Biltmore Capital Advisors’ Tyler Vernon named a 5 Star Wealth Manager by New Jersey Monthly Magazine

Vernon’s Third NJ Monthly Wealth Manager Award

PRINCETON, N.J., Feb. 26, 2014 /PRNewswire/ — Biltmore Capital Advisors President and Chief Investment Officer Tyler Vernon once again was named as a Five Star Wealth Manager by New Jersey Monthly Magazine.

The 2014 ranking recognizes the efforts and success of financial professionals across the state. The award is presented to honorees by New Jersey Monthly, based on research conducted by Five Star Professional, a consumer-focused group that aims to identify professionals who offer the highest quality service as measured by ten objective criteria.

“I am honored to be ranked once again among New Jersey’s Top Wealth Managers, whose selection review is extensive and focuses on a variety of criteria,” says Vernon. “We could not have accomplished this without the support of our clients, and the work ethic and commitment that our whole firm delivers on a daily basis. While we are always working to improve our services, we’re very grateful to be recognized in this regard with this prestigious award.”

Vernon is president and Chief Investment Officer at Biltmore Capital Advisors. He founded the Princeton, NJ-based firm after spending nearly a decade working on Wall Street. Biltmore specializes in investment planning and management, with particular focus on alternative investment strategies. His investment expertise is often featured by the national media, including CNBC, Fox Business, and in the Wall Street Journal.

Vernon was featured in the January 2014 issue of New Jersey Monthly and was also recognized in 2011 and 2013.

About Biltmore Capital Advisors

Biltmore Capital Advisors is a SEC-registered investment advisory firm headquartered in Princeton, NJ.. Biltmore serves the financial needs and concerns of affluent families worldwide. Having a keen understanding of the issues that face these families, whether it be helping to reduce risks, preserving or growing wealth, asset protection, lending strategies, tax management and gifting strategies, or estate planning, Biltmore has developed a financial planning and asset management process to help customize a plan for each family’s unique requirements. As a highly independent firm, Biltmore is committed to delivering sound investment strategies and long-term innovative solutions through a high level of client service.

For more information on Biltmore Capital Advisors, please visit

CONTACT: Tyler Vernon at (888) 391-4563 or

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Why Even Rich People Are Having Trouble Getting a Mortgage

Home prices are rising, but even the well-off are facing obstacles from tight-fisted banks

By: Richard Satran

US News & World Report’s | August 1, 2013


Having trouble getting home financing? You’re not alone. Even wealthy  people are getting rejected under the tough new lending rules adopted  after 2008’s housing market crash.

Moneyed  enclaves are still feeling the impact of tight mortgage money. In the  breezy New Hampshire lakes region where “On Golden Pond” was filmed and  waterfront homes routinely sell in the $5 million to $10 million range,  sales are “brisk” but loan applications are often rejected, says sales  associate Jerry Love of Peabody & Smith Realty in Holderness, N.H.,  on the shore of Squam Lake.

“We don’t see deals  sail through with the automatic approvals that we used to see,” Love  says. “And we are seeing plenty of wealthy people turned down on  million-dollar loans who would easily have qualified a few years back.”

The  rules may get even tougher under proposals now being considered in  Washington designed to cap borrowing as a percentage of income. That  will be especially bad news for first-time homebuyers and people with  moderate incomes who have the hardest time lining up financing. But even  those with millions in assets and high credit scores are being turned  down if their income is low. And in a low-rate environment, their  investment income counts for less than ever on bank loan applications.

“People  with a lot of resources are usually OK getting first mortgages, but  they are finding they can’t refinance or get funding for a second home,”  says Tyler Vernon, a loan specialist for Biltmore Capital Advisors in  Princeton, N.J. “Of course it’s a nice, high-level problem to have. But  it’s a real problem for retirees in places like the Northeast.”

Also,  while increasingly stringent income requirements are posing the most  barriers, stingy assessments are also a frequent problem for costlier  deals, according to real estate agents and lenders. In part, that’s  because “assessors are protecting themselves because banks have been  suing them over mortgage failures that showed inflated values,” Vernon  says. Costly properties can pose difficulties when assessors try to find  comparable sales for estimating what mansions are worth, Love adds.

“Everything  has moved to a much more rigorous underwriting environment, and every  datapoint in every application is verified, checked and documentation is  gone over multiple times,” says Michael Fratantoni, vice president of  single-family research and policy development at the Mortgage Bankers  Association.

People with money are finding ways  to buy properties, but in the first go-around, they are finding  surprises. “The lenders want income statements. They want to check with  employers directly on people’s work record, and they want to see people  who have been in jobs for awhile,” Love says. “That’s not something our  wealthy buyers can always show.”

To be sure,  it’s first-time buyers and people with moderate incomes who are having  the most trouble getting credit, Fratantoni says. But this is a  dramatically different lending environment no matter what income strata  you are in. The MBA’s index on mortgage credit availability has risen  slightly over the past year, but it’s nothing like it was prior to the  crash. The MBA’s credit availability index is just two years old. But it  calculates that home financing would have been eight times as easy in  the years leading up to the housing collapse.

