Last Thursday was the single worst day for Stocks since October of 2008 and pushed the Dow, Nasdaq and S&P 500 Index into negative territory for 2011. In fact, the Dow has lost nearly 11% after hitting a 2011 high of 12,807 back on May 2. And while it is important for our economy to improve, one result we often see during weak economic times is an improvement in Bonds, including Mortgage Bonds, and therefore home loan rates, to which Mortgage Bonds are tied. Think of it this way: Investors move their money back and forth between Stocks and Bonds, moving their money into the safe haven of Bonds when there is uncertainty or weakness in the economy. That action last week helped Bonds and home loan rates approach their historic best levels once again.

     But not all of the news last week was bad for our economy. Friday's Jobs Report from the Labor Department was better than expected, with 117,000 new jobs created during July, above the 84,000 that was expected.and better yet, May and June's numbers were revised higher to add 56,000 more jobs to the former tally! In addition, hourly earnings rose to 0.4% from 0.2% in June, which was a nice increase we haven't seen in quite some time, while the Unemployment Rate fell slightly to 9.1% from 9.2%. The Jobs Report was surprisingly good news, but it is only one report and we need to pay close attention to upcoming economic data. If future reports continue to improve, Bonds and home loan rates could worsen as investors would move their money back into Stocks, which is something we saw a little of late last week.

     The bottom line is this: Home loan rates remain near some of the best levels we've ever seen, but about the only thing that is certain in the markets right now is the volatility. If you've been thinking about buying or refinancing a home, give me a call or send me an email to learn how you can take advantage of this situation. Or forward this newsletter on to someone you know who may benefit.

• Perhaps the biggest market mover of the week could be Tuesday's regularly-scheduled Federal Open Market Committee Meeting. What the Fed has to say about the economy, inflation and the prospects of QE3 could affect rates for some time into the future.        
   
• Thursday brings another weekly Initial and Continuing Jobless Claims Report. Last week's Initial Claims came in at 400,000, below the 405,000 that was expected and right at that crucial 400,000 level which signals real improvement in the labor market.   
   
• Rounding out the week are two reports on Friday that will give us a big hint on the state of the economy: Retail Sales for July and the Consumer Sentiment Index.    

     Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. 

     As you can see in the chart below, Bonds and Home loan rates improved for most of last week, though the better than expected Jobs Report caused them to give back some of these improvements. With what will likely be another volatile week ahead, don't hesitate to call or email me if you have any questions about your situation.          

Donating Your Car to a Charity

     Getting rid of an old car can seem difficult. If it's not in the best shape, you may be reluctant to sell it to someone because you're concerned it may break down any day.and they'll come back to you complaining. Of course, you probably don't want to pay someone to just haul it away.

     Luckily, there's a third option that may be right for you. Instead of selling your car for money, you can donate the vehicle to a charity in exchange for a deduction on your taxes. For older vehicles in need of repair, it can be a better option with much less hassle. It also has the potential to benefit those in need. 

     The problem, however, is that not all charities are created equally. The following tips can help you avoid pitfalls and make the best choice:

1. Make sure your charity has 501(c)(3) status. If your intended charity doesn't have this type of status, your donation will most likely not be tax deductible.
    
2. Make sure the charity accepts vehicle donations directly. Many charities use companies that act as middlemen in the process. In these situations, the companies keep a percentage of the donation as payment for their role. Sometimes their cut is quite high, so do your homework before deciding on a charity.
    
3. Drive your car to the charity as opposed to having them pick it up. Hiring a service or a tow truck to claim the donation will cut into the amount of money your charity ultimately receives.
    
4. Understand how your deduction is valued. Discuss with the charity how much your vehicle is worth and how much you can deduct from your taxes - and make sure the charity is aware of and abides by the law when assigning value.
    
5. Sign over your car to the charity. If a charity asks you not to assign ownership, you should go elsewhere. The problem is that if you do not transfer the title, the car is legally still yours. Think about the liability issue this presents.
    
6. Get a receipt after the car is sold. It's a worthy point that requires no explanation.
    
7. Consult a tax professional. You should initially consult a tax professional to help determine if this is a good option for you. If you proceed with the donation, he or she can also be of help regarding what to do if the charity decides to keep your car for its own use, or sells it at a discounted price. Also, if the car is sold for more than $500, the tax professional can help you with the extra form that needs to accompany your yearly taxes.