Federal Reserve Chairman Upbeat on Economy, Signals Likely Rate Hike

Federal Reserve Chair Janet Yellen on Sunday sketched a bright outlook for the U.S. economy and for inflation prospects in coming months, saying the impact of the recent hurricanes will likely slow economic growth slightly but only temporarily and should be followed by a rebound by year's end.

Speaking to an international banking seminar, Yellen acknowledged that the persistence of undesirably low inflation this year has been a surprise. But she said she expected inflation to start picking up as the effects of temporary factors, such as falling prices for consumer cellphone service, begin to fade.

The Fed chair's comments suggested that the central bank will soon resume raising interest rates to reflect the strengthening economy. Most economists foresee the next rate hike – the third this year – coming in December.

"Economic activity in the United States has been growing moderately so far this year, and the labor market has continued to strengthen," Yellen said in a speech to a panel that included central bank officials from China, Japan and the European Central Bank.

Of the hurricanes that struck Texas, Florida, Puerto Rico and the Caribbean, Yellen noted that they caused enormous damage. But she added:

"While the effects of the hurricanes on the U.S. economy are quite noticeable in the short term, history suggests that the longer-term effects will be modest and that aggregate economic activity will recover quickly."

Yellen said that the economy's growth, as measured by the gross domestic product, might have slowed slightly in the July-September quarter as a consequence of the hurricanes but that growth is likely rebounding in the current quarter.

The Fed chair's speech Sunday followed the central bank's decision at its meeting last month to leave its benchmark short-term rate unchanged in a range of 1 percent to 1.25 percent. At the same time, the Fed announced that it would begin paring its enormous portfolio of bonds, which it had amassed after the 2008 financial crisis in an effort to hold down long-term loan rates for consumers and businesses. The move to let its balance sheet gradually shrink could mean higher rates on mortgages and other loans over time.

During a question period, Yellen was asked whether a booming stock market that some see as overvalued or potentially higher budget deficits resulting from the Trump administration's tax cut plan had increased economic uncertainty.

Yellen declined to respond specifically but noted that the Fed's staff has described stock prices as elevated. At the same time, she said market levels should be viewed in the context of a banking system that she called "dramatically improved" since the 2008 financial crisis.

The Fed chair said the administration's proposed tax cuts may have boosted consumer and business confidence but so far appear to have had little effect on investment or spending decisions. She said the Fed was taking a "wait and see attitude" on how the tax program might affect the economy given the many unknowns about what it might look like when the plan emerges from Congress.

In his presentation, Zhou Xiaochuan, head of China's central bank, said that his country is trying to cut excess capacity in its steel and cement industries by 10 percent but that China requires a sizable output in those areas to support an infrastructure construction program. The Trump administration has been pushing China to reduce production in such areas as steel, saying its overcapacity has depressed global prices for steel and hurt American producers.

Haruhiko Kuroda, head of the Bank of Japan, said that his country's economy was expanding moderately and that heightened global political risks so far haven't destabilized financial markets. He did not say what risks he was referring to, but investors have been focusing on the standoff with North Korea over its increased missile tests and development of nuclear weapons.

The officials spoke before the Group of 30, an international body of bankers and academics. Gary Cohn, who leads President Donald Trump's National Economic Council, spoke on a separate panel about the administration's efforts to scale back some of the tighter rules imposed on the U.S. financial sector after the 2008 crisis. In particular, he reiterated that the administration supported easing restrictions on smaller banks.

Yellen's appearance Sunday came as her future at the central bank is in doubt, with her four-year term as chair ending in February. Trump has been considering several candidates for the post, in addition to the possibility of offering Yellen a second term. The other candidates include Jerome Powell, a member of the Fed's board; Kevin Warsh, a former member of the board; John Taylor, a Stanford University economist; and Cohn.

Last week, administration officials said Trump is likely to announce his decision with a month.

Trump’s Healthcare Order Excludes Independent Contractors

President Donald Trump signed an executive order Thursday to get the ball rolling on the creation of association healthcare plans. It's intended to help small employers access more affordable health insurance coverage for their employees.