Still,  some lending has thawed a bit. The MBA says there has been some recent  easing up on loan requirements, and wealthier borrowers have benefited  the most: Even borrowers without high incomes are starting to qualify  based on healthy savings and high credit scores alone. “They have a  better chance, but not every lender is willing to do that,” Fratantoni  says. “It might require some shopping around.”

But  even as the housing market improves, loan originations overall are  expected to drop by 10 percent this year versus last, according to the  MBA. Banks remain reluctant to part with their own reserves, even though  they are flush after five years of easy money from the Federal Reserve.  Fratantoni says the change in credit availability reflects the banks’  more prudent lending and the elimination of “no-documention” and  “interest-only” loans that led to many of the foreclosures in the real  estate crash.

Also, bad loans of all shapes and  sizes are still working their way through foreclosures and court  proceedings. Just this week, prosecutors in New Jersey filed charges  against one of television’s “Real Housewives of New Jersey,” Teresa  Giudice, and her husband Giuseppe “Joe” Giudice, who were charged with  falsifying income data on $2 million in home mortgages dating back to  the early 2000s when standards were loose.

Financial  regulators are also pushing for controls to avoid the excesses that led  to the crash. The new Consumer Financial Protection Bureau has been  pushing for a limit on borrowing when a debt-to-income ratio exceeds 43  percent, although Congressional opponents worry it will “reduce access  to credit that qualified borrowers need to buy homes,” according to a  press release issued by members of a House Financial Services  subcommittee.

Lending experts say consumers  need to be well-prepared to deal with the stringent process when they  seek loans. Documentation is important, sometimes in the form of a  letter from an employer. People seeking mortgages should also be  prepared to shop for deals. Different lenders have much different  standards. Down payments are rising for many loans, with 20 percent to  30 percent equity required from private lenders. For those who qualify  for FHA loans, the down payment is 3.5 percent, but requirements for the  federal lending program are stringent. Two years in a job and a credit  score of 620 or better are needed, and costly mortgage insurance adds  more than a percentage point to the lifetime cost of the loan. For  wealthy buyers, FHA loans don’t help much since they are capped at  $625,000.

The high-end lending market is  slowly recovering, though, and private lenders are extending credit for  the well-heeled while avoiding the starter-home set that can borrow  through government programs. “It’s more work but things are getting  done,” says Love, whose clients are mostly those with enough money to  afford a second home. “We are very busy this summer, and we haven’t even  gotten to the peak period [at summer’s end when people often buy  vacation homes.]”

Biltmore’s  Vernon says his firm has been busy getting loans for wealthy clients  who borrow against their investment portfolios. The rate of borrowing in  so-called margin accounts has reached near the all-time highs just  before the 2008 market crash. That strategy is attractive because such  arrangements offer rates as low as 1 percent and sometimes even less,  and they require no additional down payment because the banks hold the  securities that back up the loans. “It’s almost no risk to the banks  because the securities are pledged as collateral,” Vernon says.

The  downside is that if the securities fall in value, the borrower’s assets  can be liquidated. Vernon says he advises caution and recommends such  borrowers keep “back-up emergency funds” like a home equity credit line.  The rates can also increase as overnight bank-lending benchmark rates  rise.

MBA’s Fratantoni worries that a further  increase in interest rates could cause problems for borrowers at all  income levels. “People’s credit has been getting better since the  crisis,” he says. “But any time you see a rapid increase in rates,  anything tied to variable rates has some additional risk.” Bankers and  consumer advocates find themselves in rare agreement on the issue.  Easing loan terms too much could be risky for banks and borrowers.

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Housing stocks fall, Facebook jumps on Wall Street

MATTHEW CRAFT / AP Business Writer

The Associated Press | July 25, 2013


NEW YORK (AP) — Disappointing results from PulteGroup, D.R. Horton and other home builders left major stock indexes with only tiny gains in afternoon trading. Technology stocks rose after Facebook’s earnings blew past analysts’ estimates.

Even with plenty of news from big companies, the broader market was mixed. Of the 10 industry groups in the Standard & Poor’s 500 index, five rose and five fell.

D.R. Horton, the country’s largest builder, and PulteGroup said orders for new houses jumped in the second quarter, but their results still fell short of what analysts had expected. PulteGroup also posted a 14 percent decline in profits

D.R. Horton dropped $1.77, or 8 percent, to $19.45. PulteGroup lost $1.95, or 11 percent, to $16.49.

‘‘Housing is taking it on the chin,’’ said JJ Kinahan, chief derivatives strategist at TD Ameritrade. ‘‘I think what you’re seeing a bit of today is people questioning what higher mortgage rates mean for housing.’’

Technology companies fared better. Facebook jumped 27 percent after reporting earnings late Wednesday that easily beat analysts’ forecasts thanks to higher revenue from advertisements on mobile devices. Facebook’s stock rose $7.16 to $33.68.

The Standard & Poor’s 500 index was up two points, or 0.1 percent, to 1,688 as of 2:30 p.m.

The Dow Jones industrial average rose two points, or 0.01 percent, at 15,543. The Dow was held back by Caterpillar, which warned of sagging sales on Wednesday.

