Anne's Land

Like a fine wine, we do get better with age!

This is article is intriguing and worth reading.  As we age and collect more experience our reasoning, judgment, discernment are better.  I'd love to hear what you think!

Brain Functions That Improve with Age

12:47 PM Wednesday February 3, 2010
by Barbara Strauch  

 

"Can I still compete?"

It's a question many of us increasingly ask as we reach middle age. We watch younger colleagues master new computer systems with ease or pull all-nighters with nary a hair out of place and — quite naturally — we're concerned. Luckily, recent research in brain science suggests that perhaps we should fret less.

Over the past few years, neuroscientists have begun to zero in on the brain's changes in middle age, and what they've found is encouraging. Results of long-term studies show that — contrary to stereotypes — we actually grow smarter in key areas in middle age which, with longer life spans, now stretches from our mid 40s to our mid to late 60s.

In areas as diverse as vocabulary and inductive reasoning, our brains function better than they did in our 20s. As we age, we more easily get the "gist" of arguments. Even our judgment of others improves. Often, we simply "know'' if someone — or some idea — is to be trusted. We also get better at knowing what to ignore and when to hold our tongues.

Not long ago, a mid-level executive told me how he'd recently changed the way he deals with younger colleagues. When gathered to discuss a problem, he keeps his "mouth shut'' and listens. Even though — more often than not — he has a good solution, he waits. He does not speak.

"I find it works best if I let the younger workers talk first, wrestle with the problem in their own way,'' he told me. "Then after a while, I say what I think might work. I'm not sure why, but this seems to work best and to help us all learn and solve the problem better.'' In fact, though he did not realize it, the executive was using the best parts of his calmer and more experienced middle-aged brain to help him manage his situation — and get better results.

It's true that by midlife our brains can show some fraying. Brain processing speed slows down. Faced with new information, we often cannot master it as quickly as our younger peers. And there's little question that our short-term memories suffer. It's easy to panic when you find you can't remember the name of that person you know in the elevator, or even the movie you saw last week.

But it turns out that such skills don't really matter that much. By midlife our brains have developed a whole host of talents that are, in the end, just as well suited to navigating the modern, complex workplace. As we age, we get better at seeing the possible. Younger brains, predictably, are set up to focus on the negative and potential trouble. Older brains, studies show, often reach solutions faster, in part, because they focus on what can be done.

By the time we reach middle age, millions of patterns have been established in our brains, and these connected pathways provide invaluable perspective — even when it's subconscious. For instance, some middle-aged managers I've spoken with talked about how solutions seem to "pop'' into their heads "like magic.''

It doesn't come from magic, of course, but from the very real — and often unappreciated — talents of our middle-aged brains.

If You Don't Buy a House Now, You're Stupid or Broke

Interest rates are at historic lows but cyclical trends suggest they will soon rise. Home buyers may never see such a chance again, writes Marc Roth

By Marc Roth

Well, you may not be stupid or broke. Maybe you already have a house and you don't want to move. Or maybe you're a Trappist monk and have forsworn all earthly possessions. Or whatever. But if you want to buy a house, now is the time, and if you don't act soon, you will regret it. Here's why: historically low interest rates.

As of today, the average 30-year fixed-rate loan with no points or fees is around 5%. That, as the graph above—which you can find on Mortgage-X.com—shows, is the lowest the rate has been in nearly 40 years.

In fact, rates are so well below historic averages that it should make all current and prospective homeowners take notice of this once-in-a-lifetime opportunity.

And it is exactly that, based on what the graph shows us. Let's look at the point on the far left.

In 1970 the rate was approximately 7.25%. After hovering there for a couple of years, it began a trend upward, landing near 10% in late 1973. It settled at 8.5% to 9% from 1974 to the end of 1976. After the rise to 10%, that probably seemed O.K. to most home buyers.

But they weren't happy soon thereafter. From 1977 to 1981, a period of only 60 months, the 30-year fixed rate climbed to 18%. As I mentioned in one of my previous articles, my dad was one of those unluckily stuck needing a loan at that time.

Interest Rate Lessons

And when rates started to decline after that, they took a long time to recede to previous levels. They hit 9% for a brief time in 1986 and bounced around 10% to 11% until 1990. For the next 11 years through 2001, the rates slowly ebbed and flowed downward, ranging from 7% to 9%. We've since spent the last nine years, until very recently, at 6% to 7%. So you can see why 5% is so remarkable.

So, what can we learn from the historical trends and numbers?

First, rates have far further to move upward than downward; for more than 30 years, 7% was the low and 18% the high. The norm was 9% in the 1970s, 10% in the mid-1980s through the early 1990s, 7% to 8% for much of the 1990s, and 6% only over the last handful of years.

Second, the last time the long-term trends reversed from low to high, it took more than 20 years (1970 to 1992) for the rate to get back to where it was, and 30 years to actually start trending below the 1970 low.

Finally, the most important lesson is to understand the actual financial impact the rate has on the cost of purchasing and paying off a home.

Every quarter-point change in interest rates is equivalent to approximately $6,000 for every $100,000 borrowed over the course of a 30-year fixed. While different in each region, for the sake of simplicity, let's assume that the average person is putting $40,000 down and borrowing $200,000 to pay the price of a typical home nationwide. Thus, over the course of the life of the loan, each quarter-point move up in interest rates will cost that buyer $12,000.

