HBA Newswatch
February 5, 2008
IS A MORTGAGE THE BEST HOME FOR A YEAR-END BONUS?
By Eleanor Laise
From The Wall Street Journal Online
You've just received a handsome year-end bonus. Congratulations. Now what?
With the market gyrating and real-estate prices tanking, deciding what to do with a windfall isn't exactly easy these days. Anyone carrying high-interest credit-card debt should pay it off. After that, the choices get tougher. You could scoop up some beaten-down stocks or battered high-yield bonds, figuring they'll rebound. Or you could play it safe and pay down your mortgage.
If the slowing economy has you worried, the mortgage option can look attractive. Say you received a $100,000 year-end bonus and have a $300,000, 30-year, 6% fixed-rate mortgage. If you took out the mortgage at the start of 2006 and simply make the regular monthly payment, you'll pay it off in early 2036. If you put the $100,000 bonus toward the mortgage, you'll pay it off more than 15 years earlier, in late 2020.
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HOUSING MELTDOWN
Why home prices could drop 25% more on average before the market finally hits bottom
As Washington policymakers struggle to keep the U.S. out of recession, the swirling confusion over the housing market is making their job a lot tougher. Will American consumers keep shopping or be forced to pull back? Will banks lend freely or be hamstrung by mortgage defaults? What are the best policy options right now? Those and other important questions simply can't be answered without a good idea of whether home prices will rise, flatten out, or keep dropping.
Some experts have begun to suggest that a bottom is in sight. Pali Research analyst Stephen East wrote in a research note to his firm's clients on Jan. 25 that "the sun is not shining very brightly, but at least the worst of the storm has likely passed." With optimism budding, Standard & Poor's beaten-down index of homebuilder stocks soared 49% from Jan. 15 through Jan. 29.
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HOUSING TO HURT ECONOMIC GROWTH
By Michael R. Crittenden
WASHINGTON -(Dow Jones)- The housing market slump and the tide of subsequent foreclosures will continue to hinder the U.S. economy through 2008, according to the budget released by the Bush administration Monday.
"It now appears that the effects of the housing slump on real (gross domestic product) growth will persist into 2008, holding down growth and delaying the expected rebound in activity," budget documents say. Beyond 2008, however, the administration said housing "should cease to be a negative influence on growth."
The budget released Monday calls for a number of proposals to help deal with the housing crisis, including overhauling the Federal Housing Administration, providing funding for housing counseling and tightening the regulation of mortgage finance companies Fannie Mae (FNM) and Freddie Mac (FRE). The Bush administration is also calling for $65 million in housing counseling assistance for tenants and homeowners.
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