What are Japanese Candlesticks? Why are they important?

I watch the bond market, stock market, futures, inflation, unemployment, housing demand, refinance and home purchase activity, world news, national news, political developments, gas prices and yes, I even watch the weather for signs of what the market will be doing in the future.

Giving reliable advice to my clients as to whether they should LOCK or FLOAT their interest rate when they have a mortgage application with me is a major goal of mine.  Their decision (based on my advice) has long term consequences and if they (and I) choose wisely so that they can maximize their investment return on their mortgage.

A mortgage is another form of investment strategy, but this is a whole blog post to come in the future.  I look forward to talking about the value of a "Big FAT 30 year mortgage" in a future Blog Post.

But today, what I want to talk about is what I use to gauge what is going on in the market TODAY, right this moment, and is something available to me and it's called "Japanese Candlesticks".  I would like to explain why this is valuable and important to me AND to my clients who are relying on my expertise and guidance,

What you see below is today's Japanese Candlesticks Chart (4%, 30 year bond yields) and it is showing lots of green "candles".  Green is Good!  It means that mortgage rates are improving or the market is favorable.  The last green candle on the far right of the chart (right next to the S1 in the blue box) is today's market activity.

Tomorrow's rates should (unless the market changes dramatically overnight or in the early hours of trading in New York tomorrow morning) be about the same, possibly better than they were today.

Yesterday's rates were worse than today's (the red candle shows a lower price, higher mortgage rate than today's), and so forth backwards.  Over the past 17 trading days the rates have been close to, above or just below the best rates in 17 months (best since May 8, 2013).

The S2 line, below the candlesticks, is the FLOOR of SUPPORT and with the rates close to this floor, if the bond prices begin to break below this floor, like happened yesterday for two hours, we COULD see the mortgage bond prices begin to deteriorate and we could see these great rates go away  (go up!) and this could be forever or temporarily, that is the gamble of NOT taking advantage of rates today.  

Call me today if I can help with analysis for your mortgage refinance or purchase.  :)

FHA Streamline Refinance-Great way to improve your rate or lower your payment

With mortgage rates at the best they have been for 15 months and the impending exit of the Federal Reserve from purchasing bonds (October, 2014 is the proposed date for tapering the bond purchase program), now may be the best time to consider an FHA streamline refinance.

The Streamline refinance program couldn't be simpler!  There is no appraisal required and the savings in monthly payments can be substantial especially if the current loan has been in existence for 5 years or more.

Information needed to begin to look at FHA streamline refinance options:

• Origination date of current loan
• Payment coupon or online payment information readily available-escrow payment, monthly mortgage insurance amount, balance of loan is on the payment coupon or online screen

Taking advantage of a lower interest rate or monthly payment savings can be something to take a look at to benefit person financial wealth with analysis of mortgage payment and payoff of higher credit card or installment loan debt.  

Also to be considered would be an increase in personal savings rate (into 401k, 403b, growth stock mutual funds, etc) with a decrease in the size of mortgage payments.  

Paying off your mortgage is a different kind of investment

As I read this article I thought of how many of my clients pay extra toward their mortgage each month in hopes of getting their mortgage paid off sooner rather than later.  8 out of 10 of my clients have regularly paid extra principal payments for most of their mortgage term.

I also thought of my fellow Business Network International friends who state in their biographies of what their #1 goal is.  The majority say that their burning desire is "to be debt free!". 

Considering the real desire of those I help and what my friends and family tell me, I found the following article interesting because it brings a great argument to the table about, "Why should we (or why should we NOT) payoff our mortgage.   

I share formulas for early mortgage payoff.  They are simple and my clients like to hear how to payoff their mortgages early,  They like the idea.  I like telling them how to make it happen.  It makes me happy that I told them about how to do it and they really like the idea of paying off their mortgage early.  Best of all?  Paying off your mortgage early is easy, it just takes discipline.

BUT here I beg the question, "Why should a mortgagee payoff their mortgage early?"  When you have a mortgage, there are tax benefits and tax savings.  Returns on a well diversified stock portfolio have a historical return of 9-12%. Why pay off early when your interest rate is sub 6%?  Lots to think about before jumping into an accelerated Mortgage payoff schedule. 

Here is the article to continue the argument for holding onto your mortgage as a GOOD (if not GREAT Investment): Should I payoff my mortgage early?

How a cancelled credit card effects your credit score

QUESTION: I've had an American Express charge card since 1999, which costs $95 a year to maintain. If I cancel it, what will this do to my credit score?
--Fred Cohen, Weston, Fla.

Ditching annual fees is often a smart play, although in this case $95 might not be much for what amounts to an open line of credit with no preset spending limit. Since you're closing a charge card (which doesn't let you run a balance) instead of a credit card (which does), your credit score probably won't take a hit, at least for now.

Credit-scoring firm FICO currently figures scores—the calculation most creditors use—without including charge cards in the all-important "credit-utilization ratio," which divides the total of all your credit limits by your total balances. (The lower the ratio, the better.)

Still, there's a longer-term risk to cutting up the card, says John Ulzheimer, president of consumer education at SmartCredit.com: Ten years after you cancel, the card's history will be wiped from your credit report, potentially shortening your credit history and lowering your score.

IRS Audit Red Flags: 12 hot spots to raise scrutiny from the IRS

#1 and #12.  Yep, I raised IRS scrutiny on my 2003 taxes because of mistake #1 (I didn't receive an interest statement in the mail for $146 of interest income on one of my old employer managed 401k's) and #12 (I took higher than normal deductions for charitable contributions which resulted in me needing to get cancelled checks to PROVE that I really gave the donations-which I did, by the way).  :)

My advice is to take your time and gather ALL your information together before you get ready to prepare your taxes, whether you do it yourself or have a professional do it for you.  THEN, since you have done such a great job of gathering, do a great job of storing your information, just in case you get a mail audit (more common every year) or a full blown audit (there's where a professionally prepared tax return pays dividends!).

Here is a list of 12 IRS Audit Red Flags to help keep you out of hot water: The IRS Dirty Dozen

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10 Common Errors Home Owners Make When Filing Taxes

By: G. M. Filisko
Published: January 25, 2011
Don’t rouse the IRS or pay more taxes than necessary—know the score on each home tax deduction and credit.  Here's 10 "sin's" that will rouse the IRS...

Sin #1: Deducting the wrong year for property taxes
You take a tax deduction for property taxes in the year you (or the holder of your escrow account) actually paid them. Some taxing authorities work a year behind—that is, you’re not billed for 2010 property taxes until 2011. But that’s irrelevant to the feds.
Enter on your federal forms whatever amount you actually paid in 2010, no matter what the date is on your tax bill. Dave Hampton, CPA, tax manager at the Cincinnati accounting firm of Burke & Schindler, has seen home owners confuse payments for different years and claim the incorrect amount.

Leprechauns give us a personal finance lesson!

Personal Finance Lessons From Leprechauns

Leprechauns are those small mystical creatures always stylishly attired in green garb and thinking of ways to hide their pot of gold. Or that is the impression I have gotten from Hollywood interpretations and my limited understanding of Irish lore. Apparently, leprechauns can also teach us a lot about personal finance and saving money.