Money Matters

Jim Bigelow & John Bucanan on Roof Insurance [Video]

In this video Jim Bigelow & John Bucanan talk about the importance of roof replacement Insurance. Check back every week for more real estate and insurance insight from Jim Bigelow & John Bucanan.

First Time Homebuyer Program thru Community Action Project

First Time Homebuyer Program thru Community Action Project

Community Action Program (CAP) has executed a contract with the City. This means that eligible buyers are able to utilize CAP funds for down payment assistance and closing cost up to 5% of the contract sales price not to exceed $5000.00.

To qualify for the down payment assistance/closing cost the homebuyer must complete the Homebuyer Education Class which covers budgeting and money management. This seminar is held on specifically schedule Saturdays.

For More information please contact me direct!

Heather Jobe 918-698-8938
hjobe@firstmortgageco.com
Eligibility Requirements

To qualify for down payment/closing cost assistance up to 5% of the contract sales price up to $5000.

• Complete CAP’s Homebuyer Education Program
• Purchase a home in Tulsa, Creek, Wagoner (Broken Arrow side) or Osage county as your primary residence
• Qualify for bank financing to purchase your new home
• Have a total annual household income that does not exceed the following guidelines:

Tips To Avoid Mishaps on a Mortgage Application

Tip 1: Try not to move cash around.

During the loan application process, your First Home Mortgage loan experts will have to verify all the income and assets listed as part of your application. Moving these assets around can create a paper trail nightmare. The best advice is to leave everything where it is and discuss any changes you wish to make with First Home Mortgage Loan Officer.

Tip 2: Document large deposits.

Your First Home Mortgage Loan Officer will have to verify all sources of funds for the transaction. We’ll be looking at any large deposits into your asset accounts (checking, savings, money market, etc.). You should be prepared to document all sources — perhaps a copy of a paycheck, bonus check, money from the sale of an asset, etc.

Tip 3: Selling something?

If you’re selling a large asset, such as a car, antique, baseball card collection to come up with the cash for closing, please document the sale. Keep everything, including the check the buyer gives you, car title or a bill of sale. Sometimes you’ll even need to get a certified appraisal of the item. Talk to your First Home Mortgage Loan Officer if you have questions.

Tip 4: Document gifts appropriately

Large cash gifts from relatives are very common when purchasing a home. If you are anticipating receiving a cash gift from a relative toward the purchase of your home, please notify your First Home Mortgage Loan Officer. Also refer to the Gift Letter form found in the First Home Mortgage document library.

Tip 5: Save everything!

Become a paper hound. Keep all of your bank statements, pay stubs, tax returns, along with any W-2s, 1099s or K-1s and any other financial papers from the past two years in a handy place. If you sold a home in the past two years, have your (HUD-1) Settlement Sheet handy. Try to create a file where you can consolidate all of your financial paperwork for easy access. When in doubt, just pop it in the folder. You never know when you may have to produce an item that you did not expect.

Tip 6: Avoid new lines of credit

It is a good idea to avoid any new sources of credit as it will materially change your credit report. Additionally, if you’re planning to pay off major credit debt before closing, hold off until you’ve spoken to your First Home Mortgage Loan Officer. We may be able to pay off those debts at closing without affecting the application process.

Tip 7: Review your credit report

The best way to get a jump start on your mortgage application process is to know what your creditors are saying about you. Request a free credit review with your First Home Mortgage loan officer.

Tip 8: Tell us about a new job

Making a career move? Make sure your First Home Mortgage Loan Officer knows about it as soon as possible so that we can ensure all appropriate changes are made to the loan application.

Exclusive Offer: Job Loss Protection Program

We at the Jim Bigelow Group realize that times are hard and that many homeowners are facing layoffs. That is why we, with Coldwell Banker Select, are the only company in Oklahoma that are offering a Job Loss Protection Program, that will pay your mortgage for up to six months if you involuntarily lose your job. Below is the official press release that outlines the plan. If you have any questions regarding this program please email me at jim@jimbigelow.com.

