Dominic Sitowski, CEP, LUTCF

It is surprising how many people will put their money in just any bank. All banks are not created equal, and let’s just say that some have proven more solvent than others. Besides FDIC insurance, what other characteristics should you seek – and what questions should you consider?
How close is this bank? Is there a branch near where you live and close to where you work? How is the online banking setup? (Yes, you should value convenience, but it shouldn’t be the only factor in mind as you choose a bank.)
How cheap is it to bank there? You’ve heard of overdraft fees and ATM fees. But how about wire fees, notary fees, and fees on cashier’s checks and money orders? Returned-deposit fees? Stop-payment fees? Fees to check your balance? Fees to talk to a teller? (No kidding, some banks do charge for that.) Is it bad taste to ask a bank to detail its potential fees? No, it’s smart. Some banks offer you a free checking or savings account and a whole lot of potential charges besides. Some have plans that cover a whole range of services, plans that could save you some money.
What else can this bank do for me? Can the bank provide your business with credit card processing? Will your checking account give you any interest? What kind of CDs does the bank offer? How about mortgage and loan types? Could you send money overseas via this bank? Do they do any trust planning?
How friendly is this bank? When you walk into the bank, what’s the reception? Do people greet you and ask how they may help you? Or are you ignored for a prolonged period? What happens may hint at the level of service coming your way.
Ask to see a bank officer, if possible. Set down a list of what you want, and see how close your potential new bank comes to providing it. Don’t be afraid to make the bank work for your business – they are working hard than ever for it.
What can you do to make a banking relationship better for you? If you bring major amounts of cash to a bank, of course you’re going to be treated as a VIP. If you don’t, it may help you to establish a relationship or two. So often, we go to a bank and we look at the tellers – and even the loan officers and mortgage consultants – as mere functionaries instead of human beings.
If you have a lousy experience at the bank or you get dinged with some weird fee all of a sudden, ask someone why – maybe the customer service staff can address the matter and work out a solution. Make yourself known – a good way to do that is to bank when it isn’t “rush hour”. A friendly, recognizable customer who wants the best from his banking relationship can turn into a valued banking client.
Would it be better to bank online? How often do you need to go inside your bank? If you really don’t require much in the way of in-person services, maybe an online bank is a better option – after all, why should you pay to support your bank’s branches if you never set foot in them?
Thinking small may help. People were leery of small banks in this last economic downturn, but the customer service can be considerably better at such institutions. When a community bank is bought by a bigger one, bigger does not necessarily mean better in terms of attention.
Dominic Sitowski is a Representative with Crown Capital Securities and may be reached at www.domsitowski.com or dsitowski@crownmail.net.

These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.

EXTENDED HOMEBUYER CREDITS & JOBLESS BENEFITS

New federal actions aid the real estate sector and the unemployed.

provided by Dominic Sitowski, CEP, LUTCF
After unanimous passage in the Senate and a 403-12 passage in the House of Representatives, President Obama signed H.R. 3548 into law on November 6. The bill extends and expands a key tax credit for homebuyers while also offering more help for those out of work.1,2
The $8,000 credit for “first-time” homebuyers continues. This tax break is now extended until May 1, 2010. If you have never owned a home or haven’t owned a home in the previous three years, you are considered a “first-time” buyer and therefore eligible for the credit (it is a credit of up to $8,000, by the way). You must sign your purchase agreement before May 1, 2010 and close the transaction before July 1, 2010 to qualify for this tax break.3
The $6,500 tax break for move-up buyers. Okay, maybe you aren’t a “first-time” buyer. You may still qualify for this new real estate credit. Have you lived in your current home for more than five consecutive years? You may be eligible for a credit of up to $6,500 if you move out of that home and buy another. Again, you have to sign your purchase agreement before May 1 and close before July 1 to get the tax break.3
Worth noting: BusinessWeek.com contacted Sen. Chris Dodd’s office (the Connecticut lawmaker chairs the Senate Banking Committee) and received word that move-up buyers can qualify for this $6,500 credit even if they have signed a purchase contract prior to November 6, provided the purchase closes before July 1.4
Does everyone qualify for these credits? Not quite. They phase out for individuals with adjusted gross incomes of more than $125,000 a year and couples with AGI of more than $225,000 a year. (The old phase-outs respectively kicked in at $75,000 and $150,000. These higher phase-outs mean that the credit can now help an additional segment of the housing market.)5
You can’t buy a vacation home and claim one of these credits – they only apply to principal residences. In fact, the home you buy has to have a sale price of $800,000 or lower.5
What will this do for the economy? “Every economist will tell you we have to steady the housing market before the economy will turn around,” Sen. Dodd expressed on November 5. “We can’t afford to let this tax credit expire now.” Respected Moodys.com economist Mark Zandi agrees, saying that “from a macroeconomic perspective, nothing is more important than stabilizing housing values.” Zandi thinks that the $8,000 credit has led to 400,000 additional home sales in 2009. On the other hand, Dean Baker, the co-director of the Center for Economic and Policy and Research, questions why the extension is necessary: “For the most part, you’re just giving people money for something they would have done otherwise.” The Joint Committee on Taxation estimates that extending these credits into 2010 will cost $10.8 billion across the next decade.5,6
An extension of unemployment benefits. H.R. 3548 – sponsored by Rep. James McDermott (D-WA) – additionally extends state jobless benefits by up to 20 weeks. This will happen as a result of another extension – an extension of the federal unemployment tax on employers until June 30, 2011.5
If you are one of nearly two million Americans whose jobless benefits are set to run out at the end of 2009, this extension will help you. Your benefits will last at least another 14 weeks into the new year – in fact, they will last for another 20 weeks if you live in a state where the unemployment rate exceeds 8.5%. Have your unemployment checks already stopped? You may reapply for benefits.5
A chance for companies to convert losses into cash. What? Really? Yes. There is one provision of the new legislation that many have overlooked: it widens the window of time on the net-operating loss carryback. It lets all businesses apply losses from either 2009 or 2008 to any five years prior to 2008. So business owners, by virtue of the new legislation, have the potential for an IRS refund on the taxes they paid for the five years prior to 2008. There are two asterisks here. One, refunds for taxes in the fifth year of the carry back shrink by 50%. Two, any business that received TARP funds can’t take advantage of this tax break.7

Dominic Sitowski is a Representative with Crown Capital Securities, LP and may be reached at www.domsitowski.com, 503-496-3641 or dsitowski@crownmail.net.

These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.

Citations.
1 google.com/hostednews/ap/article/ALeqM5hZg_pvAKDYQV-RYmrmcBrJTaJ5CAD9BQ71981 [11/6/09]
2 latimes.com/business/la-fi-tax-credit6-2009nov06,0,2604220.story [11/6/09]
3 boston.com/business/articles/2009/11/06/first_time_home_buyer_credit_jobless_benefits_both_extended/ [11/6/09]
4 businessweek.com/the_thread/hotproperty/archives/2009/11/who_qualifies_f.html [11/6/09]
5 money.cnn.com/2009/11/05/news/economy/Extending_unemployment_benefits/index.htm?postversion=2009110612 [11/6/09]
6 latimes.com/business/la-fi-tax-credit5-2009nov05,0,1817786.story [11/5/09]
7 money.cnn.com/2009/11/05/news/economy/tax_breaks_for_business/index.htm?postversion=2009110611 [11/5/09]