Every time I turn on my TV, I’m bombarded with (usually annoying) commercials for cash advance businesses that promise you quick and easy payday loans with no strings attached. However, using these services can often put you in a worse situation than you were in before. Even though they can seem like a benevolent quick fix to money problems, you will usually end up worse off. According to Credit Karma, payday loan services can be “toxic” to your credit, and they explore several alternatives that will leave you better off, such as:

1. Being smart with a credit card.
2. Obtaining small loans from credit unions and small banks.
3. Paycheck Advance from employers.
4. Borrowing money from family and friends.
5. Using your emergency fund
6. Living within or below your means

Payday loans should only be used as an absolute last resort, and only for amounts of money you know you will be able to pay back.

Photo Credit: Orin Zebest

The housing market is getting better!  The housing market recovery is at a standstill!  There is no recovery in the housing market!  Loan rates are up!  It’s a great time to buy!

With all the conflicting news about the housing market, what is a buyer and seller to do?

Carol Ann Palmieri, an agent in Franklin, Massachusetts, gave examples of confusing headlines about the housing market.  Confusing maybe, but her insight into what her own market is actually like is what buyers and sellers really need to hear,

In my market area, there is no question the market has shifted from an extreme buyers market, to a more stable and in some communities an extreme sellers market. Some being the key word. I think most people are aware of that. They are aware that there are multiple offers on homes and some homes selling for more than the asking price.

It boils down to the fact that all real estate is local.  And if you think you’re going to pay too much for a home, get an appraisal. No lender will give you more money than the home is actually worth!

I always try to do my job and do it morally, ethically, and legally.  That said it would sure be nice if everyone conducted themselves using the same professional parameters.  Sadly, they don’t.  This is evidenced by the experience of Elizabeth Weintraub, an agent from Sacramento, California, who specializes in short sales.

Short sales are – in my opinion – a sad experience for sellers to go through.  And those who gain financially from others misfortune because they are CROOKS are people I wouldn’t want in my own social circle.  Here’s one way to rip off banks and mortgage companies who are helping people through short sales,

Some guys last week sent me an email, asking me to give them first shot at my short sales and offering to let me represent them — meaning I would get both sides of the commission. They offer that because they hope that I will tell my seller to sell at a much lower price. Then, while we are in escrow getting the short sale approved, they want me to open a second escrow and be the listing agent in that escrow, too, while they try to flip the home immediately to a new buyer. This is wrong on so many levels.

Shaking my head at the audacity of dishonest people, but I also applaud Ms. Weintraub for sticking to her guns and conducting her business legally, morally, and ethically

My question when I read about things like this is how could people afford the house in the first place if they’re that ignorant?  May homes really are that much  more expensive in Connecticut, but real estate agent Joe Petrowsky talks about a couple who has been in foreclosure for quite some time.

They were offered a deal by their lender – one that should be a complete no-brainer – and they had to ask their lender if he thought it was a good deal?  From Active Rain,

This time, they called saying that their servicer made them a proposal and what do I think about what is being offered. They owe $440,000 and their interest rate is 7.5%. The servicer offered to write the loan down to $270,000 and offered them and interest rate of 4.75% for 25 years.

I was absolutely shocked to read that they hadn’t made payments for three years and were offered this sweet deal, and had to ask if it was a good one?  People never cease to amaze me.

When working with clients from foreign countries, something that easily slips notice is the FIRPTA tax owed when the property is sold. What in the world is FIRPTA? According to the Internal Revenue Service, it is the Foreign Investment in Real Property Tax Act of 1980. The Act authorized the U.S. to tax foreign persons on dispositions of U.S. real property interests.  But here’s where it gets tricky,

Persons purchasing U.S. real property interests (transferees) from foreign persons, certain purchasers’ agents, and settlement officers are required to withhold 10 percent of the amount realized on the disposition (special rules for foreign corporations). In most cases, the transferee/buyer is the withholding agent. If you are the transferee/buyer you must find out if the transferor is a foreign person. If the transferor is a foreign person and you fail to withhold, you may be held liable for the tax.

