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"Up...Up...and Away?" Don't look now, but a couple of important economic indicators showed signs of heading up. Unfortunately, that presents some mixed news - especially since one of those indicators concerns inflation. The articles below explain what happened and what it means to you. Plus, don't miss the summer links below that can help you whether you hit the road or head up, up, and away in a plane this summer.
- Home Prices, Inflation Head Up - The housing market receives some good news, but rising inflation is a concern. Here's why!
- Hitting the Road - or Air - This Summer - No matter what plans you have this summer, these links are sure to help you. Check them out now.
- Q&A: Should I Pre-Pay My Mortgage? - The answer may surprise you! Here are some things that you should consider. Read the Q&A below.
If you have any questions or would like to discuss your unique situation, call or email today. And please forward this newsletter to friends, family members and coworkers who may find the information helpful.
Warm regards,
Jessica Lanning, JD, CFP
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Home Prices Head Up, But So Does Inflation
Late last month, the housing industry received somewhat good news when home prices experienced the first monthly rise in 8 months, according to the Case-Shiller Home Price Index of 20 cities. While that's a nice tidbit of news, we need to remember that home prices are still down 4% overall when you look at the year-over-year number. The persistently high unemployment is weighing on the housing recovery, but we do expect more improvement for housing during the second half of 2011...and this is a start.
That said, home prices and unemployment aren't the only indicators that we need to keep an eye on. Last month, the Federal Reserve Board received some disturbing news about inflation when the Core Personal Consumption Expenditure (PCE) Index was released. The report is considered the Fed's favorite gauge of inflation, and it came in slightly hotter than expected.
That should raise the eyebrows of the Fed as it appears that some of the manufacturing sector's rising costs are being passed along to consumers. Remember, inflation is the archenemy of Bonds, and therefore it's bad news for home loan rates. So, should this trend of higher inflation continue in months ahead, we should expect home loan rates to move higher as well.
What does this mean for the markets and home loan rates in the short- and long-term?
Here's a visual that will help explain things. Imagine a child playing with a yo-yo riding on an escalator. If Bond prices are the yo-yo, you can see how they would be moving up and down like the action of the yo-yo in the short term. And this is what we are seeing right now: Bond prices and home loan rates are moving day to day in a somewhat volatile up-and-down fashion. But, like the boy on the escalator, they continue to move in an improving direction. Eventually, however, the child will reach the end of the escalator; Bonds and home loan rates will eventually reach the end of their improving trend, especially when inflation fears become reality. And when they do they will likely worsen quickly, as history attests.
Right now, home loan rates still remain near some of the best levels we've seen this year, and it's important to take advantage of these levels while they remain. If you have been thinking about purchasing a home or refinancing, call or email me to learn more about why now is a great time to benefit from today's historically low rates. Or forward this newsletter on to someone you know who may benefit. |
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Hitting the Road - or Air - This Summer!
Summer is officially here, and there are plenty of ways your family can have fun in the sun, while also staying safe and healthy! Whatever plans your family has in store...in addition to enjoying the traditional baseball, hotdogs, and apple pie...here are some great websites that can help.
Plan Your Road Route: Taking a road trip this year with the family? There are a number of websites such as www.mapquest.com and maps.google.com that can help you plan your route. So make sure you take a few minutes to plan your drive and print out any directions that you may need.
Fly Smarter : For the latest information on prohibited items, acceptable IDs, and other security-related items, visit www.tsa.gov/travelers/airtravel.
Weather Watch : Whether you're travelling by road or air, you'll want to keep an eye on www.weather.com. Not only does this site help you discover the weather of your final destination, it also helps you keep an eye on how the weather is impacting airports across the country.
Beach Vacations: No matter what part of the US you may be visiting, you can bet there's a state nearby that boasts about its beaches. Some have oceans while others have gulfs, bays, rivers, lakes or reservoirs. Whatever form the water takes, adventures and sports of all types can be found. Just click on the following link and then click on the state of your choice in the map at the top of the page: http://www.chiff.com/recreation/beaches/USA.htm
Staying Connected : You may find that you'd like to logon and catch up with family, friends, and co-workers through email or social media sites. But where can you find Internet access? Luckily, you can discover where you can get free wireless Internet access while you're on the road this summer at www.wififreespot.com.
Regardless of whether you already have big plans this summer or are still looking for a short vacation to take, spend a few minutes to review the links above...or consider printing this article and placing it in your vacation plans.
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Q&A: To Pre-pay or Not to Pre-pay?
QUESTION: Should I pre-pay my mortgage?
ANSWER: Another way to put this question would be to ask yourself: Would you rather be house rich and cash poor? Or house poor and cash rich in this current economic environment?
Here's some information to consider. Home equity accumulates in four ways: the money committed in the original down-payment; any appreciation in the local housing market over time; physical improvements or renovations; and, of course, principal payments on the mortgage itself. While seemingly desirable on its face, this accumulation of wealth in the home has some consequences that you should keep in mind. First, the cash in your home is "buried." Not only is it unavailable in the event of a family emergency, it is vulnerable to loss due to periodic downturns in housing values, fire, or natural disasters such as hurricanes (insurance, where available, may not cover the full market value of your home). Perhaps more critical, cash trapped in property is earning zero interest, year after year. No prudent consumer would put money into a savings account or investment plan that yields no rate of return, but many homeowners do exactly that without a second thought when it comes to their mortgage. |
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RECOMMEND YOUR FAVORITE PROFESSIONALS...
Jessica is looking to expand her business network and is looking for outstanding professionals in the following fields:
- Tax Attorney
- Nutritionist
- Relocation/Moving Specialist
- Marketing Specialist
If you know someone who is really great, please connect that person to me! Thank you! |
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Bring your personal wealth strategy to life
Meeting financial goals means getting comfortable with your money and planning your path. Let me know if you have questions or thoughts on your financial strategy. I'm your resource to achieving your financial freedom.
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