How do you handle your mistakes?

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Savor your mistakes, let them shape you.

I’ve been thinking about my Dad the past couple days, most likely because my parents just watched our kids for a weekend. As my thoughts drifted from how fortunate I’ve been to grow up in a loving family it also made me realize that it isn’t the happiest of times that I’m going to remember as the years pass.  Sure, I’ll remember those too but I’m more drawn toward the ‘tough’ love times and how they shaped who I am.  The times where my normally gentle and lighthearted father was overwhelmed with frustration and anger.  It’s those moments that resonated years later and took a foothold in my mind, leading me to shape how I wanted to act as an adult.

In the big scheme of things, how I conduct myself both personally and professionally and my views on life were directly affected by the mistakes of my youth and how I moved on from them.

As I continue in my profession for the 14th year I have realized something as well.  The professional mistakes, just like those teenage acts of lunacy are the moments that irk me.  I cringe when I think about something I’ve done that is stupid, overlooked or simply lacked forethought.

It may sound crazy, but I am thankful for these moments and love that they make me feel regretful. This emotion has been a great driver to help perfect my profession.  In anything we spend time on, it should be worthwhile.  In order to be worthwhile personally, I want to do everything in my power to improve day after day and with each interaction.  If things always go smooth, there would be no catalyst to change or grow.  I love taking a break like anyone else and simply enjoy doing nothing.  Some of my favorite moments are exactly that!

My love of doing nothing helps me keep a running thought in my head. “If I choose to put energy into this, I want to give it 100%”  When I work towards 100%, that includes improving.  Thank goodness I’ve made enough mistakes to understand, there is always something more to work on.

I’ll never be perfect, but I can certainly try.

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Bad Appraisal? Here are a few options.

A few months back I was referred a client “Jim” and his wife.  They had recently had their loan declined with a larger bank because of a low appraisal value.  This left them frustrated for a few reasons. First, they were sure their home was worth more than the value they were given and second, they felt frustrated that they had just spent $400 to have this appraisal and had no way to fight the value.

What does one do in this situation? It can feel like you’ve been ripped off and now are no better off than when you stated the process. Well, there are two choices and neither come with guarantees. In the off chance, this happens to a client of mine here’s what we do:

1. Appeal the appraisal.  Most lenders have some sore of appeal or review process in place, allowing you, the borrower and/or a Realtor to show why they feel the value is inappropriate.  The best way to do this is to find comparable homes that have sold more recently or closer to the home than the homes used in the appraisal. This most likely won’t get you the higher value you are looking for but will offer some peace of mind with an explanation for what was used to determine the value and why.

2. Take your chances with a new Lender.  Now this one, I rarely, if ever advise. The odds are not in your favor to have an appraisal come in higher.  The quality control process now leaves a lot to be desired, but overall values tend to be fairly consistent.

When Jim and I talked about his situation, we realized two things very quickly.  First, the other Lender did not offer an option to appeal the value and two, the loan officer that he was working with lacked the ability to think critically about this situation.  In fact, with the appraised value Jim had gotten, he could complete his refinance by moving into an FHA refinance program instead of the conventional program he was told to pursue.  Most loan officers are aware of the higher loan to value (or percentage of homes value that can be lended) with this program.  Jim just had bad luck with a poorly educated professional.

Here’s how Jim was able to obtain his refinance. After going over the risks of paying for another appraisal, we decided together that the risk was low for the benefits of the refinance.  The appraisal came back around the same value as the first mortgage, but that was all we needed to combine his first and second mortgages into one new mortgage at a lower interest rate as well as save Jim and his wife over $350 per month.  This gives Jim a lot of room each month to enjoy his new boat and do some Walleye fishing in Detroit Lakes.

Sometimes, the value of the appraisal isn’t the problem, sometimes it’s simply finding the right solution for the facts at hand.

Have a great week!

 

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Contract for Deed? Sometimes it’s the most sensible option.

