The Difference Between Expert Advice and Perfect Advice

Posted on May 16, 2013 by

Don’t be afraid of those two words-expert advice. Remember:

  •  An expert doesn’t mean you’re going to give perfect advice.
  •  An expert means you’re going to give excellent advice.

Here’s the difference:

If you go to a doctor with a serious illness, she can’t tell you how it’s all going to wind up in the end. She can’t know for sure. Therefore, she can’t offer perfect advice.

However, your doctor can only give you excellent advice. She can tell you about your illness and your options, whether it be surgery or medications. She can also explain what she believes to be the best option for you based on your history, symptoms, and overall health. Ultimately, though, you’re going to make the final decision of whether you go through with the treatment plan.

Once you make that decision, your doctor will take you by the hand and walk you down the road to recovery. She will explain to you that there might be adjustments that need to be made to the treatment plan, because no one can know for certain how things will turn out.

She might have to adjust your medications or increase or decrease your treatment schedule. But every step of the way, she’s there with you, helping you get to your ultimate goal. This is called excellent advice. (By the way, does this sound like what we do with our clients?)

Similarly, if you went to an attorney, he can’t tell you how the case is going to end up or how the judge or jury will rule. That would be perfect advice. What an expert attorney can do is explain your options. He might pick one or two he believes to be the best ones to pursue. He will then leave you to make the decision on which option you want to take. Once you decide, he will help put a plan together based on the facts at hand. He will help you get to the best possible resolution of the case. And along the way, he’ll make whatever changes are needed. This is excellent advice. (Again, does it sound similar to how we help our clients?)

Our roles as  Real Estate Professionals and Mortgage Professionals are similar to the role of the doctor and the lawyer. We can’t give buyers or sellers perfect advice because you don’t know what’s going to happen—you can’t know the future. However, we can give excellent advice based on the information and situation at hand. We can guide them through the process and help them make the necessary changes along the way.

And that’s exactly what your clients want…and deserve!

SOURCE: http://www.kcmblog.com/2013/05/16/expert-advice-does-not-mean-perfect-advice/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+KeepingCurrentMatters+%28The+KCM+Blog%29

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The Art Of Handwritten Notes

Posted on May 13, 2013 by

According to a report by the U.S. Postal Service, the average household went from receiving a personal letter once every two weeks in 1987 to once every seven weeks by 2010. It’s no surprise that number dwindles ever lower given that we live in the age of instant messaging, tweets, and email.

But there is a bright side. Handwritten notes now have much more value and impact than at any other time in history. They’re the perfect way to show clients and referral partners how much you value them.

Here’s a six-point formula suggested by etiquette experts. It is not necessary to write more than one sentence per point.

  1. Greeting. Simple: Dear Name.
  2. Express your gratitude. Thank you for trusting me with the financing for your new home.
  3. Make mention. One of the best parts of my job is seeing my clients find a home they love.
  4. Allude to the future. I wish you many years of happiness there.
  5. Repeat your gratitude. Not word for word, a short “Thanks again” will suffice.
  6. Salutation. End with regards such as “Sincerely” and sign your name.
Posted in Loan Tool Box | Tagged , , | 2 Comments

How Much of Your Paycheck Should You Be Saving?

Posted on May 3, 2013 by

Reblogged from ST LOUIS BY GINA:

Click to visit the original post

By Carleton English

Let’s talk about the six month milestone.

That is, you need to have three to six months of your annual salary in savings in order to befinancially secure.

The advice sounds simple and all financial advisors will tell you the same, regardless of how they dress it up to appeal to their demographic.

This is a real number.

Read more… 482 more words

We all need to prepare for our future, and your savings account is one of the top priorities that needs total attention.
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Why you need a Realtor

Posted on April 23, 2013 by

Anyone in the real estate industry for any length of time realizes that the education required and the resources necessary to be a true industry professional have dramatically increased over the last two decades. In today’s volatile market, it is necessary to have a true real estate professional if you want to sell your home for the best possible price in the shortest amount of time – and make sure the deal gets to the closing table!

The National Association of Realtors (NAR) has recently reported that as many as 15% of all deals never make it to closing. Tighter lending requirements, stronger disclosure forms and tougher appraisal standards have all contributed to the more treacherous minefield through which today’s seller must navigate.

Bottom Line – If you are selling a home in today’s confusing real estate market, it is best to take on the services of a local real estate expert. He/she will guide you through each step of the transaction thereby increasing the likelihood that there will be fewer inconveniences for you and your family.

