Wednesday, November 25, 2009

Simple Real Estate Definitions :APR

APR on Reg ZAPR is an acronym for Annual Percentage Rate.  It's a government-mandated calculation meant to simplify the comparison of mortgage options.

A loan's APR can always be found in the top-left corner of the Federal Truth-In-Lending Disclosure.

Because APR is expressed as a percentage, many people confuse it for the loan's interest rate.  It's not.  APR represents the total cost of borrowing over the life of a loan.  "Interest rate" is the basis for monthly mortgage repayments.

The main advantage of APR is that it allows an "apples-to-apples" comparison between loan products. 

As an example, a 5.000 percent mortgage with origination points and fees will almost certainly have a higher APR than a 5.500 percent mortgage with zero fees.  In this sense, APR can help a borrower determine which loan is least costly long-term. In other words, the APR is an artificial index that can be compared to determine which loans have higher or lower APRs, thus indicating the higher or lower cost to the consumer.

However, APR is not without its shortcomings.

First, different banks includes different fees into their APR calculations.  By definition, this spoils APR as a choose-between-lenders, apples-to-apples comparison method, though the total cost to the consumer is still accurately determined.

More importantly, when calculating APR, "life of the loan" is assumed to be full-term.  When a 30-year mortgage pays off in 7 years or fewer -- as most of them do -- APR comparisons are rendered less accurate. It is possible that a loan with a lower APR might be more expensive if the loan is not carried to the full term and would have had a higher APR if the shorter term had been used in the original calculations.

In other words, APR is just one metric to compare mortgages -- it's not the only metric.  The best way to compare your mortgage options is to review all the loan terms together and determine which is most suitable.

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Tuesday, November 24, 2009

2 Days to Thanksgiving - Do You Have Menu?

Planning a Thanksgiving Dinner?Thanksgiving is Thursday. If you're cooking for group (or a crowd) and you haven't yet put your menu in order, click on through Bon Appetit's Thanksgiving Menu Planner.

Answer 3 basic questions and Bon Appetit serves up a list of dishes and their respective recipes.

  1. For how many people are you cooking?

  2. How much time do you have to cook?

  3. What's your style?

The dishes range from the simple (Pumpkin Pie with Spiced Whipped Cream) to the sophisticated (Herb Roasted Turkey with Apple Cider Gravy). There's even a menu for vegetarians.

It's not too late to host a delicious Thanksgiving dinner. Bon Appetit can get you moving in the right direction.

Or if you're a lucky guy like I am, maybe someone else will be cooking and all you'll need to do is show up, be thankful, and eat! What ever you're doing though - be thankful for what you have - its probably much more than some others have. And if you really want to be grateful - how about helping some one else? All you need to do is to click on the link to the right and change the world for someone by making a small donation - maybe give up a couple of movies so a little girl can go to school - or don't - its your choice.
I've already made mine.

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Monday, November 23, 2009

Should I consider a 15 Year Mortgage?

Comparing 15-year mortgage rates to 30-year mortgage rates

For today's home buyers and homeowners that can manage the higher monthly payments, 15-year fixed rate mortgage rates look attractive as compared to comparable 30-year products.

The 15-year/30-year interest rate spread is near its 5-year high. As a result, the savings afforded by the 15 year mortgage is at its 5 year high also.

Despite lower rates, however, homeowners opting for a 15-year fixed mortgage should be prepared for its higher monthly payments. This is because the principal balance of a 15-year fixed is repaid in half the years as with a standard, 30-year amortizing product.

As compared to 30-year terms, 15-year products repay 3 times as much principal each month. It is this difference which makes the payment so much larger.

Versus a 30-year, 15-year fixed mortgages have a few downsides worth noting. The first is that, because 15-year mortgages are heavy on principal and light on interest, homeowners who itemize tax returns may have to claim a smaller mortgage interest tax deduction at tax time. Balanced against that of course, is the benefit of making much larger principal payments and retiring your debt earlier.

Another negative is that the sheer size of the payment. If you run into fiscal trouble down the road, the only way to reduce the monthly obligation is to refinance into a 30-year product and that costs money to do.

In other words, be sure you can manage the payments over the long-term before you opt for a 15-year term. If you can manage it, though, the rewards are tangible.

At today's rates, a 15-year fixed and 30-year fixed costs $230 extra per $100,000 borrowed.

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Wednesday, November 11, 2009

Help Change the World..

I'm not the greatest person to participate in fundraising activities.

Don't get me wrong I'm a very charitable guy, but I tend to be the guy who makes the donation more than the guy who asks for them . I always feel like I'm imposing on someone when I ask them to support the fund raising efforts of one of the causes that are important to me like the American Cancer Society, or Easter Seals, or the Lupus Foundation, so when I am asked to be part of a group making the effort to raise money , I am reticent about asking others for their help. Maybe its a character flaw, but that's just how it is. This time I'm making an exception to that behavior because my friend Rocky Turner has allowed me and my son Hal and daughter-in-law Jennifer the privilege of helping Rocky in her constant efforts to raise money for children in Kenya.

You may know Rocky because she's married to Jeff Turner and is busy raising 6 kids, or because she has achieved so much recognition for her work with Mothers Fighting For Others, or maybe because she's just a really smart and beautiful person. Doesn't matter how you know her or if you're just hearing about her for the first time. She does stuff that some people just talk about, and other people just dream about. She works hard to make a difference - a real difference for real people.

