What should you be doing in order to prepare yourself for what lies ahead when applying for a mortgage loan? The following points will hopefully make the process easier to understand and help you index the items that you will need to consider.
1) Know your credit score and what's on your credit: This should be the first item you look into when considering to apply for a mortgage loan. For the most part I am sure the majority of you are on top of your credit and you know exactly where you stand. If you are nervous to find out what your credit is like, you probably have a reason. Plan ahead and make sure you are aware of your situation so you can tackle these issues prior to getting too involved in the home loan/purchase process.Are there any reporting errors or collection accounts that need to be resolved? Is there any derogatory information negatively impacting your score? You would be amazed how many reports have medical collections that individuals didn't even know were there! We can help advise you on minor issues or basic items. If your issues are more complex there are also reputable credit repair companies that for a fee will help you address and tackle the issue of repairing or erasing derogatory and/or erroneous information on your credit report. If you do have some items that need to be addressed these things can take time so you want to be on top of it.
2) Locate and organize your financial documents: You will need to have the following documentation readily available: Social Security Card, two year's W2's, 30 days of pay stubs, 2 months bank statements, and a quarterly statement for any investment/retirement accounts. You may be asked to provide a divorce decree, bankruptcy documents, Social Security Award Letters and Pension Statements as well. The bottom line here is stay organized and have this information where you can readily find it without difficulty. Should you be missing anything I would suggest you contact the necessary party (i.e. Accountant, Bank, Social Security Office, Employer, etc.) to get a copy of what you are missing.
3) Disclose Everything: I can't stress how important this one is. The loan process is very thorough and there are countless checks and balances. Always relate all pertinent information to your loan officer. You may think "Oh good he didn't ask me aboutmy large deposit in my checking account etc!" This doesn't mean it won't come up later. Very little ever slips by. Just be up front. Let your loan officer mention what may or may not be a problem. If you stay quiet it very easily could cause a bigger problem later and then you will be that much farther into the loan process. You could even find out the deal is dead and that is definitely something you would have wanted to know at the beginning. Most of the time what you may think is a problem, isn't. There are many loan programs and we usually have options for you. I just recently had a deal where a client came to me after working with another lender. A purchase contract was already in place, but I had to work with them on fixing a few credit glitches before we could get started. They failed to tell me they already had an inspection done on the property. Several weeks went by while we were working on their credit items before the inspection was mentioned. I took a look and knew right away that FHA would not accept the property. These buyers could have been looking for another home instead of just assuming everything was fine. Better communication and disclosure can save time and unnecessary headaches!
4) Get a Good Faith Estimate and work with a reputable lender: The most important thing to remember here is knowing what's involved in the mortgage process. Who are you dealing with and what are they charging you? This sounds simple, but it is very important. Be sure to look at the entire package your lender has to offer.(i.e. interest rate, APR, fees, ethical background, testimonials, and knowledge of the market). If you are only focused on interest rate you could miss something! The lowest rate lender in town may not always be the best option for you. Especially if they don't know what they are doing! Some choose to sugarcoat things or lowball their quotes to get prospective customers in the door. Just be on your toes and ask the right questions and make sure you are comfortable. Remember no question is a stupid question!These are four important items when it comes to applying for home financing. The process will be much easier and more pleasant if you are prepared.
Brought to you by:
Flat Branch Mortgage, Inc.
Thursday, April 30, 2009
Wednesday, April 15, 2009
New USDA Income Limits!
One of the best loan programs available just got a little better! USDA loans have become so popular because of the extremely competitive rate (Today 5.25% is the max rate), there is no down payment required, repairs can be financed in, and there is NO monthly Mortgage Insurance! USDA loans are available to all that qualify. You must have a 620 credit score, the property must be USDA eligible, and your family must be able to income qualify. While nothing has changed in the property eligibility areas, the income limits are being relaxed. As of April 20th the following changes will go into effect.
USDA currently allows the following incomes per household:
1 Person = $49,550
2 Person = $56,600
3 Person = $63,700
4 Person = $70,750
5 Person = $79,400
6 Person = $82,050
7 Person = $87,750
8 Person = $93,400
The new limits will be as follows (effective April 20th, 2009):
1-4 Person = $73,600
5-8 Person = $97,150
So from this you can see much more will fit in than before. Also keep in mind that it isn't as simple as taking your income now. Every loan scenario is different, but there are circumstances where 2 or 3 year averages of your income will be used. Daycare and non-reimbursed business expenses are also factored in and these items offset some of the income you make. Bottom line it is worth applying for to see if you qualify. Many people qualified in the past that didn't realize they would and these new income limits will only help.