The Nasdaq composite index rose 17 points, or 0.5 percent, to 3,596.

It’s nearly halfway through the second-quarter earnings season, and the overall trend looks good, but not great, said Tyler Vernon, chief investment officer of Biltmore Capital in Princeton, NJ. ‘‘There have been some big disappointments, like Caterpillar yesterday, but we’re seeing better and better numbers coming out.’’

Analysts forecast that companies in the S&P 500 index will report earnings growth of 4.3 percent over the same period last year, according to S&P Capital IQ. At the start of July, the forecast was for growth of 2.8 percent. More than six out of every 10 companies have cleared analysts’ earnings targets so far.

Eventually, improving profits should help push the S&P 500 index above 1,700 in the coming weeks, Vernon said.

In the market for U.S. government bonds, the yield on the 10-year Treasury note climbed to 2.62 percent from 2.59 percent the day before. Late last week, it was trading at 2.48 percent.

The 10-year yield acts as a benchmark rate for most mortgage loans. A sharp increase in the rate drives up mortgage costs and could slow down sales in the housing market.

It’s still very low by historical standards thanks in large part to the Federal Reserve’s massive bond-buying program. The yield hit a recent low of 1.63 percent on May 3. By contrast, it was trading around 4 percent in the summer of 2008, shortly before the worst days of the financial crisis.

Among other stocks making big moves:

— Las Vegas Sands, a major casino operator, fell $1.25, or 2.3 percent, to $53.69 after it posted lower revenue and income than financial analysts had expected.

— Harley-Davidson rose 40 cents, or 1 percent, to $56.27 following news that the Milwaukee-based motorcycle maker’s earnings rose 10 percent in the second quarter, driven by an aggressive expansion abroad and revamped production.

— Visa rose $8.06, or 4 percent, to $194.78. Visa returned to profitability in its third fiscal quarter and reported strong revenue growth as the company processed more transactions worldwide.

© Copyright 2013 Globe Newspaper Company.

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Stocks gain after unemployment claims fall

By Steve Rothwell

Associated Press | May 2, 2013

NEW YORK The stock market is all about jobs this week.

Stocks rose Thursday after unemployment claims fell to a five-year low. A day earlier it was just the opposite; the market slumped after companies added just 119,000 jobs in April, the fewest in seven months, according to payroll processor ADP. And stocks could swing again Friday when the government’s closely watched monthly employment report is released.

“Everyone is looking to the April jobs numbers,” said Tyler Vernon, chief investment officer at Biltmore Capital. “People are more confident that it was an anomaly last month and are looking for some bigger numbers.”

Economists forecast that the employers added 160,000 jobs last month. Stocks slumped April 5 when the government said 88,000 jobs were added, less than half the number forecast.

Signs of increased hiring have supported this year’s surge in stocks and pushed the market to record highs. The run-up has started to falter in recent weeks on concerns that the global economy is slowing. More jobs should boost consumer spending, a key driver of U.S. growth.

The Dow Jones industrial average rose 130.63 points to 14,831.58 on Thursday, an increase of 0.9 percent. The index lost 138 points a day earlier. The Standard & Poor’s 500 index climbed 14.89 points, or 0.9 percent, to 1,597.59, also recovering almost all of its losses from a day earlier.

Applications for unemployment benefits fell last week to 324,000, the fewest since January 2008, the Labor department reported before the market opened.

The outlook for global growth also got a boost after the European Central bank cuts its benchmark interest rate a quarter of a percentage point to 0.5 percent.

The euro fell a penny against the dollar to $1.3060. The price of gold rose $21.40, or 1.5 percent, to $1,467.60 an ounce. The price of crude oil rose $2.96, or 3.3 percent, to $93.99 a barrel.

Higher profits from CBS, Facebook and other companies also lifted stocks Thursday.

Broadcaster CBS reported a 22 percent jump in first-quarter earnings as big events like the Super Bowl pushed advertising revenue higher. Its stock rose 95 cents, or 2 percent, to $47.35.

GM rose 98 cents, or 3.2 percent, to $31.16 after it lost less money in Europe and beat Wall Street’s expectations for first-quarter profit. The automaker’s earnings of 67 cents a share beat the 54 cents predicted by Wall Street analysts who follow the company.

Facebook gained $1.54, or 5.6 percent, to $28.98 after its first-quarter revenue rose 38 percent, surpassing Wall Street expectations. Nearly a third of the company’s advertising revenue came from mobile devices, a greater share than analysts had expected.

The social networking site bucked the trend for companies reporting in the first quarter. Most are exceeding analysts’ expectations on earnings, but falling short on revenue.

“If we continue to see several more quarters like this, investors would start to get nervous,” said Andrew Milligan, head of global strategy at Standard Life Investments. He says that growth needs to pick up in the major export markets, like China and Europe, for U.S. companies to maintain earnings growth.

Facebook’s earnings also boosted information technology stocks. The industry rose 1.4 percent, the most of the 10 groups in the Standard & Poor’s 500 index.

Technology stocks have surged in the past two weeks, after lagging the S&P 500 in the first three months of the year. Their 5.7 percent increase in 2013 still trails the 18.5 percent gain for health care companies, the best performing industry in the index.