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There are many ways to sell a house and for most of them, I highly recommend a licensed Realtor. Every once in a while,  a client of mine will bring up a situation that’s unique.  I enjoy these one off situations because it’s a exercise in creativity as well as a chance to offer direction and education. “Cody and John” were very recently married when I first met them.  They were also expecting their first baby soon and needed to move out of the tiny home that John owned.  Here was the problem: John bought his home at the peak of the market.  Three years later, he owed more than the home was worth and wanted to avoid a Short sale with the bank to protect his credit. Fortunately, Cody had a friend looking to buy a house but couldn’t get approved for a traditional mortgage with her credit history anyway.  This left both sides with an obvious solution: Having Cody’s friend buy the house from John on Contract for Deed. This was when John called me to see how to go about this. I am not an expert on Contract for Deed’s.  My expertise is in Mortgage’s themselves. Fortunately, I have worked with many different professions and situations over the past fourteen years and sent them to a former client of mine who specializes in real estate law.  Scott could walk Cody and John through every portion of the Contract for Deed, ensure they had every legal protection in place that they would need and complete the transaction for them.  This is when I got to do my job and walk them through buying a new home for their budding family. Cody, John and their little daughter are happily set in their new home.  I still get to check in with each of them for pictures of their growing daughter and share parenting stories. It sounds like #2 won’t be too far off either… Have a great week!   -Matt

Buying a home: The first and most important question to ask.

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Like many clients I work with ‘Barbara’ wanted more than anything to be a homeowner.  She had taken the time to save up a down payment and like many home shoppers, had started window shopping online in her spare time.

When I first spoke with her, she had a pre-approval from a large bank stating what price home she could buy.  The question posed to me was what interest rate she could get and what the closing costs would be for the type of home she was shopping for.  Important information that I was happy to provide.

I had one question for her: How much are you comfortable paying each month for a mortgage? I ask every home buyer this question before providing a pre-approval for a few reasons.

1. Your Budget is important!  Home ownership comes with many expenses that renters aren’t accustomed to.  Water bills, trash bills, higher energy bills.  Recognizing these costs before buying will keep your budget in line and avoid any potential of being ‘house poor.’

2. Online Calculators don’t give you the full information. Many leave out Mortgage Insurance (required in most cases if you have less than a 20% down payment) as well as not estimating property taxes or homeowners insurance.  This can lead to searching for a home that is really out of your comfort range.

3. Once we know this number, we can tailor the home search and mortgage process to meet your individual needs.  This process is fluid and based in communication between you and your mortgage professional.

Barbara spent the greater part of year finding the house that fit her budget and her needs, we traded emails back and forth any time she had a question or wanted to know the exact payment of a property near the top of her budget and once we closed on her new home, the smile on her face was worth $3 Million Dollars. Our hard work and cooperation paid off by getting her a home that not only gave her everything she wanted but would keep her from worrying about making a payment each month!

I live to hear “I love my house!”

 

-Matt

Financial Principles 101: File under Duh-uh.

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Have you seen this clip from Saturday Night Live with Steve Martin: Don’t Buy Stuff You Cannot Afford?  If you haven’t, it’s a quick two minutes and I find it absolutely hilarious.

To me, the funniest part about his entire sketch is pretty simple, people really do look at their finances in the way this couple, played by Steve Martin and Amy Poehler.  Obviously, not in such simple and direct terms.

If you look at the nature of credit cards as an example. Many households and individuals take this approach with money.  They sense a need (most likely a want), buy the item then put it on their credit card and plan on paying it later, when they have the cash. As this becomes ingrained as a habit, the minimum payments end up being made.  This is the one of the most effective ways to throw away your hard earned money.

Let’s use an example of a $2,000 vacation put entirely on your credit card.  The card has a rate of 7.99% and you start making the minimum payment of $15.  If you continue down this path, when all is said and done, you will have paid the credit card company $4,943.00!

Here’s a quick tip that helps me: When I’m in a mood where I want to purchase something before having the money.  I remind myself that if I put it on a credit card without a clear plan to pay off the balance, the item I’m looking to buy is costing me double the price.  That vacation package was a steal at $2,000 but it’s a ripoff at $4,000.  I could have gone to Europe instead of Arizona!!