Happy House Hunting!
Brought to you by:
Flat Branch Mortgage, Inc.
USDA currently allows the following incomes per household:
1 Person = $49,550
2 Person = $56,600
3 Person = $63,700
4 Person = $70,750
5 Person = $79,400
6 Person = $82,050
7 Person = $87,750
8 Person = $93,400
The new limits will be as follows (effective April 20th, 2009):
1-4 Person = $73,600
5-8 Person = $97,150
So from this you can see much more will fit in than before. Also keep in mind that it isn't as simple as taking your income now. Every loan scenario is different, but there are circumstances where 2 or 3 year averages of your income will be used. Daycare and non-reimbursed business expenses are also factored in and these items offset some of the income you make. Bottom line it is worth applying for to see if you qualify. Many people qualified in the past that didn't realize they would and these new income limits will only help.
Happy House Hunting!
Brought to you by:
Flat Branch Mortgage, Inc.
Wednesday, April 8, 2009
Homeowners Insurance Part II. Lower your premium!
In a post last week we discussed Homeowners Insurance. We focused on the parts of the home insurance policy and how it works. Today's post is part 2 of this segment. As we mentioned last time, you get what you pay for so don't focus solely on price. While this is true, there are ways to keep your premiums as low as possible. Everybody wants to keep their house payment low and if you escrow, your insurance premium plays a part in this. Some people bounce around from company to company searching for the lowest price at their renewal date. I am not a big fan of this. You don't develop any loyalty here and this could come back to haunt you if you have a large claim. Many times there is a reason why 1 company is drastically cheaper than all the others. State Farm, Allstate, etc. have been pricing their business for a very long time and have it figured out. You'll find a company come out with a super low price one year and then they run into financial trouble. You want your insurance company to be financially sound. After all, you are counting on them to be there for you. With this being said it is ok to shop occasionally, especially if you think your price is getting out of hand. This will keep them honest. Now just like last week, let me again mention an important disclaimer. I was an insurance agent for 5 years, but I am no longer licensed. All of this information is solely to help you wrap your mind around this subject and better educate you. Be sure to consult an insurance professional to find out any new details that pertain to their specific company and any industry wide changes that may affect any of the following information. With that being said, here are some tips on keeping your home premiums down:
1. Multi-Policy Discount - Insure your auto, home, and life insurance together. By doing this you will earn a multi-policy discount.
2. Raise your Deductible. - Go with a $1000 deductible. This keeps your premium down. Just make sure you are comfortable with the $1000. Also see what a $500 deductible costs .The larger the home the more difference it makes, therefore a higher deductible may not always make sense. Home claims are fairly rare and usually if something is claimed , it is a high dollar amount. Therefore, the $1000 is small relative to the damage. It also helps fight off your urge to claim something minor that could come back to haunt you down the road.
3. Home security system - By having an alarm you are eligible for a discount. It is best to have a full-reporting alarm to maximize the discount you receive. Keep in mind the cost of the alarm is more than what the discount will save you. If you already want an alarm, just realize this helps justify the price you pay for it.
4. Affinity Marketing Discounts - Ask your insurance company if they offer any Affinity Marketing discounts. Liberty Mutual is the leader in this field as they offer over 8500 different group discounts. In Columbia The University of MO Alumni Association and Missouri Credit Union are big ones. BMW and Onstar are a couple others that used to be in the fold. If your are a member or affiliated with these companies you can get a discount through Liberty Mutual. Met Life is another company that does this and there may be others, just ask. This can save you up to 15% on top of any other discounts you already receive!
5. Loyalty counts - I mentioned loyalty earlier. Some companies offer loyalty discounts or loss forgiveness programs for your years of continued coverage. Ask what programs they have in place. Keep all of these things in mind when looking to improve your premium. These perks can end up saving you more if you ever need to use them.
If you are looking to buy a new home, here are a couple things to be aware of that can potentially cost you money and give you a headache!
1. Location of the nearest fire hydrant and fire station. - If you are in the city limits this won't be an issue. If you are not, then pay attention. If you are over 1000 feet from a hydrant or over 5 miles from a station, you will pay significantly more for home insurance! Some companies won't even insure you!