Seagate Technology was another technology company that gained Thursday. The company, which makes hard drives, jumped $2.69, or 7.3 percent, to $39.63, even after the company reported a slump in sales and earnings. The decline wasn’t as bad as analysts had expected, though, and Seagate handily beat estimates for both sales and revenue.

Earnings at companies in the S&P 500 are at record levels. They are forecast to increase by 4.4 percent in the first quarter and keep rising throughout the year, according to S&P Capital IQ data.

Gains for technology companies helped push the technology-heavy Nasdaq composite higher. The index advanced 41.49 points, or 1.3 percent, to 3,340.62.

Stocks are rebounding after a slump Wednesday, when reports of slower manufacturing growth and hiring dragged down markets. The Dow had its worst drop in two weeks. The market was down even after the Federal Reserve Bank reaffirmed its plan to continue its stimulus program, which is now five years old.

For the year, the Dow is still up 13 higher, the S&P 500 is up 12 percent.

The gains suggest that the market is getting ahead of itself, given a lackluster outlook for the economy, said Uri Landesman of Platinum Partners. He thinks the stock market is set for a pullback.

In government bond trading, the yield on the 10-year note was unchanged at 1.63 percent, matching its low for the year. Bonds have gained as inflation remains tame.

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Biltmore Capital Advisors’ Tyler Vernon is named a New Jersey Five Star Wealth Manager by New Jersey Monthly Magazine!

Press Release: Biltmore Capital Advisors – Thu, Apr 11, 2013 9:00 AM EDT

PRINCETON, N.J., April 11, 2013 /PRNewswire/ — Biltmore Capital Advisors president and CIO, Tyler Vernon, receives ranking among New Jersey Monthly Magazine’s 2013 Top Wealth Managers.

The list recognizes the efforts and success of financial professionals across the state. The award is presented by New Jersey Monthly Magazine that engaged Five Star Professional, an independent research company, to perform research and rankings of Wealth Managers in New Jersey.

“It is a tremendous honor to be ranked as a Five Star Wealth Manager,” says Vernon. “My team and I strive to consistently deliver outstanding service and investment advice, and this award underscores our ongoing efforts.”

Mr. Vernon is president and Chief Investment Officer at Biltmore Capital Advisors. Mr. Vernon founded the Princeton, NJ-based firm after spending nearly a decade working on Wall Street. Biltmore Capital Advisors specializes in investment planning and management, with a particular focus on alternative investment strategies. Mr. Vernon is often featured by the national media, including on CNBC, Fox Business, Bloomberg, and in the Wall Street Journal.

Vernon was featured in the January 2013 issue of New Jersey Monthly Magazine. Vernon was also recognized on the 2011 list.

About Biltmore Capital Advisors
Biltmore Capital Advisors is a SEC-registered investment advisory firm headquartered in Princeton, NJ. Tyler Vernon is Chief Investment Officer of the firm, which employs “family office” services and fiduciary oversight for high net worth clients, endowments and foundations.

For more information on Biltmore Capital Advisors and its offerings, please visit

CONTACT: Marissa Foy for Biltmore Capital Advisors at 610-228-2104 or

Award candidates were then evaluated against 10 objective eligibility and evaluation criteria associated with wealth managers who provide quality services to their clients such as client retention rates, client assets administered, firm review and a favorable regulatory and complaint history. Five Star Professional finalized the list of Five Star Wealth Managers to be no more than 7% of the wealth managers in the area.
• Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers.
• The Five Star award is not indicative of the wealth manager’s future performance.
• Wealth managers may or may not use discretion in their practice and therefore may not manage their client’s assets.
• The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine.
• Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by Five Star Professional in the future.
For more information on the Five Star award and the research/selection methodology, go to

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First-Time Home Buyers Missing Out on Housing Recovery

By David Francis, US News & World Report’s

US News & World Report | December 10, 2012


Tougher lending standards squeeze out potential borrowers

As the housing market continues to show improved signs of strength, many first-time home buyers are failing to benefit from the broader recovery.

The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, released last week, found that first-time home buyers were purchasing only 34.7 percent of the homes sold in October. That’s down from 37.1 percent in September, and is the lowest percentage ever recorded by the survey.

This decline surfaces as purchases of non-distressed homes—houses that are not in foreclosure—have increased dramatically in 2012. The report shows that the vast majority of the homes being sold are regular purchases—accounting for 64.7 percent of all houses sold in October, up from 55.7 percent in February. The increase is a sign of strength in the housing market, as fewer people are buying homes in foreclosure.

But according to the survey, first-time buyers are the only group that has not purchased more non-distressed properties in the last five months. Meanwhile, current homeowners are picking up an increasing number of properties, purchasing 54.4 percent of all homes in October, up from 50 percent in June.

Thomas Popik, research director for Campbell Surveys, says these trends in the disparity of who is purchasing homes are due in part to increasingly tough mortgage standards by banks. But the real obstacle for first-time buyers is the Federal Housing Authority (FHA), according to Popik. At the depths of the housing crisis, the FHA loosened lending standards in an attempt to kick-start a housing recovery. Now that the recovery has begun, standards for FHA mortgages that require a 3.5 percent down payment are tightening.