The two other mental triggers that help me:

1. Will I survive without it (medical surgery? no.  A new blender? yes.)  NEED versus WANT.

2.  What mood am I in?  Studies have shown time and again that mood alters our buying habits.  If I don’t absolutely need it, then I sit back and wait for two days to reduce impulse buying.  I try not to buy things when I’m in a tired or bad mood.  Rest will make me much happier over the long term than a new CD.

Hope that video gave you a chuckle!

 

The Golden Rule

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As a parent of two young children, my wife and I often find ourselves searching for the best way to handle a situation.  We are quickly discovering two very important lessons:

1. Always evaluate your method, good or bad and see what can be improved.

2. Positive Attitudes are infectious.

I will also tell you that we didn’t come by these two rules by getting them right the first time, the fourth time or even the twentieth time.  Moreso it’s what we strive towards.

The second one is what I want to focus on today.  We have recently discovered in the midst of yet another three year old’s battle that if we take a kind and positive approach to a tantrum, they become fewer and farther in between.  We have also found that if we develop routines and habits that get our point across in a kind way, that the response and actions tend to be reciprocated over time.  That doesn’t make it easy to do in the heat of a moment, but it does give us drive to continue this path of parenting.

I’ve heard this called the “Law of Reciprocity”, the inherent desire to want to help someone whom has helped you. I like to see it in a less ‘me’ focused ideal of the Golden Rule: Do onto others as you would have them do to you.

I see this as the key to life in many ways, and our professions tenfold.  Think about this for a second, we all strive to feel fulfilled in our jobs.  It’s natural to want to be in a job that you enjoy.  Have you ever felt bad about yourself or your job when you have gone out of your way to help someone?  Odds are that you felt pretty good about yourself, and that person you helped will never forget you.  Translate this into your job, do you think a client will recommend someone that has gone above the expected call of duty to help them out?  

Try it out, take one client or conversation today where an opportunity to help out presents itself and act.  Focus on how it makes you feel.  Felt good, didn’t it.  Now rinse and repeat with your spouse, your children or simply an acquaintance. 

There’s a reason I love my job, I get to help people everyday.  At the same time, when it comes down to it, I could love any job for the same reason.

Short sale? When can I buy another house?

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Over the last several years, especially in the wake of what I like to term as the foreclosure crisis, many homeowners found themselves in a situation where selling their house for less than they owed on the mortgage was the only option.

This is commonly referred to as a short sale and this will show on your credit report. When Julie (name changed) was referred to me from her Realtor, she had been told so many different waiting periods before she could buy that she didn’t know what to believe anymore.  I’ll agree with her, it can be confusing.

The time frame varies between programs, anywhere from no waiting period to 7 years!  Julie was told that she would need to wait 3 years. In her case this was wrong and she moved into her new home less than one year after her short sale.

Here’s why:  FHA, Conventional and VA programs all have different requirements.  Julie was able to take advantage of the FHA program that allows immediate purchase of a new home as long as the mortgage on the prior home that was sold has a payment history that was on time for the prior 12 months.

Here are the programs and their timelines as of today:

Conventional:

1. 7 years with a down payment <10%
2. 4 years with 10% down.
3. 2 years with 20% down.

FHA:

1. 3 years if the prior mortgage had any late payments.
2. No wait if the prior mortgage was paid on time and the borrower can show specific hardship reasons for the short sale.

VA:

1. 2 years in most cases.
2. No wait if the prior mortgage was paid on time and the borrower can show specific hardship reasons for the short sale.

As always, talk to a professional to ensure that you meet all the guidelines in addition to this general synopsis. That’s what we are here for, to help you understand and walk through each part of this process!

-Matt

VA Mortgages and a Certificate of Eligibility

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So, you are Military Veteran.  First off, Thank you so much for your service to our country.

Typically by the time a Veteran calls me, they already have received their Certificate of Eligibility, allowing them to pursue the pre-approval for their new home purchase.  There are a million places online that go over the benefits of a VA Mortgage yet very few walk through how to obtain the Certificate if you don’t have it.