According to the National Association of Realtors® (NAR), the change holds promise for real estate professionals who seek coverage, but it will not yet help Realtors seeking more affordable healthcare coverage because, as it currently stands, Trump's order doesn't include independent contractors.

"The White House announcement is an important part of the work to expand health coverage opportunities," says William E. Brown, president of NAR. "Association health plans have long offered promise for small-business owners and self-employed individuals seeking affordable health coverage."

Brown says that NAR is currently reviewing the specifics of the latest proposal to determine what kind of aid it might offer to "self-employed individuals such as real estate professionals."

Under the order, Trump is directed the Department of Labor to write guidelines allowing small employers to band together to form association health plans and purchase coverage as a single unit in the large group health insurance market, which is exempt from some regulations of the Affordable Care Act.

The order also directs the Departments of Labor, Health and Human Services and Treasury to look at expanding the length of short-term insurance policies for individuals and modifying rules governing employer-offered health reimbursement accounts to fund employee healthcare expenses.

NAR has long supported legislation that enables the creation of association health plans and expanded health insurance options for real estate professionals, who are mostly independent contractors; and Brown says NAR will continue to work with the administration and Congress to make association health plans a workable option for Realtors.

New Tax Reform: Deducts Property Taxes or Mortgage Interest?

Homeowners would be forced to choose between two popular tax deductions – one for local property taxes, the other for mortgage interest – under a potential compromise that House Republicans are considering as they craft the evolving tax revamp.

The nearly $6 trillion tax overhaul plan being pushed by President Donald Trump and Republican leaders in Congress promises to retain the deduction of mortgage interest from federal income taxes – a cherished tax break used by about 30 million Americans that supporters say is a catalyst to homeownership.

Republicans in high-tax states such as New York, New Jersey and California are balking at the proposal from Trump and GOP leaders to eliminate the federal deduction for state and local taxes, fearing the financial hit on their constituents.

The possible deduction tradeoff is among several compromises being floated by Republican lawmakers to gain the support of their defecting colleagues from high-tax states. Their opposition threatens to derail tax legislation that's seen as a political imperative for Republicans and Trump.

Rep. Chris Collins, R-N.Y., said Tuesday he and several other Republicans discussed possible ways around the current impasse on Monday with Rep. Kevin Brady, R-Texas, who heads the tax-writing House Ways and Means Committee.

"It looks like we're going to have some compromise" on state and local tax deductions, Collins said Tuesday at the Capitol. "I am confident there will be an accommodation for the high-tax states."

But Republican Sen. Tim Scott of South Carolina, a member of the Senate's tax-writing Finance Committee, wasn't sold on the deduction tradeoff idea.

"What does it save and where does it get us? Should the average South Carolinian subsidize the high property taxes in other states?"

Scott noted that the state and local deduction costs the government an estimated $1.3 trillion in lost revenue over 10 years. It covers local property taxes and state income taxes. With more than $1 trillion having to be mined from closing loopholes and ending deductions to finance the Republican plan's sweeping tax cuts, regional divisions within the GOP have jumped to the fore.

The high-tax, high-income states – New York, Connecticut, New Jersey and California – that urgently want to preserve the state and local deduction are Democratic strongholds, but with plenty of Republican lawmakers. A coalition of 70 lawmakers from those so-called blue states, including 20 Republicans, are fighting the proposed repeal of the deduction, arguing it would subject people to being taxed twice.

Collins said other possibilities discussed with Brady included "some either-ors" like the home deduction tradeoff and "maybe some capping." That could mean limiting the amount homeowners could deduct on their local property taxes, for example, to correspond with a maximum $1 million of the home's value, he suggested. Or further reducing the cap on the federal mortgage interest deduction, which currently allows homeowners to deduct interest on up to $1 million in mortgage debt.

Changes like those "would take the argument that this is a tax cut for the rich off the table," Collins said.

