Home Loan Archives - Page 11 of 24

Planting Seeds . . . in December

Written by on December 10, 2018. Posted in Home Loan. Leave a Comment

Regardless of your political leanings or feelings toward how we got to this point in our economy, it’s estimated that the average American taxpayer will see a 26% increase in their tax return (or 26% decrease in what they owe) for 2018. This little nugget of statistical wisdom comes courtesy of the party animals over at Morgan Stanley. (Word to the wise: hide the lampshades when you invite them over to the house for your annual holiday fete.)

According to a quick Google search, the average tax return last year was just shy of $2,800. This means that a 26% increase will put the average tax return for 2018 at just over $3,500. For those of us who don’t light cigars with $100 dollar bills, I wouldn’t mind an extra seven Benjaminscoming back to me!

Yes, there are many financial professionals and pundits who write endless articles and wring their hands on cable news programs over how stupid it is to give your money to the government as an interest-free loan for a year so you can get a return when you file your taxes. In theory and principle, they couldn’t be more right. However, the reality is that most of us hate OWING money at the end of the year, so we overestimate what we have deducted from our paychecks to make sure we don’t have a bill staring us in the face on April 15th. The tax code is thicker than all the books we were required to read in junior high and high school combined. Don’t get all worked up, financial folks, over the fact we’d rather spend our weekends binge-watching something on Neftlixthan poring over spreadsheets and algorithms to figure out the exact amount of money we should deduct so we’re “even” with Uncle Sam at the end of the year!

If you haven’t already, you may be asking yourself at this point in this week’s newsletter, “Why are we talking about taxes in December?” Two words: preemptive strike. (No, I’m not talking about toilet papering the neighbor’s house before he can get yours.) Employers will be sending out W2s next month, so now is the ideal time to plant the seed with potential homebuyers that their tax return could be the perfect source for all or a part of a down payment on a house. While other real estate agents are busy posting photos on Instagram and Facebook of their Schnauzer dressed as Santa Paws or their Calico, Mrs. Finickypants, wishing you a Meowy Christmas, reach out to your prospective clients with posts about getting into a home after the first of the year with their tax returns.

We’re two weeks away from Christmas and three weeks from New Year’s. Most folks aren’t kicking and screaming to go look at houses at this very moment. Spend some time getting creative to plant seeds for the beginning of the year. If you want to get cute, have Santa Paws and Mrs. Finickypants holding a W2 and a 1040 form in the accompanying photo. It couldn’t hurt (unless Mrs. Finickypants is fond of scratching).

By the Numbers

Written by on December 3, 2018. Posted in Home Loan. Leave a Comment

Last week, it seemed, the big news in the real estate/mortgage world was that conforming loan limits were increased for 2019. Without a doubt, that is interesting and tells us that, among other things, the housing market continues to strengthen and our economy continues to improve. I’ll pause here for you to do the happy dance.

Depending on your part of the country or your market in which you specialize, you may be dealing regularly with homes that require a mortgage a little shy of $500K so the conforming loan limit being raised is a huge deal. However, if you are working with homes regularly and decidedly south of that price point, this could be like trying to make a big deal to people living in Tucson, Arizona that the cost of down-filled parkas has significantly dropped.

Let me put up three statistics I recently came across that, I believe, will have more universal significance:

Stat #1: According to the US Census Bureau, 30.3% of homes owned in our nation have absolutely no mortgage on them – they’re owned free and clear.

Stat #2: According to a new report from ATTOM Data Solutions, dated November 8, 2018, 14.5 million homes are “equity rich.” In plain English, that means that 14.5 million homes here in the United States that have mortgages on them have AT LEAST 50% equity in them! That number represents 25.7% of the homes in the United States.

Stat #3: According to the same ATTOM report, only 8.8% of homes in the United States are “under water” (the value of the home is 25% less than what is owed on the home) as of the end of the third quarter of this year. The previous quarter of this year, the number was 9.3%. That drop from 9.3% to 8.8% represents over 200,000 homes in just one quarter!

