Simple Steps To Keep Home Insurance Costs Down

As homeowners insurance premiums rise across the nation, Bankrate.com writes a helpful story on ways to keep your premiums down. The tips may surprise you.

Some of the highlights include:

1. Don't think a series of small claims is better than one big claim. The smaller clains are more expensive to process for an insurer and may result in higher premiums for your home.
2. Don't lie about your history of claims -- similar to CARFAX, homeowners have a "record" that track prior filings and getting busted is only a database search away.
3. Higher credit scores can lead to lower premiums because homeowners will higher scores tend to make fewer claims.
4. Your driving records impact your premium calculation.

The article also provides a fair amount of myth-busting so it's worth a read. A few minutes could save you some good money on your home insurance.

(Image courtesy: Spot Lite Magic & Costumes)

How Ben Bernanke's Testimony To Congress Is Moving Mortgage Rates

Despite lower prices at the gas pump, the Consumer Price Index increased a little bit more than expected in June.

According to the Bureau of Labor Statistics, CPI rose 0.2% versus the 0.1% expected by economists

CPI tries to answer the question "How expensive is everyday life?". Over the last 12 months, says the government, "life" is 2.7% more expensive.

Normally, this would cause mortgage rates to increase for rate shoppers but yesterday the normal increase was being offset by two other factors:

1. If we exclude the typically-volatile prices of food and energy, CPI increased 0.2% and that met economist expectations
2. Federal Reserve Chief Ben Bernanke testified to Congress yesterday that the economy is expanding "at a moderate pace", making it less likely that the Fed will raise the Fed Funds Rate in 2007.

Big Ben's words always carry a big stick in the markets and especially yesterday as markets looked ahead to today's release of the FOMC meeting minutes from June 28. The minutes will highlight the debate and conversation that eventually led to the Fed's press release.

If the minutes reveal that the Fed is fearful of inflation, mortgage rates will rise in response. This is because inflation devalues bond payments and mortgage rates are based on the value of mortgage bonds.

Trade In Your Automobile For A Larger Home?

The Bureau of Labor Statistics says that the average American family spends $614 a month on automobiles. This includes finance payments, gasoline, repairs, and insurance.

Let's relate that $614 per month to home buying.

Based on a 6.500 percent, fully-amortizing mortgage payment, that same $614 yields an equivalent of $97,000 in additional home purchasing power.

With an interest only home loan, it balloons to $113,000.

In other words, if your lifestyle does not require the full-time use of an automobile, you may want to consider trading in your car in for a larger and/or upgraded home.

For the temporary use of a car after a trade-in or sale, of course, you can phone a local car rental agency, or ask a friend to borrow (and be sure to fill up the tank as a courtesy).

You can also try priceline.com's Name Your Own Price feature which makes cars available for a fraction of the "standard" rental cost -- sometimes as low as $10 per day.

The Week In Review (July 17, 2007) : What To Watch For

Momentum trading and safe haven buying created a roller coaster-like week for mortgage rates last week.

This week, mortgage bonds should trade on data, by contrast.

Tuesday, at 8:30 A.M. ET, three important releases hit the wires:

1. Producer Price Index (The cost of doing business)
2. Industrial Production (How many goods are being produced?)
3. Capacity Utilization (Can more goods be produced, if necessary?)

The first release reveals the cost to business to produce goods; the latter two reveal the volume of production and the stress its places on the economy overall.

Despite last Friday's weak Retail Sales figure, markets remained unconvinced about inflation. So, together, these three releases will give some sense from a business perspective of whether the economy is shrinking or growing.

Wednesday, we'll get the Consumer Price Index -- also a major inflationary gauge. Rates should dance around this release, too.

Then, amid a host of other data, Thursday main focus will be on the FOMC's June 28 meeting minutes.

Once the data starts rolling in Tuesday, mortgage rates will close out the week based on the strength of data. Any numbers suggesting growth or increases will move rates higher; numbers suggesting weakness will push rates lower.

With so much data hitting the street, it may be best for rate shoppers to get locked in to a rate as soon as possible.

(Image courtesy: The Wall Street Journal Online)

When Everyone Spends A Little Less, We All Save A Little More

Weakness in Retail Sales data this morning is causing a knee-jerk reaction in trading circles, edging mortgage rates lower this morning.

Against expectations of a flat reading, retailers reported a 0.9% decrease in sales volume in June. This is the largest reported drop in two years.

As we've discussed before, though, when looking at data trends, we cannot ignore revisions to months prior. The same report from the U.S. Census showed that May's Retail Sales data was revised higher by 0.1%.

Now, also worth noting is that this month's report shows a margin of error of 0.7%.

That means that actual sales could have slid by as much as 1.6% or as little as 0.2% -- nobody knows for sure because the reported data is an extrapolation of the readings from a small sample set of all retailers nationwide.

So, in the best-case scenario, last month revised higher by 0.1% and this month showed a 0.2% loss -- a net loss of 0.1%.

This is a sharp reversal from last month's runaway numbers and should make the inflation-weary (i.e. the Federal Reserve) feel a little more at ease.

Slowing consumer sales reduces inflationary pressure on the economy and that is why we're seeing rates improve this morning.