This was always the hardest part for me. I was one of those idiots when it came to feeding my family. I tried to accommodate everyone. I fixed several meals at dinner time; just to please and make sure my children ate healthy. New Moms, take my advice and don’t cater. It enables their pickiness. Fix one meal and your children will learn to eat it or go hungry. It doesn’t take long, before they eat the dinner you have made. And it will save you a lot of money and frustration. Anyway, back to planning. Choose recipes with perishable ingredients that will last two weeks. Stick with recipes that do not have extremely expensive ingredients. Read the store advertisements and coupons; see what is on sale that you can use and your family likes and plan accordingly.

Brand Names

We all have our favorite brand names; that we buy all the time. If you have the patience, you can learn to use coupons and watch the papers for sales. When these items are on sale, buy a couple extra to have on hand. Generic brands can save you a lot. If you are willing to try them; your family will probably not even notice the difference in your favorite recipes.

Buy in Bulk

Sam’s Club, Costco and BJ’s are great places to buy in bulk. Staple items, like rice and beans, canned goods and meats can really save you money. And when buying meat; don’t freeze the whole package; separate into freezer bags for several meals. If the quantities are too big for your space and use; try going in on these items with family members or friends. That, too, can save you money.

Shop for Marked Down Items

You can find some great deals on meat. These items are close to their “sell by dates”. What you don’t eat right away, you can freeze for later. I have also seen bakery products on the mark down rack, as well as beauty products. Look around the store and see what you can find. And, as with all marked down foods, make sure you inspect it thoroughly.

Use the Price Matching Game

Many stores, like Target and Walmart will price match, if you ask them. Go through your papers advertisements, find the items that you want and take the ad with you. This way, you can get all the sale items at one place. This saves gas, time and money.

Freeze Freeze Freeze

The freezer is your friend. You can freeze almost anything. When you get a great deal on meat, buy extra and freeze for later meals. You can freeze the fruit your family doesn’t eat, to make into pies and smoothies. You can buy vegetables in bulk and freeze the excess. And my friend told me, you can even freeze milk. Before you freeze, though, think about what you are going to do with it, then divide it into individual packets with the label, use and date on it.

You will not only be organized and ready for meals in minutes; but, you will have saved big bucks on your grocery bill.   Who doesn’t need to save money on household expenditures these days?    Save on groceries creates money to help pay the mortgage.

But guess which back-end generates more talk (and even more money, truth be known) than either of these two booty-blessed bombshells:  the kind of pricing associated with mortgage lending.   That’s why I’ve put together this overview of what it is and what it means to you.

 Back End Pricing and What It Means to You

Okay, so you’re probably aware that interest rates change pretty fast.  But the pricing on those rates can change even faster.  Now admittedly, that sounds a little weird; I mean, we’re used to prices fluctuating on tangible items orange juice or gasoline—but it seems a little odd when we’re talking about buying something we can’t even see.  But I promise that in the money world, the price of those bottom-line impacting intangibles are indeed on the move.

What should be most important to you, however, is how that pricing is being handled (and disclosed) by your mortgage lender and even more specifically, your loan officer.

Paying Points

When you apply for your new mortgage, you may ask the loan officer what the interest rate is.  They’ll quote you a rate, maybe 5.00%.  Then they’ll tell you that to get that rate, you’ll have to pay a half percent in discount points.  On a $200,000 loan, that means you’ll pay $1,000 in addition to the appraisal, title fees, origination fee and other standard loan costs.  Then the loan officer might say that if you take a rate of 5.25%, you won’t have to pay that discount point.

 What They Don’t Tell You

Here’s what they usually don’t tell you, however.  They have a pricing sheet that gives them all of the rates for that day, as well as how much those rates actually cost.   Odds are, that 5.00% that they quoted you is a “free” rate, meaning that no buy down is necessary.  That $1,000 will just go into their pocket as commission.  And that 5.25% rate that you can get for free?  Yep, the loan officer will still make a $1,000 because the bank that they’re getting the rate from actually pays them a half of a percent for that higher rate.