Trump, top administration officials and Republican architects of the plan insist that it would provide badly needed tax relief for the middle class – and wouldn't benefit the wealthy.

The wealthiest sliver of the nation would reap big benefits, however. The plan would drop the tax rate for Americans making a half-million dollars or more by almost 5 percentage points. And the blueprint calls for eliminating the estate tax – paid by those with multimillion-dollar inheritances, a boon for wealthy individuals who inherit businesses, investments and real estate. Also slated for elimination is the alternative minimum tax, a supplemental tax for wealthy individuals and corporations that enjoy exemptions lowering their income tax bills.

Reverse Mortgages are a Sticky Business

Financial advisers often suggest you delay taking Social Security until full or normal retirement age (FRA) if not later – to age 70.

And the reasons are many: You'll get 100 of your primary insurance amount (PIA) if you wait to claim at FRA and, depending on your birth year, anywhere from 124 percent to 132 percent of your PIA if you wait until age 70; your surviving spouse will receive the highest possible benefit if you delay taking Social Security until FRA; and your monthly benefit will be higher after cost-of-living adjustments than if you had claimed before FRA.

But the delay often means finding income to make up the difference between what you would have received from Social Security – on average, it's about $1,369 a month now – and what you need for living expenses.

In recent years, advisers have suggested Americans do one, all or some combination of the following to bridge the gap: work, draw money from taxable, tax-deferred or Roth accounts and use a reverse mortgage.

The strategy to use a reverse mortgage to delay taking Social Security, however, has come under fire of late. In August, the Consumer Financial Protection Bureau (CFPB) issued a report that explored the tradeoffs of borrowing a reverse mortgage loan to delay claiming Social Security.

The CFPB found that, in general, "the reverse mortgage loan costs exceed the additional increase in Social Security that homeowners would receive in their lifetime by delaying Social Security benefits."

For instance, the CFPB noted that those who use a reverse mortgage to delay taking Social Security "assume debt for the principal loan amount, as well as for interest, mortgage insurance premiums (MIP), and monthly servicing fees, which are added to the principal every month."

The CFPB also wrote that origination and closing costs are often added to the loan balance since most consumers choose to finance these costs using the reverse mortgage proceeds. Over time, the balance of the loan increases as a result of compounding interest and MIP, and fees.

Furthermore, the CFPB wrote, using this strategy generally diminishes the home equity available to borrowers later in life.

Experts say the CFPB got some things right in its report, such as the risks associated with reverse mortgages. But experts took issue with the report's methodology and assumptions, which might cause homeowners to unnecessarily dismiss reverse mortgages as a retirement-income tool worth considering.

So, how might you go about thinking about the use and value of a reverse mortgage as part of your retirement-income plan?

• First, analyze. For many Americans, the equity in their home is their largest asset, says Marguerita Cheng, chief executive officer of Blue Ocean Global Wealth. And that equity can be turned into income with a reverse mortgage. But homeowners shouldn't use a reverse mortgage to delay taking Social Security, or for any other reason, in the absence of an analysis that addresses trade-offs, risks and rewards.

"Future debt is a risk, but the risk has to be weighed with the reward of what is being created," says John Salter, an associate professor at Texas Tech University. "There are no free lunches. But we should always have a comprehensive toolbox of strategies, and we must find the right tool for each person."

Cheng agrees that a reverse mortgage or a home equity conversion mortgage (HECM) might not be right for every person in every situation. But, she says, a reverse mortgage could help many widows and divorcees who often have lower Social Security benefits, lower 401(k) and IRA balances and increased health care costs achieve a better outcome in retirement.

• Manage longevity risk. Tom Davison, a partner emeritus with Summit Financial Strategies, says using a reverse mortgage to delay taking Social Security is primarily a risk reduction strategy rather than an income-maximization strategy.

"As risk reduction, it does indeed maximize income, especially in the later years," he says. "And the 'later years' is the key. It pushes the most possible inflation-adjusted, tax-advantaged dollars into those years."