These three statistics can be boiled down to this: if you took 100 homes in a neighborhood to target through door knocking, direct mail, or some other way of looking for new clients, less than nine of those homeowners will be under water and probably not a good candidate. Conversely, though, 56 of those homeowners (30.3% who have no mortgage, thus a boatload of equity, and 25.7% who have 50% of more in equity) will be prime candidates to approach about buying an income property or a vacation home using the equity in their primary home to finance the down payment. The few agents I know who use this data as I’ve described it have significantly increased their production. In fact, most of them began with just their past clients and built on their success quickly from that simple starting point. That makes a lot more sense (and money) than beating the drum about conforming loan limits, right?

The Value of Expertise

Written by on November 26, 2018. Posted in Home Loan. Leave a Comment

A corporation was refitting a building for a new production facility, and they needed to know where to drill a hole in the floor to install something and avoid damaging existing piping and wiring. They called a local engineer who came out, spent about twenty minutes making some measurements, marked the spot where the hole should be drilled, packed up his things, and left the premises. A short time later, the engineer sent an invoice for his services to the corporate accounts payable department: the invoice was for $1,000. The CEO, in order to contain construction costs on this production facility, had instituted a policy that any invoices over a certain dollar amount were to be sent directly to him for his approval. The engineer’s invoice was over that threshold.

Upon receipt of the engineer’s invoice, the CEO was livid. He had been out at the production facility the day the engineer performed his services, and he remembered that the engineer didn’t spend that much time on his task. So, the CEO took the invoice and wrote a note that read, “You spent twenty minutes at my facility, and all you did was mark an ‘X’ on our floor. I’m not paying you $1,000 for twenty minutes of work.” Pleased with himself, he instructed the invoice be mailed back to the engineer posthaste (that’s what CEOs say when they want something done quickly, right).

A few days later, the CEO found an envelope sitting in his inbox that was addressed directly to him. He opened the envelope and found the invoice from the engineer with a hand-written note scribbled at the bottom that read, “I’ve spent over twenty YEARS in my specialty to know EXACTLY where to mark that ‘X’ on your floor. Kindly remit $1,000.” Knowing the engineer was right, the CEO immediately approved the invoice and sent it on to accounts payable.

With the internet and especially YouTube, we’ve become a DIY people who like to fix things ourselves, and that’s admirable. However, there are still certain things we reserve for the experts in particular fields to do for us – I haven’t heard of someone with an eighth-grade education trying to perform an appendectomy on himself by watching a video, but I could be wrong (but I REALLY hope I’m not).

One of the fields in which I would highly recommend you get the RIGHT expert is credit repair for a mortgage. I would NOT recommend a credit repair service; this isn’t because they are shady or underhanded – the vast majority are completely above board – but because they aren’t designed to get you where you need to be. Their business model is simple: a person in need of help pays an up-front fee for some counseling and advice – all legitimate. Whether the person they’re helping follows their advice or not, they’ve been paid: the service’s goal has been met. When people need to repair their credit to qualify for a mortgage, the RIGHT expert to help them is us, the mortgage company.

We don’t charge a fee (no mortgage company should), and we give the borrower more attention and better advice than any other service or agency. The reason is simple: we have a vested interest to help them repair their credit as quickly as possible so they can qualify for that mortgage – and that’s how we get paid. At the end of it all, the client gets repaired credit and a home, and the real estate agent gets buyers who are ready to buy at that moment. It doesn’t take an expert to see the wisdom in that, right?

Communication is Not One Sided

Written by on November 19, 2018. Posted in Home Loan. Leave a Comment

Let me set the scene for you: a young man is getting ready to leave home for his first year in college, and his grandparents have sent him a check for $500 to help him purchase things to get started in this new phase of his life.

FATHER: “Take the check to the bank today and cash it so we have the cash to purchase your stuff. Cool?”

SON: “Sure thing, pops.”

Thirty minutes later, the father is beavering away at work when his phone rings: it’s his son.

FATHER: “What’s up?”

SON: “I went to the bank to deposit the check like you told me to do, but the ATM will only give me $300.”

FATHER: (Half laughing, half perturbed) “That’s why I told you to CASH the check at the bank.”

SON: “But that’s exactly what I did, dad.”

FATHER: “No, you didn’t. When you CASH a check, you go INSIDE the bank and interact with a live person called a teller. There, they’ll give you the FULL amount of the check. An ATM will limit you to $300 regardless of the amount you deposit.”

