This Week in Your Wallet: October 25, 2011
A few weeks ago, I wrote to you about historic lows in mortgage interest rates and what you should know in order to refinance. I quickly mentioned HARP (the Home Affordable Refinance Program), a federal program for homeowners who have a Fanny Mae or Freddie Mac mortgage taken out on or before May 31, 2009. It is aimed to help those who are underwater — that is, folks who owe more than the value of their home. At the time, I told you to “stay tuned” for updates about the program, but it looks like you didn’t have to wait for very long. Just yesterday, the Federal Housing Finance Agency announced some new changes that will help make HARP more available to the people who need it. Here’s a look at what’s changing:
- The government has removed the current 125 percent loan-to-value ceiling on fixed-rate mortgages. This means that you can now owe more than 125 percent of the value of your home and still qualify for the program.
- The plan is eliminating certain refinancing fees and removing the need for a new property appraisal. That eliminates obstacles for people who just don’t have much cash for the transaction.
- To make HARP more appealing to lenders (who, up until now, have been reticent to participate due to the risk they’re taking on with these types of loans), the FHFA announced they will be eliminating certain legal responsibilities that previously tied the lender to problems with the loan.
- The end-date for the program has been extended to December 31, 2013.
To qualify, you still need to owe at least 80 percent of the value of your home, and you need to have made your last six payments on time and have no more than one late payment in the past twelve months. Only loans owned by Fannie or Freddie qualify. If you’re not sure whether yours is, use tools atfanniemae.com/loanlookup/ and freddiemac.com (for the latter, there’s a lookup button on the home page).
In a press conference, FHFA acting director Edward DeMarco said, “These changes are designed to enhance the program’s access,” further noting that this is an “important opportunity for Americans to improve their household balance sheet.” For more information on HARP and these changes, you can check out this New York Times article. Now here’s a look at the other news of the week:
Qaddafi’s effect on your wallet
In the wake of the Libyan dictator’s death, there was much to absorb: the gore, the meaning for Libya, the odd (but amusing) obsession with Condoleezza Rice. But in the midst of all these articles — plus the continued debate on how to spell his name — I found an interesting piece of information: Oil prices fell last week, in large part due to Qaddafi’s death.
What’s up with that? Even though Libya only produces about 2% of the world’s oil, the country had been producing about 1.5 million barrels of oil before the civil war broke out. But as fighting raged on, oil production dried up and prices went as high as $127 a barrel in April. According to this Daily Finance article, as the country stabilizes and oil production resumes, prices of Libyan oil could drop around $10 to $25 a barrel. What’s more, experts say that Libya’s oil reserves are the largest in Africa and have been underexploited due to difficulties in dealing with Qaddafi’s regime. Now that he’s gone, access to the oil might get easier and that could take prices at the pump down even further.
Do you have a mentor?
According to a new survey done by LinkedIn, nearly two-thirds of female Baby Boomers in the U.S have never had a mentor at work. When asked why this was the case, a majority responded that they had never encountered someone who would be appropriate.
What’s interesting is that more than half of Generation Y women — females ages 18 to 29 — do have mentors, an indication that mentorship is growing, at least for the newest members of the work force.
I can’t say I’m entirely surprised by these results. Even though mentoring can be a great source for guidance and collaboration, not to mention recommendations and career advancement, it can be hard to approach someone for help. (And, on the other end, it can be hard to add one more thing to your plate.) However, as I just told the audience at the Economic Summit on Women in Nashville yesterday, women blow it when we turn our backs on other women. So if you’ve never had a mentor — or a mentee — I challenge you to reach out to someone. Your life will become more fulfilling because of it.
For those of you who like to plan…
The IRS announced a bunch of new tax breaks (and tax brackets) for 2012. Though they won’t affect your 2011 taxes, here are a few things to look forward to:
- The standard income-tax deduction will increase by $300 for married couples filing jointly. For singles, it will increase by $150.
- The contribution limit for 401(k)s, 403(b)s and most 457s will increase to $17,000.
- In 2012, a married couple filing jointly will need to make $70,700 to move from the 15% bracket to the 25% bracket. This is up from $69,000 this year.
If you’d like to learn more, this article from the Wall Street Journal provides some great detail.
Have a good week!
Jean