Here’s an example of what a pricing sheet looks like.  Does it look a little confusing?  Let me explain.  Any interest rate with 100.000 next to it is the free rate, meaning that no points need to be charged, to receive it.   Any rate with a number less than 100.000 indicates that in order to get that interest rate, a certain percentage has to be paid.  (And you’ll probably pay over that amount to pay the loan officer’s commission.)  Rates with a number greater than 100.000 indicate that the loan officer will receive a rebate (which technically he or she could pass on to you.) The higher the number, the greater the rebate.

 Confusing At Best

What does all of this mean?  This: ask your loan officer to see the back-end pricing sheet.  If they say no, then maybe you’ll want to look for one who’ll be a little more transparent.  Because otherwise, you’ll pay more than you have to, and that’s a real, well, bummer.

Qualify to Buy More Home

1. Lower mortgage rates = more home buying options.   When you qualify for a mortgage loan, your loan officer will do so in part by determining how much of a monthly payment you can afford based on your monthly income.    Suppose, for instance, he determines you can qualify for a total mortgage payment of $1,000 per month on a 30 year loan.   If your interest rate is 6%, the total amount you can borrow is about $134,000.  At 5.5%, you can borrow an additional $7,000—up to nearly $142,000.   Drop it to 5%, and the maximum loan amount climbs to nearly $150,000.  And at 4.5%, a loan of $158,000 is in reach.    That means that instead of only having to look at homes in the $140,000 range, you can now look at homes in the $165,000 range.

 Lower Monthly Payment

1. Lower mortgage rates = lower monthly payment.   If you’re at a place in your life where budget is a key consideration, taking advantage of low mortgage rates is key to long-term financial success.  On a $200,000 loan, dropping from a 5.5% interest rate to a 5.0% interest rate saves you $60 a month.  At 4.5%, you’ll save another $59 a month.

 Long Term Savings

1. Lower mortgage rates = greater long-term savings.  On a 30-year, $175,000 mortgage at 5.5%, you’ll pay approximately $181,075 in interest over the life of the loan.  Reduce the interest rate just half of one percent—to 5%, and you’ll pay $20,000 less interest over the same period.   And at 4.5%?  You’ll save another $18,000.

These are just three of the reasons low mortgage rates are key when it comes to buying your home.  And with home prices still favorable for buyers, there’s never been—and may never be—a better time to purchase

 Mortgage Rates High in the 80′s

In fact, as the new decade that was the 80s came into being, a “great” home mortgage interest rate was about 12%.  And although interest rates did ultimately fall, even a decade ago everybody was crossing their fingers and toes to get an 8% rate.

 Refinance Your Home Loan Now

So imagine how amazing it was to read that interest rates are the lowest they’ve been in 60 years.  On September 15, Freddie Mac announced that the average rate on the 30-year fixed rate mortgage had fallen to just over 4%, a rate not seen since 1951.  And that means that if you’ve been thinking about buying a house or refinancing the one you’re currently in, the time is now.

Don’t believe me?  Then maybe you’d believe Forbes, which came out swinging within days of the Freddie Mac announcement with this headline:  Refinance Your Home Loan Now.

“This is,” wrote Michael Chamberlain, “an opportunity to save on interest payments and use the saving to finance other goals.”

Money that could be used to build your retirement account, plan for your kids’ education or just ease your budget worries.

So if mortgage rates are the lowest they’ve been in 60 years, there appears to be only one question left:  what are you waiting for?

 Hunting For a House

I’ve bought several houses over my 40-some years and have also worked with friends who are on a house hunt.  And almost without fail, if I or another buyer said that the price range was, for instance, $175,000 to $190,000, the first house that we were shown is $190,000 to $210,000 or more.  And from that day forward, we expect to see the upgraded countertops or more expensive hardware or extra bathroom, and are remarkably disappointed and dissatisfied when the next dozen houses don’t have them.

 Conflicting Home Shopping Agendas

I suppose that from a strategic perspective, it makes good sense.  After all, when a buyer sees a nicer (more expensive) home at the beginning of the process, that’s the one that every other home will be compared to.  It is likely to be that house that the buyer will probably come back to.   And the higher the price tag on the home, the larger commission.

