- Created on 05 November 2013
Good news for homebuyers who don't have a lot of cash on hand: Banks are offering loans with down payments of just 5%.
After the housing bubble burst, buyers needed to come to the table with as much as 20% down or they had to turn to the Federal Housing Administration for a low down-payment loan.
But now banks like TD Bank, Bank of America (BAC, Fortune 500), and Wells Fargo (WFC, Fortune 500) are loosening the purse strings, offering loans with down payments that are as low as 5%.
TD Bank's "Right Step" mortgage, for example, allows borrowers to secure a loan with a 5% down payment. It also allows them to receive as much as 2% of the sale price as a gift from a relative or other third party, so they would really only need 3% down.
Why the change of heart? Market opportunity for one thing.
FHA dominated the market for low down payment loans during the housing bust. Taking on all those risky loans, however, depleted the agency's reserves and has forced it to increase costs.
Over the past couple of years, the FHA has been raising premiums. And this year, it started requiring borrowers to buy private mortgage insurance for the life of the loan -- an expensive proposition that has sent many prospective borrowers looking elsewhere.
While the loans were far too risky for private lenders to take on before, rising home prices have made them less of a gamble. Plus, the banks think they can offer a better deal than FHA.
- Created on 04 November 2013
NEW YORK (CNNMoney)
Child care costs continue to soar, with prices so high in some parts of the country that they exceed tuition at state colleges.
Last year, average center-based child care costs rose by nearly 3% nationwide, according to a report from the nonprofit Child Care Aware of America. Full-time care for an infant ranged from a high of $16,430 a year in Massachusetts to $4,863 in Mississippi. Meanwhile, center-based care for a four-year-old hit a high of $12,355 in Massachusetts and a low of $4,312 in Mississippi.
Why such huge price disparities? Blame it on differences in labor costs, state regulations and cost of living expenses, such as housing, food and utilities.
For example, Massachusetts has strict child care regulations that require one teacher for every three infants, compared to one teacher per five infants in Mississippi. Meanwhile, child care centers in New York City, among one of the most expensive places for child care in the country, pay significantly higher rents and also must meet strict state standards.
"In order to meet those (standards), it costs money," said Jessica Klos Shapiro, public policy and communications coordinator at the nonprofit Early Care & Learning Council, which advocates for families across New York state.
The centers are also grappling with ballooning operational costs, ranging from rising insurance costs to higher food prices, said Lynette Fraga, Child Care Aware's executive director.
As a result, child care costs grew by as much as eight times the rate of family incomes last year, the report said. And they continue to take a major chunk out of family budgets, often representing a household's largest monthly expense.
Center-based infant care for one child was greater than median rent payments in nearly half of the states, while fees for two children (an infant and a four-year-old) exceeded rent in all 50 states. And in nearly two-thirds of the country, average child care costs were greater than yearly tuition and fees at a four-year public college.
To determine affordability, Child Care Aware compared average child care costs to the state's median family income. Oregon was the least affordable state, with average care for an infant representing more than 18% of the median income for a married couple. New York, Minnesota, Massachusetts and Colorado rounded out the five least affordable states.
In recent years, Denver resident Liz Sagaser and her husband have spent as much as $1,400 a month on full-time child care for their two children.
Their 5-year-old daughter started public kindergarten this fall, and their 3-year-old son is in public preschool. But they still spend around $1,000 a month on education and child care, which takes up around 13% of their annual income.
"That's a mortgage for a lot of people, and that's just the child care costs," she said. "That's a huge portion of our living expenses."
With nearly 11 million children under the age of five needing child care services and not enough government subsidies to go around, working parents are forced to make difficult choices, said Fraga. Many end up choosing cheaper non-licensed options, which don't have to meet health and safety standards.
|State||Avg. cost of center-based infant care||Median income for married couple||Percent of Income|
- Created on 01 November 2013
(AP Photo / Jae C. Hong, File)
NEW YORK (AP) — Wal-Mart Stores Inc. is upping the ante on holiday shopping.
The world's largest retailer is pulling forward by nearly a month seven big deals on items like TVs and tablets that were originally reserved for the day after Thanksgiving and so-called Cyber Monday.
Shoppers will be able to purchase the items online starting shortly after midnight Friday. At the same time, Walmart.com will be pushing another 300 holiday deals on its website, from toys to home decor.
The seven deals include a 42- inch JVC LED TV for $299, a savings of 36 percent, and a 10-inch XELIO tablet for $49, a 51 percent discount. The items will be available while supplies last. Last year, Wal-Mart offered about 100 holiday deals online right after Halloween, but the offerings were focused on home decor.
"It's been a tough year for the average American family," Joel Anderson, president and CEO of Wal-Mart.com, told The Associated Press. "It's our job to be able to help our customers."
He said Wal-Mart decided to accelerate offering the seven deals a month ago. Wal-Mart declined to say whether it would be repeating the discounts during the Thanksgiving weekend.
Anderson noted that on top of economic challenges, there are loyal Walmart shoppers who want to be able to shop for bargains early. Last year, Wal-Mart saw traffic on its website surge right after Halloween, he noted.
The move comes as Wal-Mart, like others, have seen customers scale back purchases heading into the holiday shopping season, which accounts for anywhere from 20 percent to 40 percent of retailers' annual revenue. While the job and housing markets are recovering, the improvements haven't been enough to sustain increased spending among shoppers.
The partial government shutdown, which lasted 16 days, also soured shoppers' confidence. The National Retail Federation, the nation's largest retail trade group, expects an increase of 3.9 percent in sales for the November-December period. That's higher than last year's 3.5 percent, but the forecast didn't account for the prolonged shutdown. Online sales are expected to be up 13 percent to 15 percent, according to the group.