“The basic problem is that about half of owner-occupant homebuyers rely on low down payment loans. FHA is now under significant financial pressure,” Popik says. “They’ve tightened their underwriting, and weeded out a lot the lenders that have poor lending practices.” He adds that, in the process, FHA has restrained access for first-time buyers who can’t make the traditional 20 percent down payment.

Lack of access to mortgages for first-time buyers has broad consequences. Without these buyers, the housing recovery will be difficult to sustain. It also robs first-time buyers, many of whom are young (the National Association of Realtors estimates an average age of 31 for first-time buyers) of the opportunity to cash in on the recovery and build wealth.

Behind the FHA’s tightening. As the housing market failed to gain traction following the explosion of the real estate bubble, the Obama administration decided to loosen standards for home loans—giving borrowers who would not qualify for a typical bank loan a chance to enter the housing market. At the same time, FHA extended lifelines to underwater homeowners, allowing them to refinance mortgages to keep their homes and avoid foreclosure.

These programs required FHA to take on large amounts of debt, Popik says: “FHA really picked up these low down payment loans in the second half of 2008 and 2009, even going into 2010 and 2011.”

To service this debt, FHA had to rely on people who wouldn’t have been able to qualify for a traditional loan and people who had homes that were underwater. As payments on these loans have slipped in recent years, FHA now finds itself $16.3 billion short in its insurance fund.

This has forced FHA to tighten lending standards, limiting loan options for many first-time buyers, says Tim Ralph, portfolio manager and chief operating officer at Biltmore Capital Advisors. FHA is now “looking for three years of steady income, understanding what’s outside of your income in terms of debt, and you investment portfolio,” Ralph says. “Rates might be at 2.75 percent, but that’s not happening for someone with a 650 credit score who can’t put 10 percent down. If there’s a slight downturn in the housing market, this buyer would be immediately underwater.”

According to Robert Simons, a professor of urban planning at Cleveland State University, FHA is now behaving like the big banks by avoiding borrowers who give the slightest hint that they might not be able to keep up with payments.

“Their taste for risk is complicated by how their overall portfolio is doing,” Simons says, referring to the $16.3 billion shortfall. “If they have a lot of defaults, they will continue to have an unacceptable level of capital.”

Changing attitudes toward housing. Simons says first-time buyers might be avoiding the housing market because of the hangover from the housing crisis. He says they are turned off by the unpredictability of the investment. “People are disillusioned. They don’t see appreciation like they once did,” he says. “There’s a false hope of growing wealth in a house. People are being more selective about where they buy.”

Simons also believes the culture of foreclosure that persisted throughout the crisis has negatively influenced attitudes toward the housing market. “People who went through it themselves, or know people who went through it, are definitely turned off. People who defaulted will not buy quickly,” he says.

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Refinancing near retirement can be smart

By Amy Hoak, MarketWatch

Marketwatch | December 10, 2012


CHICAGO (MarketWatch)—Tempting low interest rates continue to make headlines, making refinancing your mortgage look attractive. But when retirement isn’t far off, the decision to refinance can get more complicated.

After all, most pre-retirees are trying to reduce debt before their last day of work, not extend the amount of time they’ll be on the hook for payments.

Still, for some homeowners with retirement on their minds, it makes sense to trade their higher mortgage rate for one near record lows, said Keith Gumbinger, vice president of, a publisher of mortgage and consumer loan information. The money saved each month on your mortgage can be poured into other investments that could pay off in retirement, “whether that’s a 401(k) or IRA or cleaning up other debts,” he said.

If you haven’t refinanced in the past few years, your monthly savings can be substantial. The 30-year fixed-rate mortgage averaged 3.34% for the week ending Dec. 6, while the 15-year fixed-rate mortgage averaged 2.67%, according to Freddie Mac’s weekly survey of conforming rates. For those with a current mortgage rate near 5%, refinancing could mean significant improvement to their monthly cash flow.

Consider this: A homeowner who’s 52 today and who wants to retire at 70 bought a home in 2002 with a $250,000 mortgage. He refinanced at 5% in 2003. If he refinanced again into a 3.49%, 30-year fixed-rate mortgage, his payment would go down $415 a month, according to Gumbinger’s math.

The downside is the loan wouldn’t be retired until he is 82, and it would cost $3,432 more in interest over its lifetime than if he didn’t refinance.

To make that kind of trade-off work for you, it’s critical to ensure the increased cash flow is used productively.

“You have to be determined to save the money and invest it in something that would yield a higher rate of return than the interest rate you’re paying,” said Rich Arzaga, founder of Cornerstone Wealth Management in San Ramon, Calif. Conservative vehicles including corporate or municipal bonds—held long term—are a good option, he said. Money market accounts and certificates of deposit probably won’t cut it right now, with the paltry returns they’re paying out.

For others, the monthly cash flow may not be worth the hassle or the cost of a refinance, especially if the homeowner is close to the end of the mortgage term. At that point, the bulk of the payment is going to principal, said Tyler Vernon, president of Biltmore Capital Advisors in Princeton, N.J.