August 3, 2009 :: Tulsa, OK- The Jim Bigelow Group, part of Coldwell Banker Select, , is the only company in Oklahoma offering the Rainy Day Foundation’s Homeowner Education and Loan Protection service (HELP), which is designed to assist homeowners with their mortgage in the event that they lose their employment. This mortgage protection program will enable homeowners to have security in an economically turbulent time. Coldwell Banker Select, specifically the Jim Bigelow Group, is the only company in Oklahoma offering this Job Loss Protection Program.

In the current economic environment many Americans are concerned with job stability and how they are going to make their mortgage payments if they lose their job. The unemployment coverage included in the Rainy Day Foundation’s HELP service assists in keeping homeowners current on their mortgage payments each month so homeowners can minimize their financial stress while they are looking for a job. The Mortgage Protection Program is designed to provide up to six months of mortgage payment if the borrower becomes involuntarily unemployed. The enrollment process is easy and can cover up to $1800 per month.

When asked about his enthusiasm for the program, Bigelow stated, “We want to ensure that the homeowners that buy with us are taken care of.”

About the Bigelow Group:
The Jim Bigelow Group is a leading Tulsa real estate group that serves the greater Tulsa metropolitan area. Their marketing ensures maximum exposure to the homes listed. For Tulsa home buyers, they will help you to locate exactly the home that fits all your criteria and needs.

Credit Scores & Credit Reports- Things That Hurt and Things That Help

Ever wondered exactly how the credit reports and credit scores could effect you? Here is a simplified breakdown of what can help you and hurt you regarding your credit.

Credit Score Model
• Scores are Somewhat Counter Intuitive
• 30% of your score is based on Balance to Limits
-Individually & Cumulatively
-Balances normally reported at month End.
• Closing Accounts could hurt credit scores
• Recent Negative Information could be Damaging
-Paying off 5 year old charge off becomes recent and could damage credit rating.

What Can Consumers Do?
• Keep balances low to credit limits
• Some credit issuers don’t issue limits
-Dispute all bureaus to get issuer to report
• Monthly accounts like American Express will demonstrate high balance over time
• Review person credit reports regularly

Annual Credit Reports
• New Federal law provides for annual credit reports
-www.annualcreditreports.com
-Available Annually, Quarterly

Rapid Re-Score
• Independent Credit Re-sellers can provide updated scores based on corrected information
• Most re-sellers part of NCRA or National Credit Reporting Association www.ncra.org
• Potential increases 20-100 points
• Cost ranges from $75 to several hundred dollars based on trade lines involved

Identity Theft
• Identity Theft is the fastest growing While Color Crime
• Can drive scores from 700+ to 580
• It is time consuming to resolve
• Cost incurred can be extensive
• Check your credit report regularly
• Be aware of inquires from Out of the Area
• Dispute with Grantor immediately and file a fraud alert , police report or fraud affidavit
• You may have to file suit to get the identify theft resolved

What about Inquiries
• You can shop for 45 days with a hard inquiry, Mortgage, Auto, etc
• Inquiries pulled from consumer do not count against you

Who else wants to know your Score?
• Employers view credit reports as inexpensive background checks
• Insurance Industry- if under financial stress you may be more prone to cause loss for insurance company- increase rates
• Mortgage Insurance Premiums can be impacted by scores, positively or negatively

Take Advantage of the First Time Homebuyer’s Tax Credit!

Now is the time to take advantage of the first time homebuyer’s tax credit. Check out this video to learn more on how to take advantage of this opportunity. If you have any questions please email me at lindsey@jimbigelow.com.

Does it Still Make Sense to Buy versus Rent?

Nearly a full third of households are still renting. If you’re one of them, you could be paying a hefty price.
Before talking about purchasing a house, it’s important to note two things. First—and this is extremely important—the housing market is actually localized. So the outlook in your hometown may be different than another city across the state or on the other side of the country. Second, home prices are tied to employment. For example, if someone feels like their job is in jeopardy, it might be enough to stop them from making a move. So, if your local job market is feeling a pinch, the home prices in your area may be down as well.

But with all those factors under consideration, it still makes sense to buy instead of rent. In fact, renting may be costing you a bundle.

Let’s look at an example…

If you are paying rent at $1,500 per month and your landlord increases your payment by a modest 5% each year, you would wind up paying just about $100,000 over a 5-year period! Worse yet, after forking over $100,000, you still would have nothing to show for it.