Loan Costs

Stay with me now. We are at 5%. As you can see by the graph above, as the economy stabilizes, it is reasonable for us to see 30-year fixed rates climb to 6% within the foreseeable future and probably to a range of 7% to 8% when the economy is humming again. If every quarter of a point is worth $12,000 per $200,000 borrowed, then each point is worth almost $50,000.

Let's put that into perspective. You have a good stable job (yes, unemployment is at 10%, but another way of looking at that figure is that most of us have good stable jobs). You would like to own a $240,000 home. However, even though home prices have steadied, you may be thinking you can get another $5,000 or $10,000 discount if you wait (never mind the $8,500 or $6,500 tax credit due to run out next spring). Or you may be waiting for the news to tell you the economy is "more stable" and it's safe to get back in the pool. In exchange for what you may think is prudence, you will risk paying $50,000 more per point in interest rate changes between now and the time you decide you are ready to buy. And you are ignoring the fact that according to the Case-Shiller index, home prices in most regions have been trending back up for the last several months.

If you are someone who is looking to buy or upgrade in the $350,000-to-$800,000 home price range, and many people out there are, then you're borrowing $300,000 to $600,000. At 7%, the $300,000 loan will cost just under $150,000 more over the lifetime, and the $600,000 loan an additional $300,000, if rates move up just 2% before you pull the trigger.

What I'm trying to impress upon everyone is that if you are planning on being a homeowner now and/or in the foreseeable future, or if you are looking to move your family into a bigger home, then pay more attention to the interest rates than the price of the home. If you have a steady job, good credit, and the down payment, then you really are being offered the gift of a lifetime.

Marc Roth is the founder and president of Home Warranty of America, which touches just about every part of the real estate industry since it sells through builders, real estate agents, title companies, mortgage companies, and directly to consumers.

A seller's mindset today

The California Association of Realtors hosted an industry tradeshow in San Jose earlier this month and shared some results from a recent phone survey of home Sellers in the state of California.

If you are a Seller, perhaps this will provide some comfort that you are not alone.

If you are a Buyer, this should give you a broader perspective of the market dynamics today.

Key highlights:

Primary reasons for selling - 80% have to do with money

• trouble making mortgage payments
• job loss
• mortgage payments went up

Types of mortgages held by current sellers:

• 45% are 2 year fixed, then adjustable
• 25% are 3 year fixed, then adjustable
• The 5 year fixed rate mortgages will be the next wave to reset in the coming months

45% of Sellers have owned their homes less than 2 years.  The majority of the people purchased larger properties or properties in better locations.  Today, their income is not keeping up with their expenses.

Seller's biggest concerns with home selling process:

• 89% say time it take to sell
• 83% say sales price of home (ie. what they will NET)
• 74% say Buyers being able to get a loan to complete the purchase

63% of Sellers have had their home fall out of escrow before it actually sold.

• 69% due to buyer not getting an acceptable mortgage
• 24% due to the lender withdrawing

50% of all escrows did not close ON TIME due to loan delays.

A good agent with intimate local market knowledge can help Sellers price and market a property most effectively and assist in setting reasonable expectations for time on the market and the ultimate sales price. 

Thoughts for the 4th of July

A friend and colleague sent this today.  It is worth reading and remembering.

Have you ever wondered what happened to the 56 men

who signed the Declaration of

Independence

?

Five signers were captured by the British as traitors,

and tortured before they died.

Twelve had their homes ransacked and burned.

Two lost their sons serving in the Revolutionary Army;

another had two sons captured.

Nine of the 56 fought and died from wounds or

hardships of the Revolutionary War.

They signed and they pledged their lives, their fortunes,

and their sacred honor.

What kind of men were they?

Twenty-four were lawyers and jurists.

Eleven were merchants,

nine were farmers and large plantation owners;

men of means, well educated,

but they signed the Declaration of

Independence

knowing full well that the penalty would be death if

they were captured.

Carter Braxton of Virginia, a wealthy planter and

trader, saw his ships swept from the seas by the

British Navy. He sold his home and properties to

pay his debts, and died in rags.

Thomas McKeam was so hounded by the British

that he was forced to move his family almost constantly.

He served in the Congress without pay, and his family

was kept in hiding. His possessions were taken from him,

and poverty was his reward.

Vandals or soldiers looted the properties of Dillery, Hall, Clymer,

Walton, Gwinnett, Heyward, Ruttledge, and Middleton.

At the battle of

Yorktown

, Thomas Nelson, Jr., noted that

the British General Cornwallis had taken over the Nelson

home for his headquarters. He quietly urged General

George Washington to open fire. The home was destroyed,

and Nelson died bankrupt.

Francis Lewis had his home and properties destroyed.

The enemy jailed his wife, and she died within a few months.

John Hart was driven from his wife's bedside as she was dying.

Their 13 children fled for their lives. His fields and his gristmill

were laid to waste. For more than a year he lived in forests

and caves, returning home to find his wife dead and his

children vanished.

So, take a few minutes while enjoying your 4th of July holiday and

silently thank these patriots. It's not much to ask for the price they paid.

Remember: freedom is never free!