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Save Money by Paying Your Closing Costs; Travel for Less This Summer; Protecting Your Home from Dangerous Weather; Weighing Your Options in a Complicated Mortgage Market; Kitchen of the Future; Saving on Storage Space
Aired May 12, 2007 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HOLMES: Of course, we'll have more on those missing soldiers in Iraq at the top of the hour. Plus, we'll take you live to Florida and California for the latest on the fight against the wildfires.
NGUYEN: But first, OPEN HOUSE with Gerri Willis starts right now.
GERRI WILLIS, HOST, OPEN HOUSE: Good morning. I'm Gerri Willis, and this is OPEN HOUSE, the show that saves you money.
Find out about a mortgage lender that says it can save you a ton by paying your closing costs. And learn how to travel for less this summer.
But first, we begin with weather warnings from coast to coast. This week brought floods to the plains states and wildfires in California, Florida and Georgia.
To make matters worst, the first named storm of the 2007 hurricane season formed off the southeast coast, weeks before the official hurricane season even starts.
CNN meteorologist, Reynolds Wolf, is in the severe weather center.
OK, Reynolds, what do homeowners need to know in the next month?
REYNOLDS WOLF, CNN METEOROLOGIST, CNN SEVERE WEATHER CENTER: Well, the first thing they need to know is that, in many parts of the country we're suffering from a drought, especially in the southeastern United States in parts of Alabama, southern Georgia, northern Florida - even central and southern Florida.
We are very, very dry there. We could use some rain.
And these areas where we're suffering from drought, that's also going to be your biggest fire danger, in the Southeast as well as parts of the Appalachians.
But as we head out to the West, we have some issues there, as well - West Texas, the southern half of the four corners into the Great Basin. And California - well, your usual suspects. Parts of southern California and right along portions of the central coast, that's going to be a problem where we could see some fires, as well. WILLIS: Reynolds, floods - what do people need to know about?
WOLF: Well, in terms of flooding, the best chance that we're going to see some flooding is going to take place, at least over the next couple of months, in many parts of the Gulf Coast, parts of Florida and into the eastern seaboard.
The reason why is, these are areas that are most susceptible to hurricanes, and there's many reasons for that - the warm water that we have in the Gulf of Mexico, the jet stream that pulls its way along parts of the eastern seaboard.
And it's going to be in these same spots, the same spots that are currently suffering from drought conditions, that may see some flooding over the next couple of months - certainly areas that homeowners need to be advised.
WILLIS: Reynolds, thank you so much for that.
Time now to take a look at how you can protect your home from dangerous weather.
Mike Rimoldi with Flash.org in Tampa is here to help us.
Good to see you.
MIKE RIMOLDI, FLASH.ORG, TAMPA, FLORIDA: Hi, Gerri. Nice to be here.
WILLIS: Now, you're going to do this in an interesting way. We're going to talk about threats to your house and cheaper solutions and longer term more expensive solutions.
Let's start with wind. You know, we had the story this week out of Greensburg, Kansas, just devastating photos out of that town, leveled by the tornado.
But lots of homeowners face high winds that aren't tornado strength. What are some cheap and easy things you can do to make sure that your house - just this weekend - to make sure your house is safe?
RIMOLDI: Right, Gerri. One of the first things folks can do is go out and police their yard. You know, walk around the yard. It's low cost. It's free, actually.
And look for things that can become debris - that dead tree, that tree limb, the child's play set - even that shed that you may have put up in the backyard that doesn't have any anchorage to the ground. That needs to be anchored, because just the Christmas items that you put in there aren't going to hold it down.
WILLIS: Yes. Look at your roof for missing shingles. Anything can become a missile when the wind is blowing so strong.
What if you have a lot of time and a lot of money? What do you do? RIMOLDI: That's when you start to look at things like upgrading your garage door, upgrading your doors and windows, maybe replace your roof covering with something that's more wind resistant.
WILLIS: All right.
I know 80 percent of residential damage comes right through that garage door, and you've got to be careful with that.
WILLIS: Moving on now to wildfires. This is a huge threat out West.
What should people be doing this weekend that wouldn't cost (UNINTELLIGIBLE) of dough to help themselves protect their house?
RIMOLDI: Once again, Gerri, similar to wind, walk around your yard. Look for things that might be fire debris, so to speak. You know, or do you have a fireplace? Do you pile that firewood up against your house?
