Category: General

Let’s
open this week’s column with a quote from Dr. Ben Carson, head of the United
States Department of Urban Development –
also known by it’s much cooler street nickname of HUD (which is not to be
confused with the Paul Newman movie of the same name):

“Bureaucrats are people who think their
rules are more important than the goals.”

This
column isn’t going to be about breaking the rules or anything like that –
quite the opposite, actually.  Here in
our culture, we often talk about and revere the mavericks, the rule
breakers.  They make for a good movie or
book, for sure.  However, when
people excel and achieve while KEEPING the rules –
no matter how restrictive they may seem –
THAT is when you have a very cool and intriguing story.

Anyone
who’s been forced to read some of Shakespeare’s sonnets can attest to the fact
he seems to use A LOT of words to convey a simple thought.  One might argue that Old Will was getting
paid by the word, so he was fluffing it up at every turn.  However, when you learn a little more about
Shakespeare you’ll find that he was a very skillful writer who used every word
concisely.  Let me explain.

When
writing many of his sonnets, he employed something called iambic pentameter
(which sounds like a disease you get from not taking your vitamins) –
it’s a sort of rhythm he used when writing these sonnets that forced him to
find the perfect word with the proper number of syllables or one that could be
“chopped up” to fit that rhythm.  In
other words, by using this cadence and living by its “rules”, he demonstrated
that he had a much better command of the language and ability to express his
thoughts than many of his contemporaries –
he stood out, and he was highly sought after by patrons (customers) because of
this.

As
I said before, this column’s purpose this week is not to advocate rule breaking
but to praise and laud those people who play by the rules AND WIN.  I’m not going to get all controversial on
you, but that’s the reason so many people refuse to recognize Barry Bonds as
the reigning home run champion of all time –
they think he found a way AROUND the rules, and they don’t wish to honor
him.  (If
you want to argue amongst yourselves about the validity of Bonds’ title, I’ll
wait.)

Sure,
there are illegal and unethical means that less-than-stellar agents and loan
officers can (and sometimes do) employ to “get ahead” of the competition –
these folks should be avoided like the plague (and iambic pentameter –
I prefer poetry that rhymes).  But when
you’re a self-employed stamp collector whose sole source of income is bartered
beaver pelts and we get you a loan when no one else can, it’ll be because we
played by the rules and kept looking until we found something that fit for you –
we’ll stand out, and we’ll be highly sought after by your friends and family
because of this.

For
those other lenders who insist that their rules won’t allow them to give you a
loan, I can think of another “B” word to describe them: BUMMER!

There’s
a commercial for a mortgage company that plays regularly on a podcast that I
like to follow.  In this commercial you
hear the question, “Why can’t people get a decision on their mortgage in
minutes rather than having to wait weeks?”
Kudos to the copywriter of the ad for keying on our penchant to have
things instantly instead of having to wait.
In today’s day and age, we take photos with our phones and see them
instantly (and most likely never view them again until we’re looking to free up
storage space on our phones).
Conversely, it wasn’t THAT long ago that there was this thing called
“film” that went inside a camera (that had no way of making phone calls), and
you had to take the film to a place that developed it and printed the photos on
PAPER –
and we would wait a few DAYS to get those prints back to see that we had our
thumb in front of the lens in five of the shots and seven other photos were
completely blurry and unrecognizable (and we paid for ALL of the developed photos).  We
were such barbarians!

There’s
nothing wrong with wanting to have things instantly.  Don’t worry: I’m not going to wax poetic
about the virtues of waiting and how it makes things so much more worthwhile –
I’d probably lose all three of the people who regularly read this article if I
did.  What I am going to do is tell you
what the commercial doesn’t tell you: getting an “instant” decision on your
mortgage IS possible, but it’s not done with the wave of a magic wand –
YOU, the buyer, have to have everything ready.
Think of what I’m about to list as your mortgage “bug-out bag” (that bag
of essentials you have pre-packed and ready so you can escape a bad situation
at a moment’s notice).  Here’s what you
need:

•Valid
ID and Social Security Card (Passport or Birth Certificate is acceptable) for
all borrowers

•Most
recent pay stubs for the past 30 days

•Most
recent two years’ W2s and/or 1099s

•Most
recent two years’ Federal tax returns

•Two
most recent bank statements (with ALL numbered pages)

•Current
401(k) or Retirement Account statement

•Divorce
Decree (if applicable)

•Bankruptcy
Discharge (if applicable) or Complete Bankruptcy Filing (if applicable)

•Veteran’s
DD214 (VA loan), Commanding Officer’s Information (active military)

•Pension/Social
Security Income Award Letter (if applicable)

•Annuity
Distribution Letter (if applicable)

As
you can see from the list above, these are all things that you should be able
to access without a problem –
we’re not asking for copies of your third-grade report card or proof that you
won the tri-county funnel cake eating contest.
If you have these items easily accessible, you can get a decision on a
mortgage very quickly.  If you don’t,
though, then that decision will drag on and on until you gather them up and get
them to your mortgage company.  It’s
completely up to you.

