The value of your 401(k) is dependent on the tax rates when you withdraw money from it. Some think this will place restrictions on politicians in the future who want to raise taxes as all those owners of 401(k)’s will see the value drop with higher tax rates. Others are sure tax rates will have to go up because of the serious shortfalls in Social Security and Medicare. What this means is dependent on the individual but if you have a large 401(k) balance and that’s your primary retirement ticket, then you’ll probably want your representative to advocate for low marginal tax rates so the value of your 401(k) is there for you when you need it.
http://www.nytimes.com/2006/11/09/business/09scene.html

Boomer 411 made PC Magazine’s top 10 baby boomer web sites. Below is an excerpt from PC Magazine’s commentary.

This news-aggregating site is like Digg for the older set. With Boomer411, you can bookmark and share your favorite content, as well as submit content to be voted on by other users. Topics range from jobs and insurance to alternative medicine and real estate. Visit the Boomer411 blog to read interviews and guest columns and comment on them.

Financial Ambition has been tagging relevant finance and real estate related content for Boomer 411. They are a great search tool and resource for the baby boomers.

I often get the question of what movers, Storage, utilities, phone, internet and TV offers are available on a specific home. I came across a great new free service that will not only tell you what services and products are available, but what it will cost and if there are any special deals from a specific company. The site is called White Fence. They say that they are a national service and I checked my address in the Bay Area and they seemed accurate. Check it out and let me know if you have heard of any other interesting solutions for home service providers.

The press is filled with bad economic news.  If you’re nervous, this article might help.  Or you can call your financial advisor.  Hopefully you’ve been wise enough to choose an advisor who has gone through several of these cycles so they can be helpful to you and not in panic themselves.
Resist the Urge to Panic

Looks like Zillow has now entered the real estate game market. They recently released a game that is the hot or not of homes. Dueling Digs is a fairly boring game, but worth a look.

I just read an interesting perspective on the currently most asked question of 2008. So, Is now a good time to buy? We have written many different posts stating why it’s an excellent time to buy in the Bay Area. The main reason is that we are seeing negotiating opportunities for our buyer clients while currently we are still seeing historically low rates.

Yet, Dan Green of the Mortgage Reports has an interesting mortgage brokers perspective on why now is a good time to buy. His main reason is that there are drastic changes still taking place in the mortgage markets. Banks are still introducing new guidelines and tightening credit. That from Dan’s perspective the known is always better then the future unknowns.

I also found it interesting that Dan has an article on how the feds drops in interest rates are actually pushing long term interest rates upward. This brings me back to one of my old posts, where I discussed that rates can rise while property values can stagnate. This can squeeze buyers into paying more even though prices have fallen. A Bay Area buyer only has to look at Berkeley to see that many areas values have not fallen through the proverbial floor.

So, as I have stated before… Now is a great time to buy for those that are long term (3-5 year) buyers that are well qualified with good credit and down payments.

Susan McHan, CEO & President of Opes Advisors, a Bay Area wealth management company specializing in mortgage banking and investment advising, was recently interviewed on ABC7’s The View From The Bay on the current mortgage & real estate environment.

This is a great take on where we are in the real estate and mortgage markets (locally, state and nation), where it may go from here and what actions to consider. You can watch the approximate 5 minute interview here. Be informed by someone with an historical and personal experience perspective (bio).

Umbrella Insurance

(New York Times article)

This type of insurance is often overlooked but shouldn’t be. My insurance agent put it this way. If you are in an accident and become involved in a lawsuit, the purpose of umbrella insurance is to have a big insurance company on your side fighting your case because it is their millions on the line (not yours).

Recently, past clients have asked me if this is a good market to sell their homes and move into better homes in better neighborhoods. This is an uncommon thought as compared to the typical national market sentiment that sellers should stay put in the current market turmoil. In working with these clients I have found that this market is a great opportunity for some move up buyers. The general discussion goes like this…

You will be taking less profit on the sale of your home, but you also will be buying for less on the other end. Usually, I am finding that this opportunity is open to clients whose income has risen since they bought their homes, thus they can afford to buy into nicer neighborhoods. Anti-intuitive to the current market mentality, I have found that it may make better sense to make the move now, then it did in the hot market.

2 years ago move up buyers were selling their homes and getting more money then they ever thought possible. Yet, they would also be competing against many others and buying homes at higher prices. This market fed itself with sellers cheering the competition when selling and dreading it when buying. It also usually meant increased capital gains taxes on the sale and increased property taxes on the purchase.

Now, as the market has changed, home owners have been watching as median home prices have fallen off of their record highs. Yet, buying at a cheaper price means that you save on annual reoccurring taxes. As a buyer you now have the ability to negotiate with sellers who are lacking multiple bidders. We are also still seeing historically low interest rates that are still making loans very attractive to buying. Not to mention the Federal Government that is creating incentives for buyers, by lowering prime interest rates and raising conforming rates nation wide.

Here is a recent example. I recently completed 2 transactions for a client who sold their 1.5 million dollar plus home and traded for a more expensive home. On the sale I estimate that they took about $200,000 less then the top of the market price. Yet, on the purchase they bought a home which cost less then the current cost to construct the home (the price per square foot was less then current cost to construct the home). I estimate the savings to be approximately $200,000 on the purchase. They bought into a situation where their new home has a better potential for future appreciation. They bought a home that is 1,000 square feet larger than their previous home, in a better neighborhood for them. Their taxes ended up being approximately $3,000 less per year then if they had purchased at the height of the market. They got a great interest rate on the portion of the home they leveraged. They got less profit on their sale, but gained even more on their purchase.

Just as in the hot market, the trick to moving up now is a financial and real estate team devoted to developing an uncommon strategy to better your situation. I have found that this market is a great opportunity for many move up clients.

Thanks Kerrythis for the car image above.

I know, alphabet soup… Welcome to the world of government acronyms and abbreviation. In lay terms, the 2008 Economic Stimulus Bill has cleared the way for three channels of mortgages (FHA, Fannie Mae & Freddie Mac) to increase their loan limits. Good news for most of California because these three types of loans generally have lower interest rates and/or easier qualifying criteria and/or higher loan-to-value limitations (the amount of a mortgage relative to the value of the home).

Earlier this week, HUD (Housing and Urban Development) released the new FHA (Federal Housing Administration) loan limits for California, with the remainder of the country soon to follow. (You can read more about the FHA limits at this link.) And today, the OFHEO (Office of Federal Housing Enterprise Oversight) that oversees Fannie Mae and Freddie Mac announced the loan limits for those counties and Metropolitan Statistical Areas (MSAs) that are affected by the new loan limits. Data for all areas are available on the HUD Web site at this link.

Ten counties in the greater Bay Area will have their limits raised to the new maximum loan limit of $729,750 for all three types of loans (FHA, Fannie Mae, Freddie Mac). Those 10 counties are: Alameda, Contra Costa, Marin, San Francisco, San Mateo, San Benito, Santa Clara, Santa Cruz, Napa and Monterey.It will still take time before anyone can act on the new, higher, loan limits. How long? We don’t know yet, but our speculation is in the next 4-8 weeks. And we still don’t know how these loans will be priced (i.e. interest rate you can get). Although most lenders can do conventional (Fannie Mae & Freddie Mac) loans, not all lenders can do FHA loans. So don’t assume your friendly mortgage broker necessarily can. This is good news for the CA real estate and mortgage markets. It won’t solve all California issues, but it certainly will help.