“Banks do that because they know that most people don’t have a mortgage for more than six years, so basically they’re paid mostly interest up front,” he said. But by the time the homeowner has five to 10 years left on a mortgage, he or she is paying much less interest, he said.

It’s helpful to talk out your own personal scenario with a financial planner before deciding to pull the trigger. But here are a few factors to consider prior to making a decision.

Your personal time frames

When doing your calculations, it’s important to consider how long you’ll stay in the home and when you plan on retiring. Knowing your goals is essential in making this financial decision.

For instance, if your goal is simply to increase cash flow and owning your home free and clear isn’t a priority, perhaps refinancing makes sense. Some people plan on downsizing when they retire or trading in their home for something more suitable, Gumbinger said. If you’re one of those people, the idea of refinancing might not be as frightening—you’ll be paying off that mortgage anyway when you sell your home.

But the time you’re planning on staying in the home shouldn’t be too short, since you’ll want to be there long enough to recoup the closing costs on the refinancing.

That said, if you’re planning on remaining in the home for good, with a goal of paying it off, you’ll have to seriously think about how you’ll pay the mortgage when you’re no longer bringing home a paycheck. And you may have no interest in lengthening the mortgage term into retirement.

How old you are will also be a big factor. “If you’re closer to 65, that’s a different scenario than if you’re 55 or 52,” Gumbinger said.

Time left on the existing mortgage

Regardless of your personal time frame, if you have 10 years or more left on the existing mortgage, there’s a chance it may make sense to refinance. With more than a decade to go, you’re not yet applying as much payment to principal, said Bill Losey, president of Bill Losey Retirement Solutions, based in Wilton, N.Y.

For those with less than 10 years on the loan, it’s a different situation, since more of your mortgage payment goes toward principal.

Furthermore, while lenders might offer a refinance product with a 10-year term, it will be difficult finding a mortgage with a shorter term than that, Gumbinger said. And if you’re near retirement, it’s unlikely you want to add another 20 years to your mortgage through a 30-year fixed product.

Risk tolerance

In the end, only you can decide how much risk you’re comfortable with.

“I always say, you want to enter retirement completely debt free, with the only exception potentially being your mortgage,” Losey said. “No one should have a mortgage past 70 tops, even at these historic low rates.”

Others see some upside to extending your mortgage. With a mortgage paid off in retirement, you may have more control of your expenses but it could be more difficult to tap home equity if you need it. For instance, there’s no guarantee reverse mortgage products will be available at some future date, Gumbinger said.

And you may not want to go that route anyway. Investments such as bonds and stocks that refund dividends are more liquid than your home equity, which could be helpful when those on a fixed income need cash—whether the reason is unexpected or not.

Either way, take a pass on mortgage life insurance, Gumbinger said. That’s a policy that offers more protection to the lender, who will receive funds in the event of your untimely demise, he said. You’re better off considering a standard term life policy instead; that way, the beneficiary has the freedom to do what he or she wishes with the proceeds—including, if he or she wishes, paying down the mortgage.

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To buy or re-fi: Is now the time?

by Kathryn Tuggle, Personal Finance Editor

Dimespring | November 21, 2012


Interest rates may be at record lows, but that doesn’t mean you should pull the trigger on a major purchase before you’re ready. Whether you’re looking to buy a home or refinance the one you’ve got, it’s always best to put pen to paper and consult with experts before making a change. With that said, it’s unclear how long rates will remain below 4 percent, and nobody wants to miss the boat. We checked in with interest rate and mortgage experts to find out if now is really the best time to make a move.

Will interest rates ever be this low again?

“It’s certainly a generational low — no one has ever seen this before,” says Tyler Vernon, president and CIO of Biltmore Capital Advisors in Princeton, NJ. “There’s a camp who thinks we’ll enter a Japanese deflationary cycle, in which case we could see much lower rates. In our opinion that is not a very likely outcome, especially during a time when our Fed Chairman Bernanke has studied the Great Depression and seems to rely heavily on monetary policy, primarily the printing of more dollars.”

Vernon says that he does not think rates will go much lower, and that it’s likely that this will be the last time “our generation” sees these kind of rates.

It’s likely that interest rates will stay low until the economy is back in full swing and unemployment is down to at least 5 percent, says Joe Gross, marketing expert and president of Joe Gross Marketing in New York.

In the near future, interest rates will remain low due to the Fed’s commitment to purchase bonds, says Robert Luna, CEO of SureVest Capital Management in Phoenix, Ariz.

“Longer term I fear that this game can only last so long and will eventually lead to much higher rates,” Luna says. “I am much more concerned with rates rising looking three to five years out than I am in the shorter term. “

Should you move now on that purchase you’ve been debating?

“If you are referring to a home, yes,” says Vernon. “In our view, it’s quite clear that the housing market is coming back on a national basis. By instituting Operation Twist, the Fed has been intentionally buying long term bonds in attempts to drive down mortgage rates which are tied to bond prices. They have succeeded!”

Vernon says the historical lows we are seeing on mortgage rates is helping the housing market by making loans cheaper — leading to a win-win for both first time and existing home buyers.

