by Broderick Perkins
Certified financial planners, financial advisers and the like say home buying isn't a solitary means to an end, but an integral part of a household's or family's overall financial needs, planning and goals.
Their more financially holistic approach to the transaction puts a different spin on home buying advice and sheds new light on achieving home ownership.
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When business and personal finance writer and author Jill Andresky Fraser approached the issue of home buying, she didn't talk to real estate salespeople, mortgage brokers or lenders, as is often the case.
($25.95, Bloomberg Press) and White Collar Sweatshop: The Deterioration of Work and Its Reward in Corporate America ($15.95, W.W. Norton & Co.) sought the advice of those whose business is to know all the angles in personal finance.
What she came up with were "5 New Rules For Buying A House," recently published by Child magazine.
The rules dispel the myths of what she calls "old-think" and provides insight on the "new-think" axioms for home buying.
Here's what she found:
Rule #1: Look Before You Leap
Old Approach: Common advice is that home prices have nowhere to go but up and the longer you wait the more you'll pay -- if you aren't priced out of the market.
New Approach: If you are too over-burdened financially to buy a home and take the "buy now" advice you could wind up bankrupt. Ignore the pressure, take a thorough look at your financial picture and pay off debt. Home ownership comes with many more costs than the monthly mortgage payment, property taxes and insurance. Renting, for now, could keep you in the black.
Rule #2: Skip The Starter Home
Old Approach: Begin small with affordable housing and move up later.
New Approach: Unless that smaller starter home is truly a great deal with room to expand, buy a home that fits your growing family now. After all, home prices have nowhere to go but up.
Rule #3: Get A 30-Year Fixed-Rate Mortgage (FRM)
Old Approach: Pay off your mortgage as quickly as possible.
New Approach: Long-term mortgages offer easier-to-budget fixed payments and payments that are lower than shorter-term FRMs. If you have extra cash along the way, you have the flexibility to make more payments against the principal.
Rule #4: Borrow A Financial Safety Net
Old Approach: Don't touch your equity unless there is an emergency.
New Approach: When an emergency hits you could be out of work and, with no visible means of support, your application for emergency cash likely will be declined. It's not necessary to use a home equity line of credit when you obtain it, but if you get it soon after your first mortgage you could reduce time, paperwork and the cost of the money. And it'll be there if you need it.
Rule #5: Browse For Housing
Old Approach: When searching for a home, you've got to see it to believe it.
New Approach: If you are just beginning your search, get on the Internet and save time, learn the market, get to know the neighborhoods and, in the end, become a more knowledgeable home shopper. You have plenty of time to beat the bushes and knowledge can be a strong negotiating point.
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Survey: Students Not Taught Basic Finance (AP)
AP - More states are requiring students to learn about managing money, but personal finance remains a fringe topic in schools and a major source of federal concern.
GE Unit to Enter Japan Mortgage Business (Reuters)
Reuters - A subsidiary of U.S. conglomerate General
Electric Co. said on Friday it plans to enter the housing loan
business in Japan next month by opening offices in six major
cities.
More Accounting Problems at Fannie Mae (AP)
AP - Additional serious accounting problems at Fannie Mae recently discovered by federal regulators could mean as much as $2.8 billion in further losses, according to an analysis based on information provided by the embattled mortgage giant.
Greenspan Says Taxes Should Focus More on Spending (Reuters)
Reuters - Federal Reserve Chairman Alan
Greenspan on Thursday backed a change in the tax code, shifting
more to taxing personal consumption, but said scrapping the
income tax altogether may be too drastic a step.
30-Year Rates Highest Since December (Reuters)
Reuters - Interest rates on U.S. 30-year
mortgages rose to their highest level since December amid
concern that long-term rates are poised to increase, according
to a report issued on Thursday by mortgage finance company
Freddie Mac.
Rates on 30-Year Mortgages Increase (AP)
AP - Rates on 30-year mortgages climbed for a third straight week, pushing the level to the highest point this year.
Home Mortgages (AP)
AP - Home Mortgages
Watch for Management Changes After Mergers (AP)
AP - The largest mutual fund merger in history was completed last month, the result of J.P. Morgan Chase & Co.'s $58 billion purchase of Bank One Corp., and analysts say more consolidation is likely in the financial sector. But what do such mergers mean for fund shareholders?