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First Time Home Buyer Tips

Posted on April 22, 2013 by

1.) Establishing a Realistic Price Range

A common mistake among first-time home buyers is purchasing more house than they can afford. You should not rely on banks to determine what you can comfortably spend on a new home. Banks are adept at determining the amount of monthly debt in the form of mortgage, insurance, credit card, student loan and auto loan payments. They have no way of knowing, however, what you spend each month on groceries, entertainment and utilities.

You should make a list of all monthly expenses, excluding rent or your current mortgage payment. Whatever is left after monthly expenses is the amount available for a mortgage payment and housing expenses such as taxes, insurance and home maintenance. Carefully consideration of your budget saves time by weeding out homes that you cannot afford and guards against overspending.

2.) Seeking Pre-approval

Getting pre-approved for a mortgage prevents a deal on a dream home from falling apart due to failure to obtain financing. You should compare loans from several lenders to see which one best suits your needs. A pre-approval letter will give you some power to negotiate on a home’s price because the seller will view a pre-approved offer more favorably than an offer that comes without lender pre-approval.

Keep in mind that pre-approval is different from pre-qualification. During pre-qualification, the lender estimates what you can afford. Preapproval is a more involved process in which the lender looks at your credit report and performs an extensive financial background check. At this point, you will get a good idea of the mortgage interest rate as well.

3.) Setting Priorities

You should compile a list of what you need and want in a house. Needs might include the number of bedrooms, square footage, high-quality schools and commute time. These needs are aspects of the house that either cannot be changed or cannot be changed without substantial cost to you.

Wants, on the other hand, are something you would like and that can be changed. Wants may include a pool or hot tub, landscaping, finished basement or hardwood floors. Making a list of wants and needs helps you focus on what is really important in a house, narrowing the list of prospective homes. Ideally, the new house will include all of the needs and a few wants.

4.) Choosing the Right Neighborhood

Crime statistics, insurance rates, property taxes and school quality are important considerations for you. Because the neighborhood makes up a large part of a home’s value, take your time to find exactly what suits your needs. You should also consider job commute, traffic during rush hour and proximity to amenities such as shopping, churches and libraries.

Driving through the neighborhood at various times during the day and night will provide a more complete picture of the location. Don’t forget to talk to potential neighbors, who can be a good source of information regarding the neighborhood and residents in the community. Take note that bad neighbors can bring down the value of a house.

5.) Finding the Right Home Inspector

You will also need a professional home inspection. Even new houses may present costly problems evident only to a home inspector.

You should talk to several inspectors before hiring one. You should ask about the inspector’s qualifications, scope of the inspection, how long it will take and the nature of the report you will receive at the end of the process. Main areas covered by the inspection should include quality of construction, integrity of the foundation and condition of plumbing, electrical, heating and cooling systems. If the inspection uncovers serious issues, such as cracks in the foundation, you may decide to back out of the contract or ask the seller to repair the problem.

SOURCE: http://www.kcmblog.com/2013/04/17/5-tips-for-first-time-home-buyers

Posted in First Time Home Buyer | Tagged , , | 2 Comments

Is Budgeting the Best Way to Save? Seven Personal Finance Myths

Posted on April 19, 2013 by

Reblogged from ST LOUIS BY GINA:

Click to visit the original post

By CNBC

Think you're financially savvy? When it comes to their personal finances, people carry around notions all their lives that may or may not be valid. For example, you've heard that money can't buy you love, but can it buy happiness? Most people believe that it can't -- but science may prove them wrong.

Here are seven personal finance myths that happen to be everyday beliefs about the way we consider and handle money.

Read more… 1,373 more words

I have always believed the bulk of this information, but some of it is new to me and has really opened my eyes.
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Residential Inspections

Posted on March 14, 2013 by

InspectionThe Purpose of a Residential Inspection Prior To Purchase – To identify major defective components and safety issues and to give buyers and sellers a better understanding of the homes condition.

When performed by a trained, professional home inspector, the information revealed in the inspection helps buyers understand the true condition of the property.

A typical inspection should include:
     – A thorough visual inspection of the structure (inside and out, from foundation to roof).
     – An examination of all major systems (mechanical and electrical).
     – An evaluation of hundreds of components.
     – A printed report explaining all significant findings and recommendations.