“Consumers should certainly move now if they are considering a big-ticket purchase because interest rates are about as low as they’re going to get,” says Odysseas Papadimitriou, CEO and founder of Evolution Finance and “The credit card data we monitor on an ongoing basis shows that 0 percent offers have plateaued as of late, with the average introductory period lasting right around 10 months. Failing to pull the trigger now could therefore cost you a lot of money down the road when rates rise and finance charges become a bigger factor.”

If you’re considering a major life-changing purchase like a house or a car, etc. should low interest rates even influence such a significant purchase in your life?

“Yes, low rates should certainly influence your timing,” says Vernon. “Make sure, however, that you can afford this kind of property and don’t just buy it because rates are low. If the timing is right and you find a home or car you like, assuming you need it, it certainly is the time to buy.”

Vernon cautions that if it’s a car you want to buy, you may have to negotiate a bit as companies can make a lot of money by charging you a higher rate.

Luna says he feels this is the “ideal environment” in which to be borrowing, as “outside of rising rates, all of the monetary stimulus we have witnessed will lead to much higher inflation.”

Overall, it’s okay to let lower rates influence your buying and borrowing decisions because at the end of the day, it’s your monthly payment that dictates whether or not you can live comfortably, says Gross.

“The lower the rate the lower the payment and that means you can afford things that you couldn’t afford before or otherwise,” Gross says.

How do you know when you should make your move and when you should sit on the sidelines?

“You need to have a need,” says Vernon. “Don’t just buy to buy.”

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Caterpillar, Apple push Wall Street lower

By Caroline Valetkevitch

NEW YORK | Tue Sep 25, 2012 5:22pm EDT


NEW YORK (Reuters) – The S&P 500 suffered its worst day since June on Tuesday, pulled lower by Caterpillar Inc (CAT.N) after it cut its profit outlook, the latest high-profile company to warn about profit growth.

Technology shares came under pressure after a second day of weakness for Apple Inc (AAPL.O), the world’s most valuable public company. Shares fell 2.5 percent to $673.54 as the company sold out of its initial supply of the new iPhone, raising concerns about keeping up with demand.

Caterpillar, the heavy equipment maker, said on Monday sluggish global growth was responsible for reduced estimates. Other companies to recently cut expectations include FedEx Corp (FDX.N) and Norfolk Southern (NSC.N).

Shares of Caterpilar were the biggest weight on the Dow for a second day and ended down 4.2 percent at $87.01. That was the stock’s biggest daily percentage drop since May.

Tuesday’s decline reversed earlier gains attributed to portfolio “window dressing” as the quarter ends. Stronger-than-expected figures on U.S. consumer confidence also contributed to temporary gains.

This is “a market that has rallied and climbed a wall of worry. Right now the market is getting skittish and looking for reasons for buyers to be less aggressive,” said Jim Fehrenbach, head of equity distribution at Piper Jaffray in Minneapolis.

The Dow Jones industrial average finance/markets/index?symbol=us%21dji”>.DJI was down 101.37 points, or 0.75 percent, at 13,457.55. The Standard & Poor’s 500 Index .SPX was down 15.30 points, or 1.05 percent, at 1,441.59, its fourth day of losses. The Nasdaq Composite Index .IXIC was down 43.06 points, or 1.36 percent, at 3,117.73.

It was the S&P 500’s biggest percentage daily loss since June 25 and the biggest for the Nasdaq since July 20.

The S&P 500 is up 2.5 percent so far in September, historically a difficult month for the market, and recently hit the highest level in nearly five-years.

For the quarter,the S&P is up 5.8 percent so far, with gains largely tied to the latest moves by the European Central Bank and the U.S. Federal Reserve to stimulate their economies.

San Francisco Fed President John Williams said on Monday he expected the central bank to expand its bond-buying program next year to more aggressively combat the unemployment rate, but Philadelphia Fed President Charles Plosser countered on Tuesday saying that the latest monetary stimulus will not do much to boost economic growth or lower unemployment.

Economic data from the Conference Board showed U.S. consumer confidence jumped to its highest in seven months in September.

Two separate reports showed home prices rose for another month in July, though the gains were not as strong as the previous month.

Red Hat (RHT.N) dropped 4.3 percent to $55.08 after the world’s largest distributor of Linux operating software reported a lower-than-expected adjusted profit and lowered the top end of its full-year revenue outlook.

Volume was roughly 6.75 billion shares traded on the New York Stock Exchange, the Nasdaq and the Amex, compared with the year-to-date average daily closing volume of 6.54 billion.

Decliners outnumbered advancers on the NYSE by about 11 to 4, and on the Nasdaq by about 2 to 1.

(Additonal reporting by Atossa Abrahamian; Editing by Theodore d’Afflisio)

(; +1 646 223 6393; Reuters Messaging: For multimedia versions of Reuters Top News: 3000 Xtra: visit BridgeStation: view story .134


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Brawling Politicians: Bad for Your Portfolio?

By Richard Satran           September 7, 2012

The love fest of the political convention season ended almost as soon as it began, when the first prime-time speaker, House Speaker John Boehner, set a Republican agenda that “starts with throwing out the politician who doesn’t get it, and electing a new president who does.” Since then, the two parties have launched into a brawl in which few rules apply, and flame-throwing and facile lies are standard gear.

