CNNMoney.com
Companies Economy International Corrections Pre-market trading After-hours trading Winners/losers/actives Bonds Currencies Commodities Money Magazine Retirement Mutual Funds Taxes Ask the Expert Money 101 Autos Loan Center Best Places to Live Calculators Mortgage Rates Personal tech Big Tech blog Techland blog Sectors and stocks Fortune 500 techs Tech Talk 100 best places to launch Ultimate resource guide Small biz makeovers FSB 100 Fortune 500 Technology Investing Management Rankings Main Create portfolio Edit portfolio Create Alerts Edit Alerts
Gerri Willis Commentary:
Top Tips by Gerri Willis Column archive

Gloomy outlook? Buy the recession

As tight credit markets lead consumer confidence to a five-year low, Gerri Willis offers reasons for optimism.

Subscribe to Personal Finance
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Gerri Willis, CNN

home_rich_cover.03.jpg
For more information on managing your largest investment, check out Gerri Willis' "Home Rich," now in bookstores.

NEW YORK (CNNMoney.com) -- Consumer confidence plunged to a five-year low Tuesday as tight credit markets, rising prices and worsening job prospects weigh on American consumers. But Gerri Willis is here to give us reasons for optimism.

1. Low mortgage rates

This is good news for homeowners who want to refinance into a fixed rate loan.

Today, the traditional 30-year mortgage rate is less than 6%, according to the Mortgage Bankers Association. And if you have an adjustable-rate mortgage, Fed rate cuts will make your adjustment less painful.

If you have a home equity line of credit, you will also see your interest rate decline. A majority of HELOCs are tied to the prime rate. And those rates have fallen as the fed cuts rates.

And there's also good news out there if you are in the market for a jumbo loan. Traditionally, rates on jumbo loans - mortgages up to $417,000 - were high because Fannie Mae and Freddie Mac couldn't purchase loans over that amount.

But thanks to the economic stimulus package that passed in congress, that limit is raised to $729,000. That means you'll likely pay a lower rate.

But you have to act quickly. You'll have to lock in those lower jumbo rates because the higher limits only last until Dec. 31.

2. Consumer incentives

If you're in the market for a car, the time to buy is now until the end of the summer. That's when incentives will reach record numbers, says Jesse Toprak with Edmunds.com.

That's because this year could be the worst year in a decade for car sales, according to Toprak. These incentives will include cash rebates, low APR programs, lower interest rates on leases and dealer cash incentives. The vehicles with the most incentive programs: SUVs and large trucks.

Compact cars tend to have the least incentives. "In times of economic uncertainty, people make safer choices. Manufacturers don't need as much incentive to sell them," says Toprak.

To see a list of what incentives are available for an individual car, check out Edmunds.com.

Another good place for bargains: Furniture. Sales volume is low, so furniture retailers are rolling out the deals.

And if you want to get a good deal on a flat panel LCD or plasma TVs, those prices are going down too. In fact, according to Consumer Reports, you should find a good selection of these TVs for less than $1000.

3. Buy the recession

When the market plunges, it's tempting to cut your losses and pull your money out of the market. But market declines can provide opportunities for investors looking for investments at bargain prices.

Consider this, if you missed 30 of the best days in the market you would have wound up losing almost half of your portfolio's value, according to a research note by Edward Jones.

Keep in mind that the stock market falls in anticipation of a recession and recovers before it ends. Your best bet is to keep your portfolio diversified, prepare for some short-term setbacks but keep your eyes on the long-term horizon. To top of page

Gerri's Mailbox: Got questions about your money? We want to hear them! Send e-mails to toptips@cnn.com or click here - each week, we'll answer questions on CNN, Headline News and CNNMoney.com.
Features
10 fast-growing real estate marketsYes, even amid the housing crisis, parts of the U.S. are still expected to post price gains in the coming year. Here's where to look. more
Where home prices are headed nextWant to know what your home will be worth this time next year? Check out these home price forecasts for the 100 largest U.S. markets, from Money Magazine.  more
Markets Last Change
Dow Jones 12,737.41 -129.37 / -1.01%
Nasdaq 2,429.94 -21.30 / -0.87%
S&P 500 1,385.78 -11.90 / -0.85%
10-year Bond 101 Yield: 3.75%
U.S.Dollar 1 euro = $1.544 0.004
May 9, 2008 9:32 AM ET
CompanyPrice% Change
Hovnanian Enterprises, Inc 9.74 -12.49%
Conseco Inc 10.60 -11.81%
Omnicare, Inc 23.41 11.26%
Beazer Homes USA, Inc 10.32 -11.03%
May 8 3:58pm ET †
Web 2.0 second actsWeb 2.0 (or Bubble 2.0, as critics see it) has serial entrepreneurs buzzing with plans for a fresh hit. Will they fly high or get zapped? more
8 ultra-tiny cars Automakers are working on a new generation of ultra-tiny cars. And some of them could make it to gas-crunched U.S. consumers. more
Eco-friendly office suppliesRenewable woods and non-toxic chemicals help create an environmentally sound - and stylish - office space. Here are our picks for the best of the green bunch. more


© 2008 Cable News Network. A Time Warner Company. All Rights Reserved. Terms under which this service is provided to you. Privacy Policy
Copyright © 2008 BigCharts.com Inc. All rights reserved. Please see our Terms of Use.
MarketWatch, the MarketWatch logo, and BigCharts are registered trademarks of MarketWatch, Inc.
Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. All Times are ET.
Intraday data provided by ComStock, an Interactive Data Company and subject to the Terms of Use.
Historical, current end-of-day data, and splits data provided by FT Interactive Data.
Fundamental data provided by Hemscott.
SEC Filings data provided by Edgar Online Inc..
Earnings data provided by FactSet CallStreet, LLC.