Real estate attorney Richard Zaretsky boiled it down to basics, including:

The way FIRPTA works, at the sale the closing agent or the new Buyer must withhold and submit to the IRS 10% of the sale price.  Note, that is 10% of the contract sale price, not the net to seller!  The Seller then needs to file a tax return and either pay the additional tax (if more would be due) or seek the refund.

So if you’re buying land, a house, or a business from a foreign seller, you might need to note this quirky little law that could bite you hard!

Photo from Apartment Therapy.

Business Insider said the last five years have been a once-in-a-lifetime opportunity for people to buy homes.  During this historic time, prices were low and mortgage interest rates were lower.  But it’s all coming to an end,

Meanwhile, house prices have been flying higher, and it looks like the market has carved out a bottom.

“After making a peak to trough decline of 33.8% from April 2006 to March 2012, the Case-Shiller home price index (C-S) has since advanced +10.9%,” wrote Deutsche Bank Chief U.S. Economist Joe LaVorgna in a note yesterday. “The fact that C-S gains have been so broad-based suggests to us that they should persist, because we have found that breadth is often a sign of durability.”

If both interest rates and house prices continue to rise, housing affordability will go down, and the historic opportunity will be over.

So. Did you buy during this time period? IF you’re like most people, you did not. Many of us suffered job loss or became under-employed. For us, it was nothing short of a miracle that we were able to hold on at all. But with the housing market on an uptick, so is are job numbers. So while it may be an opportunity slipping away for some, for others it’s financial relief finally within grasp!

If you’re considering buy a home, Freddie Mac is now offering an online program called CreditSmart that helps would-be buyers understand their credit and take some of the other financial steps necessary to make that big purchase. From Freddie Mac,

CreditSmart has a lot to offer. It can help you build or repair credit, create a budget, decide if owning a home is right for you, make sound financial decisions, and avoid costly scams. You’ll learn what types of mortgages are available and how to shop for a home loan. You’ll even get tips on finding a real estate agent who’s right for you. 

Working with a good agent, making sure you know how to challenge a false credit report, and so much more is available through the free service. Check it out!

When you first get out into the big, real world, it’s hard to pay yourself first. But you should.  Make an effort to stash away $10 to $50 per month at first so that when the retirement years come (and they will come), you’ll be able to enjoy your senior years rather than working until you die.

But as you save, you should “save” intelligently. Make those savings work for you rather than sitting in an account making money for your banker.  From NPR, here’s an excerpt from Instead of Snoozing in Savings, Let’s Put $5,000 to Work,

It’s a freakish situation last experienced during the Great Depression. “We haven’t seen a sustained period where interest rates have been this negative for this long. This is a truly unprecedented situation,” Kirkegaard says.

When Kirkegaard says “this negative,” here’s what he means: The average yield, or interest rate, on a savings account at a major bank is 0.1 percent, according to Bankrate.com. Inflation is running at 1.7 percent. Do the math there. It’s a lousy deal for savers.

Between the unprecedented fees now charged by banks and the super low rates they pay on savings, it really would be a better option to put your savings to work in other investment.

After my children move out, I would consider renting our upstairs rooms to someone. But it would have to be to someone I know who doesn’t have young, screaming children.  I’d want someone who is considerate and picks up after themselves.  The added benefit is that a renter would help with the mortgage!

More and more people are renting rooms to help pay the mortgage. And then there are those who rent the whole house as a vacation home for a week or two during peak tourist times.  From NBC News.com,

Mark Mangum, who lives deep in the heart of Texas football country, has found a way to capitalize on his location. He periodically rents his house to football fans, a move that takes the sting out of his $1,300 monthly mortgage and has helped pay for costs associated with refinancing last year.

“It’s huge for us,” says Mangum, who expects this year to charge up to $1,600 for a weekend in his 1,650-square-foot ranch house. During Texas A&M football weekends, the couple decamps to his wife’s parents’ house.

Hmmmm… I do live near Bonnaroo and Nashville. This could work!