Heading in to the winter months is alwasy a stressful time for my family.  Not only do we have to deal with the month-to-month finances, but we get to throw the holidays in the mix.  Travel costs, gifts, extra meals, and charitable donations...how do they all fit in?

Additionally, when it comes to trying to put your finances in order so you can purchase your next dream home...how can you fix your 'cash flow problems'?  Seems like more and more we're dealing with people who are living paycheck to paycheck.  How can we make headway if we're living this way?

I found this article that really helped my wife and I reprioritize how we wanted to manage our home.  I though you would enjoy it as well.

This will not only help you create less stress in your life, but will also put you in a position to 'weather the storm' that we're currently dealing with AND hopefully put you in a position to buy that next dream home!  I hope you enjoy.

Secrets to Creating a Budget

    You'd never set out on a cross-country road trip without consulting a map.  And, likewise, you can't expect to reach your financial goals without developing a plan for spending and saving.  Indeed, budgets play a pivotal role in helping consumers pay off debt, feather their nest egg and make the most of their hard-earned dollars.
    Yet, despite their best intentions, many Americans lack the money-management skills necessary to get their bank accounts under control.  Why?  Often, it's because they don't know where they stand, says Jim Tehan, a spokesman for Myvesta Foundation, a self-help consumer education Web site.  "People write out budgets all the time without knowing where their money is really going," he says.  "What they've created is a wish list of how they'd like to spend their money, but it's not realistic.  It's a page of lies."

Follow the money: Track your spending
   
    The first step to developing a budget, says Tehan, is to track your expenses for at least a month, using a checkbook ledger, a sticky note inside your wallet or a daily expense work sheet.  Be sure to record every purchase no matter how small, including ATM fees.  "Once you know where your money is going, you can make an educated decision about how best to allocate your money," he says.
    Many novice budgeters make the mistake of becoming too financially conservative, at least on paper.  "The No. 1 rule of setting budgets is to not cut all the fun out of your life.  Inevitably, Spartan budgets that have no allowance for entertainment are doomed to fail."  Instead, learn to moderate. "If you're eating out every night, and that's something you enjoy doing, try eating out once a week instead," says Tehan.  "It's not about cutting out everything that gives you joy in life.  It's about better allocating your money."

Make savings contributions automatically

    Though every budget scenario is different, Curt Weil, a Certified Financial Planner for the Lasecke Weil Wealth Advisory Group in Palo Alto, Calif., says a good rule of thumb is to allocate at least 10 percent of your earnings toward savings, using direct deposit to pay yourself first.
    Short-term savings that you may need to access can be held in an interest-bearing savings account, six-month certificate of deposit or money market fund.  Long-term savings, meanwhile, should be directed toward a tax-friendly retirement savings tool, such as an individual retirement account, or IRA, or 401(k).
    The ultimate goal, of course, is to maximize your 401(k).  But those just starting out should contribute at least enough to get the employer match, says Weil.

Define spending and priorities
   
    Another 35 percent of your earnings, he says, should be earmarked for housing and utilities.  Weil says, however, that homeowners can often up that percentage since principal payments are already a form of forced savings, and the mortgage interest they pay is tax-deductible.
    If you're saving for something specific, such as a new car or your child's college education, you may want to set aside another 10 percent of your earnings into an interest-bearing account or a tax-favored 529 college savings plan.
    Everything else -- the remaining 45 percent-- is discretionary, for use on food, entertainment, clothing and vacations.  That's where priorities come in.  You can't have everything you want, says Martin Siesta, a Certified Financial Planner for Compass Wealth Management in Maplewood, N.J., but you can direct your dollars toward things you want the most.  "If consumers start by deciding what's most important to them, then cutting back on some of the things that aren't that important isn't really a sacrifice," he says.

Pay with cash

    One you've determined how much to set aside for saving, spending and investing; it's time to make those numbers stick.  The growing popularity of credit and debit cards makes it all too easy to overspend.  With the exception of your mortgage and car loan, most consumers should implement a strict policy of paying with cash for groceries, clothes, vacations and nonessential items.
    Siesta also recommends relying less on ATMs, especially those that charge a fee.  Withdrawing a fixed amount of discretionary money at the beginning of the month, he says, forces you to make better spending choices.  "By spending cash out of an envelope you begin to get a better feeling for where your money is going and what your priorities really are."

