Emery Financial - Your Mortgage Banker Blog

Where are the affordable solar power solutions for homeowners?

Emery — Thu, 14 Apr 2011 04:06:51 GMT

If you drive through any neighborhood in Phoenix, Arizona you will see a few homes with solar panels on the roof. Your first thought may be “why doesn’t every home here have them?” After all, this is a place that averages over 330 days of sunshine per year. If any region could show the world how renewable solar energy can work it would be the American southwest.

This won’t shock you. It’s the cost. At least that’s what everybody thinks. A household could get all of its electricity from solar cell panels (photovoltaic panels), but the average homeowner is usually reluctant to pay for the initial outlay.

Another reason we are lagging behind in jumping on the bandwagon for solar energy solutions is that the solar market took a financial hit just like the rest of the economy in the recent downturn. Most companies and individuals watched their ability to invest in new solar initiatives dry up with the bad economy or the credit crunch. Innovation and implementation of the dream of cheap renewable energy has taken a hit in recent years.

But we may be getting to a place where the economic incentives can now meet the technology.

The Federal Government is giving back in tax credits to homeowners up to 30 percent of the cost of installing solar or geothermal energy in their homes. States also add incentives above and beyond the Federal breaks. You can find them here.

A tax credit for installing solar panels can save hundreds of dollars on energy costs. A $50,000 investment can be paid off in five years and can save $1,600 a year in electricity bills. The tax subsidies last through 2016 and are eligible for a tax credit equal to 30% of costs, with no cap. You will need to file IRS Form 5696 with your taxes, and keep receipts for the installment.

You can still go green without the cash by leasing panels. All it takes is a company willing to lease and install the panels with no money down (the solar leasing company gets the tax breaks and incentives). As an example, a company called SolarCity installed panels on a house that was used to paying an average of $269 per month for electricity and leased the panels generating 100% of the electricity to the homeowner for $107 per month. That’s a pretty good savings that also reduces the carbon footprint of the homeowner.

You may want to consider going with solar if you are selling a home or re-financing. It could help a sale since utilities are a big consideration when buying and it modernizes the property. If you match a lower rate and the tax incentives together by re-financing, you could lower your rate and your bills in one shot and it reduce the costs of the solar panels 30-50%. You could break even in just one year.

If you’re still not convinced that going solar is a good move, Google has just sealed a deal to invest $168 million in a Mojave Desert solar energy plant. How smart are they?

Should You Build a Bond Ladder?

Emery — Thu, 28 Apr 2011 04:49:56 GMT

Some people say a good way to manage a fixed income portfolio when interest rates are uncertain is to ladder bonds. Others claim that individual bonds will not generate extra income when interest rates go up and that bond mutual funds are a better bet.

Laddering bonds is defined by investing in bonds with different maturity dates. The claim is that you can invest in bonds and lower your risk in the market. As your bonds mature, the idea is to re-invest your money into new bonds at the prevailing rates, thus keeping yourself constantly in the game, rather than waiting on long-term funds to mature.

Here are some pros and cons:

PROS

A bond ladder will match cash flows with a demand for cash. It can reduce the risk of putting all of your eggs in one basket and instead provides returns throughout the year. One bond might mature in one year, the next in two years, etc. This is how you build “rungs” on your ladder.

By staggering returns, you aren’t locked into one particular bond that might not provide the return you want in the long run. If you invest $10,000 into one single bond with a yield of 5% for a term of 10 years, you won’t be able to capitalize on increasing or decreasing interest rates during this period.

Using a bond ladder helps you to survive the market fluctuations because you have a different bond maturing (about) every year. If you have a bond that matures at the bottom of the interest rate, you have a chance to improve your yield at a much quicker pace.

Your cash flow is fluid. This can especially be good for retirees who depend on investments as the main source of income. If you lose your job or have an unexpected expense, the upcoming source of income can be reassuring.

The greater the number of rungs (bonds) on your ladder, the more diversified your portfolio can be and will help if any one company defaults on their bond payments. The higher you take your ladder, your average returns could be higher since bond yields generally increase with time.

CONS

Investing in individual bonds pays at a fixed rate. What if that rate is lower in the marketplace when it comes to maturity? You could lose out. In contrast, a bond mutual fund can add higher rate bonds into the pool to ensure interest income.

You could be forced to reinvest at lower rates with an individual bond if you do not chose to spend the money. In a bond mutual fund, if interest rates decline, the value of your bond fund shares will rise, giving you more shares than you started with, and more potential gains.

Bond ladders can have a higher default risk. If one goes bad, it could take a mean slice out of your portfolio. Mutual funds are more diversified.

Bond ladders can be expensive. They need to be managed, meaning more commissions. A no-load mutual fund charges no commissions and costs only a small amount per year in management fees.

The money needed to start a ladder that would have at least five rungs is usually a large investment. You may want to avoid building a ladder altogether if you can’t afford a portfolio that invests in both stocks and bonds for diversity.

Are You Ready for - The Big One?

Emery — Wed, 20 Apr 2011 04:13:23 GMT

The recent earthquake(s) in Japan and the devastation they caused may have reminded you of the need to have a plan in the case of a similar event happening in California. We can just cross our fingers and hope that it won’t happen here anytime soon or we can prepare ourselves for the inevitability.

The best thing to do is put together a home disaster kit and keep it in a place you can get to if the worst happens. At a minimum, here’s what your kit should contain:

A guide to locate and shut off the gas, electricity and water sources.

