Home Loan Archives - Page 19 of 24

It’s a New Year, Just Breathe

Written by Priority Lending Admin on January 2, 2018. Posted in Home Loan. Leave a Comment

By all accounts, 2018 should be very interesting with news that home values continue to rise with demand for homes showing absolutely no slowing. So, with this new year upon us, I wanted to write something that would be useful – something that would act as a good jumpstart for what lies ahead of us – and the more I thought about what that could be, my mind kept going back to a very fundamental truth I had been taught when I was going through my licensing class. It’s nothing earth-shattering, and many of you are going to chime in with a collective “well, duh”, but I’ll soldier on for the sake of filling up some space (and reaching those who either didn’t know it or don’t mind a gentle reminder). The question was floated out there: “Why doesn’t the seller of property get to pick the escrow company?” The obvious answer is, “Well, because that’s the law,” but the deeper answer is more interesting – and that answer is just one word: Leverage. The instructor of my licensing class gave an example to expound on that one-word answer, and it goes like this: Kyle, a software engineer, was buying a home that was being built. Being the stereotypical, A-type engineer that he was, Kyle would stop by the building site on a fairly regularly (let’s call a spade a spade and just say “daily”) basis. On one of his daily visits, he saw that there was a plumbing problem on the second floor of the house, and it was causing major problems with the drywall, ceiling, flooring, etc. Upon seeing this, he speed-dialed his Loan Originator, Mindy, and proceeded to lose his mind. After hearing Kyle out and giving him a chance to find a brown paper sack to breathe into to stop hyperventilating, she told him he had absolutely no reason to worry because they had chosen an escrow company that was not associated with the builder. Between breaths into the paper bag, Kyle asked her to explain, and she said that the builder had good reason to make sure everything is fixed to his liking because Kyle had “leverage.” While Kyle could appreciate the dulcet tones of Mindy’s voice and the confidence with which she addressed his . . . freak out, he asked her to elaborate (as he almost choked himself by inhaling a receipt that was inside the paper sack).

She said, in very simple terms, that when it comes time to close, they (Kyle and Mindy) will have demonstrated that they did everything that was required of them by closing the loan on time. However, the builder is not going to get paid from the escrow company until they can demonstrate that they have fixed everything on the punch list to Kyle’s satisfaction. Kyle has leverage because the builder REALLY wants to get that check from the escrow company. Had Kyle allowed the builder to direct him to their favored escrow company (as they had tried to do), he would not feel quite so confident that the builder had proper incentive to fix what the plumbing problem had caused – he would have had little or no leverage.

Make 2018 a great year – all the ingredients are there for the mixing – and trust The Process. It doesn’t assure perfection, but it certainly gives you confidence that it’ll all work out in the end.

The Power of Doubt

Written by Priority Lending Admin on December 26, 2017. Posted in Home Loan. Leave a Comment

We find ourselves in that weird week between Christmas and New Year’s – that week that feels a bit like the Twilight Zone where no one’s sure what’s real and what isn’t. Because of that, most people tend to focus on one of two things: eating as much as possible or setting goals for the upcoming year. The former is squarely focused on the present – how much can I stuff into my gaping maw at this very moment before I pass out and/or puke – while the latter is focused on the future.

Last week, before the Twilight Zone kicked into full gear, I read a short article that resonated with me, and I think it’ll prick up your metaphorical ears, too. The author of the article is a gentleman who professionally trains Olympic athletes, and he highlights the talents of a particular athlete from the Philippines who is training to be a marathon runner. He points out that this runner is not a professional athlete, nor does she receive any type of financial support from any organization in her quest to qualify for the Olympics. She has a fairly high-profile and demanding job with consumer products giant Procter & Gamble that takes up more than its fair share of her time, leaving very little time for personal pursuits.

On her own dime, she flew over to Canada to run in the Ottawa Marathon, and she did so well that not only did she qualify for the prestigious Boston Marathon, she ranked in the top 15 runners from her home country of the Philippines – and she’s only been doing this for a handful of years (all around her busy schedule being a regular person). How is this possible? He says the key to her success is that in all the time he has coached her, he has never heard her utter these three words: “I know that.”

Because of that, she listens far more intently and is more coachable. Every critique and every suggestion are taken to heart and internalized, translating to better performance and improved results. While this springs from the field of sports, this lesson applies to all of us.