And speaking of having nothing to show for it, how about any improvements you might make to a rental property? It’s not uncommon for renters to freshen up the paint, install new light fixtures or plant some nice flowers outside. But guess what… all your efforts, labor and the benefit of that improvement belong to the landlord, not to you.

With convenient down payment options still available for qualified buyers, affordable home prices and low interest rates, the very same money could have been used towards home ownership.

Even using a standard 30-year fixed program, a mortgage of $300,000 could be obtained with a total monthly mortgage payment—including property taxes and insurance—of around $2,200. Assuming a 25% tax bracket, this would be equivalent to the average amount spent on rent during the same period after your tax benefit.

And the benefits of home ownership are quite considerable. Because the mortgage is being paid down each month, equity is being built. After 5-years, the $300,000 mortgage could be reduced to $279,000, adding $21,000 to your net worth!

Visit www.irs.gov and use the IRS withholding calculator. This very handy tool can quickly show you the impact that a change in withholding will do to your net paycheck. Remember to balance this with the expected refund and it is always a good idea to check with your tax advisor.

Should I buy down my Mortgage Rate?

Interest rates are constantly in flux. In fact, the interest rates will likely change between the time you start your mortgage application and the time you are approved.

Locking the interest rate does not become in effect until you have property and contract.
First you need to understand how mortgage rates are priced.

1. The longer out you lock a rate the higher the rate. You will have a higher rate if you lock for 45 days out vs. 30 days out. Make sure if you lock on a 30 day you can close by that time otherwise the rate will have to be extended and additional fees apply.

2. Most buyers should be asking what current rates are WITHOUT any points. This means you don’t want to pay anything to get that rate and you are not buying down the rate. It is also known as PAR pricing.

3. You may decide to buy down the rate to get a lower rate. Have your lender run a good faith estimate for you both ways (buying the rate down and not buying the rate down). Although a lower rate always sounds more appealing it is not always the best option.

4. You need to decide how long you plan to stay in the new residence. For example, if you plan to stay in the new property a maximum of 5 years then it may not be worth buying the interest rate lower. You may not recoup the expense of buying the rate lower.

5. Ask if you lender has a float down option. This means you can lock and if rates go lower do you have an option to get a lower rate prior to closing. Most of these options require an charge up front and some are refundable and some are not. Ask questions.

What is the Mortgage Application Process???

Before applying for a loan, you should check the current interest rates, you may want to review your credit report for accuracy, and begin shopping for a lender. When, comparing Mortgage Lenders, consider such factors as lock-in policies, fees and loan options.

Comparing Interest Rates:

Interest rates are constantly in flux. In fact, the interest rates will likely change between the time you start your mortgage application and the time you are approved. Even so, it’s wise to compare the rates offered by different lenders before you apply for your mortgage.

Filling Out the Mortgage Application:

After you’ve chosen a mortgage lender or mortgage broker, you’ll fill out the mortgage application. Be sure to complete the application honestly and completely. If you inadvertently (or intentionally) put false information on your mortgage application, it could seriously hurt your chances of getting approved.
Take your time when filling out the paperwork, and be sure to get all your questions answered by the mortgage lender.

Providing Mortgage Documents:

During the mortgage loan application process, you will be asked to provide a variety of documents to the mortgage lender. Always ask the lender whether or not they need the original document. If they need the original, be sure to copy each document for your own records when you apply for a mortgage.

Mortgage Approval With Conditions:

In most cases, mortgage approval comes with certain conditions. These conditions may include a satisfactory appraisal, termite inspection, etc. Ask your lender what conditions and requirements you need to meet, and be aggressive about completing them on time.

Making Changes to Your Application:

If anything significant changes during your mortgage application process (changing jobs, marital status, etc.), tell your lender as soon as possible. On closing day, you will be certifying that no significant changes have occurred, so it’s important to address changes as they arise.

Conclusion:

Keep in mind that everyone wants you to be approved for the mortgage loan as much as you do. It’s in everyone’s interest to see the process through to successful completion. Be honest and helpful, and things will work out in the end.

Should I Lock or Float My Mortgage Interest Rate?