 Show Me What I Can Afford

That’s why, on behalf of homebuyers everywhere, I want to tell any real estate agent this:  show us what we can afford—and nothing more.    If you really want to make us happy, start with a house smack dab in the middle of our price range, then show us a couple on the low side and a few on the higher end (but not outside of) that range.  Only if we as your clients want to see what an extra $10k or $20k or $30k will buy us, and only if we simply cannot find a home that meets our needs in our initially stated price range should you show it to us.

 Don’t Stretch My Budget

Why?  Here’s what it comes down to:  We don’t want to be pressured into stretching an already tight budget.    And if we do choose a less-expensive property, we don’t want to feel badly every time we walk through the door as we think about the one we couldn’t afford.

 Mortgage Terms Are Confusing

Mortgage-ese consists of phrases like “With an LTV of 90, you’ll need PMI, which will increase your P&I—we’ll want to see a back-end of 36 or lower.  Oh, and you’ll see a point four increase in the APR, but we’ll go over that when we review the TIL and compare the info from the GFE.”

 Understanding Mortgage Terms

It’s not exactly tough to see Mortgage-ese and why people hate it when you read that, is it?  So for the rest of us, here’s a primer of terms that you’re going to want to know when you get a mortgage loan:

LTV:       The loan-to-value ratio means how much your home is worth versus how much you owe on it.  If you owe $80k on a home appraised at $100k you have an LTV of 80%. The lower the LTV, the better.

APR:      Your loan officer will say something like “this is the actual interest rate you’ll pay on your loan.”   (To the rest of us, that means “blah, blah, blah.”)   Here’s what it comes down to:  your lender has to show you the APR (annual percentage rate) because it’s an easy way to compare lenders.  If you’re comparison shopping between two lenders, borrowing the same amount at the same interest rate and the same term, the one who shows you the higher APR is charging you more in closing costs.  You’ll probably want to go with the other guy.

TIL:         The truth-in-lending (TIL) form is one of the most terrifying documents you’ll ever see.  Why?  Because it tells you how much you’re going to pay over the life of your loan.   The first time you see that you’re going to pay $400,000 in payments over the next 30 years on a home you’re buying for $200,000 you’ll want to lie down.  But it’s also going to tell you what the APR is on your loan and some other pertinent information…so buck up and read it before you sign.

GFE:       There’s nothing really having to do with faith in the Good Faith Estimate (GFE); in fact, it’s a document required because faith in one’s fellow man when it comes to mortgage lending has largely disappeared, replaced with the cold, hard facts.  On this spreadsheet on steroids, you’ll see what you’re borrowing and every single fee you’re going to pay for the loan you’re getting.  Again, it may be eye-boggling as well as mind-boggling, but the info is important, so pay attention.  This isn’t something you’re going to want to gloss over.  And make sure you receive an actual Good Faith Estimate as opposed to just a fee sheet.

Debt Ratios:       How much you pay out every month versus how much you take in every month is precisely what debt ratios are all about.  On the front end, your loan officer takes the monthly payment on the loan you’re applying for and divides it by your gross monthly income.  Your housing payment shouldn’t be more than about a quarter of your total income.  On the back end, the loan officer will take your monthly debt payments (credit cards, student loans, etc.), add them to your new loan payment and, again, divide it by your gross monthly income.  And  bigger isn’t better;  if more than about 35% of your gross monthly  income is going to pay debt, you may not be able to get a loan.

So do you understand Mortgage-ese now?   Well, that’s okay–neither to the rest of us.  But there’s always hope.  (see RateWindow® — See What The Loan Officer Sees!)

When my sister and her husband applied for their first mortgage, I happened to accompany them on their first appointment with the loan officer.   I listened, stunned, as the loan officer advised that they would have to supply pay stubs, bank records and virtually every other piece of financial paperwork they’d ever received, handing it to someone they’d never met before.  Why would such a thing be required? I wondered.  And more importantly, what on earth was the loan officer going to do with it?

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Well, times haven’t gotten much better.    So for those folks who aren’t tremendously familiar with lending and will be equally shocked when they have to track down everything from their bank statements to their third grade report card in order to get a loan; I’ve put together this little summary of what the required documents are and why they’re apparently needed.