Are your gutters full of leaves? You know, those dry leaves can ignite quickly.
So, look for things like that. Look at mulch or brush that's piled up against your house.
WILLIS: OK. If you have a little more time, a little more money, what should you be thinking about?
RIMOLDI: That's when you can look for things like the fire- resistant coating for your roof, even fire-resistant roofing.
Siding for your house - what kind is it? Do you want to upgrade to something that's more fire resistant?
WILLIS: They even have these fireproof sprays for your deck, that I know people are really excited about, too.
RIMOLDI: Sure. That's another thing. You know, they're not inexpensive, but your deck is wood. And if you can find any kinds of means that you can make it more fire resistant, it's a good thing.
WILLIS: Now, let's move on to floods. Reynolds was just saying practically the whole East Coast is in danger of a flood this year. And, of course, we've seen a ton right in the center of the country, a ton of floods. You're looking at some pictures right now.
Number one, if you want to do something this weekend cheap and easy, what do you do?
RIMOLDI: Walk around your house again. Look for things like cracks in the foundation. If you have a basement, do you have any open areas? Check for caulking and sealant around doors.
Obviously, that's only going to control minor water intrusion, but it's a start.
WILLIS: Yes. All of it matters, right?
WILLIS: I mean, because water is a huge enemy of homes. I don't think people realize what they're dealing with, with even a small leak.
OK. Now let's say that you have a budget, you can actually invest some money. What do you do?
RIMOLDI: Right. If you want to spend some money on things, you look at maybe a more elaborate drainage system around the perimeter of your house.
If you know you're in an area that often gets inundated with water, maybe that's when you raise your major appliances - the furnace, the air conditioning unit, the water heater. Raise them up enough off the ground to keep them from getting wet the next time.
WILLIS: You say even change the landscaping.
RIMOLDI: Yes. You know, a lot of times people have done some landscaping after they've moved into their house, and they may not even recognize that they're channeling water towards the home, as opposed to channeling it away.
WILLIS: Mike, great advice. Thank you so much.
RIMOLDI: You're welcome. Thank you.
WILLIS: Still ahead, how to take that summer vacation for less. Then out with the old and in with the new. We'll check out your kitchen of the future.
And weighing your options in a complicated mortgage market. We have new ways to save money.
But first, your "Tip of the Day."
WILLIS: You see them promoted all the time - low mortgage rates. Most of the time, they're the very best rates available to the very best customers - folks with tip-top credit scores.
To find out what's more realistic for you, head on over to myfico.com. For $15, you can get your credit score, then use their tool to find out the rate you should expect to pay in your area.
Armed with the answer, shop around and negotiate. That's your "Tip of the Day."
WILLIS: Bank of America has introduced a new, no-fee mortgage loan that will cut borrower's costs by thousands of dollars. But borrowers will still need to pay for some items, including home inspections and taxes.
Is Bank of America's new loan too good to be true? And what other options might you have to save money on your mortgage?
Greg McBride from bankrate.com always seems to clear this kind of thing up for us. Greg, good to see you.
GREG MCBRIDE, BANKRATE.COM: Thank you, Gerri. Great to be here.
WILLIS: I've got to tell you. I've talked to my mortgage broker community about this Bank of America loan and they are a little dubious. They say that you'll probably pay a higher interest rate.
Is it obvious where the deals are? Is this hype, or is this reality?
MCBRIDE: Traditionally, products like this have involved paying a higher rate in exchange for lower fees. Now, in Bank of America's case, they say that's not the case; you will not pay a higher rate.
But the bottom line is, if you're borrowing money, you won't know that unless you shop around and compare it with other offers and see what's best.
WILLIS: Yes, we'll definitely talk about that.
Let's talk about another offer out there from Washington Mutual. They've got an interesting loan out there for folks. Tell us about that.
MCBRIDE: This is a loan that hooks both the mortgage and home equity into one. And the appeal here - and I think this is something we're going to see more of in years to come is - the ability to borrow from home equity as time goes along without the expense or hassle of another loan closing and more documents and expenses.
That's an appealing part.
They also have a lot of bells and whistles in there, or the ability to change your rate from a fixed to a variable, change your payment, things like that.
I think the average American household, what they need is not those bells and whistles, but they need a predictable payment that's going to help them manage their finances and build wealth over the long term.