One of those people is Irene Mwihaki, the newest member of our family. Our family has taken on the task of raising money to help her obtain an education. According to Rocky:

Irene is an extremely bright girl. She had the highest marks of all the
girls entering HS this term. She is determined to make herself proud this
school year.

I've never been to Kenya and know embarassingly little about the country. So I took a few minutes to find out what life might be like there. According to, life in Kenya is challenging beyond our expectations

A 2005 report by the United Nations ranked Kenya as 154th out of a list of 177 countries, in terms of life expectancy, literacy levels and overall gross
domestic product. Just three years earlier, the country had ranked 134th. For
comparison, Uganda was ranked at 144th, and Tanzania was 164th. Both are immediate neighbors of Kenya.

But we're struggling too right? Our economy is terrible weak, and everyone is feeling a pinch - but even at its worst is it this bad?

So is making a donation to Irene going to help? Surely going to school is basic. Even the poorest child in the US has that opportunity.

School fees are often out of reach for poor families, leaving each generation to continue trying to find work while lacking the education to advance. Cultural biases towards women create further limitations for the growing number of female-led households.

I look at Rocky's pictures of Irene and I see a pleasant bright eyed young girl who should have a great future in front of her. After all if you are smart, hard working and pleasant, shouldn't you have a reasonable chance be able to achieve happiness if not greatness? My Grandparents and Great Grandparents left countries where they could not achieve to come to this country. That's just not possible for everyone. But because they did, their children and their children's children had the chance to achieve and succeed. Irene deserves that too.

So help me show the power of community on-line, where a small donation from a lot of people can make a huge difference in a person's life. I'm going to depart from my norm and ask you to make that small donation. If you can, just click on the widget on the side of the page, and gove whatever you can - if you can't make a small donation, feel free to make a larger one - and if you don;t have $5 or $10 or $20 (or more) to give, forward this post to someone who might - take a minute to make a real difference in somone's life - a real some one - a smiling bright eyed girl who lives in a poverty stricken country who shouldn't be forced to loose that smile or waste the intelligence that is so obvious when you look at her eyes.

Honor your loved ones and your life by helping someone today- Please... Make a difference in the world with a little donation by making a big difference in this little girl's life -

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Saturday, November 7, 2009

Home Buyer Tax Credit is Extended and Expanded!

The House Financial Services committee meets. ...Image via Wikipedia

In my last market statistics post , I mentioned that an extension of the $8,000 first time home buyer tax credit would be a real incentive for people to continue buying even in this traditionally slow time of year.

Congress must have been paying attention (or I tripped on something that other people agreed with!) and the $8,000 Tax Credit was extended this week. In addition, people who have owned their homes for 5 consecutive years (out of the last 8 years) can now get a $6,500 tax credit when they buy a new home.

With the threat of higher rates in the first quarter of 2010, and affordable houses all over the Philadelphia marketplace (which includes South New Jersey and the surrounding counties) , now may be that perfect moment - if people don't get too complacent about the housing market and assume that they'll still be able to reap the maximum benefits from the convergence of rate, price, and tax credits. I guess the only way to find out what the public's reaction will be is to wait and see -
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Thursday, November 5, 2009

Philadelphia and Surrounding Counties Market Statistics

Boat House Row in PhiladelphiaImage by reeltor99 via Flickr

As Congress discusses a 6 month Extension of the First Time Home buyer Tax Credit with an additional credit for repeat home buyers, the results of the initial credit seem to be obvious when we look at the Pending Sales Market statistics from September for Philadelphia and surrounding counties.

Pending Home Sales
Sept 2009 Sept 2008 % Change
Philadelphia 1287941 36.77%
Bucks 58241440.58%

With such substantial increases in the pending sales for all five counties, its obvious that our housing market has recovered substantially. Though its tough to know exactly how much the tax credit influenced this, logic tells us that it has had a substantial impact. When we add to this the decrease in inventory, we see what would be defined as a recovering real estate market.

Current Home Inventory Sept 2009 Sept 2008 % Change
Philadelphia 9,704
10,559 -8.10%
Bucks 4,0114,262-5.89%

So what does this mean for the next 6 months?
  • With a tax credit extension, motivation for first time home buyers will continue
  • A tax credit for repeat buyers will increase motivation for a new group of buyers
  • Shrinking inventory generally means competition between buyers for more desirable homes and possible upward pressure on prices.
  • Though the tax credits are significant, the 6 month window is still a limited window off opportunity.
  • The limited opportunity provides substantial additional motivation for buying even at a time of the year which is traditionally slower because of the retail market.
So though there is still uncertainty about the unemployment numbers, and we have not seen a great resurgence in consumer confidence yet, it does seem that in the house buying arena, there are substantial reasons for potential home buyers to get off the fence and take action now to benefit from the combination of affordable prices, low mortgage rates, and tax benefits that may not be extended again in the more active spring market.
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Sunday, November 1, 2009

Charging Your Phone(s) Without the Clutter

The Powermat ChargerTired of "wire clutter" where your mobile phones, MP3 players and gaming devices compete for outlet space?

The Powermat may be your solution.

The Powermat is a 12-inch long wireless battery charger that's conspicuously missing "plugs". Instead, it uses magnetic induction to safely recharge up to 3 devices at once.

Just place your phone(s) on the pad and they charge automatically.

The Powermat debuted at the 2009 Consumer Electronic Show and was reviewed in video. The reviewers had many positive comments on the Powermat, but highlighted some negatives aspects, too. Give a look and see what you think.

Powermat retails for $99 on and is usually shipped for free.

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