Gloves, safety glasses and an extra set of clothes, including heavy-duty shoes.

A radio with extra batteries (wind up portable radios are available that don’t need batteries).

A flashlight for every family member, with extra batteries.

Waterproof matches and candles. Make sure to check for any gas leaks before using.

A stash of cash. It’s likely banks won’t be open and ATM’s won’t be working, or out of money for awhile.

Important papers-legal and medical, copies kept in a plastic bag.

An up to code fire extinguisher.

A comprehensive first aid kit.

A supply of necessary medications (keep updated) and extra pair of eyeglasses if needed.

Water. As much as you can store-and replace every six months if stored in plastic.

Food with a long shelf life (health bars and beef jerky are good examples of easy portability and good calories).

You can also do things to minimize damage in the home. Make sure anything that can fall on you is secured. You never know where you’ll be when it happens.

Secure bookcases to wall studs with safety straps. The heaviest items should be on the bottom shelves. Use museum wax to secure freestanding delicates.

Wall hangings should be hung with closed hooks so they won't fall off your walls. Don’t hang anything heavy over the head of your bed. Wide screen TV’s should to be bolted to the wall.

Fans and lighting fixtures should be secured with ceiling studs.

Kitchen cabinets can be secured with childproof locks. Just like in airline baggage holders, be careful when you open them, as things will shift in the shaking.

The connections to gas stoves, water heaters, etc. need to be flexible and have a little give for when things start moving.

Lock or block off your refrigerator wheels.

Keep your bed in the center of the room and away from windows.

Clean and organize your garage so that if chemicals fall, they don’t mix and become caustic, or fall anywhere near electrical outlets.

For more information you can visit this website.

If you have any tips you don’t see here, you can suggest them through the comment section below.

Is Gold a Good Investment Right Now?

Emery — Tue, 05 Apr 2011 05:31:21 GMT

Some people believe that investing in gold is a good hedge on inflation and should be a part of everyone’s portfolio. Others don’t believe the hype, and insist that its value fluctuates on the whims of an insecure market.

It could be argued that gold isn’t an investment at all, just a roll of the dice that eventually craps out. Solid investments, like stocks, bonds and real estate can see long-term growth with a well-researched investment plan.

Gold bullion is not supported by anything other than its good looks and can rise and fall at the whim of investors. Even the fact that it has increased in value fairly rapidly in recent times should be a red flag. Gold has skyrocketed from $600 an ounce to over $1,400 in the last five years. The last time that happened in the 1970’s the price dropped drastically and eventually sat there for over 20 years.

You may be convinced that gold is necessary when inflation is looming, but there are no current indicators that that will happen in the U.S. anytime soon. The economy is improving (arguably slowly) and the stock market is robust and many experts predict that corporate profits will exceed current expectations. Any investment in the other direction could prove to be foolhardy. The bottom line is gold doesn't produce profits or dividends as other investments do.

On the plus side, if you are good at knowing when to fold, the game could be very lucrative. Prices hit a record high just today. And it’s a universally known fact that solid gold jewelry is a good investment in domestic relations.

The Value of Word-of-Mouth Referrals for your Business

Emery — Thu, 31 Mar 2011 06:31:59 GMT

The most cost effective way to market a business is by word-of-mouth referrals. People want to help others, and if they have received a great product or service, they will be more than happy to pass on their experience to their friends, family and sometimes complete strangers.

As a mortgage broker in California, Emery Financial found out almost by accident the power of social media, way before Facebook was even conceived. It came with simply understanding the needs of our clients. The referrals followed once they realized that our goals were more about building a loyal customer base than just making money.

Once you become known as an industry leader with the knowledge and skill to make the customer experience a special bond, something that sets you apart from all the big box competitors out there, you become more than a product or service. You become essential.

Here are some ways to make your company worthy of the highly coveted word-of-mouth referral:

1. Be honest. If you are up-front with your clients and let them know exactly what they can expect from you, and in turn what you expect from them, it will lead to a trust that builds the relationship.

2. Keep learning. You must think out of the box and stay one step ahead of industry trends. Knowledge is power, and profitable too.

3. Be self-aware. Know why the customer decided to go with you and what sets you apart from the competition. They chose you for a reason. Build on that.

4. Become a good listener. The value of someone who actually listens to the needs of the customer is passed on to others.

5. Ask. If you have had an exceptionally good relationship with a client, it doesn’t hurt to ask for a referral. In fact, it can often be flattering that you think that much of them.

6. Forge business relationships. Someone who works in a related field can spread the word like wildfire. Below is an email Emery Financial VP Shelly Logemann was singled out in and sent from a real estate agent she frequently works with.

I have to send this email as yet again, I had a deal not going anywhere fast with financing. I called Shelly and her team last week to step in. Shelly called me tonight to let me know they are ready to order docs. I did a quick check and since June of last year, her team has stepped in and saved over $ 100,000.00 of my commissions. I believe that says it all.

This alliance was built within the same client target base and is more valuable than any paid advertising could ever generate. Some experts say that word-of-mouth marketing is ten times greater than any other form of marketing.

The best sales team you could ever find is satisfied customers. You don’t have to pay them to spread the words of praise. When they become passionate about your reputation, it means you’ve earned it. They feel like they’ve become members of a special club, and will become advocates for your business to people who they think are special too.