When shopping for a mortgage, what is the best time to float your rate and when should you lock it in? The answer to this question depends on two things:

1. Your objective – if you are buying a home, would your chances to qualify for the loan be jeopardized if interest rates rose? If you are refinancing, will the current interest rate save you a significant sum of money?

2. Your tolerance for risk – floating an interest rate can benefit a client in two ways. First, if rates were to fall, the client could lock a lower rate. Second, if a client chooses to wait until just before the closing date to lock the rate, often times the loan officer can give the client a small break on costs because the mortgage company doesn’t have to take on the risk of managing the lock. So, if you’re willing to risk the possibility of interest rates rising, it may pay off via a lower rate or lower costs. If you don’t like the idea of taking that risk – lock the rate.

What is a Rate Lock?

A rate lock is a pledge between lender and client that guarantees the loan at a specified interest rate. The lender and client have a window of time, usually 15, 30,45, or 60 days, to close the loan. The shorter the lock period, the better things look from a financial point of view. Locking a rate means the lender now has taken on the risk.

However, don’t confuse a rate quote with a rate lock. Just because a lender gives you a rate quote doesn’t mean you’ve locked in at that rate. This is a common mistake many prospective borrowers make. Make sure you are crystal clear as to whether you’re locked or not and, if you are locked, what the rate and terms are. Get it in writing.

What Does It Mean to Float?

Floating means you are willing to take the risk that interest rates will either not go up or that they will fall. If rates have been dropping, then you might want to take a chance that rates will be lower by the time you close your loan than they are today.

Here’s some practical wisdom from Bob Walters, chief economist, “Far too many people, who couldn’t have cared less about interest rates before, become obsessed with rates while they are in process with a mortgage company. The reality is that, while we’d all love to time the market perfectly, it’s extraordinarily difficult to do. If the loan, at the quoted rate, makes sense – lock it in. Leave the rate prognostication to the bond traders.”

Short Term Loans Now Available to First Time Borrowers

WASHINGTON (MarketWatch) — Federal Housing Administration-approved lenders can now provide short-term loans to first-time borrowers eligible for the $8,000 home buyer tax credit.

But under guidance issued by the Department of Housing and Urban Development late last week, the loans must be on top of — not instead of — the minimum 3.5% down payment normally required on FHA-insured loans.

Buyers can still receive down-payment assistance from their parents, employers, nonprofit groups and certain government entities. But other than that, the down payment must come from their own funds.
Thus, FHA borrowers relying on the lender to finance the tax credit will have to come up with their own money for the 3.5% down payment. But after that, they can use the proceeds from the short-term loans to increase their down payments, cover their closing costs or buy-down their mortgage rate.

HUD did not estimate how many FHA buyers would benefit from tax-credit advances, which cannot result in cash back to the borrowers, cannot exceed the total amount needed for the down payment and closing costs and may not be for more than the anticipated tax credit due the borrowers.

To prevent third-party down-payment assistance outfits from “buying” the tax credit refunds from borrowers, the rules state that the buyer’s down payment may not consist of any funds provided by the mortgagee, the seller or any other person that financially benefits from the transaction. That prohibition specifically includes third-party entities that are reimbursed, directly or indirectly, by anyone benefiting from the deal.

HUD didn’t want to do anything that would allow “these seller-funded schemes back in,” a senior HUD official said at a briefing on the program. The department also plans to monitor the purchase of tax-credit transactions closely, warning that missteps would result in referral to HUD’s Mortgage Review Board, the Federal Trade Commission or the appropriate state attorney general’s office for disciplinary action.

When Should I Begin Thinking About Long Term Care Insurance?

We are discussing the costs and benefits of long term care insurance this week. Did you know that 1 in 2 people will need some form of long term care insurance at some point? This type of insurance can be the difference between ending up at home rather than in a nursing home. If you have any other questions regarding whether you should be considering long term care insurance contact me at jim@jimbigelow.com or John at john.buchanan@countryfinancial.com.