Bank statements:            When you look at your bank statements, you’re probably just making sure that checks have cleared, that you haven’t been overcharged anywhere and that—mostly importantly—you still have money in there.  But lenders will go over them with the proverbial fine-toothed comb.  They want to see a history of your average balance over a given period of time, see if you’ve had any overdraft charges and evaluate unusual deposits or withdrawals.   Here’s a hint:  if you’re in the mortgage market, make sure that your bank statements have as much curb appeal as the house you want to buy.  And make sure you can provide ALL pages of the statement…even the pages that only include the advertisements.  Believe me – they will require them.

Paystubs:                            Okay, this is a fairly obvious one.  They show that you’re employed and also tell the loan officer how much you make.   What they cannot show, however, is how much you made last year or the year before, which is why you may have to provide…

W-2’s:                                   Make sure you can provide all W-2’s for the last 2 years.  And if you are self-employed or receive any additional form of 1099 income you may also have to provide…

Tax returns:                        This is where the rubber meets the road when it comes to folks who are self-employed or who receive other types of income.   The loan officer (or the underwriter, really) will be looking for stability of income here, too, as well as any significant business losses you may have claimed.     Large loss?  You’ll want to provide…

Your first-born child.       Okay, just kidding.

Oh—and be aware that a verification of employment will also be sent to your HR department at least once during the loan process, and usually again immediately before your loan closes and funds.   So if you’re thinking about a job change, do it after your loan closes.   Otherwise, that first-born child will still be renting right along with you.  Give RateWindow a try!

“…there is no reason that every person who is looking to purchase a home or refinance the one they’re in should not comparison shop.  Not only between rates, but also between lenders.”

Americans, it’s safe to say, are shoppers at heart.   And, more importantly, we are comparison shoppers.  From boots to boats, hand towels to houses, we are driven to find the best fit, the best name, the best bargain.

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For some inexplicable reason, however, we abandon this need to compare when it comes to home financing.   We go to a lender, sign some paperwork and more or less take when they offer us.  Are we happy with the final outcome?  Maybe.  But all too often we’re actually more or less just resigned to it all.

But if there’s one area in which comparison shopping should be done, it’s in the home financing process.  After all, for most Americans, home buying and ownership represents the largest investment and asset transaction they’re likely to make.

Here are a few things that are important to know:

1. Although Americans used to be more likely to buy a new home rather than remodeling the one they were in, that trend has shifted.  ( http://www.housingzone.com/professional-remodeler/article/buildfax-remodeling-index-shows-top-april-record)   So it’s important to consider a longer term view of home ownership than you might have previously.
2. Saving as little as an eighth of a percent on your interest rate can save you tens of thousands of dollars over the term of your loan.
3. Thanks to online resources, you as a consumer have more opportunity than ever to evaluate not only interest rates, but also the cost of those rates.
4. Sometimes it is better to have a slightly higher mortgage payment and pay less in closing costs.
5. Lenders differ significantly not only in pricing strategies, but also in business practices and service delivery.

Given this information, there is no reason that every person who is looking to purchase a home or refinance the one they’re in should not comparison shop.  Not only between rates, but also between lenders.

There are several online lending services which pull your credit report and then shop it between lenders.  When you receive their offers, you choose which suits you best.  Obviously, this does require you to release information, including your social security number, to the sites who essentially serve as a mortgage “hub”.   Another limitation of this type of service is that you are not seeing the back-end pricing on the loan—only the available interest rates and the discount points the loan officer wants you to pay to get a specific rate.

A less intrusive and more transparent tool is RateWindow®, which collects very basic information (i.e., the state you’re living in, the property type and value, occupancy and how good you estimate your credit to be) and instantly tells you the available rates, pricing options, an

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d how much money you can save in your closing costs.  Thing the lender sees.  The only time that you will have contact with a lender is when you ask for more information.

Comparison shopping for home financing really can save you money and increase the satisfaction you’ll feel at the end of the mortgage process.  Compare mortgage options with RateWindow®.

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Purchasing a Home with RateWindow®

For years my boss encouraged me to purchase a home.  I think he must secretly think I’m an awesome employee and that if I purchase a home then I would HAVE to continue working for him to pay for it.  Regardless of my delusions about my “employee of the year” status, the thought of purchasing a home scared me to death.  I had visions of throwing dollar bills into the fireplace and watching them curl up in flames.  Additionally, I am not a good saver.  I had no idea how I was going to come up with all the money needed for closing costs.  Then my boss invented RateWindow®.