• Manage sequence-of-return risk. Retirement researchers increasingly say homeowners ought to consider a HECM with a line of credit to manage the risk of having to withdraw money from retirement during down markets. The researchers call withdrawing money from falling retirement account balances sequence-of-return risk.

• When not to use reverse mortgage. "Everyone wants to age in place," Cheng says. "But reverse mortgages don't make sense if it's not the right home to age in place. They also may not make sense if the house is too expensive to maintain."

Can You Buy a Home Using Bitcoin?

Nearly half of Americans are unsure of the legality of bitcoin, a new study this week suggests, yet a loyal group of its advocates embrace it as a symbol of financial and philosophical freedom.

"I believe there is a strong chance that it may someday revolutionize significant parts of our financial infrastructure," says Aaron Hanson, a software engineer from Chicago.

Hanson uses bitcoin wherever he can – to buy food at an empanada restaurant, airline tickets, his honeymoon in Africa this year – listing it alongside technology and individual freedom as his three beliefs in life.

Austin Craig, a practicing Mormon who attended Brigham Young University, went a step further: He lived entirely on bitcoin during the first three months of his marriage and chronicled it in a documentary, Life On Bitcoin.

"Mormons are descendants of pioneers who carved their livelihood out of the wilderness," he says, describing the cryptocurrency's appeal to members of The Church of Jesus Christ of Latter-day Saints. "There is a strong element of rugged individuals, self-sufficiency."

Welcome to the mind-set of a typical bitcoin owner. For many, it is a lifestyle, something to be valued more than gold for financial investments and shielding personal information from the prying eyes of a distrusted government.

Most Americans (78.5%) are familiar with the cryptocurrency, according to a survey of 1,000 Americans by LendEDU, a personal-finance comparison site. But 48% aren't sure it's legal, and 11% consider bitcoin ownership illegal in the U.S.

Still, 40% were open to using bitcoin in the future, says Michael Brown, research analyst at LendEDU.

For those with any doubt about the digital currency, they need look no further than its true believers, who have embraced bitcoin as a way of life and help drive its prices to record highs, causing some analysts to warn of a bitcoin bubble.

The digital currency, whose finite quantities are created by computer programs, trades outside the traditional financial system, an attraction for people who have doubts – or at least seek an alternative – to mainstream institutions.

"There's certainly a libertarian feel" to the beliefs of bitcoin users, says Melanie Shapiro, CEO of Token, an identity-ring maker in New York. "But we're technologists, and technology provides freedom" from centralized government systems.

Their long-term passion and principles have paid off handsomely: Bitcoin closed Tuesday at $4,009 per token – twice its price in July and significantly more than when Shapiro and her husband bought it for just $2 in 2011.

The currency, which surfaced in early 2009 from someone using the name of Satoshi Nakamoto, has slowly evolved from cult curiosity to widespread lifestyle choice, with elements of political and religious fervor.

What began as a currency championed by libertarians advocating decentralized currency or criminals trying to avoid law enforcement has been embraced by venture capitalists and investors. It's not mainstream yet – too many people are wary of its high risk and complicated tools – but it's getting there.

"It is the first global, highly liquid form of currency," says Mike Jones, CEO of Science, an incubator that owns and trades cryptocurrency. "Much more so than gold. It is about opening financial markets globally."

"It is digital gold," says Overstock CEO Patrick Byrne, whose online retailer was one of the first to accept bitcoin payment.

There is a "doomsday sentiment" among many bitcoin users, who horde the currency along with non-perishable food and drinks in the event of an emergency.

Byrne's Salt Lake City-based company has stockpiled several million dollars worth of cryptocurrency, $12 million in gold and a 30-day supply of food to feed all of its 2,000 employees there.

(Byrne is convinced the U.S. dollar will dramatically weaken, as has currency in Venezuela, because of a crippling debt, thus strengthening bitcoin and other digital currency.)

That, in part, is motivation for bitcoin fanatics – but not the entire story, financial analysts say.