Employee Confidence Slides -- Surveys (Reuters)
Reuters - U.S. employee confidence fell sharply
in February, as workers grew more worried about personal
finances, layoffs and job security, according to surveys
released on Wednesday.
FCC Proposes $770,000 Do-Not-Call Fine (AP)
AP - The government proposed a $770,000 fine on Tuesday against a mortgage company for allegedly calling people who put their telephone numbers on the federal do-not-call registry.
Charter Says 4Q Loss Widens to $340M (AP)
AP - Charter Communications Inc., the nation's third biggest cable television system operator, said Tuesday its fourth-quarter loss widened to $340 million, citing higher programming and service costs, increased interest expense and a lower income tax benefit.
Sallie Mae Names Fitzpatrick CEO (AP)
AP - SLM Corp., known as Sallie Mae, promoted Thomas Fitzpatrick to chief executive to replace Albert Lord, who will be elected chairman later this month.
Bonds Slide, Yields Highest So Far in '05 (Reuters)
Reuters - Benchmark U.S. Treasury yields climbed
to their highest level so far this year on Monday as
mortgage-related selling and a break of a major chart level
caught many in the market by surprise.
Countrywide Raises '05 Earnings Forecast (Reuters)
Reuters - Countrywide Financial Corp. on
Monday increased the range of its 2005 profit outlook on
expectations of resilient demand for home loans, even though
interest rates have risen slightly.
Accountant Decries IRS on Insurance Taxes (AP)
AP - Most people dream of golfing, fishing or playing with their grandchildren at the end of a long career, not picking a fight with the Internal Revenue Service. Not so for Charles Ulrich, a certified public accountant in Baxter, Minn., who has spent 45 years in the field. Now, he is battling the nation's tax collectors over life insurance.
Dow Closes Down 75 While Nasdaq Loses 14 (AP)
AP - Stocks skidded Monday as investors, concerned about rising prices and the threat of inflation, took profits after last week's three-day rally. Volatility in pharmaceutical stocks and an analyst downgrade of Dow Jones industrial General Motors Corp. also pressured the market.
Why These Times Are Not So Taxing For Intuit (BusinessWeek Online)
BusinessWeek Online - At irs.gov, the very first link is Free File -- an invitation to use, gratis, the sort of tax-preparation software that often goes for $30 or more. That would seem to be handwriting on the wall for Intuit , one of the companies that Uncle Sam lassoed into the Free File initiative and the maker of the leading tax software, TurboTax.
Existing Home Sales Decline in January (AP)
AP - Sales of existing homes edged down a slight 0.1 percent in January as strength in sales of condominiums was offset by a dip in demand for single-family homes, a real estate trade group reported Friday.
Pfizer's Raines Won't Stand Re-Election (AP)
AP - Pfizer Inc. said Director Franklin Raines, former chief executive of Fannie Mae, won't stand for re-election at the company's upcoming annual meeting.
Santander Reports Fourth-Quarter Loss (AP)
AP - Santander Central Hispano SA, Spain's biggest bank, reported a fourth-quarter loss Friday, blaming it on layoffs and costs related to its purchase of Britain's Abbey National PLC, Britain's sixth-biggest bank and second-biggest mortgage lender.
Abbey reports first profit since 2001, confirms 3,000 job cuts (AFP)
AFP - Abbey National, the British bank recently bought by Banco Santander Central Hispano (SCH) of Spain, announced its first annual profit since 2001 and confirmed the elimination of 3,000 British jobs.
Intuit's Winning Streak Continues (The Motley Fool)
The Motley Fool - Software maker Intuit recently reported second-quarter earnings of $0.77 per share, exceeding the average estimate by a penny. That shouldn't come as a surprise considering the company has a habit of beating the Street's expectations. Total sales increased 5% driven by strong gains from QuickBooks (a 10% sales gain) and consumer tax software (a 9% sales gain).
Axa's 2004 Profit More Than Doubles (AP)
AP - French insurance company Axa SA said Thursday that its profit for 2004 more than doubled, crediting productivity gains at its life insurance and savings arm and better property and casualty underwriting.