2.Dogs - If you own a Pit Bull, Doberman, German Shepard, or other dangerous breed you may have some issues obtaining home insurance.
3. Prior claims on the residence - If the home has a history of water problems or claims,you will want to know. In some instances you may need special approval and this can affect your future rates. Insurance companies have different rating policies, so get all the information available to help avoid surprises in this area. Not to mention that if there is past water issues with them home you will want to make sure they are taken care of anyway! Nobody wants these items coming back! Your insurance companies claim search is another way to make sure the seller isn't hiding something.
Hope all of this information helps!
Brought to you by:
Flat Branch Mortgage, Inc.
Posted by: Eric Hemmer
1. Multi-Policy Discount - Insure your auto, home, and life insurance together. By doing this you will earn a multi-policy discount.
2. Raise your Deductible. - Go with a $1000 deductible. This keeps your premium down. Just make sure you are comfortable with the $1000. Also see what a $500 deductible costs .The larger the home the more difference it makes, therefore a higher deductible may not always make sense. Home claims are fairly rare and usually if something is claimed , it is a high dollar amount. Therefore, the $1000 is small relative to the damage. It also helps fight off your urge to claim something minor that could come back to haunt you down the road.
3. Home security system - By having an alarm you are eligible for a discount. It is best to have a full-reporting alarm to maximize the discount you receive. Keep in mind the cost of the alarm is more than what the discount will save you. If you already want an alarm, just realize this helps justify the price you pay for it.
4. Affinity Marketing Discounts - Ask your insurance company if they offer any Affinity Marketing discounts. Liberty Mutual is the leader in this field as they offer over 8500 different group discounts. In Columbia The University of MO Alumni Association and Missouri Credit Union are big ones. BMW and Onstar are a couple others that used to be in the fold. If your are a member or affiliated with these companies you can get a discount through Liberty Mutual. Met Life is another company that does this and there may be others, just ask. This can save you up to 15% on top of any other discounts you already receive!
5. Loyalty counts - I mentioned loyalty earlier. Some companies offer loyalty discounts or loss forgiveness programs for your years of continued coverage. Ask what programs they have in place. Keep all of these things in mind when looking to improve your premium. These perks can end up saving you more if you ever need to use them.
If you are looking to buy a new home, here are a couple things to be aware of that can potentially cost you money and give you a headache!
1. Location of the nearest fire hydrant and fire station. - If you are in the city limits this won't be an issue. If you are not, then pay attention. If you are over 1000 feet from a hydrant or over 5 miles from a station, you will pay significantly more for home insurance! Some companies won't even insure you!
2.Dogs - If you own a Pit Bull, Doberman, German Shepard, or other dangerous breed you may have some issues obtaining home insurance.
3. Prior claims on the residence - If the home has a history of water problems or claims,you will want to know. In some instances you may need special approval and this can affect your future rates. Insurance companies have different rating policies, so get all the information available to help avoid surprises in this area. Not to mention that if there is past water issues with them home you will want to make sure they are taken care of anyway! Nobody wants these items coming back! Your insurance companies claim search is another way to make sure the seller isn't hiding something.
Hope all of this information helps!
Brought to you by:
Flat Branch Mortgage, Inc.
Posted by: Eric Hemmer
Thursday, April 2, 2009
Homeowner's Insurance. What Coverage's are Worth Buying?
I'm sure we all can remember the process we went through to buy our first home. It was an exciting time for me, but I bet we can all agree that securing an insurance policy on our new home was not a memorable occasion! Actually, nothing about insurance is exciting. In a perfect world you buy a good policy, pay over time, and never have to use it. To most people this is a big waste of money! Deep down we really know this isn't the case. Insurance is very critical to your family's financial well-being. We all take for granted that if we lost everything, "the insurance company will pay for it". Just imagine the family that doesn't have this luxury. They just lost a $150,000 home and all of their belongings! What a nightmare! All because they let their policy lapse! The reason that I feel strongly about this is because I was an insurance agent for 5 years. I saw how having or not having insurance affected many people. Please keep in mind that I am no longer a licensed insurance professional. I simply bring up the following items to help anyone looking for information on coverages. I hear from numerous clients that are clueless about their policy. All they know is the price and not what they are paying for! Please consult with your agent to confirm any questions that pertain to their specific policy. All companies offer relatively the same thing, but they do differ slightly.