"Devotees are motivated less by (the) financial (aspect) than their passion for distributing power to the masses," says Jawad Ansari, managing director of investment firm Boustead Securities.

IRS Offers Tax Relief to Irma Victims

Hurricane Irma victims in parts of Florida and elsewhere have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced. This includes an additional filing extension for taxpayers with valid extensions that run out on Oct. 16, and businesses with extensions that run out on Sept. 15.

"This has been a devastating storm for the Southeastern part of the country, and the IRS will move quickly to provide tax relief for victims, just as we did following Hurricane Harvey," says IRS Commissioner John Koskinen.

The IRS offers this relief to any area designated by the Federal Emergency Management Agency (FEMA), as qualifying for individual assistance. Parts of Florida, Puerto Rico and the Virgin Islands are currently eligible, but taxpayers in localities added later to the disaster area, including those in other states, will automatically receive the same filing and payment relief.

The tax relief postpones various tax filing and payment deadlines that occurred starting on Sept. 4, 2017, in Florida and Sept. 5, 2017, in Puerto Rico and the Virgin Islands. As a result, affected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes that were originally due during this period.

This includes the Sept. 15, 2017 and Jan. 16, 2018, deadlines for making quarterly estimated tax payments. For individual tax filers, it also includes 2016 income tax returns that received a tax-filing extension until Oct. 16, 2017. The IRS notes, however, that because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.

A variety of business tax deadlines are also affected including the Oct. 31 deadline for quarterly payroll and excise tax returns. Businesses with extensions also have the additional time including, among others, calendar-year partnerships whose 2016 extensions run out on Sept. 15, 2017, and calendar-year tax-exempt organizations whose 2016 extensions run out on Nov. 15, 2017.

In addition, the IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due during the first 15 days of the disaster period. Check out the disaster relief page for the time periods that apply to each jurisdiction.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year), or the return for the prior year (2016). See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by severe storms and flooding and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

For information on government-wide efforts related to Hurricane Irma, visit www.USA.gov/hurricane-irma.

Irma's Aftermath

More than 5.5 million homes and businesses in Florida remained without power at midday Tuesday after Hurricane Irma plowed through the state.

Food, water and gas deliveries were starting to return in Central and South Florida as the demand swells from returning evacuees. Airports started to provide limited operations. And the process of allowing people to return to homes was underway in most areas outside the storm-ravaged lower Florida Keys.

Irma is expected to cost the state and federal government billions of dollars.

Meanwhile, Florida Power & Light spokesman Rob Gould asked customers on Tuesday to be patient as they wait for restoration of electricity.

"We understand what it means to be in the dark. We understand what it means to be hot and without air conditioning," Gould said. "We are out there 24-7. This will not be just a daylight operation. We will be restoring power day and night."

The company, with more than 20,000 restoration workers, anticipates getting power back by the end of the weekend to most of its customers in eastern parts of Florida.

A deadline of Sept. 22 has been set for restoring power to customers in the company's western counties, which include all or parts of Manatee, Hardee, Sarasota, DeSoto, Charlotte, Lee, Hendry, Collier and Monroe.

The timelines don't include homes and areas that were completely destroyed by the storm, Gould noted.

Juno Beach-based FPL reported 2.8 million of its nearly 5 million homes and businesses were still without power on Tuesday.

St. Petersburg-based Duke Energy Florida had 1.27 million of its 1.8 million accounts in the dark on Tuesday. And Tampa Electric still had to reconnect 300,000 of its 750,000 accounts on Tuesday.

"Restoration will take days – but, thankfully, not weeks," Tampa Electric President and CEO Gordon Gillette, said in a prepared statement.

Tampa Electric said power had already been restored to about 20 percent of its customers who had been impacted.

Statewide, electricity has been restored to more than 1 million homes and businesses as the broader recovery process got underway from Irma, which hit the Keys and Southwest Florida on Sunday and traveled up the state before exiting North Florida on Monday.