Strategically pay down expensive debt   

     Financially speaking, of course, you'll never get ahead if you don't also implement a plan to pay down your debt.  Interest payments made to credit cards not only cost you big, but also deny you the ability to apply that money toward savings or entertainment.
    "I approach it from an investment point of view," says Weil.  "Not having to pay interest is the same, economically, as earning interest.  So not having to pay credit card interest is like earning 18 percent."
    Conventional wisdom maintains that consumers with multiple credit card balances should tackle the card with the highest interest rate first, while continuing to make minimum payments on their other cards.  Once the first card is paid off, focus on the next highest rate card.  Tehan contends, however, some debt-laden consumers get a psychological boost by paying off the smaller balances first.  "Paying off your highest rate card first makes sense because it saves you the most money, but if you have several smaller cards it can be easier psychologically to get those out of the way first.  That way you can see some immediate progress, which gives you a little boost," says Tehan.
    The secret to paying off debt is to determine how much you can afford to send each month and make those payments consistently.  "It's important to keep sending the maximum amount you can afford to send," says Tehan.  "Some people make the mistake of reducing the amount they send when they see their payments going down."
Build a safety net
    No matter what your debt situation, you should also begin saving for a rainy day.  Financial planners recommend setting aside three- to six-months' worth of living expenses into an emergency fund, in case you or your spouse lose a job, fall ill or get hit with an unexpected bill.  "It's important to set aside savings while you're paying off debt," says Tehan.  "It may sound backward, but if you don't have an emergency account and you pay down your credit cards for six months and then an emergency pops up, all the progress you have made is going to be instantly wiped out."
    The most painless way to save, of course, is to set aside any financial windfalls you receive, such as bonuses, tax refunds or yearly raises.  You could also try saving your change or any $1 bills that find their way into your wallet.

Live within your means   

    Learning to live within your means is a simple matter of spending less than you make.  For most consumers, that means cutting back.  It does not mean doing without.
    According to Siesta, there are dozens of ways to reduce your monthly expenses without crimping your lifestyle.

* If you're paying multiple credit cards, consider rolling the balances over to a lower rate card, taking note of any introductory rates that may expire.
* Still have an adjustable-rate mortgage, or ARM?  If you're planning to stay put, refinance to a fixed mortgage before interest rates climb any higher.
* If you're paying private mortgage insurance, or PMI, check to see if it can be canceled.  Under the Homeowners Protection Act of 1998, servicers are required to automatically terminate PMI on loans originated after July 29, 1999, when the loan is paid down to 78 percent loan-to-value, which means you have 22 percent equity in your home.  In some cases, you can request PMI cancellation when your equity reaches 20 percent.
* Slash health-care costs by ordering generic medications through a mail-order pharmacy.  "If you're taking a medication regularly, you can save a lot of money using a mail-order service," says Siesta, noting consumers should consult their medical plans first.
* Depending on your family's needs and comfort zone, you can also save big by raising the deductibles on your home and auto insurance.
* Don't be afraid to play hardball.  Many consumers today continue to pay more than they should for cable TV, Internet service and local and long-distance phone plans.  By approaching your current providers with more competitive offers and a threat to switch teams, you can often significantly lower the rates you pay.
* It's equally important to pay your bills on time.  Not only will you avoid late fees, but you'll keep your credit score clean, which rewards you with the best possible rates on future loans. 
And above all else, stop trying to keep up with the Joneses.  Your neighbors with the latest clothes and luxury cars may be drowning in debt, and while you may not sport a designer watch, you will be able to sleep at night.
 
By: Shelly K. Schwartz, www.bankrate.com
 

I’ve started a new email education sequence geared specifically for Real Estate Agents and builders.  I’d like your help getting the word out to realtors or builders you know.

There is NO obligation, NO solicitation, and NO cost.  We are not going to do anything with their information other than give them resources to build their business and make them better.  The purpose is to mutually motivate each other through weekly sales tips, referral marketing ideas, and useful industry specific information.  The articles and sales tips come from nationally recognized professionals.