For those of you who are reading this between stuffing an entire Christmas ham down your gullet and taking a long winter’s nap, I’ll leave you here and wish you a happy holiday. For those intrepid few who are sitting down to strategize and set real-estate-related goals for yourselves for the upcoming year, let me add this: rather than knowing what you know, DOUBT WHAT YOU KNOW. For example, if you KNOW that having a low credit score will keep you or a client from getting into a home in 2018, swat yourself in the back of the head for being that annoying know-it-all, because you’re wrong. If you KNOW that you or a client can’t get approved for a loan because of self employment, same thing for you and the head swat. When you doubt you know something, you tend to ask more questions and learn more things – and you avoid bruising or slight contusions to your head. Happy headache-free Holidays!

Let’s Be Clear

Written by Priority Lending Admin on December 18, 2017. Posted in Home Loan. Leave a Comment

A man and woman shaking hands over coffee.

Recently, I went into a clothing store to look around and let the sales clerk who has an unusually high opinion of his fashion sense believe that I was going to purchase something – it’s always fun to tease those guys! As I was milling about, the following occurred:

Older Woman (approaching younger woman): “What are you looking for?”
Younger Woman: “Owen.”
Me: “You’re not going to find him in that rounder of shirts. I just looked through it and didn’t find anybody.”

Both women first looked at one another and then looked at me with a quizzical look on their faces – no words. I just smiled back at them. They narrowed their eyes and fixed me with a cold, hard stare as they backed away (and I just kept smiling and didn’t break eye contact with them – it was an epic staring contest).

What in the name of all that is holy and licensed by Disney does this have to do with mortgages and real estate, you ask. Well, absolutely nothing, really. I just thought it was funny and thought you might find it a teensy bit humorous, too. I’m only kidding. Like the exchange described above, the choice of wording can take things in unintended directions.

Wording, in a real estate contract, is SUPER important. I’ve seen some contracts where one of the agents, who clearly missed her/his calling to be a novelist (a really bad one, I might add), had inserted an addendum that was so long they contained plot twists no one saw coming and characters with a penchant for stealing avant-garde art installations while sipping cheap wine from Nebraska – and at the end of it all, the only thing they really wanted to convey was the fact the buyer wanted the seller to leave the washing machine but not the dryer. I’ve seen other contracts with hand-written margin notes that resembled markings found on the Rosetta Stone (that will probably take longer to decipher without help). In many cases, all of this is at the behest of the client who wants to make sure everything is “in writing”. I’m going to let you decide amongst yourselves how you want to address that, but at the end of the day, you want to make sure everything is clear to ALL PARTIES. A simple rule of thumb: write like you’re trying to make sure a sixth-grader will understand your message. (I’ll let you insert your own comments here – I’ll wait.)

What MOST agents and their clients don’t know is that in a real estate contract, from the mortgage side of things, there are certain things that can be written in/added that can absolutely KILL the deal – and there are others that can cause some major damage and will take time (and some pixie dust) to heal. Whether the deal is killed or maimed, the end result is the same: DELAYS – and NO ONE wants those! My biggest recommendation is a simple one: before you put on your creative writing hat and start spilling ink to get your demands in writing, give your favorite lender a call (I know a really good one) and just run your ideas by them. It’ll save you a lot of time from looking for the proverbial Owen in a rounder of shirts, believe me.

Illustrating Your Options

Written by Priority Lending Admin on December 11, 2017. Posted in Home Loan. Leave a Comment

Last night, I finished reading a book (some of you might be shocked to learn this – you might find it even more shocking to learn that the book had absolutely NO pictures, just WORDS), and the author made a point at the end of the book that he purposefully didn’t give a step-by-step guide on how to follow his advice – he felt it would be better to let the reader determine her/his own path. Kudos to the author for his . . . laissez faire approach to teaching, but that doesn’t quite work for me. In light of recent developments with the economy and signals that the housing inventory shortage should come to an end in about 18 months, I thought I should go back to an article we published previously that gives a step-by-step guide on how to prepare oneself to purchase a home. Here goes:

I once met a man whose upper body was entirely covered in tattoos. He told me that all this ink took well over 100 hours in total at the cost of $85.00/hour. Mortgage geek math: that’s $8,500, and THAT’s a down payment! Huge misconception: 20% is THE required down payment. Not true! A very popular loan option only requires 3.5%. For the Illustrated Man, $8,500 represents a 3.5% down payment on a $242,000 mortgage – that’s not a palace, but that amount of money could buy a modest home in a nice neighborhood.

A recent poll revealed that potential homebuyers believe that because of student loan debt, they have no extra funds to save for a down payment. Like any human being who wasn’t born with a million-dollar trust fund, I understand the realities of budgeting and finances – there are so many demands on our income that it seems impossible to save enough for a down payment. Despair not, my fellow regular people! Let’s look at a real-life scenario that will give you hope – and a VERY workable solution.