Here’s the beauty of RateWindow®:  it allows you to choose your interest rate based on how much help you need with your closing costs.

When purchasing a home, a borrower first needs to discern how much he can afford.  A good rule of thumb is choose a purchase price that is 2 to 3 times your gross annual income.  How does that translate to a mortgage payment?  Check out ratewindow.com. Anonymously, you can enter a few pieces of information and come up with a basic idea of what kind of monthly mortgage payment you have.  But, you’ll get even more valuable information.

I knew the purchase price I needed and I also knew how much the mortgage payment was.  I needed to know how much my closing costs would be when purchasing a home.  With RateWindow®, the loan officer disclosed his fees up front.  This made it easier for me to estimate the amount of money I needed…which was still more than I had.

Then, suddenly, some of my circumstances changed and I needed to purchase a home fast.  But I didn’t have enough money.  Again, RateWindow® helped me.  With RateWindow® I was able to look at the interest rates and see a corresponding Freebate.  The Freebate was the amount of money that the loan officer would apply to my closing costs.  By simply choosing a slightly higher interest rate (which gave me a slightly higher mortgage payment), I was now able to purchase a home.  For example, I was originally looking at a rate of 4.375% with a monthly mortgage payment (principal and interest only) of $699.  However, by taking a higher rate of 4.5%, I was able to get an additional $1,572 towards my closing costs.  And here’s the kicker – it only raised my monthly mortgage payment by $7.

I’ve worked with many loan officers.  There are good, honest, decent loan officers and there are a few who would rob their mother blind if it meant they could make another dollar.  RateWindow® helps borrowers find the good, honest, decent loan officers; while still allowing the loan officer to make a living.  RateWindow® connected me with a loan officer who offered the Freebate.

With the help of RateWindow®, purchasing a home became a lot less scary and a lot more exciting.

Why Do I Need a Loan Officer?

If you’re looking into financing a  property then one of the first things you’ll need to do is find a loan officer.  You might be thinking to yourself, I’ll just call my local bank and take whoever they give me.

Here’s why that’s a bad idea.  Think of how much time in a month you spend talking to your closest friend?  Now add to that the amount of time you spend watching TV and double it.  That’s roughly the amount of time you’ll spend working with your loan officer in a week.

More Reasons for a Loan Officer

Not a good enough reason?  How about this then: companies who loan incredibly large amounts of money require a lot of personal information.  They need your driver’s license, social security number, a copy of your credit report, your address, phone numbers, email address, mother’s maiden name, height, weight, shoe size, favorite color, name of your first grade teacher…you get the point.

Every piece of information doesn’t go straight to a computer that will keep it safe from prying eyes.  First it goes to your loan officer who is required to keep a copy for up to three years.  Your loan officer will become your new best friend.

How Do I Choose a Loan Officer?

I’ve worked with loan officers for years and know from experience that they don’t always work well with their clients.  So how exactly do you make sure you find a loan officer that you can work with?  Following is a list of ideas put together from my personal interactions with loan officers.

• First, talk to friends and neighbors.  Chances are you know a few people who financed their homes.  Find out what company they used and get the loan officer’s name.  Ask a lot of questions to make sure your friends’ experience was what you’re looking for.
• When you’ve narrowed down your choices, make some calls and ask about the loan officer’s fees.  Loan officers are not Robin Hood.  They usually work off of commission and like their big screen HD TVs and swimming pools.
• Do a web search and see what you can find out about the loan officer online.
• Meet with the loan officer to find out if you can work together.  If the visit doesn’t go well, move on.
• Most importantly, find someone who is available and will communicate with you at the level you choose.  Loan officers can be working up to 50 files at a time.  They’re notorious for being unavailable and keeping their clients in the dark.  Make it clear up front if you expect regular updates, and don’t work with a loan officer that doesn’t answer or return missed calls within a reasonable amount of time.

Loan Officer Summary

You might say it doesn’t matter, you can work with anyone for the short period of time it takes to close a loan, but the truth is some loans aren’t short.  You could end up working with a loan officer you can’t stand for months.  Besides, if you do the work the first time, you’ll already have a loan officer for your future investment properties.