Retailers also say that there's more pressure this year, because the period between Thanksgiving and Christmas is six days shorter than in 2012.
Against this background, a slew of stores including J.C. Penney Co. and Macy's Inc. have announced they are opening their doors on Thanksgiving evening for the first time. Wal-Mart, which started deals at its stores Thanksgiving evening last year, hasn't said when it will start doing so this year.
Wal-Mart has been particularly vulnerable to the economy's woes since it caters to low-income shoppers. But the retailer is also trying to offer its shoppers anywhere, anytime access and using its website as a weapon in the holiday wars.
Marketers started promoting the Monday after Thanksgiving as "Cyber Monday" in 2005 to push people to shop online.
Heading into the holiday season, Walmart.com has doubled the number of products it offers online to 5 million. It's now offering free shipping for orders of more than $50 on nearly 99 percent of the items sold on Wal-Mart.com. That's up from 15 percent.
Such moves are expected to help fuel the company's online sales, which the company forecast to increase 30 percent to $10 billion in its current fiscal year. However, it's still a sliver of its annual revenue of $486 billion.
- Created on 31 October 2013
Federal Aviation Administration (FAA) Administrator Michael Huerta announces that government safety rules are changing to let airline passengers use most electronic devices from gate-to-gate during a news conference, Thursday, Oct. 31, 2013, at Washington's Ronald Reagan National Airport. The change will let passengers read, work, play games, watch movies and listen to music _ but not make cellphone calls. (AP Photo / Evan Vucci)
WASHINGTON (AP) -- Airline passengers will be able to use their electronic devices gate-to-gate to read, work, play games, watch movies and listen to music - but not talk on their cellphones - under much-anticipated new guidelines issued Thursday by the Federal Aviation Administration.
But passengers shouldn't expect changes to happen immediately. How fast the change is implemented will vary by the airline, FAA Administrator Michael Huerta said at a news conference.
Airlines will have to show the FAA how their airplanes meet the new guidelines and that they've updating their flight crew training manuals and rules for stowing devices to reflect the new guidelines. Delta said it was submitting a plan to implement the new policy.
Currently, passengers are required to turn off their smartphones, tablets and other devices once a plane's door closes. They're not supposed to restart them until the planes reach 10,000 feet and the captain gives the go-ahead. Passengers are supposed to turn their devices off again as the plane descends to land and not restart them until the plane is on the ground.
Under the new guidelines, airlines whose planes are properly protected from electronic interference may allow passengers to use the devices during takeoffs, landings and taxiing, the FAA said. Most new airliners and other planes that have been modified so that passengers can use Wifi at higher altitudes are expected to meet the criteria.
But connecting to the Internet to surf, exchange emails, text or download data will still be prohibited below 10,000 feet, the agency said. Passengers will be told to switch their smartphones, tablets and other devices to airplane mode. So, still no Words With Friends, the online Scrabble-type game that actor Alec Baldwin was playing on his smartphone in 2011 when he was famously booted off an American Airlines jet for refusing to turn off the device while the plane was parked at the gate. And heavier devices such as laptops will continue to have to be stowed because of concern they might injure someone if they go flying around the cabin.
In-flight cellphone calls also will continue to be prohibited. Regulatory authority over phone calls belongs to the Federal Communications Commission, not the FAA. The communications commission prohibits the calls because of concern that phones on planes flying at hundreds of miles per hour could strain the ability of cellular networks to keep up as the devices keep trying to connect with cellphone towers, interfering with service to users on the ground.
An industry advisory committee created by the FAA to examine the issue recommended last month that the government permit greater use of personal electronic devices.
Pressure has been building on the FAA in recent years to ease restrictions on their use. Critics such as Sen. Claire McCaskill, D-Mo., contend there is no valid safety reason for the prohibitions. The restrictions have also become increasingly difficult to enforce as use of the devices has become ubiquitous. Some studies indicate as many as a third of passengers forget or ignore directions to turn off their devices.
The FAA began restricting passengers' use of electronic devices in 1966 in response to reports of interference with navigation and communications equipment when passengers began carrying FM radios, the high-tech gadgets of their day.
A lot has changed since then. New airliners are far more reliant on electrical systems than previous generations of aircraft, but they are also designed and approved by the FAA to be resistant to electronic interference. Airlines have been offering Wi-Fi use at cruising altitudes to passengers for several years. Planes modified for Wi-Fi systems are also more resistant to interference.
The vast majority of airliners should qualify for greater electronic device use under the new guidelines, Huerta said.
Today's electronic devices generally emit much lower power radio transmissions than previous generations of devices. E-readers, for example, emit only minimal transmissions when turning a page. But transmissions are stronger when devices are downloading or sending data.
Among those pressing for a relaxation of restrictions on passengers' use of the devices has been Amazon.com. In 2011, company officials loaded an airliner full of their Kindle e-readers and flew it around to test for problems but found none.
FAA advisory committee members expressed mixed feelings about whether use of the devices presents any risk. Douglas Kidd of the National Association of Airline Passengers said he believes interference from the devices is genuine even if the risk is minimal. Other committee members said there are only anecdotal reports from pilots to support that the devices can interfere with aircraft systems, and most of those reports are very old. However, the committee recommended the FAA allow pilots to order passengers to shut off devices during instrument landings in low visibility.
A travel industry group welcomed the changes, calling them common-sense accommodations for a traveling public now bristling with technology. "We're pleased the FAA recognizes that an enjoyable passenger experience is not incompatible with safety and security," said Roger Dow, CEO of the U.S. Travel Association.