Lending for Foreclosed Properties

Many buyers contact me who are pre-approved and want to buy a foreclosed property so that they can get a great deal. Foreclosed properties range in condition. Some just need some updating while others need structural, sheet rock, floor and other repairs. These homes are usually sold “as is” which means the owner/bank who now owns the property will not make repairs. This is where we get into a catch 22. Conventional, VA, FHA and Rural Development lending require that if there are repairs indicated by the appraiser, structural, termite & EMP report that those repairs be done prior to closing. I have had borrowers want to work on the home and do the repairs themselves prior to closing. This creates several problems. First of all you are trying to make repairs on a property that you do not own. There is a liability issue for the current owner/bank to have someone making repairs on a home they do not own. You can try and find a mortgage lender that offers a FHA 203b mortgage. If you find a lender that still does FHA 203b mortgages then you can buy a home “as is” and finance in repairs depending on appraisal. Be warned this type of mortgages take a lot of time to process and close and involve a lot of paper work. Make sure you give yourself a lengthy contract period to assure closing. The only other option is to obtain a construction mortgage through a banking institution. Construction lending will have their own guidelines for lending but most banks are requiring 20% down. (This will vary for each banking institution.) If you get a construction loan you will have a time frame to make the purchase of the home and make repairs. After repairs are done you could then refinance the home into a permanent 15, 20 or 30 year mortgage.

Remodeling your home? Get Insurance Advice First

Are you thinking about remodeling your home to increase its value? Check out this video where John and I talk about how to go about insurance for your new additions. Learn about replacement costs to avoid losing coverage on your home. If you have any questions about whether you have the proper coverage email me at jim@jimbigelow.com or John at john.buchanan@countryfinancial.com.

Why did rates jump so high???

Consumers have gotten so used to hearing about rates below 5% that it is shocking how they could jump from 4.75% on a 30 year fixed rate mortgage up to 5.75%. It seems to have happened overnight!!
Since May 21st the move has been pushing home rates to the highest level since December. Fears of future inflation and added supply have been the culprits behind the recent sell off of mortgage backed securities.

The market volatility is very high and conditions may change rapidly during the day. Remember the market can change daily even hourly. This may make shopping for that perfect rate a little challenging. While lenders may quote a rate in the morning it can change by afternoon depending on market and economic reports and conditions.

With rates going up is it still a good time to buy??? YES! Most consumers have conditioned their mind to think of rates at 4.75% or lower and 5.75% seems unbelievable but remember we are still in historic times for home mortgage rates.

Only 15 years ago in January 1993, the average rate for a 30 year fixed mortgage was 8.12% and 20 years ago in January 1988, 10.55%. Even those rates seem low though when considering the average interest rate for a 30 year fixed mortgage in January 1983 came in at a whopping 13.40%.

There hasn’t been a better time to buy a home or a first time homebuyer with the $8,000 tax credit that is now offered.

How Will my Mortgage Lender Calculate my Income???

When you shop for a mortgage or other loan, one of the key factors a lender will take into consideration before granting approval is your debt-to-income ratio. This is the ratio between how much you owe each month on personal debt and how much you earn. This ratio calculates the percentage of debt you are carrying in relation to how much money you are making and gives lenders a good indication of how much additional debt you’ll be able to handle.

What documentation do I need to present to my lender when pre-qualifying for a home?

If you are a W-2 Wage earner you will need 30 days worth of pay stubs that will show YTD income and last 2 years W-2’s.

If you earn overtime at your current job then you must have consistently been receiving overtime for the past 2 years in order for a lender to count this into your gross monthly income. Overtime must continue. An average of the last 2 years W-2’s and current YTD income will be used to calculate income and overtime.

If you are self employed you need to be self employed for the past 2 years and provide the lender with last 2 years complete tax returns (all pages) If you have an s-corp., c-corp. or partnership then the last 2 years complete tax returns will be required to calculate income. Mortgage lenders look at adjusted gross income plus a few other line items to determine your actual monthly income. Mortgage lending does not go off gross receipts of a business but focus on the amount you actually pay taxes on for calculating gross monthly income.

If you receive child support, you must provide your filed divorce decree. 3 more years of receiving this income must remain for an underwriter to count this income as part as your monthly income. You must also provide 12 months canceled checks to prove that you have been receiving child support income.

If you are a 1099 employee then you are technically self employed because taxes are not taken out of your income. Therefore, just like a self employed individual you must provide last 2 years tax returns.