In
today’s seller’s market –
where the good homes are going under contract as quickly as they’re appearing
on the MLS (or even before) –
you WANT to have your “bug-out bag” current and ready.  If not, you’re going to have to weather the
storm with no roof over your head.

A
friend of mine works for a major car manufacturer in his capacity as a mechanic
and technician –
he’s been with the same company for over 20 years, so it’s safe to say he knows
a thing or two about how engines work, right?
Whenever I have a problem with my car that extends beyond needing new
tires or an oil change, I always reach out to him to see if he can give me an
idea of what’s going on and how much it’s going to cost to fix it.

In
the times he’s kindly come over to look at one of my ailing vehicles, I’ve
learned a couple of things.  One is you
don’t need nearly as many “things” to change your spark plugs as the folks at
the auto parts store try to sell you.  The
other little morsel of wisdom is in order for a car to start and run, it needs
three things: air, spark, and fuel.  For
an internal combustion engine, if you take one of these three things away, you
don’t get the controlled explosion that makes the heart of your engine
pump.  (Side note: this is not to be
confused with Earth, Wind, and Fire –
the band whose music you need as a vital part of a play list to make the heart
of your party pump.)

As
if you didn’t see this coming from a mile away, I’m now going to equate this to
a successful real estate transaction –
one that lives and breathes.  The air,
spark, and fuel in a successful real estate transaction is, respectively, an
agent, a buyer, and a mortgage person –
if you take one of these three things away, you just have a couple of people
trying to make pleasant but possibly awkward conversation.

The
agent supplies the oxygen –
the vitality, if you will –
with her/his knowledge, expertise, attention
to
detail,
and zealous representation of the buyer’s best interests.  The
buyer provides the spark –
the excitement and drive –
to acquire that first investment, a home in which to start a family, a vacation
property or second home, or a home after relocation.  And the lender, of course, provides the
right type of fuel and
the correct amount to get
everyone to that final
destination.

There
are specific things that each party MUST do that the other two parties can’t,
of course.  In most instances, this is
understood and doesn’t need to be discussed.
However, would it be a bad idea to get all three parties in one room
before a property is previewed or a prequalification occurs to discuss the
expectations everyone has of one another and have all three agree to live up to
their parts?  If this were to occur
(assuming everyone did, in fact, live up to what they promised to do), we would
have smoother, shorter, and more seamless closings.  Why?
One word: accountability.  When
someone is accountable (buyer included), they pay better attention.

Let’s
return to our car analogy:  whether it’s
a Mercedes-Benz S 560 (a
luxury home)
or a Fiat 500c (a
one-bedroom condo),
you still need air, spark, and fuel –
you can’t substitute even one of those things, and each one has to do its part
equally well, or all you have is a hunk of materials that no one wants to buy
or own.

In
late December 1944, the German army launched a major surprise attack that
became known as The Battle of the Bulge (a term which would later become sort
of a rallying cry for people trying to lose weight –
sometimes it’s embarrassing to be a human).
With the commanding officer back in the United States for a staff
meeting, command of the 101st
Airborne Division of the US Army and the defense of the besieged city of
Bastogne, Belgium fell
to Brigadier General Anthony McAuliffe.

With
the city surrounded by the German army on December 22, 1944, General Heinrich Freiherr
von Luttwitz
of the 2nd
Panzer Division sent a note to General McAuliffe recommending that the US
forces in the city surrender to avoid annihilation of the troops, further
destruction of the city, and an increase in civilian casualties.  To drive his point home, General Luttwitz
detailed the resources he had at his disposal and was willing to use to take
the city and wipe out the Americans.  I
honestly can’t guess at General Luttwitz’
true intentions for sending this note, but it would seem he was being a
reasonable, honorable, and humane man despite the terrors and ugliness of
war.  (Look it up on Wikipedia and read
the note yourself.)  The German general
gave the Americans a time limit by which to respond –
and the clock was ticking.

