It's A Good Time to Buy Real Estate

March 29, 2011 11:31 am

RISMEDIA, March 29, 2011-According to the latest Spending and Saving Tracker from American Express, more than two in five (41%) of Americans said that it's a buyer's market for real estate. However, over 61% agree that a seller's market is at least a year away.

Other findings:

Homeowner confidence on whether they would receive the asking price for their home is nearly evenly split-43% said they are confident they would; 47% are not very or not at all confident.

However, many homeowners-39%-are not willing to settle for less than the asking price, even considering the tough real estate market, in contrast to 23% who are willing and 38% who are not sure.

To sell their home in the current market, 44% of homeowners note that they would be interested in including appliances, while 28% would consider offering to make requested repairs or allowing an allotment for repairs.

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Treasury to Begin Orderly Wind Down of Its $142 Billion Mortgage-Backed Securities Portfolio

March 29, 2011 11:31 am

RISMEDIA, March 29, 2011-Recently, the U.S. Department of the Treasury announced that it will begin the orderly wind down of its remaining portfolio of $142 billion in agency-guaranteed, mortgage-backed securities (MBS). Starting this month, the Treasury plans to sell up to $10 billion in agency-guaranteed MBS per month, subject to market conditions.

"We're continuing to wind down the emergency programs that were put in place in 2008 and 2009 to help restore market stability, and the sale of these securities is consistent with that effort," says Mary J. Miller, Assistant Secretary for Financial Markets. "We will exit this investment at a gradual and orderly pace to maximize the recovery of taxpayer dollars and help protect the process of repair of the housing finance market."

The Treasury acquired its portfolio of agency-guaranteed MBS under authority provided to it by Congress under the Housing and Economic Recovery Act of 2008. These purchases of agency-guaranteed MBS helped preserve access to mortgage credit and promote economic stability during a period of unprecedented market stress and volatility.

The market for agency-guaranteed MBS has notably improved since the time the Treasury purchased these securities in 2008 and 2009. Based on current market prices, the Treasury expects to make a profit for taxpayers on this investment. The sale of these securities will not alter our previously stated debt management objectives, nor change the path on which we intend to achieve those objectives.

In 2008, the Treasury retained State Street Global Advisors to acquire, manage, and dispose of its agency-guaranteed MBS portfolio. That firm will manage the wind down of this investment. At the end of each month, the Treasury will post on its website the total agency-guaranteed MBS sales it has made, broken down by coupon and agency.

The sale of these securities is part of the Treasury's continued efforts to wind down emergency programs that were put in place in 2008 and 2009 to promote financial stability and restore economic growth. On Oct. 3, 2010, new Troubled Asset Relief Program (TARP) purchasing authority expired, and the Treasury is moving to exit its remaining TARP investments in private companies. In December 2010, the Treasury sold its final share of Citigroup common stock, locking in a profit of more than $12 billion on that TARP investment. General Motors' (GM) recent initial public offering cut the Treasury's common stock stake in that company nearly in half and brought in a total of $13.5 billion for taxpayers. Additionally, the Treasury recently received $9.6 billion in TARP repayments through the sale of its Ally Financial trust preferred securities holdings and AIG's sale of its MetLife equity stake.

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Update on First Time Homebuyer Credit and Tax Refunds

March 29, 2011 11:31 am

RISMEDIA, March 29, 2011--The IRS recently released information on processing issues that are impacting a small percentage of tax returns involving repayment of the First Time Homebuyer Credit (FTHB), primarily involving 2008 home purchases. While most of these returns are processing normally, the IRS recognizes the hardship caused by delayed refunds, and it has assigned additional staff and resources to address the issues promptly.

It is important to note that taxpayer returns claiming a home purchase in 2010 are not affected, and those returns are being processed as are the vast majority of other homebuyer returns.

Here's an update on the source of the processing issues:

1. Married Filing Joint taxpayers who received the FTHB credit on a 2008 purchase

There seems to be an identified processing issue primarily impacting refunds for married couples filing joint returns this year who received the First Time Homebuyer credit on their 2008 tax return. This credit was an interest-free loan, and must be paid back beginning this year under the provisions of the law.

This issue, related to Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, primarily impacts Married Filing Jointly taxpayers who filed their tax returns this year before Feb. 22. The IRS is working aggressively to manually process tax returns for this group of taxpayers. It expects most, if not all, of these refunds to be available by April 5, and others the following week. (The date assumes that there are no other issues with their return, and that their refunds are not subject to any offsets for unpaid federal taxes or other debts.)

2. Taxpayers who received the FTHB credit and are now reporting the sale or disposition of their home

3. Taxpayers who received the FTHB credit and are attempting to pay back more than the amount required (typically $500)

These two issues require changes to IRS' core tax processing systems. The IRS is actively working on the development and testing of the required changes that will allow these impacted tax returns to be processed and appropriate refunds issued. The IRS does not currently have a definitive date for when these changes will be complete, although it will be in April.

What should taxpayers do?

The IRS understands that taxpayers affected by this issue are anxious to get the status of their refund. For those who have already filed, no action is necessary. They can check "Where's My Refund" at for updates. Because the IRS is already aware of this issue and is taking corrective action, there is no need to call.