WILLIS: You know, there's no better time to get a fixed rate than right now, obviously, if you are shopping for a loan.
I think what's going on out there is, Americans are pretty cash- strapped right now. And I think banks are putting out products that they hope will get the attention of people who are borrowing money.
MCBRIDE: The mortgage business is very competitive, so there's always innovation.
What we're seeing now is a reflection of the fact that household savings is in negative territory. It's been there for two years. People don't have a whole lot of extra money laying around.
WILLIS: All right. But if you are shopping for a mortgage, or you're thinking, hey, I'm going to refinance, there are ways to make comparisons among mortgage loans. It's called APR. Tell us a little bit about that.
MCBRIDE: APR stands for annualized percentage rate. What this does is, it reflects the total cost of the loan - not just the interest rate, but also other fees that you pay to the lender.
So, it's important to comparison shop on the basis of that APR, and not be so laser-focused on what the monthly payment is.
The other thing is, apply with three different lenders. Get good faith estimates from each. Once you've done that, you have the APR, you have the good faith estimate in front of you, then you can really evaluate the merits of each one.
WILLIS: You know, one thing I think people don't think about when they're looking for a loan, you want to be getting those offers on the same day, or as close to the same day as possible, because mortgage rates are changing all the time. It's hard to make an apples-to-apples comparison, even if you are looking at APRs, unless you do that.
Greg, thank you so much.
MCBRIDE: Thank you, Gerri.
WILLIS: In this tough housing market, many folks are simply making improvements to the house they already own.
Check out this kitchen we found at this week's 2007 Kitchen and Bath Industry Show and Conference in Las Vegas. We caught up with Tim Woods of Internet Home Alliance to check out the ultimate digital kitchen.
TIM WOODS, VICE PRESIDENT, INTERNET HOME ALLIANCE: This is kind of a nerve center for the entire kitchen. In fact, it's the nerve center for the home. This is the HP TouchSmart PC. And it's kind of social computing, right, at its best.
But the idea here is, you put everything in one place at a touch point. There's a middleware program on this from a company called Exceptional Innovation. And what that did is, it brought all of these elements like lighting and shade control and music, and put them all into one interface. Now, mom does about 80 percent of the input on any family calendar, but she wants the ability for dad to go in there, the kids to go in there, leave notes - do all of these things that really become tools for the family.
A refrigerator is a big piece of real estate in the kitchen. And what's great about Whirlpool executed on this is that, when they came up with the central parts (ph) system, it's the idea that this device, which actually hangs off of a power strip that's built into the top of the door, can be flexible.
I can use this from Microsoft, which is kind of this fantastic interface for recipes and being able to shop and do all of these things online in a live environment. It also comes out.
Let's say I wanted to take this off, right, and I wanted to put up some family pictures. So, now I've got this picture frame, interactive picture frame running pictures of the family. It's what I want, when I want it. That's the idea of flexibility.
Families like TVs in the kitchen, but not necessarily why we all think they like TVs. It's not about entertainment, it's more about information.
So, what we just saw over on the PC can also be reflected on the TV. And what's very important about that is, when consumers think about control point, the TV is a natural venue for something like that.
We spend a lot of time on the couch in front of it. Why not put these controls where they make the most sense for consumers?
WILLIS: Up next on OPEN HOUSE, get rid of the paper and save some space. We'll show you how to make your home clutter-free.
And pack those bags. How to take that summer trip without breaking the bank.
And a trip to one of the most popular tourist destinations in the U.S.
But first, your mortgage numbers.
WILLIS: More than 11 million Americans rent storage space. They're spending $45 to $95 a month. And that really adds up.
We turn to Suzanne Rust from "Real Simple" magazine to show us how to cut the clutter and save money on your monthly expenses.
WILLIS: Welcome Suzanne. SUZANNE RUST, "REAL SIMPLE" MAGAZINE: Thank you. It's great to be here.
WILLIS: It's nice to have you here.
You know, I read somewhere that people spend as much as 55 minutes a day trying to find things.
RUST: That's true.
WILLIS: People need to get rid of that clutter, right?
RUST: That's like two weeks out of your life every year. You don't want to do that. So, we really want to give you some guidelines as to how to avoid that. You don't need to spend all this money (ph).
WILLIS: All right. Start us off.