A responsible young couple sets their sights on a place close to downtown: a small home with an asking price of $180,000. They could get a bigger house that’s new if they move farther away from downtown, but they decide that this option is best for them: less of a commute, closer to restaurants they love, etc. A 3.5% down payment is $6,300 – they have a little bit in savings, but they want to keep it there for emergencies. They need a plan.

Their VERY smart realtor sits them down and does some VERY simple math with them:

•The average person spends $8/day at a Starbucks/Dunkin Donuts/Peet’s – that’s on a drink and something to nosh (bagel, scone, that weird granola parfait, etc.)
•For a couple, that’s $16/day X 5 days/week (we won’t count weekends – live a little): that’s $80/week or $4,160/year
•A 3-lb bag of coffee at Costco costs $12.00, and it makes between 100-120 cups – conservatively, that’s a 10-week supply for two people
•Using the Costco coffee, they can probably do the year with 5 bags for a total of $60.00
•All told, switching to Costco for JUST one year, the couple could save $4,100
•As most young couples are wont to do (because they’re working and busy), they tend to eat out 3-4 nights/week
•By cutting out just one of those dinners out each week, that could save $50/week – that’s $2,600
•With these two “tweaks” to the couple’s lifestyle (for JUST one year), they could save $6,700 – and that would keep their savings account wholly intact
•Even if home values increased by 5% over the year of saving, that would put the home (or one like it) at $189,000 – 3.5% of that is $6,615, and the couple has $6,700.

Is it a coincidence that the difference between the amount saved ($6,700) and the down payment needed ($6,615) is $85.00? That’s just enough to spend an hour with a tattoo artist where the couple can have their favorite realtor’s name forever inked on their biceps. It’s like it was meant to be!

The Spooky Truth

Written by Priority Lending Admin on October 23, 2017. Posted in General, Home Loan. Leave a Comment

Do you have that friend or family member who pronounces a fairly common word incorrectly on a regular basis? Or, do you know someone who’s pretty intelligent but consistently conjugates one particular verb incorrectly? I have a friend of almost 20 years when something isn’t quite going his way, he gets “fustrated” – this friend is a very successful, college-educated professional who works with executives at the C level every day. In the conjugation department, I have a relative who constantly says “I seen that” – I’m not sure if he knows that the word “saw” isn’t just something you use to cut through a log or plank.

The next time you find yourself in a discussion with a handful of people, watch for the use of the word “impact” and listen to the way it’s being used. I’m willing to bet you’ll hear this phrase: “I was impacted by . . .” Until relatively recently, the “translation” of that phrase would have meant that the person was, literally, crushed like a stone by something – so if the person was still alive to tell the story, then you were talking to a member of the Justice League or one of the Avengers, someone with superhuman strength. Over time, though, saying that you were “impacted by” something has become acceptable in the English language to mean that this something has significantly affected you – and left you standing unscathed by a one-ton rock. (And yes, it has AFFECTED you, not EFFECTED – that’s a lesson for another day.) Words are funny.

Speaking of funny words, the word “mortgage” has its origins in Old French that translates to “death pledge” – spooky! Granted, for anyone who hasn’t yet purchased a home, the idea of entering into a contract to pay back a ginormous sum of money over a 30-year period can be pretty overwhelming, even spooky. However, let me throw you a curve: the word “rent” has its origins in Middle English meaning “to tear, rip”. When you rent instead of buying a home, you’re metaphorically tearing a hole in your financial pockets – the money’s just falling out and landing in someone else’s pocket who carries the mortgage. With a mortgage, you have the benefits of building equity, enjoying a tax deduction, painting the kitchen whatever color strikes your fancy, and hanging a framed velvet painting of dogs playing poker on any wall you choose.

I’m going to throw one more word at you: “faith” – don’t worry, I’m not going to get religious on you. Faith can be defined as holding a belief in something for which there is incomplete evidence. I point that out because, quite often, buying a house is referred to as a “leap of faith” – but I can’t disagree more. Millions of people have purchased homes and realized the benefits detailed above – THAT is rather COMPLETE evidence, wouldn’t you say? Conversely, I would say that believing one can continue to rent a home and realize those same benefits is based on VERY incomplete evidence – and THAT’s spooky!

Category: Home Loan

It’s a New Year, Just Breathe

The Power of Doubt

Let’s Be Clear

Illustrating Your Options

The Spooky Truth