When Should You Order a Home Inspection?
Immediately after reaching a written purchase agreement with the home seller. Most Real Estate purchase agreements include a clause, generally 5-10 calendar days, making the purchase contingent on the home inspection for the buyers protection. NOTE: A professional home inspection can take 2-3 hours. You may choose to attend the inspection or arrive toward the end to review the inspector’s significant findings. Keep in mind to schedule the needed inspections right away because the 5-10 day window set forth in the contract will go by fast.

Put the Inspection Findings in Perspective.
Please keep in mind that very few homes are in perfect condition, and most will likely need some mainrenance and TLC. Cosmetic items and conditions previously disclosed by the seller should not be used as a bargaining tool with the seller after the home inspection is completed.

Choosing an Inspection Company.
When choosing your inspector, please ask the following questions:
     – Ask the inspector about their experience and background.
     – How long has his company been in the business? How long has he/she been in the business?
     – Is he/she insured? Bonded? Certified?
     – Does he/she belong to any professional inspection organizations such as ASHI (American Society of Home Inspectors)?
     – Can he/she perform, or arrange, all of the additional inspections you may need such as Termite, Radon, Well and Septic, etc? One stop shopping is a huge plus.
     – Is he/she lisenced for any of the previously mentioned inspections? In Missouri to perform a Well & Septic inspection, the inspector must be licensed. All other inspections do not require any licenses. ASHI & Radon Certifications are a plus.
     – What type of inspection report do they provide? Narrative, Check List or a combination of both? Will there be any photos in the report? How will you receive the report – mail or email? How long is their turn around time? And finally, will it be hand written or computer generated?

Posted in First Time Home Buyer, Purchase | Tagged , | Leave a comment

FHA Is Getting More Expensive

Posted on March 8, 2013 by

Act Now - Red ButtonThe 3.5% down payment on FHA loans could be more expensive for buyers than expected. Beginning April 1, 2013, the mortgage insurance premium will go up by .1% to 1.35% which may not even be noticeable to most would-be homeowners.

The staggering increase will occur on 6/3/2013 when FHA’s policy on the duration of the required mortgage insurance will be increased for the life of the mortgage. It basically doubles the amount of total MIP if the loan is paid to term.

Below is an example with a purchase price of $175,000 with 3.5% down payment at 4% mortgage rate on 30 year term.

FHA Changes

(Regarding the current MIP duration: When the unpaid balance reaches 78% LTV of original purchase, the MIP can be released. In any event though, the minimum time must be five years.)

Currently, the MIP is required for approximately 9 years 9 months with normal amortization. The new program would require the MIP for the life of the loan. In this example, the initial monthly MIP is $196.88 which decreases based on amortization.

There are buyers that qualify on income and credit who may not have the necessary additional down payment required for 80% and 90% conventional loans. The 3.5% FHA program has provided a great vehicle to get into a home with a minimum amount of cash.

For homeowners that expect to stay in their home for ten years or less, the new changes might not have much financial impact. Homeowners who expect to be in their home long term can refinance with a conventional loan without mortgage insurance once the equity has increased due to amortization and appreciation.

For buyers to avoid these increases, they will need to act now to get the FHA commitment issued prior to these change dates.

SOURCE: http://www.kcmblog.com/2013/02/19/fha-more-expensive-than-expected/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+KeepingCurrentMatters+%28The+KCM+Blog%29

Posted in First Time Home Buyer, Loan Programs | Tagged , , , , | 1 Comment

When Applying For A Mortgage – Avoid These Mistakes

Posted on February 26, 2013 by

1. Forgetting to Check your Credit:

Before you apply for a mortgage or even start looking for a bank that will give you a home loan, you should take a look at your credit score. Do you know that a low credit score (620-679) can raise the interest rate on your mortgage by several points above another individual with a high credit score (720-800)? Or worst case scenario, your application may even end up getting rejected. Make sure that you know your credit score earlier than application time, so that if you make any changes or corrections to get make it attractive again.

2. Don’t apply for other credit before the application process is complete:

Make sure that you don’t apply for any kinds of credit until the application process for the mortgage is complete and the loan has closed. If you apply for any other kind of credit, like an auto loan or a new credit card while you are seeking a mortgage, there is a chance that you will be seen as a high credit risk. Or even worse, your DTI ratios could plunge over the maximum allowable limits (43%). This could prevent you from getting the mortgage.

3. Not Getting a Pre-Approval:

Good mortgage loans come with great individual preparation. Before you start house hunting, make sure that you are actually qualifying for the mortgage loan. You can do this by getting pre-approved. Mortgage pre-approvals are more robust compared to pre-qualification because the lender or the bank will first pull your credit score and look at your assets, income, and employment.