RUST: Yes, so you want to edit all your stuff. Edit mercilessly. Understand what it is you really need to keep. And then, third, set up a command center to control all this.
WILLIS: All right.
RUST: So, when I talk editing - I mean, you look through everything. Do you need to keep all these things that you have? I mean...
WILLIS: Well, that's easier said than done.
Let's get to some details here...
WILLIS: ... about when you're editing, what to do.
WILLIS: For example, everything you get through the mail, how much are you saving for, say, a month?
RUST: You want to hold on to sales receipts, credit card receipts, you know, that type of thing, for about a month, so when you do your statements, it's going to balance out. It's about the type of thing you keep.
WILLIS: Then get rid of it.
RUST: Then get rid of it.
WILLIS: What about the year-long? Are there things that I'm just keeping for 12 months? RUST: Yes, there are certain things. Again, the summaries at the end of the year for your credit cards, other major tax stuff. All those bare bones, you want to hold on to those.
And you've got a safety deposit box for things like birth and death certificates, wedding and marriage licenses, that type of thing. You've got a small area for that. You don't need a lot of space for that.
WILLIS: There are some things that you'll keep indefinitely...
WILLIS: ... but you want to keep them safe.
RUST: Yes, keep it sane. And we really encourage people to set up a command station for all of this.
WILLIS: Well, tell me about the command station. What do I have there? And where are we going to put it, the kitchen maybe?
RUST: You could put it in the kitchen. If you're lucky enough to have a home office you can do that. You don't need a lot of space, but you do need a few tools to help you get through that.
When you walk in the door with mail, touch it once. Don't like flip through it and put it down. See what you need...
WILLIS: You've got to decide right away.
RUST: Decide right away and fast.
WILLIS: Is it staying or is it going?
RUST: Exactly. And keep a little shredder on the table. Shred it. Get rid of it. File it.
You know, we have some things that you can use. You know, when you walk in, maybe you don't have time to do everything. Just rest it here. You have a place for it. It's not getting stuck in a pile. Your keys...
WILLIS: Things have a place to go and...
RUST: Yes, exactly. Your keys in one place. You've got a little magnetic board here to write things down that you need to keep track of. It's magnetic, as well.
WILLIS: This is a nice place for a grocery list, too.
RUST: Exactly. And flyers that you just don't want to forget that you have them.
And these baskets are great for toting around any kind of documents that you might want to move from room to room, you know, or hobbies... WILLIS: That's the problem with filing cabinets, is that they're not mobile and you've got to lean over to get into them.
WILLIS: But these are nice and movable.
RUST: Yes. This can go anywhere in your house. And you just need to set up a system, and it really will work for you.
You know, once you're organized, it's harder to fall back into your old habits. So, just a few - knowing the right place to do it and having the right tools. And...
WILLIS: All right. What do you have up here, Suzanne?
RUST: This is another place you can just rest mail or any kind of documents that you have. And Pottery Barn makes this wonderful organizing system for your walls. So, you can really just kind of get a hold on things, and you don't have to use storage space.
WILLIS: But bottom line, you've got to get rid of the clutter, because at the end of the day it costs you time, and it can cost you money.
RUST: Oh, it can. I mean, if you're a packrat - you know, it's a time not to be a packrat. You really don't need to.
WILLIS: Beautiful. Suzanne, thank you for your help today.
RUST: You're welcome.
WILLIS: I appreciate it.
WILLIS: Good advice.
As always, if you have an idea for a weekend project, send us an e-mail to email@example.com.
And if you want to check out this weekend project again, check out the Web site, cnn.com/openhouse.
Up next, cheap plane tickets, cut-rate hotels - learn how to take the summer trip for less. Up next.
But first, a top U.S. tourist destination every single year in this week's local lowdown.
WILLIS (voice-over): The spot some call Sin City - gambling, golf, nightclubs and other activities. More than 33 percent of homes in Las Vegas are investment or vacation homes. That's one of the highest rates in the country. ANTHONY B. SANDERS, W.P. CAREY SCHOOL OF BUSINESS, ARIZONA STATE UNIVERSITY: So, what you have is, you have a lot of people whose ARMs are resetting to higher payments. And the futures contracts are indicating that there's going to be a decline of 5.5 percent.
WILLIS: That's a problem for those who hold adjustable rate mortgages.
SANDERS: These are ARMs that were originated about three years ago when the housing market was booming upwards.
