Jon "J.R." Finger

Want to take advantage of a government tax credit for purchasing a home, but weren't eligible under the first-time homebuyer credit? Well, it's time to start looking for that new house. The government, hoping to lure higher-end buyers back in the market, has created a tax credit of $6500 to homeowners wanting a new home.

Here are some of the highlights:

-You must have owned your home for at least 5 of last 8 years.

-The credit is good for new or existing homes, but no investment properties. It must be your primary residence.

-You must be under contract by April 30, 2010, but have until June 30, 2010 to close the deal.

-Single filing taxpayers must have an adjusted gross income of $125,000 or less. Joint filers are eligible with income of $225,000 or less. Single filers with incomes up to $145,000 ($245,000 for joint) may receive a partial credit.

-Homes with a purchase price of $800,000 or less are eligible for the program.

You need to also keep in mind that if two unmarried people buy a home and only one qualifies, the one individual who does qualify can claim the full tax credit.

It is amazing to me the amount of confusion that abounds among homeowners as of late. Should I refinance or wait? Did my home go down in value? Should I pay off credit cards? Will I have a job tomorrow? What steps will the government take (or not take) to help out homeowners? With all of the talk in the media of this new program and that new program, bailouts, sour markets and consumer confidence in the tank; it's no wonder everyone is suffering from a little "analysis paralysis". There is just too much info.

I understand this, but the only thing you can control is your action.

First, don't count on the government doing a whole lot to help. They may be well intentioned, but their programs usually aren't feasible and rarely work. FHA Secure and the Hope program were both supposed to help around 500,000 homeowners each, but both died quick deaths. The guidelines to qualify were difficult, if not impossible, to meet.

Should you refinance?

Well, if you plan on staying in your home for at least 5 years, you probably should at least take a look. Don't assume you know what your credit looks like or if you qualify. The mortgage market has changed dramatically even in the last 6 months. Call your loan officer and talk to him or her. After all the rates are below 5% for a 30 year fixed rate. It would be crazy not to take a look and won't cost you anything to have a qualified individual give you a mortgage analysis.

Create a cash reserve

Now is the time to be socking money away. If you do refinance with a lower payment; consider putting the money you would have sent to your lender in a savings account. Look for little ways to cut costs. Let's face it. A lot of people are losing jobs right now and money in the bank is, well......... money in the bank.

If you have a home equity line you may have noticed the minimum monthly payment going down. Take a look at what your payment was a year ago and continue "paying" that every month. Simply take your monthly equity line payment now, subtract it from what you were paying a year ago and put the difference in a savings account.

Pay down debt

Now is a great time to negotiate lower rates and maybe even close some of those extra cards. Did you know you can close a credit card and negotiate the rate down to less than 5%? I did it with a Bank of America card I had. Boy, does the balance go down fast when the interest rate is low! Know something else? The less you owe on credit cards in relation to your credit line; the better your credit score is! It shows the creditor you are responsible with credit, even if it is available to you.

Last, but not least, update your resume

Hey, nobody likes to talk about it, but the reality is that talented people with education and skills and experience are losing their jobs every day. That's not a dig on them. Companies simply have to cut costs to survive. Having that resume fresh and ready to go certainly helps you mentally to cope with both the possibility and the realty of it if it happens.

So make a plan! Take control! You'll feel so much better and you'll be better prepared to handle this downturn and be that much smarter and confident when it turns around.

Take a look at the Charlotte Business Journal today. http://www.bizjournals.com/charlotte/stories/2009/03/09/daily36.html Foreclosures in North Carolina according to Realty Trac are down by 50% from the same time last year!

There actually is a ton of positive news out there this week. The stock market is up over 500 points this week. Companies are actually announcing that they are hiring again. Locally are we starting to come out of this recession? This thing has already lasted longer at the end of April than any other recession we've had since World War II. What about you guys in other parts of the country? What are you seeing out there?

I know you've all been deluged with a huge amount of bad news regarding the financial markets. The mortgage market is just one of them. I recently found a website that is a fantastic source of upbeat information regarding the economy. One could get the idea very quickly from reading the articles that the majority of the good news is not being reported by major media outlets. The website is www.positiveeconomicnews.com.