To be clear, the Certificate of Eligibility is not your service record, it is a very specific form that someone receives from the VA (Department of Veteran’s Affairs). When I spoke with Debra (name changed), she thought she had her Certificate of Eligibility when we first spoke.  She was mistaken and that led us on a search to the quickest and fastest way for obtaining one. Here’s how  we got her Certificate:

There are 3 main options:

1. Call a local Lender.  In most cases, a good Lender can obtain this online.  If not…

2. Have your Lender send in the request – With this option, you will have to fill out a couple request forms, send these forms along with the proper service records to your Lender and wait while the request is processed. In many cases this can take up to a week or longer.

3. Call your regional VA Center.  From my conversations with the St. Paul MN location,  most Veteran’s can go directly to the center and walk out with their Certificate of Eligibility the same day.  My advice would be  to skip option 1 altogether.  It cuts out a middle man and a delay.  The sooner you have this form in your hands, the easier the mortgage process will be.   Here is a link to the VA offices: http://www.benefits.va.gov/benefits/offices.asp

Once you have this in hand, then it’s time to call your local mortgage professional and take advantage of one of the most affordable and best mortgage options on the market today. A well deserved benefit for the Men and Women that serve our country!

Have a great week!

Matt

 

 

What I look for in a professional

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It occurred to me the other day that how I choose to run my business is a direct result of what I value with other professionals I work with. I would have a very difficult time paying anyone for their services if their business ethos differs from mine in a major way.

I’ve narrowed it down to a few key traits.

1. Communication –

When I have a question for my financial planner. my accountant or the painter we’ve used for our home on numerous occasions. I send over an email, a text or simply give them a call depending on the immediacy of the question.  We are all busy people and I would never expect an instantaneous response but I do expect that if they don’t have an answer the same day that they will let me know when I can expect to hear back.

2. Expertise –

I don’t believe anyone will have every answer off the top of their head.  Simply put, no one is capable of knowing every single thing in a complicated profession. However, I do expect that they know how to go about getting accurate answers. The truest professional in my opinion has the confidence to say “I don’t know but I will find out for you.” or “I believe the answer is this, but let me confirm that so we are 100% sure first”.

3. Concern –

I could have labeled this one with several titles but it all boils down to this. I want to work with someone who is interested in getting to know me as a person. Not simply because they want to make new friends but because that deeper understanding of me as a client will help them assist and advise me more accurately than they could have otherwise.  I suppose one could also title it, caring about your client.

4. Trust –

The final item on my list is not a trait that a professional has per se.  This is s a culmination of the first three and the most important. I always try to listen to my instincts and if the first 3 traits are all met with integrity and honesty by the professional, then the trust I place in them is simply a byproduct of their approach.

I am willing to bet that if you look for those 3 traits within anyone you choose to do business with, you will be rewarded greatly with the relationships you foster and cut out hours of needless stress and worry.

That’s my two cents.  Have a wonderful week!

Mortgage terms are confusing!

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One of the first things I tell every one of my clients is that there are no stupid or silly questions!

Too many times, it is assumed that asking what a fixed rate is or how to get equity in a home is something that everyone should know.

The average homeowner will buy a home 2 or 3 times in their life.  I work with Mortgage’s every single day.  My point is this: You should not be expected to remember the terminology being used, the thousands of constantly changing requirements or details or what a specific program is called.

This is why you pay a professional to handle one of the biggest investments of your life.  You want someone that understands the language, the details and the requirements to ensure that everything goes smoothly.

That being said, there is one expectation you should have of anyone you work with and that is Translation.  This is the most important part of my job, being a Translator for my client.

Even though you may not know what DTI stands for or how to calculate it, I take the time to help you understand the concept of the term and explain it to you in every day English. I focus on educating my clients because I want them to understand each piece of the mortgage puzzle. Even if they may not be able to define amortization or remember the term rescission, they still deserve to know how to pay their loan down faster or why they need to wait three days after signing the papers to get a check.

I am here to answer your questions, to walk with you through the mortgage process step by step and answer every question you have and ensure you understand the answers.  I am a personal concierge to cater to every need you have in the mortgage process.  Let me translate for you.  No one expects me to speak Italian if I walk into a an Italian restaurant.  I don’t expect you to speak mortgage when you step into my office.