Personal Banking E-Newsletter - August 2012

Take Advantage of Record Low Interest Rates: Tips for First Time Homebuyers

With interest rates at record lows, many consumers are looking to buy their first home or refinance the loan on their current house. Purchasing a home is one of the biggest financial decisions you'll make during your lifetime, and it's not a simple task. Spend time preparing before you choose a mortgage product and sign on the dotted line. Here are five tips to make your road from renter to owner less bumpy:

1. Create a housing budget. Knowing how much you're able to spend on your home puts you in a better position when shopping around for interest rates. In general, housing costs (including property taxes, utilities, maintenance and homeowners insurance) should not be more than 28 percent of your pretax income. If you can afford it, negotiate for a larger down payment or a shorter loan term to reduce overall interest costs.

2. Review your credit. Credit is tighter these days, so use to verify that you don't have any errors on your credit report before you apply for a mortgage. If your credit score is lower than you'd like, work on lowering your debt ratio to compensate. This number is the percentage of your income that goes toward repaying debt each month. A lower debt ratio usually results in a lower interest rate for loans.

3. Get pre-approved. To improve your changes at getting a lower interest rate on your mortgage, ask your bank to pre-approve you first. A free service at most banks, loan pre-approval will boost your credibility with real estate agents and sellers because it shows you're able to get financing and are serious about buying a house. It will also make the process of applying for your mortgage faster, especially if you obtain the loan from the same bank that pre-approved you for credit.

4. Shop around. Just like you shop around for the perfect house, make sure you shop around for the perfect mortgage. Don't only compare the interest rates, however. Look at loan origination fees, administrative fees, title insurance, settlement charges and any other costs added to the price of the house. Consider the costs of building versus buying, as well.

5. Negotiate. Discuss the price of the loan with both the bank and the seller. Some sellers are willing to cover various closing costs and fees, reducing the overall cost to you. This strategy is particularly helpful if you have an established relationship with the bank you're getting the mortgage from. They'll have a better understanding of your financial goals and be able to recommend the best mortgage product for your circumstances.

Many of these tips also apply for consumers looking to use today's low interest rates to refinance a current mortgage. Whatever your ownership status, these tips can help you walk out of the bank with a great rate and the keys to a new home.

Source: WBA Consumer Column for 7.16.12

Low-Cost Ways to Put Off Pricey Home Repairs

You change your car's oil every 3,000 miles or so, get your teeth cleaned regularly, and rebalance your investments once a year. So why wouldn't you undertake similar preventive maintenance on your house?

Having to replace just one of its hardest-working surfaces -- from roofing to exterior paint, hardwood floors to lawn -- would cost you thousands. But you can stave off that pain with simple, often-overlooked upkeep procedures and slight tweaks to the way you already approach routine chores.

Exterior paint: The biggest controllable threat to the paint on your house is the landscaping around it, says architect Karen Sweeney, director of facilities for two Frank Lloyd Wright buildings in Chicago.

Overgrown foundation plantings rub away paint -- and bring moisture and bugs onto the finish.

The fix: Prune bushes to keep them at least a foot away from the house; a landscaper might do it for $200 if he's already there.

Roofing: You can't stop nature from damaging your roof, but you can address the harm coming from within by adding ventilation to your attic. Without proper airflow, that space can get 35° to 55°F hotter than the outside temperature, roasting the roof from below.

The fix: Have a contractor add airflow by installing high and low attic vents; they can go in the walls or the roof itself, depending on the situation ($500 to $1,000).

Hardwood floors: Every grimy boot and dragged chair brings you closer to the day when you'll have to refinish the floors. "But sanding floorboards makes them a little thinner, bouncier, and creakier," says Sweeney. "And after three times there's nothing left to sand."

The fix: Hire a floor guy to "screen," or sand away most of the old finish -- without touching the wood -- and apply new polyurethane ($1,000 to $1,500 for a typical first floor, half the cost of refinishing).

"People like the look of a close-cropped lawn," says University of Tennessee agriculture professor John Stier, a consultant to Major League Baseball grounds crews.

But in the North, grass shorter than 2½ to 3½ inches is less drought resistant and invites insects and weeds (in the South, one inch is fine).

The fix: Set the mower higher and never remove more than a third of the grass height at a time. Says Stier: "Think of mowing as a trim, not a crewcut."

Protecting Your Virtual Estate

What happens to all of your e-mail and other digital assets when you die? Financial pros say not knowing can be costly.

When Missouri estates and trusts lawyer Robert Kirkland was preparing a will for a client several years ago, it never occurred to him to include any provisions about electronic bank statements or e-file tax services, both of which were then relatively new. The result of that omission became clear only last year, when the client died unexpectedly -- and his wife had no way to access their joint online bank accounts and the other key financial records that were stored digitally.

After weeks of trying to guess her late husband's passwords, the widow finally had to call on some IT specialists to hack into his computer. Kirkland still cringes when he thinks about it: "It was a headache on top of a heartache," he says.

As more and more of our lives are put online, estate planners are grappling with how to advise clients to secure and transfer their virtual estates -- the body of nontangible, digital assets people create and store on their computers and the Internet. Thirty-six percent of adults over age 45 now do their banking on the Web, according to the Pew Internet & American Life Project, and millions of people store some financial records online, which are often locked behind myriad user names and passwords. But estate planners say few, if any, of their clients consider digital assets in their wills -- an oversight that can result in real-world losses to beneficiaries. And experts say the estate-planning industry itself has been slow to adopt standards for dealing with the sort of "property" that may exist only in cyberspace.