If you have a job gap over 30 days the your lender may require a letter of explanation be added to the file and if you are starting a new job then at least 30 days of paystubs are required OR your employer must provide an irrevocable contract for the underwriter to review and determine income.

Since income is a big factor in loan approval then I suggest having this information up front at the time of application so you know exactly how much income will be allowed or calculated for your mortgage loan.

What Happened to the Interest RATES????

If any buyer has checked into interest rates since Wednesday they have probably noticed an increase. Rates can change daily or even multiple times a day depending on current market conditions. Rates change without notice. We saw mortgage rates move from 4.75% up to 5.5% in one day. So many ask…..why???

The main culprit for the rate increase was the sell off Treasury bonds. The treasury has literally been printing money by way of Treasury auctions to pay for the massive spending. And these hundreds of Billions of dollars of new Bond supply have to be absorbed by the market, so the additional supply literally weighs on the entire bond market and drags prices lower, which makes rates increase!

After losing a staggering 363 basis points since last Thursday, Mortgage Bonds are bouncing higher today. But the question on everyone’s mind…will rates come back? The answer is that we will probably see some improvement, but it will be difficult to see rates fight back to the levels they were at just last week.

Oil continues to gush higher hitting nearly $67 a barrel this morning. A direct result of a weakening US Dollar, caused by concerns over the massive debt being issued. This is going to cause prices to rise at the pump and unfortunately weigh on the consumer further during a time when we need consumer spending to pick up and help revive the economy.

I am asked daily by homebuyers that are already in a contract whether they should lock or float? Rates are still at historic lows. It is a buyers personal choice since I cannot predict when the rates will rise or fall but I think a lot of homebuyers have learned that sometimes you can get too greedy when waiting for rates to drop just so you can get a .25% lower in interest rate because rates as shown this week do go up a lot quicker than they come down!

Private Mortgage Insurance is Tax Deductible

Congress has extended tax deductions for homeowners paying private mortgage insurance through 2010.
But to qualify for the deduction you must have bought or refinanced your home since Jan. 1, 2007.
Families with adjusted gross incomes of up to $100,000 can deduct 100% of their insurance premiums, much the same as they deduct property taxes. The deduction is then phased out up to an adjusted gross income of $110,000

Mortgage insurance guarantees lenders will be repaid if the borrowers default. It’s almost always required if you hold less than 20% of the equity in your home. Your equity is the difference between your home’s market value and what you owe on your mortgage (and home equity loan, if you have one). The annual premiums run about 0.5% to 0.75% of the outstanding balance, $500 to $750 a year for every $100,000 you owe.

9 Steps to Cancel PMI (Private Mortgage Insurance)

1. Are you qualified? Most people can cancel PMI once equity in their home reaches 20 percent. Some types of loans, such as government insured FHA and VA loans, require PMI for the life of the loan. If in doubt, call your loan servicer to find out your options.
2. Do you have enough equity?
3. Has your home risen in value? If home values in your area are rising quickly, your equity will reach 80 percent more quickly. Mortgage servicers are not required to consider your homes current value but may do so.
4. Have you made extra payments? The other way to add equity is to make extra payments. Have you made any additional payments and applied them to principal?
5. Do the math Estimated value minus mortgage balance = equity.
Equity divided by estimated value = percentage of equity.
If you come up with a figure of 0.20 (20 percent) or greater, and your estimate is accurate, there’s a good chance you can drop PMI and save.
6. Call your lender Talk to someone at your lender’s customer service department to inquire about procedures for PMI removal. The formal request will likely have to be in writing, but calling first might save you some false steps later.
7. Write your lender When you make your written request, ask your lender to provide, in writing, the minimum amount the property will have to be valued at to qualify to have the PMI dropped.
8. Get an appraisal Most lenders require a formal appraisal of property — at your expense — before they will approve a request to drop PMI. Ask your lender if it has any specific requirements for the appraisal or appraiser that must be met. The company, rather than you, might have to order the work, for example, even though you’ll have to pay the tab of approximately $200 to $350.
9. Final precautions Make sure your loan is up-to-date before making the formal written inquiry to your lender. The lender will consider your payment history when deciding whether to drop PMI. Also, if the property has been converted into rental use, higher percentages of equity are required

Next Page »