So, what you have is, you have a lot of people whose ARMs are resetting to higher payments.
WILLIS: That's your local lowdown.
WILLIS: Who can resist a good bargain, especially when it comes to somewhere warm and sunny?
According to AAA, over 326 million people traveled last year during the summer months.
Nina Willdorf is a senior editor with "Travel and Leisure," and she's here to help us figure out our summer and get the best travel deals online. OK, Nina.
NINA WILLDORF, SENIOR EDITOR, "TRAVEL AND LEISURE": Thanks for having me.
WILLIS: Oh, you're welcome.
So, I know the rule of thumb was always book two weeks out - at least - ahead, because otherwise you'll be paying far higher for at least airfare. But that's not true anymore.
WILLDORF: Yes. There are more Web sites than ever now, and they're really competing with each other. So the traveler has an advantage by shopping around and finding the best deals.
So, that two-week advance minimum purchasing, that's out the window.
WILLDORF: Basically, there are great last-minute deals. You can book really far in advance. That's one thing to keep in mind.
WILLIS: So, last minute or far in advance, it doesn't matter.
WILLIS: OK. Let's talk about best times of days to book. There are some secrets.
WILLDORF: Yes. Actually, one great time to book is right after midnight. That's when travelers who have put tickets on hold, but not actually booked them, that's when the airlines release those fares. And so, you have a broader stretch of fares that you can actually have access to.
WILLIS: Great idea. And you've also got a great Web site here called Farecast...
WILLIS: ... that lets you track deals. How does that work?
WILLDORF: I love Farecast, because what they're doing is taking the sort of gamble out of online booking.
So, what they do is, you punch in the destination that you want to go to, and they have tracked the fares there over the past 90 days on a chart. So you can see how it's really up or down, and they'll make a recommendation about whether it's a good time to book.
WILLIS: Wow. Nice. OK. We've got a ton of Web sites to get to here.
The first one is one of my favorites, kayak.com.
WILLDORF: Kayak.com is great, because it's really user-friendly. And so, what they do is, it's called an aggregator. And they will, you know, do a lot - they'll give you results for a lot of sites.
WILLIS: I've seen that, but I never think that they're giving me every airline in the world, right? They have most of them, but not all.
WILLIS: As a lot of these do.
WILLDORF: They poll 120 sites. A site like mobissimo.com polls 172. And so, it's really up to the consumer to do some comparison shopping. We recommend that people do two to three searches on sites now, so that you're getting results.
WILLIS: Let's talk about LuxuryLink briefly here. If you want to spend some dough, go first class, this is a great place to go. Right?
WILLDORF: Exactly. LuxuryLink is great, because they do online auctions. So you can pull - you know, you can do last-minute travel. You want to go to a luxury resort and you can bid for the best deals.
WILLIS: OK. Cfares, what is that?
WILLDORF: Cfares pulls wholesale fares. And so, you're going to get the rock-bottom prices. WILLIS: All right. Let's talk about some places to go. What do you recommend this summer? What's a good deal?
WILLDORF: Well, you know, all this booking online sounds like a whole lot of hard work, but there are some great deals out there.
You know, travel - hotel rates are up by five percent right now. Airfares are up by six percent. So, the key is to really find the places where you get the deals.
Some great destinations to go to, you know, everyone always wants to go to Europe, but you should be thinking about Eastern Europe to find the best deals. You'll see...
WILLIS: How about Croatia? I've heard a lot about that.
WILLDORF: Croatia is beautiful, especially along the Dalmatian coast. So what you're going to find is sort of a vibe very similar to Italy, you know, with the Adriatic coast.
WILLIS: Turks and Caicos, you say, in the Caribbean, a good deal.
What about South America?
WILLDORF: South America is fantastic. I mean, the dollar is still so strong there, and Buenos Aires is such a cosmopolitan city, and you can just walk around forever and have great meals.
WILLIS: Nina, thank you so much. I appreciate your time today. Great advice.
WILLDORF: Thanks so much for having me.
As always, we thank you for spending part of your Saturday with us. OPEN HOUSE will be back next week, right here on CNN. And you can catch us on HEADLINE NEWS, every Saturday and Sunday at 5:30 p.m. Eastern time.
Don't go anywhere. Your top stories are next in the CNN NEWSROOM.
Have a great weekend.
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