Both were speaking English, but they certainly didn’t understand one another. This calls to mind a quote that has been attributed to both Oscar Wilde and George Bernard Shaw: “England and America are two countries separated by the same language.” Or, for those of us who prefer to be less literary and more pop culture, there’s the line from the Pink Floyd song that goes, “Your lips move, but I can’t hear what you’re saying.”

For those of us who use social media as a means to generate business, this simple example could well be a cautionary tale. In other words, are we REALLY communicating with those people we hope to attract and encourage to do business with us? Remember, for communication to take place, it has to allow people to respond.

Whether you’re a real estate agent or a mortgage lender, more than your handle (@gr8realest8 or @urfavlender) has to let people know what you do –and people need to know how they can reach you. Day after day, I come across Instagram accounts that have one of those nifty handles and a short headline that reads “I’ll help you buy a house” (or something equally trite), but there’s no substance. These feeds only contain photos of all the gluten-free food they eat, videos of them doing 739 pushups, and images of the puppy they just adopted/rescued. They feature nothing that would/should compel someone to entrust themselves to the account owner for purchasing a home. I see just as many feeds where the account owner posts a bajillionphotos of houses for sale, houses they just sold, and them with their clients at the title company –all good –but nowhere in their collection of photos or anyplace else in their feed is a phone number that someone could use to CALL THEM. News flash: there are a lot of people who like to talk to another human being.

In order to have an effective social media presence, you don’t need cutting-edge technology or professional-grade photography. You simply need to let people know what you do, why they should call you, and how they can reach you. You just need to encourage human interaction – that’s why it’s called SOCIAL media. Because he chose not to communicate with a human being, the young man who deposited his check at the ATM robbed himself of 40% of his good fortune. How much are you robbing yourself with ineffective social media?

Deal Killer: the Unknown

Written by on November 12, 2018. Posted in Home Loan. Leave a Comment

Let me tell you a little story. The subject of this story was a college athlete. Specifically, he was a swimmer, and a darn good one at that. He and his relay team had won a lot of competitions and accolades, and they made it all the way to the Olympic trials . . . only to miss making the summer games by .07 seconds. A sneeze lasts longer than that.

Because of his unique set of skills, he has been hired by the United States government to train Navy SEALs in endurance swimming. Most of his training takes place in San Diego where the Pacific waters are rather chilly.

Unlike some of the PE coaches I had back in high school who “trained” me in physical fitness but hadn’t run or done anything physical since the Nixon administration, this SEAL trainer does everything he requires of his students. When they swim five miles in the open ocean, he swims five miles with them. When they swim at night, he swims with them. And each time he does this, he beats them. (I mean he reaches the end of the swim before they do; he doesn’t take a large stick and start whacking them with it.)

The average age of someone going through the SEAL training is early/mid 20s. Our intrepid instructor is 51 years old. (You didn’t see that one coming, did you?) Recently, someone asked him how he’ll know when it’s time to throw in the towel (or wrap up in a towel and stay on the beach), and his answer was simple and succinct: “when one of them beats me.” He went on to explain that there’s one major factor he has playing in his favor that gives him an edge over these “boys” who weren’t even born when he was vying for a spot in the Olympics: the unknown.

When they start their five-, seven-, or ten-mile swim, he knows all the checkpoints and markers that tell him how far he’s gone and how far he has to go; the students have no idea. Further, the unknown plays into the students’ heads. Are there sharks out there? When do they get to eat next? When will they be able to take a rest? Our instructor doesn’t have any of these questions bouncing around in his head; he can focus solely on the task at hand.

We, as real estate and mortgage professionals, are very similar to this instructor (or we should be): we know the checkpoints and the markers. The difference, of course, is that we’re not training Navy SEALs; we’re helping people realize their dreams, build their portfolios, and giving them peace of mind. This means we should let absolutely nothing unknown linger in our clients’ heads. If it means taking an extra five minutes to ask and answer a few more questions to assure our clients are fully apprised of what’s next and what’s coming up, they won’t lose their energy or resolve before we get them to the finish line.

Category: Home Loan

Planting Seeds . . . in December

By the Numbers

The Value of Expertise

Communication is Not One Sided

Deal Killer: the Unknown