In a pre-qualification, the lender will only make an estimate of the mortgage that you are eligible to take. In pre-approvals, you will be given a go ahead based on your earlier finances. What loan amount you will be able to afford will not be based on estimates but hard numbers.

The DTI ratio (debt-to-income) will also matter when you want to know what mortgage payment you will be able to exactly afford. When you get pre-approved for the loan, you can ask for a written commitment that the lender will finance your mortgage. This will show your home seller that you are serious about purchasing the house.

4. Don’t chase loan programs that sound complicated:

You should certainly look around for the best terms, low closing costs, and better rates, but don’t do it just by getting lured by exotic loans. If you hear something that sounds too good to be true, then it likely is. Sometimes the monthly payment is too low. Here you might be paying only the interest. It is even possible that your mortgage negatively amortizes (your balance in the mortgage grows every month). It is in your best interest to keep the mortgage simple. Take a mortgage that you can easily understand, like fixed rate mortgages.

5. Changing Your Job:

To get a mortgage approval, another key criterion is steady income and employment. The underwriter, who works on your application, will be interested to know you are holding a steady job and that you get a consistent income every month which will continue in the future. Avoid job-hopping before you apply for the mortgage. If you are making a job change, it shouldn’t be a problem but a change in career can cause problems. If you are considering a job or career change, wait until the mortgage has been closed first.

Posted in Cedit Scores, First Time Home Buyer, Interest Rates, Loan Programs, Purchase | Tagged , , , , , , , , | 1 Comment

Short Sale Myths Answered

Posted on February 7, 2013 by

Short-SaleA short sale is when a bank agrees to accept less than the total amount owed on a mortgage to avoid having to foreclose on the property. This is not a new practice; banks have been doing short sales for years. Only recently, due to the current state of the housing market and economy, has this process become a part of the public consciousness.

To be eligible for a short sale you first have to qualify!

To qualify for a short sale:

  • Your house must be worth less than you owe on it.
  • You must be able to prove that you are the victim of a true financial hardship, such as a decrease in wages, job loss, or medical condition that has altered your ability to make the same income as when the loan was originated. Divorce, estate situations, etc… also qualify. There are some exceptions to hardship now, but for the most part the bank or investor will need to verify some type of hardship.

1.) If you let your home go to foreclosure you are done with the situation and you can walk away with a clean slate. The reality is that this couldn’t be any farther from the truth in most situations. You could end up with an IRS tax liability and still owing the bank money. Let me explain. Please keep in mind that if your property does go into foreclosure you may be liable for the difference of what is owed on the property versus what is sells for at auction, in the form of a deficiency balance! Please note this is state specific and in most states you will be liable for the shortfall, but in some states the bank may not always be able to pursue the debt. Check your state law as it varies widely from state to state.

Here is an example of how a deficiency balance works:

If you owe $200,000 on the property and it sells at auction for $150,000, you could be liable for the $50,000 difference if your state law allows it.

Not only could you be liable for the difference to the bank, but in some situations you could also be liable to the IRS! Although there are exemptions (mostly for principle residences) under the Mortgage Debt Forgiveness Act, there are times when you could be taxed on both a short sale and a foreclosure, even in a principle residence situation. Since the tax code on this is a little complicated and I am not a CPA, I advise always talking to a CPA when in this situation as you are weighing your options. Banks and the IRS can go as far as attaching your wages. Not to mention if you let your home go to foreclosure you will have that on your credit, as well.

Guess What? A short sale can alleviate your liability to the bank, in most situations. There are also exceptions to this, but in most cases banks are releasing homeowners from the deficiency balance on a short sale.

2.) There are no options to avoid foreclosure. Now more than ever, there are options to avoid foreclosure. Besides a short sale, loan modifications along with deed in lieu are also examples of the many options. In most cases (but not all) a short sale is the best option. Either way, there are more options today than there have ever been to avoid foreclosure.

3.) Banks do not want to participate in a short sale, or, it is too hard to qualify for a short sale. Banks would rather perform a short sale than a foreclosure any day. A foreclosure takes a long time and creates a huge expense for the banks; a short sale saves both time and money. In working with some of the biggest lenders and servicers in the country they have told me that on average they net 17-25% more on a short sale than on a foreclosure. A testament to this is the financial incentives now being offered by banks, and how much the entire process has recently changed to try and streamline the process for all parties. Banks more than ever welcome short sales. Qualifying for a short sale is easier than you think, you need to have a true financial hardship, or a change in your finances and your house has to be worth less than what you owe on it. Not only do consumers, but banks also now have government incentives to participate in short sales.