Please forward this to any realtor or builder you know who would benefit from being involved with this free education sequence.

Here is the link to the signup page - http://legacylendinggroup.com/agents.html

We've worked very hard over the last challenging year to not only maintain business, but actually grow our firm.  With that in mind we're excited to announce what is new and exciting

for Legacy Lending Group.

We were approached in March with an opportunity to be a part of a local financial radio talk how. The host and planners of the show have done business with Legacy Lending Group and were encouraged by our business philosophy & practices. They invited us to join their team as they felt we would be able to add value to the show.  After a six month due diligence process, we have decided to participate in this venture.

The mission of the show is to provide financial expertise & information to a broad base of listeners leading to increased financial planning awareness and eventually financial security to those who listen and act on sound advice.  This is not a 'mortgage specific' show.  It will cover a great range of financial topics.  We feel strongly that you'll really enjoy the format and content.

The radio is a great medium to reach a broad audience. We are a part of a team of local experts that will also take part in this daily radio show, including a local financial adviser firm, a CPA firm, estate planning firm, and real estate professionals that are among the best in their field. An individual that hosted a financial radio show for the last eight years will serve as the full-time host of the program.

We hope you will consider tuning into the show yourself and providing any feedback you may have.

The show will be broadcast Monday thru Friday on 630 AM from 4:00 pm to 5:00 pm.

If you can't get it on your radio then log on and listen to it on-line.  http://www.580kido.com/pages/main

Last week I introduced you to the new article I wrote call "The 5 Biggest Deal-Killers of Your Next Home Mortgage - Which One Will You Make?"

We talked briefly about the first and second mistake.  First, not knowing the status of your credit at all times and second, assuming that because you're an A+ borrower you won't have to jump through any lending hoops.

Today we're going to talk about the third, fourth, and fifth deal-killers.  These three issues are getting more scrutiny than ever before.

3.  Debt-to-Income (DTI) Ratio. 

This ratio measures the amount of total monthly debt against the amount of total gross income of the borrower.  Before the mortgage meltdown if a borrower had a high DTI we were able to explain it away with other strong compensating factors of the borrower's file.  Now, however, there is less wiggle room then ever before.

So, what can you do about your DTI ratio?  Eliminate any unnecessary debt.  Don't know what that means?  Remember when Dad used to talk to you about "needs" versus "wants"?  Well, that should get you started here too.

If you're current debt-to-income ratio is higher than 50% you need to figure out how to eliminate monthly installment payments.

Items used to calculate DTI are house payments, auto, boat, RV, or motorcycle payments, student loans, credit card monthly payments, department store and other revolving accounts (tire stores, Chevron cards, etc.), lines of credit, quick cash loans (i.e. Money Tree), and any other monthly installment loans or accounts.

If you don't NEED it, get rid of it.

4.  My buddy's little boy always asks me "Hey, how much money you got?" 

Now, no one expects you to have enough money in the bank to pay cash for your house…but the bank sure makes it seem like it!

Listen, don't get discouraged here…we're all in the same boat.  We'd all love to have a million bucks in the bank just lying around waiting on us, but let's face it very few people have adequate liquid assets these days.

The biggest deal we look at when talking about assets is a term banks use called 'reserves'.  Essentially they want to know if you slip on your next ice skating trip and are out of work for a few months, how long will you be able to make your house payment.  Most of the time the banks will want to see a 'reserve' (remember, that's just a fancy banker term for savings) of six month's worth of your current mortgage payment (with taxes and insurance).

So, for example, let's say that your new proposed mortgage payment is going to be $1,220 including taxes and insurance.  In most cases, you'll need to have $7,320 sitting on the sidelines somewhere.  Now, this is NOT the case with FHA, VA, and most first-time homebuyer programs.  

Bottom line…the bank wants to see that you have the ability to save a little money and use it if you need to.  They want to see liquid assets such as 401k, checking and/or savings accounts, stocks, bonds, CD's, IRA's or any kind of other account.  