New Problems Found in Fannie Mae Accounting (AP)
AP - Federal regulators investigating the accounting of embattled Fannie Mae have discovered additional serious problems, the mortgage giant disclosed Wednesday, as it received a three-month extension for boosting its capital cushion against risk.
Earned Income Tax Credit Can Boost Refunds (AP)
AP - Millions of people each year qualify for the earned income tax credit but don't claim the benefit. It can mean much bigger refunds for low-wage workers, but its rules and qualifications can be confusing. Here are some common questions and answers about the tax credit:
Fannie: Regulator Finds Accounting Issues (Reuters)
Reuters - Fannie Mae on Wednesday said
its federal regulator has identified several accounting and
internal control issues and raised new questions about the
mortgage funder's accounting in an ongoing probe.
Regulators Make Fraud-Reporting Proposal (AP)
AP - Federal regulators have proposed requiring mortgage giants Fannie Mae and Freddie Mac to promptly report mortgage fraud or suspected fraud to the government and to establish internal controls to detect it. The action follows the alleged defrauding of U.S. housing finance agency Ginnie Mae.
Fannie Mae Mortgage Portfolio Shrinks (AP)
AP - Fannie Mae is shrinking its loan portfolio even faster than expected as the mortgage giant prepares for new capital standards that go into effect at midyear.
Exec: Ebbers Said CFO Was Too Conservative (AP)
AP - WorldCom CEO Bernard Ebbers was a temperamental manager who complained his chief financial officer was too conservative in the projections he gave Wall Street, a former WorldCom executive testified Tuesday.
Tax Changes at a Glance (AP)
AP - Some changes in income tax rules for your 2004 returns:
Tax Calendar and Deadlines (AP)
AP - Dates and deadlines related to the filing of income tax returns this year:
AmEx Unit Accused of Defrauding Investors (Reuters)
Reuters - New Hampshire securities regulators
have accused the personal finance advisory unit of American
Express Co. of defrauding investors by giving
incentives to its advisers to push select mutual funds over
other funds with better performance.
Bush Aides Play Down Need for Drastic Tax Overhaul (Reuters)
Reuters - President Bush's promised overhaul
of the tax code could be accomplished without drastic changes
such as switching to a national sales tax or flat income tax
rate, a White House report said on Thursday.
Nextel Profit Falls, Revenue Up (Reuters)
Reuters - Nextel Communications Inc. ,
the No. 5 U.S. mobile provider, on Thursday said quarterly
earnings fell 26 percent due to higher taxes, but revenue rose
on strong subscriber growth.
Housing Starts Rise to Nearly 21-Yr High (Reuters)
Reuters - A jump in starts on single-family
housing pushed total U.S. housing starts to a nearly 21-year
high in January, but other data released on Wednesday were not
as robust.
Housing Starts Climb to Nearly 21-Yr High (Reuters)
Reuters - U.S. housing starts unexpectedly
rose 4.7 percent last month to a nearly 21-year high as
single-family housing starts shot up to a record, a Commerce
Department report showed on Wednesday.
Mutual Fund Firms Angle for Advisor Loyalty (NewsFactor)
NewsFactor - Many times, personalization and CRM efforts are aimed toward customers or end-users of products and services. Often, though, they are aimed at channel partners, which, in the case of mutual-fund firms, are financial advisors.
W.House Questions Fannie, Freddie Value (Reuters)
Reuters - The White House on Monday called for
a new, stronger regulator for government-sponsored housing
enterprises, saying a problem at one of the giant mortgage
funders could spread throughout the financial system.
Ameristar Earns Respect (The Motley Fool)
The Motley Fool - The average investor has a huge advantage over Wall Street analysts. The Wall Street guy has to take a given set of companies and assign values to every company in that group. But as individual investors, our job is much simpler: We don't need to find every single stock that goes up; we just have to pick the high-percentage opportunities that make sense to us and hit them hard.
De-Commissioning Your Insurance Policy (Reuters)
Reuters - (Linda Stern is a freelance writer. Any opinions in the
column are solely those of Ms. Stern. You can e-mail her at
lindastern).
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