I would encourage all of you to not only take a look at it, but to actually use the information given and pass it around to your friends, family, co-workers and customers. It paints a very different view of what is going on than you hear from in the major media outlets.

So take minute to go to the website and take a look. I can guarantee your spirits and hopes will be lifted. Remember, the market is as much about perception as reality and right now we need all of the positive perception we can get.

Reuters reported today that online retail spending rose 15 percent on the Monday after Thanksgiving from a year earlier. Sounds pretty good doesn't it? Take a look at the link here. http://www.reuters.com/article/internetNews/idUSTRE4B25Q220081203It seems that online spending reached $846 million on Monday. It was the second heaviest online spending day ever.

Everyone who knows me knows that I have always said that consumer confidence is the only thing that will save this economy. It is actually the only thing keeping the economy down right now.

Think about it. What is depressing the stock market right now? Are stocks inherently less valuable than they were a year ago? You could argue that some of them are due to sales forecasts and revenues being lower than were expected, but that is still a function of consumer confidence and the consumers willingness to purchase the product. However, the physical assets of the companies are still in place. The plants, equipment, raw materials, labor force and real estate owned by these companies are all still in place. They have not been diminished in the least. Sure there are some issues regarding some companies' goodwill and reputation, but the physical assets still physically remain. Get it?

The question still remains... just what will jump start the economy?

Well, falling gas prices will help. Keep in mind that retail sales, both in-store and online are probably being positively affected by the drop in gas prices. A recent article in the Kansas City Star computes that the average 2 car family is saving about $200 per month compared to last July. Where do you think a significant portion of that savings is going this year? I would say Christmas. The drop in fuel prices will also save money for those people this winter who rely on heating oil and natural gas to warm their homes. This will further ease pressure on those pocketbooks.

There is something else. Food and staple products we use every day aren't dropping as we'd like. There are 2 important reasons for this. Number one, diesel is the fuel of choice in large trucks that transport these products. Although it is cheaper, it hasn't fallen at the rapid rate we've seen in unleaded gasoline, but it is lower and will continue to fall. Number two, fertilizer is petroleum based and many of the products on the shelves including, (can you believe it?) disposable diapers are petroleum based as well. These products were made well in advance of them being on the shelves and were made with previously more expensive oil-based products. You should expect the first items you see coming down in price to be the items that are daily delivered, perishable and don't use petroleum products. (eggs, milk and fresh produce)

Let's take a look at some other things. How about housing? It has suddenly become more affordable for many people to become homeowners. In Southern California existing home sales are up 65% since last year. What happened? Housing prices dropped. You had a huge pent-up demand of people who thought they were doomed to be lifelong renters. Slash 25-30% off the price and suddenly it's the after Thanksgiving Black Friday housing event of a lifetime. Many areas of the country are experiencing this and consumers are responding.

And how about mortgage rates? We quoted 5.5% on a 30 year fixed rate mortgage last week. When was the last time rates were that low?

These are all very positive signs and by themselves would probably be enough to get consumers spending again, but for one thing; unemployment. Unemployment is hanging around 6.5%. Some economists are predicting it could get as high as 8.5%, but as my old man used to say, "If you laid all the economists in the world end-to-end, they still couldn't reach a conclusion." Nobody is going to accurately predict that number. That being said, I believe that as job growth improves in certain areas of the country, you will see localized consumer confidence improve.

And what will be the effect of all of this government meddling? Government bailouts unfortunately will only allow bad companies to continue to stay in business and lose our money. I don't really see the government as much of a savior in all of this, only a hindrance as they won't help existing business create more jobs by doing the one thing they can actually help with, which is lowering taxes. The best we can hope for out of the government is that they don't screw up the natural selection process. The market is very good at creating better products, lowering prices, creating new jobs and getting rid of unprofitable industries that consumers don't want if left alone.

My prediction? A good spring due to overall lower costs in the marketplace for areas with relatively low unemployment. Consumer confidence will surge amoung those with stable employment and will improve as more jobs are created. It's all about the consumer feeling good about the future. It always has been. (by the way, consumer confidence was up in November! A harbinger of things to come?)