Digital assets, of course, can range from things with obvious financial value (online bank and brokerage accounts, and Web-based businesses) to less obvious but still valuable properties like domain names, blogs, Twitter accounts and even social media pages. Karin Prangley, an estate-planning lawyer in Chicago, says that merely accounting for these assets after the owner's death is often a challenge -- and can be trickier if the person paid his bills and filed his tax returns online. But without log-in information, access to those Web accounts and services may require hiring a computer-forensics expert or obtaining a court order.

And the problem isn't limited to assets. Without proper documentation, says Kimberly Foss, founder of Empyrion Wealth Management in Roseville, Calif., executors may have no way of knowing how to cancel the cable service or stop automated bill payments. Complicating matters is that accessing the deceased's online account (even that of a spouse or parent) may run afoul of terms of service agreements -- and federal antihacking laws. When Prangley's own father-in-law suffered a stroke in 2009, leaving him incapacitated, the family was left to sort through the assets of his building-supply company. Trouble was, his client records and invoices were stored digitally -- and the e-mail service provider refused to help. "All that information was trapped in an e-mail account we couldn't access," she says.

While estate-planning pros say the problem is only getting bigger, just a handful of states have passed legislation related to digital-property management after death. That large legislative gap, meanwhile, is leading a growing cadre of estate planners to be digitally vigilant as never before, creating step-by-step instructions for how heirs can access and transfer virtual properties after a client's death.

For starters, Foss now asks her clients to take inventory of all their digital accounts and store an updated list of passwords on a flash drive, locked in a safe. Some pros are also looking to websites like and, which enable users to release account information to designated beneficiaries after their death. Taking even a few modest actions now, says New York attorney Bernard Krooks, can keep your assets from getting lost in a cybercemetery. "In a worst-case scenario, the accounts get frozen and your heirs won't have access," Krooks says. "At the end of the day, they could potentially be gone."

How to Take Advantage of Early Back-to-School Sales

Most kids have another four weeks of summer vacation before school is back in session. But retailers are eager to get them -- and their parents -- shopping for supplies a whole lot sooner.

While back-to-school sales typically kick off in August, this year they started in June with deals on computers from stores like Best Buy and Staples, as well as manufacturers including Apple and Dell. Now other retailers are on the bandwagon, pushing purchases of backpacks, notebooks, clothes and other classroom essentials. Kmart's new "back to campus" deals offer 30% off juniors' clothing and 20% on dorm-appropriate appliances like mini-fridges. Staples, which introduced a 15% off "back to school savings pass" in mid-June, has offers in its latest ad for one-cent notepads and binders and 25-cent pens.

The early enticements are likely aimed at reversing recently lackluster retail sales. During the first half of the year, consumers spent 4.6% more than during that period last year, but shoppers have been progressively cutting spending since April, according to the National Retail Federation. Shoppers are being more cautious about how they spend their money, reasoning they might need it for more essential items if the economy continues to be sluggish. "Consumer confidence is down," says James Bieri, principal at Stokas Bieri Real Estate, a Detroit-based retail consulting firm. "That has retailers thinking, we better get ours first."

Experts say some early back-to-school offers should be avoided. Many of the new fall clothing items in circulars are still full price, and experts say shoppers in the market for a laptop can expect cheaper deals in September. Others are worth checking out:


Focus your early buys on summer clearance items that will last into fall, rather than stores' new fall and winter items, says Michelle Madhok, the founder of sale-tracking site T-shirts and tank tops are wearable now, and also through the fall layered under sweaters. Dresses, shorts and lightweight sweaters are also good buys. Kohls currently has up to 55% off select kids' clothes, plus extra discounts of up to 30% for store cardholders. Macy's is in the midst of its "Summer Stock-Up" sale, with discounts of up to 40% on men's, women's and kids' apparel.

Colder-weather items -- including jeans, boots and coats -- won't have decent sales until at least September, Madhok says. You're better off waiting. "It's always better to buy late in the season to get a deal," she says.


If you're buying for a college-ID-carrying student, manufacturers have already debuted their fall discount promotions, which tend to be the best discounts available. At Apple, for example, students can get a MacBook Air for $949 instead of $999, and also be rewarded with a $100 gift card for e-books, apps and other media purchases. Dell is offering students a $200 e-gift card for its site, as well as student-only pricing.

But parents who are buying for a younger child or themselves, or are looking for a tablet, it's worth waiting until September for better pricing, says Michael Paulson, a vice president for gadget price-tracker Based on the site's data, prices tend to dip 10% during the last two weeks of September, he says. The best current sales are on older models such as the 15.6" HP Pavilion, which was originally $650 but currently sells for $510, or the 15.6" Toshiba Satellite, originally $680 but currently as low as $544 online.

Office supplies

Current sales can offer a good excuse to stock up on basic supplies like printer paper and pens for kids' and parents' needs alike. In addition to Staples' penny deals, there are also Office Depot deals for 50-cent crayon packs and $4 multi-packs of tape, and at Office Max, packs of pens for $2 and highlighters for $1.

The only reason to wait: if your child's school has yet to release a list of needed supplies. Waiting for that ensures you won't buy too much or the wrong things, and the sales are likely to be good through the rest of the summer, says Kit Yarrow, a professor of psychology and marketing at Golden Gate University. Plus, there are often state sales-tax holidays later in the summer that can sweeten the deal for items that aren't currently on sale. "Unless you're buying something that never goes on sale, 4% or 8% off is not that big a deal," she says.