For those who have not yet filed and are making a repayment of a First Time Homebuyer Credit this year, there is a simple step taxpayers can take to help speed processing. Couples filing a joint return for tax year 2010 who received the credit on their jointly filed 2008 tax return should file two 5405 forms, one for each taxpayer. For couples filing a joint return for 2010 but who had a different filing status in 2008 and only one spouse received the credit, the IRS recommends filing one Form 5405 for the taxpayer who received the credit.

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Spring Cleaning Made Easy

March 28, 2011 11:31 am

RISMEDIA, March 28, 2011--For those living in colder climates and even for those who don't, spring is a much-needed reprieve full of sunshine, chirping birds and fresh flowers. It's also the perfect time to clean up and rid yourself of items that serve no other purpose than cluttering your home. Having a functional and organized home is important to any homeowner, so use the springtime to get your affairs in order and clean, clean, clean! Follow these simple tips to help you through the process:

Windows are a hotspot for dirt to accumulate. A squeegee, a bucket of water and some window cleaner will help you go the distance. Leave no window untouched. Wipe down every window until all streaks are gone and repeat the process if necessary. A dry cloth can also help get every single grain of dirt. Those perfectly clean windows will help the sun shine into your home every day of the season.

Help brighten up your home by changing any old or dingy linens. Use lighter colors and color coordinate them for a brighter appeal. Pale greens, yellows, lavenders and other pastels are good choices for duvets, pillow cases or couch slips. Simple decisions like this will help create the perfect warm atmosphere that your family to enjoy.

Attack the fridge whenever possible. If you've been putting off the task, now's the time. Throw away old containers of food, clean mildew and rid your fridge of bad smells. Take everything out of the fridge and thoroughly wipe down the inside. Remove drawers and shelves and clean those as well, removing any crust or old food that may be stuck. It's important to start a solid cleaning regimen your refrigerator to ensure fresh food and a healthy family.

Rugs, floors and carpets will be one of the easier tasks on your spring cleaning journey. Vacuum all of your floors, and time permitting, use a strong cleaner for an extra bonus. Some vacuum cleaners allow for washing carpets and can be done with the help of a special attachment. Hiring a cleaning service is also an option. Remember, if using stronger solutions, keep windows open to ventilate the house.

Cleaning out closets can be one of the most time-consuming pieces to the puzzle, but is essential for de-cluttering your home. Remove winter items and store them in storage bins under your bed, in the garage or possibly the attic. This alone saves plenty of room and allows for more space for your spring and summer wardrobe. It's also a great time to start a donation box. Clothes you haven't worn in seasons can be donated to The Salvation Army, Goodwill or any charity. It's a good deed that will also help you organize and prioritize.

Junk draws and miscellaneous items add up quickly! Take every "miscellaneous" spot in your home and try halving the items inside. This doesn't only apply to your junk drawers. Try doing this with your closet floor, coffee table, or any spot where clutter tends to creep up in your life.

Spring cleaning can sometimes be a burden, but the feeling you'll get afterwards will be a great one. Split up the work amongst family members and get cracking. Your home will be well-prepared for the seasons to come and you'll be happy you took time.


Easy Ways to Transform a Room

March 28, 2011 11:31 am

RISMEDIA, March 28, 2011-Updating a living room or family room doesn't have to mean giving it a complete makeover. A few simple changes can transform a tired room into a fresh space in no time.

Give your windows better treatment

Replace heavy draperies, which can look outdated, with a more contemporary alternative. Faux wood, honeycomb blinds, roman or vertical shades-there are a lot of options to dress up your windows. Many online companies will send you samples so you can see how the different options will look in your particular space.

Lighten things up with sheers. The soft folds of billowy sheers allow more light to come into the room, but still offer some privacy. Sheers in lighter colors also make the room appear larger and serve as a color-coordinated highlight at the same time.

Use mirrors to add visual interest

Instead of hanging a large mirror in a traditional space, such as above a couch or fireplace, modernize by hanging several smaller mirrors. Create a grouping of mirrors with frames that have the same color, but different sizes, shapes and textures.

Hang a large mirror between two windows to give the illusion of having more windows in the room.

Replace an outdated furniture item

Update your coffee table or entertainment center. These larger pieces are often the focal point of the room, so changing them out can put the entire room in a whole new light.

Look for items that are both functional and easy to assemble. For example, Z-Line Designs furniture includes an instructional DVD with each item, so you can easily assemble pieces that are traditionally complicated to put together. Their ready-to-assemble mounts and stands for flat panel TVs can update any room in a flash. For more information, visit

Freshen up accessories

There's no need to re-upholster a sofa or its matching chairs. Swap the current accent pillows out for some new ones. Try a new, complementary color or add a pattern or fun texture to a solid background.

Switch out your centerpieces. Replace a silk flower arrangement for a tray with pillar candles on it. Update the framed photos with new pictures and new frames. Look around the house for a few interesting pieces that can be put to new use-what can you do with a stack of interesting books or a grouping of pretty bowls?

For more information, visit

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