Fool.com: The 6% Solution [Motley Fool Take] April 15, 2004

Fool.com: The 6% Solution [Motley Fool Take] April 15, 2004: "Imagine that you and the seller agree on the price of the house at, say, $200,000. You then ask the seller for a 6% seller concession. What this means is that you add (up to) 6% to the price of the house. That's right, you're now going to pay $212,000 for that house -- but the seller is going to give you that $12,000 back when the sale takes place. You're going to use that money to cover all of your closing costs."

If we pretend for a moment that those costs add up to precisely $12,000, then what you've done is folded those closing costs into the mortgage. Points, title search, recordation fees, and all other closing costs -- most of which are not tax-deductible -- have effectively been included in your mortgage. Since your mortgage interest is tax-deductible, these costs have effectively become tax write-offs.

In addition, you don't have to come up with all that extra cash at settlement. Your down payment will be somewhat higher (if you're putting down 20%, then in the current example your down payment would be $42,400, versus $40,000) and, of course, your mortgage payments will be higher, but it ends up saving you money.

The seller has no reason to refuse this -- after all, the agreed-to price is still the same.

The catch with the 6% solution is that the house has to appraise for the higher value. If the appraiser comes back and tells you that this house won't appraise for more than $200,000, you can't do it.

Let's look into this a little further. Say you buy the house for $200,000. Your $40,000 down payment leaves you needing a $160,000 mortgage. You get a 30-year loan at 8%. Your monthly payments for principal and interest are $1,174.

Now, say you decide to use the 6% seller concession strategy. You buy this house for the price of $212,000. You put down 20%, and this leaves you needing a $169,600 mortgage. Your monthly payments will be $1,244, or $70 more per month. Is it worth it?

To begin with, many people aren't going to feel an enormous pinch paying the extra $70 per month -- not nearly as much as they would feel having to fork out an extra $12,000 all at once to cover closing costs. But, what about the fact that now you have to pay this extra money over the course of 30 years? Well, over the course of 30 years, you're paying $25,200 more for that extra $12,000 ($70 more per month x 12 months in a year x 30 years = $25,200).

However, remember that's $12,000 less out of your pocket at the time of closing. If you take $12,000 and invest it at 10% (less than the market average has returned over the past 35 years), then your money will grow to more than $200,000 (before taxes) at the end of 30 years. So, in this scenario, it can be well worth it.

Naturally, you'll want to run the numbers for your particular loan to see whether it would be worth it for you.

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Fool.com: Is Whole Foods Overvalued? [Commentary] April 15, 2004

Fool.com: Is Whole Foods Overvalued? [Commentary] April 15, 2004: "One analysis of Whole Foods
Some quick analysis of Whole Foods' financial statements provides us with the pieces needed for the discounted cash flow analysis. The company's fundamental business model is pretty clear: It finances growth in stores from the cash flow that it generates. In the last five years, cumulative cash flow from operations has been $923 million. In the same time period, Whole Foods used $877 million to develop new stores, acquire other companies, and upgrade existing stores. The store count has increased from 87 in the beginning of 1999 to 146 today, and square footage has more than doubled from 2.1 million to 4.6 million.
Since 1999, the company has grown sales from $1.5 billion to $3.1 billion, a 16% annual growth rate. Indicating that it has ample cash to fuel the growth of its business, it just initiated a small dividend last year. At $0.60 per share for a total of just over $35 million per year, the dividend is not a significant factor in its valuation, but it does indicate that management feels the operating cash flow is more than enough to fund growth"

Matrixz Consortium

Matrixz Consortium: "Ma'trix (ma'triks; mat'riks), n.; pl. MATRICES (ma'tri�sez; mat'ri-; rarely, ma�tri'sez); MATRIXES (ma'trik-sez; -siz; mat'rik-).[L] A place or enveloping element within which something originates, takes form or develops. The natural material in which any metal, fossil, pebble, crystal, or gem is embedded. That which gives form, origin, or foundation to something enclosed or embedded in it "