Upon
the receipt and reading of this note, General McAuliffe and his advisors
quickly discussed how best to respond to the Germans’ ultimatum.  In short order, they decided to send this:

To the German Commander.

NUTS!

The American Commander.

The
response was delivered to General Luttwitz
by Colonel Joseph Harper.  General Luttwitz,
while a very intelligent and urbane man, was not familiar with American
sayings, so he asked Colonel Harper what this meant, to which Harper responded,
“In plain English?  Go to Hell.”

The
Germans threw everything they could at Bastogne and brought in the German
Luftwaffe to bomb the city nightly, but the Americans held their position until
December 26th
when the 4th
Armored Division arrived with reinforcements.
Bastogne did not fall, and the American forces did not fail.

Perhaps
your first impression when you read General McAuliffe’s response to General Luttwitz’
ultimatum was how brash and cavalier it seemed.
However, I’ve had the pleasure of knowing a number of women and men who
have served in the military, and they know firsthand the heartbreak and horror
of war –
they would do anything to keep their fellow soldiers out of harm’s way –
so I would be willing to say McAuliffe’s response was neither brash nor
cavalier.  He wasn’t going to subject his
men to inevitable death out of pride or a misguided desire to look good in the
eyes of his superior officers –
just the opposite, really.  He had
complete and utter confidence in his forces, his position, and his collective
abilities to face this menacing challenge.

In
a sellers’ market, you need an agent who has that confidence.  You need an agent who’s going to stand toe to
toe with other agents who are competing for the same property for their
clients.  And you need a lender who has
the firepower to back you and your agent up in the fight.  When it’s the Battle of the Bungalow, no
surrender!

We
don’t like to do pre-quals.  There, I said it –
but now I better explain it.  A very
large number of potential homebuyers think a pre-qual is a short two-minute
phone call where a loan originator asks them a handful of questions about their
income and other sundry financial details, punches some numbers into a
calculator, and says, “You’re golden!  Go
out and put an offer in on that house and have fun riding your pet unicorn.”
Obviously, there’s a bit more to a pre-qual than that, but when loan
originators simply ask a couple of questions, they’re setting themselves (along
with the buyer and the agent) up for failure –
a failure that usually manifests itself AFTER a home has gone under contract –
and the last I checked, that’s not good.

For
the most part, when a potential homebuyer comes to us for a “pre-qual”, we ask
a lot more questions and, quite often, go so far as to ask for certain
documents before we issue anything that says the person is qualified for any
amount of a loan.  By doing it this way,
we assure that when buyers go through the formal loan application process, they
get approved.  Research has shown that
people are much happier when they get their loan applications approved as
opposed to getting a big, fat denial –
you can’t argue with science.

There’s
an old saying that applies to a lot of instances: “The customer is always
right.”  In the real estate/mortgage
world, however, not so much.  Hear me
out.  There are a lot of misconceptions
that many, if not most, homebuyers have when they start the process of looking
for and purchasing a home.  Down payments
– needing to be at least 20% – is one of the biggest, of course, and I’ve written
about that a lot in the past (so I’m not going to beat that dead horse –
not today).  There are others surrounding
eligibility as related to bankruptcy, foreclosure, etc. –
there are a lot more options and shorter waiting periods than what most people
think exist.  While those are major
misconceptions that agents and loan officers alike are constantly trying to
remove from the collective mindset, the biggest misconception keeping people
from buying a home is –
are you ready for this –
IGNORANCE.  Okay, that’s a little harsh,
but I got your attention, right?  Forgive
me, please.

The
#1 thing that keeps people from buying a house is they have no idea what
they’re qualified to buy.  People can
rattle off their credit score (whether it’s correct or not) faster than their
social security number, but if you were to ask them how much of a 30-year
mortgage (and its accompanying monthly payment) they would qualify for based on
their income and financial standing, they would look at you like you just asked
them to perform a lewd act in public.
Usually, when you hear someone say, “You know, I’m not sure where I want
to end up, so I’m going to keep renting for now,” what they’re actually saying
is, “I have no idea how much of a mortgage I would qualify for.”

Let’s
start something and get it to go viral: on your social media –
personal AND business –
post the question “Do you know how much of a mortgage you qualify for?”  And then follow that question with this
statement: “I’ll bet you don’t.  Call ANY
mortgage company TODAY and find out –
it’s FREE!”  For those who follow this
advice, they’ll most likely find that the only person who doesn’t qualify for
SOMETHING is about as rare as a unicorn.