I have compiled a few tips and coverage explanations to look for when looking for your home insurance policy.
Dwelling with Expanded Replacement Cost-
If every insurance agent and computer property evaluator was perfect, we wouldn't need this endorsement. However, we know this isn't the case. When writing an insurance policy some agents do better than others in estimating how much to insure your home. You do not want to be held to the amount they come up with. Many times people only look at price and not what their home is actually being covered for. Poor agents will also cut coverage in order to make the premium to look good and land a sale. This can really put a customer in a world of hurt. Just look at the fires in California that occur from time to time. $700,000 homes were burnt to the ground and they were only insured for $500,000. That is a $200,000 burden left up to the customer. With expanded replacement cost, the policy will pay up to 120-125% of your homes value. This gives you an extra cushion in the event your home was under insured! (Keep in mind it only pays out if you need it).
Inflation Protection -
Most good policies have this. This adjusts your policy each year for inflation. I am sure you have seen your $150,000 insurance policy jump to $154,500 in its second year. This increase is due to inflation protection. This is needed because it will cost more to re-build your home in the years to come than it will today.
Other Structures -
This is coverage for any detached structures. If you don't have any, it will stay at 10% of your dwelling amount. If you have more detached structures to cover than the 10% allowed, you will want to make sure it is increased.
Personal Property Replacement Cost -
We all know what this is, but believe it or not there are still policies out there that have limited replacement cost or actual cash value! Stay away from these. Full replacement cost is the only way to go! Also look at the amount you are covered for. Some companies cover 75% of your dwelling amount. Others offer less. Just get the most bang for your buck!
Loss of use -
If you are unable to live in your home due to a loss, your policy will pay for the expenses you incur while living elsewhere until your home is repaired. Some policies cap the amount here. Make sure you feel the limit is sufficient. Good policies will state "Actual Loss"
Liability -
The minimum amount is $100,000. This is too low. $300,000 is the minimum you should have in my opinion. You can of course have more. If you have an umbrella policy you can keep your liability at $100,000, but if not make sure it is increased. There are too many sue happy people out there and you want to be protected!
Medical Payments -
This is not like your car insurance med-pay. This is only for others on your property. Not many people go with more than $1000. Just make sure your liability is high and you should be fine. Make people file suit if they are on YOUR property and try to collect money off of your policy! Either way this isn't an expensive part of the policy so if you have more it isn't the end of the world. I just wanted to point out some people's logic on why they don't carry much.
Deductible -
Your deductible is up to you. Go with an amount that makes you feel comfortable. $1000 is most popular today and makes the most sense. This reduces your premium and will also help ward off small piddly claims that will raise your rates. What good is a $500 deductible if you claim something that is $700? You save $200 and your rate goes up $20 a month. Then if you would happen to have a 2nd loss, you would have 2 claims and are in danger of non-renewal or a huge rate hike!
Earthquake Endorsement -
Some people have this and others don't. Make your own decision, but realize that if your home is damaged due to an earthquake or earth movement, you are out of luck! This isn't too expensive so weigh the pros and cons. Earthquake deductibles are typically 10% or so. This equates to $15,000 on a $150,000 home. This may also factor into your decision.
Water or Sewer Backup Endorsement -
This is something many people think is included in a policy and it is not! Water damage is covered, but not sewer! Your can purchase specified amounts of protection. Be sure to look into this and ask your agent.
Identity Theft Endorsement -
This is a newer item, but is gaining in popularity. If someone steals your identity and causes you harm, it can cost some time and money to clean things up. This will pay for it and provide a representative to help facilitate the process!
Scheduling Items -
The most common item to schedule is jewelry. Your policy has low limits for specific items. You will want to schedule valuable or priceless items. This is a quick summary of the parts of a home insurance policy.
Keep all of these points in mind when deciding who you are using and what coverages to include. Just remember you are buying piece of mind and financial security when you pick your coverages. Don't focus solely on price and find an agent that will work hard for you. I hope this helps. Here are a few links to some of the larger insurance companies.
State Farm Insurance - http://www.statefarm.com/
Liberty Mutual Insurance - http://www.libertymutual.com/
Allstate - http://www.allstate.com/
Shelter Insurance - http://www.shelterinsurance.com/
American Family Insurance- http://www.amfam.com/
Brought to you by:
Flat Branch Mortgage Inc.
