Archive for January, 2012

EXPERT ADVICE: Tips For Buying a New Home

Thinking about buying a home? There are so many factors to consider, and it can be hard to know where to begin. This week, Sonia Jones, our Housing Resource Director, has some helpful tips to get your started on the path to homeownership.

How much can you afford?
You don’t want to take on a mortgage that is too expensive and end up house poor. Bankrate.com has lots of helpful information, including explanations of terms like ‘debt to income ratio’ and calculators to help estimate how much of a mortgage you can afford given your income. You should also consider any other real estate that you currently own, and assess whether you would be able to afford those in addition to your new house.

You’ve heard it before: location, location, location!
There are many factors that influence the desirability of a location. Consider the property value and make sure the area you’re looking at is not a declining market area. The quality of neighborhood schools is also important. Being in a good school district increases your chances of re-selling the property in the event you move. Other important things to look at: taxes, services, crime rates, transportation, and zoning. If you find a property you like, free property value analysis tools at sites like Zillow or Home Gain are pretty accurate

Get pre-qualified for a loan.
UnderstandingHomeLoans.com lists the three most important reasons to make sure you are pre-qualified:

1. You’ll uncover credit problems
2. You’ll know how much house you can afford
3. Most real estate agents require a pre-qualification letter signed by the lender, along with a purchase contract

Be clear about the price and all other costs—don’t be afraid to ask questions.
When you find your perfect home, work with your agent to negotiate the price. When you’re ready to close the deal, make sure you understand the settlement statement, which details all the funds paid by the buyer and the seller. Request a copy of the settlement statement, review it carefully, and discuss with your agent about who pays the closing cost and any other fees associated with the loan. If anything is unclear, don’t hesitate to clarify.

For more information on home buying, visit http://www.homebuyingtips.net.

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January 27, 2012 at 5:07 pm

Business Incentives Should Create Good Jobs

Economic development in North Carolina, and the nation as a whole, has been focused on creating more jobs, particularly in this climate of persistent high unemployment. But often, this has been at the price of creating quality, well-paying jobs; instead, more jobs are being created that pay less than what is required to meet an average worker’s needs, also called a living wage.  According to the Social Security Administration’s wage statistics, the recession saw broad-based collapse in wage levels and raises. These statistics further show that the new jobs created since the recession have not been the traditional middle-class jobs that pay individuals a living wage, but instead have been lower paying positions.

The NC Justice Center in early January presented a plan for how North Carolina’s Economic Development Incentive Programs could be leveraged to not only create more jobs, but also better jobs for our economy (available here).  This program would emphasize the creation of jobs that pay a living wage, allowing North Carolina families to meet their most basic needs.  Their plan includes:

1. Attracting and retaining high-growth industries to North Carolina such as manufacturing, boat building, and pharmaceuticals.  An emphasis would be on targeting higher-wage occupations.

2. Increasing the wage standard for all incentive programs to meet the North Carolina Living Income Standard.

3. Enforcing the current performance criteria for incentive deals.

4. Requiring all incentive firms to meet certain wage standards in exchange for the subsidies.

5. Publishing quarterly and annual reports on firm performance in a public, searchable database.

Public reporting and an emphasis on job creation might have led to different results in Maiden, NC, where Apple recently completed a $1 billion data center, as reported by the Washington Post.  According to the report, both the state and the local government awarded Apple huge financial incentives.  However, the facility created just 50 total new full-time jobs and 250 indirect contracting jobs.  “There is not an immediate payback – there’s no doubt about that,” Michelle Bailey of the International Data Corp. said, as quoted by the Washington Post article.  In the future, the economic development programs should make sure incentive dollars are used to create more and better jobs.

by Sarah Grimme, Development & Policy Associate

January 20, 2012 at 11:00 am

EXPERT ADVICE: Bucket List for Obtaining a Business Loan

Every other week our lending staff will be providing tips and helpful advice on a range of issues. This week, our Vice President of Business Services and Operations, Roberta McCullough, has a ‘bucket list’ for those of you thinking about getting a business loan.

1. Have a plan—a real one.  You must have a written business plan for what it is you want to do. It should include the market you plan to serve, a projection of demand with facts to back it up, projections on how much money you plan to make, how much it will cost you to run your business (at least annually), and lastly, but most importantly, what you want the money for!

2. Determine how much money you need to get started, and be prepared with some of your own cash.  Lenders will not give you 100% of what you need.

3. If you are going to set up your business outside the home, have an idea of where you want your business to be, but please don’t sign a lease until you know you can get a business loan.

4. Be willing to be flexible.  You might not get exactly what you ask for.  Have a plan B.

5. Have a secondary method for paying the lender back.  If you have a job, don’t quit it!  At least until you see your business can make it.

6. Make sure you complete the application in its entirety.  A lender will quickly deny you if s/he is buried in paperwork and your application is submitted incompletely.  And guess what— it’s legal!  Lenders can legally deny you just for an incomplete application, regardless of your qualifications.

Good luck!

January 13, 2012 at 11:00 am

It’s True: Small Businesses Create Jobs, If they Can Grow

PolitiFact dug into the statement made by House Majority Leader Eric Cantor that small businesses create 70 percent of the jobs in the United States.  Citing studies by the Small Business Administration and the Bureau of Labor Statistics, PolitiFact ruled that this claim is true; small businesses do indeed create between 60 to 80 percent of new jobs.

“Small business” in this case is measured by the SBA definition of “an enterprise with fewer than 500 employees.” However, most of the businesses The Support Center works with are typically much smaller. What about the impact of smaller enterprises on job creation?

As stated by PolitiFact, 85 percent of net new jobs in the first quarter of 2011 were created by businesses with less than 500 employees.  The data also reveal that businesses with fewer than 100 employees created just about 50 percent of jobs in the same quarter, and businesses with fewer than 50 employees created almost a third.

This is a significant percentage, particularly in places where most of the businesses are much smaller than 500 employees.  For example, the SBA’s profile for North Carolina published in February 2011 showed that 86 percent of employer firms in the state have fewer than 20 employees. It also shows that firms with less than 100 employees accounted for 87 percent of net new jobs between 2006 and 2007.

It’s clear that small businesses play an important role in our state and national economy, but it isn’t just a matter of firm size.  As Jared Bernstein explained recently in an OpEd in the New York Times, new small businesses create jobs when they can expand and become larger firms. While Bernstein’s main argument is that the role of small businesses in job creation may be overstated, he still makes an important point: public policy should not abandon small businesses. Given all the hurdles they face, a more nuanced approach to public policy can provide the support that small businesses need to grow and create the jobs this economy needs.

– by Sadaf Knight, Policy & Research Director

January 6, 2012 at 7:21 pm 1 comment


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