4.) Short sales are not that common. At this present time, short sales range from 10-50 % of sales in various markets and it is predicted that in 2013 we will have more short sales than any other year, to date.  One of the biggest reasons is that MHA(Making Home Affordable expires December 2013). Many of the Government incentives like HAFA, will expire the end of this year. Due to economic changes in the last few years, this is something that is affecting millions of Americans. Short sales are in every market, and are not just limited to any particular income class. This has affected everyone from all facets of life. A short sale should be looked at as a helpful tool, not a negative stigma.That is why the government is offering programs that actually pay consumers to participate in short sales. It is not just affecting one community; it is affecting communities and consumers across the nation.

5.) The short sale process is too difficult and they often get denied. Though the short sale process is time consuming; it is not as difficult as the media would have you believe. The problem is that most short sales are denied because of a misunderstanding of the process. It is true that if the short sale process is not followed correctly there is a good chance of getting denied. An experienced agent knows how to avoid this. Short sales require a lot of experience, and a special skill set. If you are looking to go the option of a short sale make sure your agent is skilled and experienced in this area.

6.) Short sales will cost me money out of pocket. A short sale should not cost you any out of pocket money. In fact, you could get between $3000-up to $30,000 to participate in a short sale. In many ways, a short sale may put you in a better financial position than prior to the short sale. Almost every short sale program now has some type of financial incentive for the home owner, as long as it is a principle residence, and we are even seeing relocation money being paid on some investment/second homes. As a seller of a property you should never have to pay for any short sale cost upfront to any professional service. Realtors charge a commission that is paid for by the bank. In most communities there are also non-profits and HUD counselors who can help you with foreclosure prevention options for free. The only potential cost you could incur is if the bank would not release you from a deficiency balance in the short sale, which is happening less and less now.

7.) If I am behind on my payments, I can perform a short sale any time. The farther you get behind on your payments, the harder it is to get a short sale approved. The closer a property gets to a foreclosure the harder it is to convince the bank to perform a short sale. As they get closer to a foreclosure sale more money is spent, thus deterring them from doing a short sale. If you think you need to perform a short sale, time is of the essence; the sooner you start the process, the better. Waiting too long can trigger the ramifications of a foreclosure, losing the ability to do a short sale as a viable option.

8.) I have already been sent a foreclosure notice so I can’t perform a short sale. For the most part just because you received a foreclosure notice or notice of default it does not mean that you do not have time to perform a short sale. The timeline and specifics do vary from state to state, but having done short sales all over the country, I have seen banks postpone a foreclosure to work a short sale option as close as 30 days prior to the scheduled foreclosure auction, but the longer you wait the less chance you have. If you have received a legal foreclosure notice, please reach out to a professional right away. The longer you wait, and the closer you get to foreclosure, the fewer options you have. If you have received a notice to foreclose this means the bank is filing paperwork and starting the process to take legal action to repossess the house. You still have time at this point to prevent foreclosure, but do not hesitate! The closer you get to the foreclosure date the harder it becomes to negotiate with the bank for whichever option you choose.

9.) I was denied for a loan modification, so I know I will get denied for a short sale. Short sales and loan modifications are handled by two separate departments at the bank. These processes are totally different in approval and denial. If you got denied for a modification you can still apply for a short sale; in some cases you can get a short sale approved faster than a loan modification, as some loan modifications are denied because they cannot reduce the loan low enough based on the consumers income.

10.) If I go through a short sale I cannot buy another house for a long time. The time to buy another house depends on your entire credit picture and can vary from 2-3 years. Fannie and Freddie just came out November first and said a homeowner may be eligible two years after a short sale to repurchase. There are even a few FHA programs that allow for a purchase sooner than that, but the guidelines are fairly strict. Some regional and local banks will finance 16-18 months after a short sale, but the interest rate will more than likely be higher than one of the national chains, and this is based on their specific under writing guidelines.

These are just a few of the common myths surrounding short sales and foreclosure. With the options available today, no homeowner should ever have to go through foreclosure, and hopefully this information can help a few more homeowners think twice before walking away from their home not realizing the possible long term ramifications a foreclosure can have.

SOURCE: http://www.kcmblog.com/2013/02/06/short-sales-10-common-myths-busted-2/

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