Posted by: Eric Hemmer
I have compiled a few tips and coverage explanations to look for when looking for your home insurance policy.
Dwelling with Expanded Replacement Cost-
If every insurance agent and computer property evaluator was perfect, we wouldn't need this endorsement. However, we know this isn't the case. When writing an insurance policy some agents do better than others in estimating how much to insure your home. You do not want to be held to the amount they come up with. Many times people only look at price and not what their home is actually being covered for. Poor agents will also cut coverage in order to make the premium to look good and land a sale. This can really put a customer in a world of hurt. Just look at the fires in California that occur from time to time. $700,000 homes were burnt to the ground and they were only insured for $500,000. That is a $200,000 burden left up to the customer. With expanded replacement cost, the policy will pay up to 120-125% of your homes value. This gives you an extra cushion in the event your home was under insured! (Keep in mind it only pays out if you need it).
Inflation Protection -
Most good policies have this. This adjusts your policy each year for inflation. I am sure you have seen your $150,000 insurance policy jump to $154,500 in its second year. This increase is due to inflation protection. This is needed because it will cost more to re-build your home in the years to come than it will today.
Other Structures -
This is coverage for any detached structures. If you don't have any, it will stay at 10% of your dwelling amount. If you have more detached structures to cover than the 10% allowed, you will want to make sure it is increased.
Personal Property Replacement Cost -
We all know what this is, but believe it or not there are still policies out there that have limited replacement cost or actual cash value! Stay away from these. Full replacement cost is the only way to go! Also look at the amount you are covered for. Some companies cover 75% of your dwelling amount. Others offer less. Just get the most bang for your buck!
Loss of use -
If you are unable to live in your home due to a loss, your policy will pay for the expenses you incur while living elsewhere until your home is repaired. Some policies cap the amount here. Make sure you feel the limit is sufficient. Good policies will state "Actual Loss"
Liability -
The minimum amount is $100,000. This is too low. $300,000 is the minimum you should have in my opinion. You can of course have more. If you have an umbrella policy you can keep your liability at $100,000, but if not make sure it is increased. There are too many sue happy people out there and you want to be protected!
Medical Payments -
This is not like your car insurance med-pay. This is only for others on your property. Not many people go with more than $1000. Just make sure your liability is high and you should be fine. Make people file suit if they are on YOUR property and try to collect money off of your policy! Either way this isn't an expensive part of the policy so if you have more it isn't the end of the world. I just wanted to point out some people's logic on why they don't carry much.
Deductible -
Your deductible is up to you. Go with an amount that makes you feel comfortable. $1000 is most popular today and makes the most sense. This reduces your premium and will also help ward off small piddly claims that will raise your rates. What good is a $500 deductible if you claim something that is $700? You save $200 and your rate goes up $20 a month. Then if you would happen to have a 2nd loss, you would have 2 claims and are in danger of non-renewal or a huge rate hike!
Earthquake Endorsement -
Some people have this and others don't. Make your own decision, but realize that if your home is damaged due to an earthquake or earth movement, you are out of luck! This isn't too expensive so weigh the pros and cons. Earthquake deductibles are typically 10% or so. This equates to $15,000 on a $150,000 home. This may also factor into your decision.
Water or Sewer Backup Endorsement -
This is something many people think is included in a policy and it is not! Water damage is covered, but not sewer! Your can purchase specified amounts of protection. Be sure to look into this and ask your agent.
Identity Theft Endorsement -
This is a newer item, but is gaining in popularity. If someone steals your identity and causes you harm, it can cost some time and money to clean things up. This will pay for it and provide a representative to help facilitate the process!
Scheduling Items -
The most common item to schedule is jewelry. Your policy has low limits for specific items. You will want to schedule valuable or priceless items. This is a quick summary of the parts of a home insurance policy.
Keep all of these points in mind when deciding who you are using and what coverages to include. Just remember you are buying piece of mind and financial security when you pick your coverages. Don't focus solely on price and find an agent that will work hard for you. I hope this helps. Here are a few links to some of the larger insurance companies.
State Farm Insurance - http://www.statefarm.com/
Liberty Mutual Insurance - http://www.libertymutual.com/
Allstate - http://www.allstate.com/
Shelter Insurance - http://www.shelterinsurance.com/
American Family Insurance- http://www.amfam.com/
Brought to you by:
Flat Branch Mortgage Inc.
Posted by: Eric Hemmer
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