The loser could well be you and your stock portfolio over the next two months. Much of the heated rhetoric will consist of Republican claims that President Obama mishandled the economy or Democrats saying how they believe Mitt Romney’s programs would hurt people more.

In that kind of environment, investor confidence, already low, could sink further, say some analysts. Fund company T. Rowe Price said in its recently monthly report, “investors are focused on an apparently never-ending eurozone crisis and the campaign rhetoric emanating from both major political camps in the U.S.”

Good-time elections now history. Historically, election years have been good times for investors. But over the past five elections, the Dow has fallen an average of 3.72 percent, and declined in four out of five September-to-November election day periods.

“The past several presidential elections, and politics in general, just keep getting more nasty,” says Tyler Vernon, chief investment officer and co-founder of Biltmore Capital Advisors in Princeton, N.J. “It’s not the way things were 25 years ago. Over the past few cycles, it has become much more negative. With Democrats and Republicans, the attack ads are questioning leadership more and more. It hurts investor confidence.”

The perception that advertising is growing more negative is borne out by numerous studies. A recent one by the Wesleyan Media Project showed negative ads rising by a staggering amount—accounting for 70 percent of all presidential advertising in the early few months of this year, compared with just 9 percent in the 2008 period (although other factors, including fewer positive ads run by groups supporting Obama in this cycle, caused some of that shift.)

The big difference over the past four years is that so-called Super PACs have been freed from spending limits, or even listing contributors, and the Big Money advertising has been overwhelmingly negative, the Wesleyan study showed.

Politicians have always had a penchant for painting a negative picture of their opponents—some remember President Johnson’s vivid black-and-white television ad showing a girl picking a flower as a nuclear mushroom cloud appeared behind her, a slap against his opponent Barry Goldwater’s strident anti-Communism, or George H.W. Bush’s ads accusing Massachusetts governor Michael Dukakis of furloughing a convicted murderer, Willie Horton, who embarked on a violent crime spree.

Those negative campaigns, though memorable, were not the norm. The LBJ ad was quickly withdrawn. And ads were often about “finding prosperity,” rather than slamming the economy, Vernon says. From 1900 to 1988, the market scored nearly twice as many gains as losses in the September-through-November election span. The Dow gained in 15 of the years and declined in eight. The average September-to-election gain was 1.7 percent, exactly in line with the average gain for all two-month periods since 1900.

Impact of financial crisis. The most recent election losses can be blamed at last partly on the crash of 2008, which was an election year event, although election years of the past also had some ugly Octobers, including the 1932 pre-election period in which stocks plunged 20 percent.

But the rising importance of the economy as an election factor and a surge in negative advertising are also playing a critical role, studies show. It’s not just your imagination; things really have gotten uglier since the days of Ike and Adlai, or even since Bill Clinton and George Bush the First.

The Google Ngram tool, which measures and displays keywords in publications going back to 1800, shows a dramatic “hockey stick” upswing in the term “negative political advertising” after 1988. It also shows the steady rise of the phrase “the economy” in the national dialogue. Social issues and foreign policy have faded, in relative terms.

The issue-oriented negative ads might be even more effective at swaying voters than obvious personal attacks, suggested one study by two Rutgers professors and one from George Washington, “The Effects of Negative Campaigning, A Meta-Analytic Reassessment.” They saw significant potential for the practice to undermine public sentiment.

“When that happens, people spend less, they don’t hire, they don’t buy homes,” says Vernon.

The focus on business issues likely reflects the fact that many of the Super PAC contributors are wealthy and tend to be most interested in issues affecting their financial standing. Supreme Court rulings in 1976 and 2010 affirmed a free-speech right to spend one’s money on political campaigns without limit, freeing wealthy contributors and candidates of key post-Watergate campaign reforms. Many politicians began shunning matching funds to give them more fund-raising freedom.

What investors are doing. “A lot of people are just incredibly confused about the economy, and they are like deer caught in the headlights,” says Vernon. “The campaign promises and attacks are not helping. There is always uncertainty about elections, but it is really magnified this time. The leadership, both Democrat and Republican, acts like they are in kindergarten when it comes to getting things done. They prefer to do things that are right for the party, not for the country,” citing the near shut-down of the federal government over the disagreement on extending the debt ceiling.

Still, the market responds to influences well beyond the scope of any election, and there’s no doubt it’s been surprisingly strong in the August through early September period with the S&P returning to prerecession highs. But economic indicators, like the latest ugly jobs report, are still weak. “It’s hard to get really excited about the market when all that really gets it going is the chance for easier Fed policy,” says Vernon.

He is advising his own clients “to stay long, but stay hedged.” He advises a balanced portfolio and a long-term view. Studies in the past have shown that the market does worst during the first two years of a presidential term, and tends to do better the second two years.

While stocks have performed poorly in recent pre-November periods, bonds have been generally stronger, gaining in price and offering steady yield.

“From now to the election, bonds will be a fairly good place to be,” Vernon says. “People do not want to invest in riskier things when there is a high level of uncertainty. And there is a lot of that out there now.”


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