Back to School Behind the Wheel
A Commuter's Education

You already know that your daily drive can make you aggravated, exasperated, and even potty-mouthed. But did you know it could make you smarter, too? A USC study found that drivers who cover an average of 12,000 miles a year will, over the course of three years, spend enough time in their cars to complete two full years of college. That could make commuting the single most important educational tool we have. Think of it as the U of YC: the University of Your Car. You can purchase discounted new and used audio books online, and your local library branch has shelves of audio books that you can borrow for free. Here are a few course offerings to consider:

Required courses. Looking to refresh your memory regarding the causes of World War I? Or perhaps you want to listen to Harold Bloom read The Best Poems of the English Language. Whatever class you're thinking of taking, there's an audio book covering the topic, from actual college lectures to best-selling non-fiction.

Get a degree in business. All of the best business titles come out instantly in audio books. Learn to make friends and influence people, give yourself a total money makeover, or start thinking like a billionaire-all before you get to the office in the morning.

Stay informed. One of the difficulties with radio is that it's easy to miss your favorite show. With the advent of Podcasting, this will soon become a thing of the past. Podcasting enables listeners to download audio broadcasts, from select media outlets or individuals, and listen when it's convenient. Rather like TiVo® for radio, you can even "subscribe" so that new content is automatically accessed. Another radio resource is www.audible.com. This site sells popular radio show content as well as daily audio versions of the New York Times and the Wall Street Journal. (An MP3 player is required.)

Aprende un nuevo idioma. Remember those old language tapes? Well, they still make those, and they're better now. I promise. And what better place to work on that accent of yours than alone in the car? As for the people in the next car, the ones watching you talk to yourself, they can think what they want.

Enroll in comedy school. Since you're the dean of admissions and you make the reading (or, rather "listening") list for this degree, you can study what you want. Why not check out recordings by today's top comedians? Margaret Cho, Bill Cosby, Richard Jenni-they all put out CDs and audiotapes. Maybe they'll inspire you to work on your own routine.

Your commute isn't getting any shorter, but at least now you can get smarter while you're getting where you need to go. And the next time traffic is stopped dead on the freeway, look on the bright side: you can take notes.

I have an educational audio series which covers topics ranging from real estate investment strategies and an explanation of credit scoring to dispelling home equity myths. Please contact me to obtain a copy today!

The Federal Reserve lowered interest rates for the third straight meeting of the FOMC. What does this mean? Well, if you're looking to capture the best home loan rates, you need to act now. For those with an application already in process, you should probably lock your rate as soon as possible. And, for anyone who has yet to begin a loan application, what are you waiting for?

Rate Hikes on the Horizon
Despite this latest cut from the Fed, rates for many borrowers could actually increase soon. Why? Because Fannie Mae and Freddie Mac have recently announced 2008 Loan Level Price Adjustments (LLPAs) that are already starting to show up on lenders' rate sheets. LLPAs are automatic “penalties” based on credit scores, which tack on costs in the form of points or higher rates for most anyone with a FICO less than 720. Call me, and I will give you all the details.

Back to The Fed
But, let's get back to the good news. The Fed cut the Federal Funds Rate, an overnight lending rate that banks charge each other and which influences the amount of interest consumers pay for various types of debt, such as credit cards, home equity lines of credit, and auto loans.

Since September 18th, the Federal Funds Rate has gone down 100 basis points. If you have a loan that is tied to the Prime Rate, this means your rates have been lowered a full point. But, for those seeking to obtain new financing, you must act now to take advantage.

No Time to Wait
Following each of the last two interest rate cuts by the Fed, home loan rates jumped higher a couple of weeks later. Remember, lower short-term rates are inflationary by nature, and cause consumers to spend more money. Because of this, long-term rates tend to increase as bond holders hate inflation and command higher rates as a result in order to protect their investments.

Because of these pressures and the upcoming Loan Level Price Adjustments, interest rates are going to rise. You need to call me now in order to secure the best deal you may see for some time. You'll be glad that you did.

We appreciate your business and wish you a happy and healthy holiday season!

A negative amortization loan is an adjustable rate mortgage that allows the consumer to tap into home “equity” by offering several monthly payment options. Up to an additional 25% of the original loan amount is available to the borrower.

This flexibility works well for consumers who have seasonal income or want more control over their cash flow. However, the borrower must have some degree of financial discipline. Each month, the borrower will choose to make a fully amortized payment, an interest-only payment, or a low introductory rate payment.

A fully amortized payment is larger, and includes payment toward principal + interest. The interest-only payment is lower, but no part of that mortgage payment goes toward the principal. The borrower is simply keeping their head above water.

The third option is where negative amortization comes into play. If the consumer chooses to make the low introductory rate payment, the interest is not sufficiently covered for that month. The balance of interest owed is then tacked back on to the principal, thus increasing the mortgage debt.

Smart consumers can use these payment options to their advantage, but should have a full understanding of how adjustable loans work. They should also know that once the maximum loan amount has been reached, the lender will immediately increase the payment amount to the fully amortized rate.