"What you're going to see today all around the state, is you're going to see more resources," Gov. Rick Scott said Tuesday morning while at Jacksonville International Airport. "This impacted the whole state, so it's hard to pre-position all the assets you'd want to position if the storm just came from one coast or the other. But even with that, I think the number is over 30,000 individuals from out of state are helping us get our power on."

Scott had earlier in the day taken an aerial tour of Jacksonville with the Florida National Guard. The U.S. Coast Guard had provided Scott with a similar view of Key West on Monday.

Damage assessment continues in the Florida Keys, where engineers are determining if bridges can handle the weight of returning vehicles. Water and sanitation also remain issues, Scott said.

Problems in Jacksonville stem from flash flooding from the St. Johns River. The U.S. Coast Guard reported rescuing more than 100 people Monday in Jacksonville.

Jacksonville Mayor Lenny Curry, who put the number that needed rescuing from floodwaters at around 300 on Tuesday, expressed some frustration about people not heeding evacuation warnings.

"It would have been nice if there weren't people in the areas that were affected by the surge, but the first responders just stepped right up and did their jobs," Curry said.

Curry said he would have evacuated if he wasn't the city's mayor.

"We're not trying to be difficult. We're not trying to make people's lives inconvenient," Curry added. "I think the governor said it best leading up to this, evacuations are not about convenience, they're about safety."

Search and rescue operations continued in the Keys and Southwest Florida. Among other developments Tuesday:

  • More than 94,000 people remained in about 400 shelters still in use across Florida.
  • The Herbert Hoover Dike around Lake Okeechobee remained safe, according to the U.S. Army Corps of Engineers.
  • The Florida Highway Patrol was escorting 44 tractor-trailers with relief supplies and 600 utility trucks into Southwest Florida.
  • Port Tampa, Port Everglades and Port Canaveral reopened for fuel trucks.
  • Florida reopened 20 state parks in the Panhandle, but 147 others throughout the peninsula remained closed Tuesday morning.
  • Lakeland-based Publix reported 22 of its 776 stores in Florida remained closed on Tuesday.

Source: News Service of Florida, Jim Turner

Florida Under State of Emergency!!

Gov. Rick Scott on Monday placed all of Florida under a state of emergency as the projected path of Hurricane Irma could take the powerful storm toward the southern part of the state by the end of the week.

The declaration is intended to give local governments in all 67 counties time to prepare, the governor's office said.

"Hurricane Irma is a major and life-threatening storm and Florida must be prepared," Scott said in a statement.

"Today, given these forecasts and the intensity of this storm, I have declared a state of emergency for every county in Florida to make certain that state, federal and local governments are able to work together and make sure resources are dispersed to local communities as we get prepared for this storm," he added.

Scott has been advising people the past couple of days – through Twitter – to prepare for the storm by visiting the Florida Department of Emergency Management's disaster page, which focuses on individuals, businesses and special needs Floridians.

"Families should take time today to make sure you have a disaster plan and fully-stocked disaster supply kit," Scott tweeted on Monday. "I am continuing to coordinate with emergency management officials as we monitor Hurricane Irma."

Hurricane Irma continues to fluctuate, but it's a Category 5 storm that may diminish only slightly if it passes over Caribbean Islands. The storm was moving towards the west at 13 mph, but most experts predict it will start to turn – but no one knows yet when that will happen. The National Hurricane Center said Monday that while it's too early to determine where the storm will go, "There is an increasing chance of seeing some impacts from Irma in the Florida peninsula and the Florida Keys later this week and this weekend."

Price gouging
Attorney General Pam Bondi also activated Florida's price gouging hotline for all consumers in Florida law prohibits extreme increases in the price of essential commodities, such as food, water, hotels, ice, gasoline, lumber and equipment needed as a direct result of an officially declared emergency. Anyone who suspects price gouging during this declared state of emergency should report it to the Attorney General's Office by calling 1-866-9-NO-SCAM.

Association and business preparations
Businesses should also be prepared for a storm to make sure operations can continue afterword. Following the series of storms in 2004, Florida Realtors created a preparation plan for local associations, though the recommendations generally apply to brokers too. For more info on other Florida Realtors efforts, including its tax-deductible Disaster Relief Fund, visit the website.