In other words…No, Bubba, you're 1979 fully restored, totally radical AMC All-wheel drive Eagle (do you remember those things?) does not constitute as an asset to the bank.  Even though you're SURE it's worth a mint, they'll want to see something in the bank.

5.  SHOW ME THE MONEY, JERRY! 

The amount of money you make each month is really irrelevant to the transaction as long as you can document enough monthly income to cover your DTI.  However, when it comes to making money, the banks want to see a track record of being able to make money.  So, employment history comes into effect here.

If you're one of those people who have made a career out of changing careers then there are a couple things you'll want to know when looking to get a new mortgage.  First, nearly every single loan product out there is going to require a two-year work history WITHOUT any gap in employment.  That means if you decided to take a three-month 'fishing sabbatical' last year you're going to have a hard time convincing the bank to give you some money.

Second, Verification of Employment forms are ordered on nearly all loans now.  What's that you ask?  That's a form that's sent over to your employer to verify your wages, date of hire, last pay raise, and a couple other minor employment questions.  You wouldn't think this would be that big of a deal, but we've had several loans held up because of this one little piece of paper.  So you'll be best to let the boss know someone from the bank will be calling, faxing, or emailing over a paper.  We need it back, don't throw it away…thank you very much!

Unfortunately, these aren't the only things killing deals these days, but if I had to load my quiver full of deal-killing arrows it would have these five for sure.  Most of the problems I see on a day-to-day basis would fall in one of these five categories.  There are ways to work with or around the issues in order to get your deal done.  That is why it's so important to work with a professional.

I'm in this business to stay.  I'm not just waiting it out until I find something better.  I strive to become educated in the industry so I can provide you the best possible option currently available.  So, even though Cousin Eddie told you he'd "Hook you up" with your next mortgage…you may want to consider dealing with someone who knows how to structure the deal to make it work.  

If you have something specific you'd like to ask me about your personal deal then shoot me an email or call.  I'm happy to answer your questions and help you prepare to avoid "The 5 Biggest Deal-Killers of Your Next Home Mortgage."

Where did the summer go?  It seems like every year we all have big plans to spend more time with family, take a few more days of vacation, sleep out under the stars, etc. etc.   If you are llike me, you are left at the end of the summer with a list of things you wish you had done... Let's face it, life is busy and there always seems to be any number of distractions taking our time away from things that are more important.

In the interest of summer coming to a close, we wanted to let you know about an opportunity to spend some family time together this coming Saturday. 

Legacy Lending Group has been invited by Colman Homes, to be their on-site lender this coming weekend (Aug. 20-22nd) at West Highlands in Middleton.  West Highlands is a master planned development with a resort style community center and pool that is the largest in the treasure valley.  You can check out all of the amazing amenities that this community has to offer at: www.westhighlandsidaho.com

Check out the attached flyer.

Coleman Homes (www.mycolemanhome.com) would like to extend West Highland's community center and pool to families this Saturday for an end of summer activity.  Families who are looking to explore the possibility of having an affordable custom built home of their own can visit us this coming Thursday or Friday at West Highlands from 3:00-7:00 PM.  Here we can discuss different financing options, including the USDA Rural Development loan which is true $0 down financing only available in certain areas of the treasure valley. 

Then, you can come back on Saturday for a day of fun in the sun with family and close friends.  The community center will be open this day from 11:00 AM - 7:00 PM.   

Please contact me with any questions... Don't miss out on an opportunity to spend quality time as a family.

WestHighLands.pdf (1.79 mb)

I've been asked a lot over the last little while what is happening with refinancing since all of the government bailout money and programs have come out. So this week I'm going to touch a little on that. I know it can be frustrating for people trying to get loans as well as it is with us as lenders, trust me !!!

Like most things in Government, their programs take awhile to kick in and when they do finally go into affect there are very few people they actually help.

Here is a recent report that I've seen.

It says that: "Report finds only 9 pct of homeowners getting help; 10 mortgage companies haven't helped any."

It goes on to say: "BofA modified just 4 percent of eligible loans, and Wells Fargo 6 percent. Wachovia Corp., which was taken over by Wells Fargo in December, modified only 2 percent.

