American Express Preferred Rewards Green Card

DID YOU KNOW?

	When looking for a mortgage it is very important to keep one’s mortgage deal, including credit profile, in good shape. One should also know what lending organizations expect from the borrower. Now let’s look into what the borrower expects from the lender. This factor is also an important one, as a loan on a mortgage is a process of mutual benefit, to the borrower and the lender. Today, the mortgage industry functions in a highly competitive environment like other industries. This opens up a lot of opportunities for the borrower to shop around and identify the most suitable lender. When doing so, the first few questions that spring to the borrower’s mind are “Is this mortgage plan affordable?”, “If so, how affordable is it going to be?” and so forth. The most powerful factor that makes any particular mortgage loan affordable or not is the Mortgage Rate. The Mortgage Rate largely depends upon the interest accrued on the loan obtained by mortgaging. The Mortgage Rate is expressed as Annual Percentage Rate [APR]. APR is the total amount of money repayable by the borrower to the lender on a loan, per annum. Though APR is expressed as a percentage of the loan amount that is borrowed, unlike interest rates, it includes additional fees. That is, APR means the interest fees on the principal plus additional fees. The Federal `Truth in Lending Act’ makes it obligatory to all players in the mortgage industry to disclose the APR in all loan agreements. We can have a concrete idea of how APR is used, by looking at the data provided by www.bankofamerica.com, the official web site of Bank of America. Its APR values for Home Equity Mortgages, at 06:15 am PST as on December 8, were: 6.335, 5.951, 7.164, 6.665 and 6.589 for 30 years fixed, 15 years fixed, 1 year ARM, 5 years ARM and 7 years ARM. Borrowers use APR as a basis to compare costs of loans or Mortgage Rates. Then they select the most appropriate loan.

The November 12 issue of Barron's featured their "Outlook 2006" article. I always look forward to that issue because Barron's surveys a dozen or so of the top strategists on Wall Street to get their market predictions for the coming year.

Whatever these strategists think is what the brokers of their firms will likely be touting to the public. And since whatever the public is doing is usually the wrong thing to do, a better contrary indicator you will not find.

Here are some of my observations from the article...

• Of the 12 analysts surveyed, 10 think the S&P 500 index will be higher for 2006 than it is now. Bullish predictions ranged from a low of 1300 (Chip Dickson of Lehman Brothers) to a high of 1530 (Ed Keon of Prudential). A more typical bullish forecast was in the 1350-1400 range. The median forecast was for a gain of 9%.
• Only 2 of the 12 think the S&P will be lower -- Richard Bernstein of Merrill Lynch (a modest decline to 1225) and Abhijit Chakrabortti of J P Morgan (a bearish 1125). Mr. Chakrabortti was the only outright bear.

• They were asked to choose three of their favorite sectors for 2006. The most popular was health care, followed by technology and financials.

• Only 2 of the 12 listed energy. And none of them chose basic materials (which would include gold and silver mining and commodity stocks).

• They were asked to choose key themes for 2006. They were overwhelmingly partial to growth stocks over value stocks and large capitalization stocks over small capitalization stocks.

So if you want to go along with the crowd in 2006, you want to be bullish on the stock market. And your focus should be on large growth stocks in the health care, technology, and financial sectors.

But if you want to make money, you probably want to do something different. Like maybe invest in shares of small capitalization companies that are good businesses selling at bargain prices. And as far as sectors are concerned, Wall Street still seems to be ignoring the ongoing bullish prospects of energy and basic materials. That bodes well for those sectors.