"In Florida, we always prepare for the worst and hope for the best, and while the exact path of Irma is not absolutely known at this time, we cannot afford to not be prepared," Scott said in Monday's statement. "This state of emergency allows our emergency management officials to act swiftly in the best interest of Floridians without the burden of bureaucracy or red tape."

5 Things to Never Tell a Contractor

Contractors may be your client's go-to person during a home renovation. To ensure things go smoothly, realtor.com warns of a few phrases homeowners should never say to the contractor, including:

  1. "I'm not in a hurry."
    It's nice not to pressure the contractor and create good feelings, but this phrase suggests that the contractor and crew can take as much time as they'd like with the home project, Victoria Shtainer, a residential expert at Compass New York, told realtor.com. Time is often money and convenience.
  2. "We had no idea this would be so expensive."
    "There is no worse feeling than bidding on a project, feeling good about your bid, and learning that the budget for the project is set unreasonably low," says Nathan Outlaw, CEO of Onvico Inc., a general contracting company. "A good lesson for contractors and owners is to always get the money talks started during an early conversation."
  3. "I'll buy my own materials."
    Contractors are often eligible for better pricing on materials. Still, "it isn't necessarily a bad idea to check what materials a contractor is using for things like the subfloor or cabinets," Outlaw says. "But trust them to use a good, well-established supplier to have the materials brought to the job site."
  4. "I'll pay up front."
    Don't take away your bargaining card from the start. A contract between you and the contractor will ensure the contractor will get paid, but make it contingent on the job being done to your satisfaction. You want to be able to hold the contractor accountable for the work they do.
  5. "I'm old-school. We can use a handshake."
    "When a client says this, I know it's time to run for the hills," says Outlaw. "There should never be any fear about getting the scope of work and payment terms in writing." A contract protects you and the contractor from the project being done on budget and in a timely manner. Get everything in writing first.

Could Hurricane Harvey Increase Fla. Homeowners Insurance?

Hurricane Harvey's devastating property damage toll will easily be counted in the billions of dollars, but insurance industry experts say they shouldn't have an impact on property insurance rates in hurricane-prone Florida.

AIR Worldwide, which advises companies on managing risk, estimates that Harvey caused between $1.2 billion and $2.3 billion in wind and storm damage. Another analytical firm, CoreLogic, forecasts between $1 billion and $2 billion. Risk Management Solutions says the total could be $6 billion but likely will be less.

But that's just the hit for property and casualty insurers. Flood damage could be tens of billions more.

Lynne McChristian, spokesperson for the Insurance Information Institute, an industry organization, said that Florida homeowner insurance rates shouldn't be affected for one simple reason: rates are set at the state level and are based on what happens within the state. "What happens in Florida stays in Florida, what happens in Texas stays in Texas and that is the way it works in every state," she said.

The organization's website, www.iii.org, includes a chart that shows average insurance rates across all states. Those reflect the risks inside each state's borders.

The lowest insurance rates in the U.S. are Idaho and Utah, she said. "That's primarily because you don't have hurricanes there – or major flooding. And, there is not the population density of more disaster-prone states."

That's not the case for the struggling National Flood Insurance Program, because that is regulated at the federal level, she said.

Jay Neal, CEO of the Florida Association of Insurance Reform, also said he doesn't expect Harvey's toll to impact Florida homeowner rates. Still, he said, the devastation in Texas should be a wake-up call for the estimated 1.4 million Florida homes vulnerable to storm surge but not currently covered by flood insurance.

"People still don't understand that storm surge is not covered by their homeowner policies," he said. "People need to wake up and look at Texas. This could happen here."

In a statement, William H. Stander, executive director of the Florida Property & Casualty Association, said the organization can't speculate on how Texas losses could impact Florida rates: "More importantly, all Floridians should recognize the importance of buying flood insurance, which is not covered under your homeowner's insurance policy," he said.