"We think they could have ramped up better, faster, more consistently and done a better job serving borrowers and bringing stabilization to the broader mortgage markets and economy," said Michael Barr, the Treasury Department's assistant secretary for financial institutions. "We expect them to do more."

I repeat: Michael Barr said, "We expect them to do more."

REALLY ? Yah, so do we :~)

Reports do show that they are pushing banks now to make bigger strides in helping people, which allows us as lenders more options when the banks offer that for us.

If you have tried talking to a bank directly and have hit a wall, or know someone else that has, we want to remind you to come talk to us and let's see what options there are. There is always new programs coming out. We're here to help you and your friends.

Let's hit on some house cleaning items first...

Interest rates have stayed very low for the last week which has surprised a lot of us 'industry smart-guys'.  I know I've told you this in past emails, but if you're thinking of refinancing or buying a home you really don't have much time to jump on these handsome rates.

I'm here to answer questions...so if you're curious about numbers or rates, please give me a ring here at the office and I'll be happy to answer your questions.  And as always, there will be no 'selling' you on anything.  That I promise!  Give me a ring...888-9394.

Or, better yet...you know a bunch of people that could use my services.  If you believe we could help them save a buck or two...or if they're wanting to buy a home and have question then "Refer a Friend" on our website.  It'll take you less than 60 seconds to fill out the form and I'll take over from there.  We won't call them without your permission.  Here's the link.

http://www.idaholegacylending.com/refer-a-friend.aspx

OK, now onto the important stuff.

Over the last month or so we've talked about some homeowner scams.  Today we're going to continue with this topic since it's near and dear to me personally this week.

Brandie and I returned from a family vacation recently.  The day of our return I received a call from the bank telling me that my personal business account was over-drawn.  Now, understand that we don't use that account for anything other than fuel, meals, and taxes...so needless to say we were little concerned.  We went in to the bank and reviewed the last weeks spending history.  We were shocked to see that over $4,100 had been spent in three days all over Southern California.  The only problem was that wewas in Idaho and not SoCal.

After an investigation by the bank the scam was found.  On our return trip we'd purchased a room at a hotel over the phone.  We used our debit card (like many of us do without thinking anything wrong with it).  The thief took that number and re-programmed another card.  With that new fraudulant card they went all over the area on a three-day spending spree.

Now, I'm not going to go into what I'd personally like to do to this thief (only because you probably think of me as a nice guy and I don't want to ruin that impression!!), but I've learned from this very personal experience and want to share some tips how to hep you avoid the same problem.  Also, it helps to have a very good bank to work with...Thank you Idaho Independent Bank in Nampa.  You guys rock!!

Here's a link to an article written for The Consumerist.  It does a great job explaining some simple things you can do to avoid any potential micro-identy theft problems like the guy in our office did.

http://tinyurl.com/kwuz6f

Have a great day!

Jason

Here's the deal, I've been very careful about not trying to push anyone into a rate specific loan product.  However, we've had great market movements today and rates are down significantly on conventional loans.  FHA loans have also seen noteworthy improvements.  We do not anticipate this to last long!

Typically when we see significant interest rate improvements we also experience a market "correction" shortly after, sometimes

within the same day.  

In fact, I dare say this may be the last time we see rates near 5% for a long, long time.  So, if you or anyone you know has been sitting on the fence waiting for rates to "improve"...NOW is the time to make a move. 

Keep in mind that if your loan is owned by Fannie Mae or Freddie Mac you may be eligible for a special government initiated loan product designed to help homeowners who have stayed current on their house payments, but haven't been able to refinance because values of homes have dropped.

Step number one is to check if Freddie or Fannie own your loan!

You can check to see if your loan is owned by Fannie Mae or Freddie Mac  by going to the appropriate website, and entering your address EXACTLY as it shows on your monthly mortgage statement.  Please call me if you have any questions or difficulties with these sites.

http://loanlookup.fanniemae.com/loanlookup/

https://ww3.freddiemac.com/corporate/

As always, I am here to answer any questions you might have an would love to hear from you.  'Windows of opportunity' like these usually don't stay open very long.

Best Wishes.