The use of exotic mortgages such as interest-only loans is skyrocketing, jumping threefold between 2003 and 2005 to about 30 percent of all new residential mortgages, says the Government Accountability Office. The type of borrowers is changing too, as payment-option adjustable-rate mortgages and other nontraditional loans are being marketed to buyers who use them to purchase houses they otherwise couldn't afford. Most of the new loans are concentrated in high-priced markets on the East and West coasts.
But many buyers don't understand the risks of these loans, partly because the confusing loan disclosures they get at closing time usually don't explain the dangers. Federal law should require lenders to spell out the potential risks of alternative mortgages to buyers, the GAO is telling Congress. Unless the loan is refinanced or the house is sold, monthly payments will eventually increase sharply. For example, monthly payments on a $400,000 payment-option adjustable-rate mortgage with a 1 percent initial interest rate could more than double from $1,300 to $2,900 in five years under typical terms.
Detroit, Philadelphia, and Los Angeles are the most expensive places to own and operate a car, thanks largely to high insurance rates, says Runzheimer International, a company that develops reimbursement programs for business travelers, among offering other services. Insuring a 2007 midsize car in the Motor City costs $5,072 a year for liability, comprehensive, and collision coverage. Philadelphia punches in at $3,779, and rates in Los Angeles are $3,225. The cost of vehicle maintenance varies from a high of nearly eight cents a mile in San Francisco to a low of five cents a mile in Bismarck, ND, for normal services, maintenance, and tires for a vehicle driven 60,000 miles over four years.
|Total annual cost*|
|West Palm Beach, FL||9,170|
|Grand Forks, ND||7,726|
|Sioux Falls, SD||7,629|
The federal government wants all passenger vehicles to have electronic stability control (ESC) installed as standard equipment by the 2012 model year. The National Highway Traffic Safety Administration says ESC, which helps drivers keep their cars from skidding out of control, will save up to 10,300 lives and prevent up to 252,000 injuries each year. Adding ESC to vehicles that already have an antilock braking system will cost an estimated $111. The proposal would require all car manufacturers to start equipping passenger vehicles under 10,000 pounds with ESC beginning with the 2009 model year.
Since 2004, the NHTSA has urged car manufacturers to voluntarily add ESC as standard equipment. Almost three-fourths of 2007 models (145 of 201) offer it as standard.
You can split your federal tax refund three ways next year, says the IRS. New rules will let you direct part of the money to a checking or savings account; mutual fund or brokerage account; an IRA; or a health savings, medical savings, or education savings account. You'll need to fill out a new Form 8888 and attach it to your tax return for 2006.