Finding the Best Mortgage

As rates are inching up but still very affordable, buyers should remember that there is an alternative to a fixed rate mortgage that can provide the lowest cost of housing for the homeowners who understand the parameters. finding best mortgage.jpg

A $300,000 fixed-rate mortgage at 4% has a principal and interest payment of $1,432.25 per month for the entire 30 year term. A 5/1 adjustable mortgage at 3% has a $167.43 lower payment for the first five years and then, can adjust, up or down, based on a predetermined index.

Another interesting fact is that the unpaid balance on the ARM at the end of the first five years is $4,624 lower than the fixed-rate mortgage. The total savings in the first five years on the ARM is $14,669.00.

Adjustable rate mortgages are not the right choice for everyone but buyers should at least consider the options based on their individual situation. It could be an obvious choice for a buyer who is only going to be in the home for five years or less.

Use the ARM Comparison worksheet to see what possible savings you could have based on your actual numbers. A trusted mortgage professional can help you to understand the advantages and disadvantages based on your situation. You need the facts to make the best decision.

Things That Kill Your Credit

Some people take their credit for granted and don’t start paying attention to it until they need it. The problem with this is that it could delay if not altogether cause the loan to be denied. iStock_000050117608_250.jpg

The most common issue is not correcting items on your credit report. A large majority of credit reports have errors but not all of them are critical. Since it takes time to remove them, it is a good practice to review your free credit reports from each Experian, TransUnion and Equifax once a year at

Another problem is making late payments. One 30-day late payment could be enough to cause a borrower to pay a higher interest rate or even be denied a loan. Payments have a due date and even when they allow a few days before a late fee kicks in, if it isn’t on-time, it is late.

Maxing out credit cards is another big problem. Ideally, a person wants to have an outstanding balance of no more than 30% of their available credit. As the percentage of available credit decreases, the credit score will go down.

Bad credit can not only keep you from getting the loan you want, it can raise your rates on the insurance you buy. In a study released by the Consumer Federation of America, people with good credit paid less than people with average and poor credit. Their results indicate that some customers with poor credit scores were charged about twice as much as those with excellent scores.

A prudent idea if you are going to be moving to a larger home is to get pre-approved with a trusted mortgage professional before you sell your current home. Occasionally, sellers find out after they’ve sold their home that they can’t qualify for another mortgage.

Wayne Gretzky and Customer Service

14 Nov 1981, New York, USA --- Wayne Gretzky, of the Edmonton Oilers, controls the puck during a game at Nassau Coliseum on Long Island in New York. --- Image by © Bettmann/CORBIS

“Don’t think, React!” That was the daily advice of my Junior High School basketball coach, Mr. Korowin. He believed that if we spent too long pondering the next move on the court, we would be prone to mistakes, indecisiveness, and poor judgment. For us, gangly eighth graders, it may well have been excellent advice.

Better advice might have been to learn to be proactive rather than reactive. Being proactive means we’re taking charge of our situation, trying to be a bit in front of the wave, so to speak. Proactive people are taking control of today.

But what if we could anticipate the next occurrence on the court: the next pass, the next cut, the next shot? Wouldn’t we be better players and make better decisions? Hockey great, Wayne Gretzky, once explained that the greatest players didn’t go to the puck, they went to where the puck will be. Anticipation. Proactive playing? No, Gretzky showed us something new. Gretzky gave us PREactive. Maybe a little too much for an eighth grader.

Customer Service is like basketball and hockey. While it is better to react than to do nothing, it is much better to be proactive than to simply react. Being proactive was a great idea when it rose to prominence in the 90’s. In today’s fast paced world, however, being proactive isn’t enough. We need to be preactive. We need to carefully anticipate what is coming down the line and take definitive action to insure success and prevent upcoming problems.

Conceptually speaking, this is great. True pre-activeness, however. has some foundation beneath it. In order to be preactive you must do four things:

1) Know your stuff. It’s difficult to know what’s coming when you don’t know what’s happening. The lesson is to be knowledgeable about your product or service – your stuff. As your customer, I’m not sure you can help me, or anyone else if you are not familiar with your product, tools, systems or resources. Mastery of subject material is the base upon which you build preactive customer service (or even halfway decent pro and reactive service).

2) Know your customer(s). This “customer(s)” thing is written in both the singular and the plural so that you understand that you not only need to know your individual customer, but also customers (people) in general. Our primary focus should be on what our people want and/or need. Our ability to preact is completely dependent on us having a firm handle on what we do and for whom we do it. While this knowledge aids us in serving our customers, the only real way to provide the best service to an individual is…

3) Ask, Probe, Clarify, then begin to Anticipate. It’s not possible to give someone what they want/need without actually knowing what they want/need. We can’t even be REactive without this knowledge. To be PREactive, however, an in- depth examination of our individual customer is needed. If we know our business completely and know our customer thoroughly, we have the ability to anticipate what we can do to provide the best service possible. Routine service is just that: routine. The best customer service is individual, focused and unique. Soon, it becomes anticipatory.

4) As Daniel Burrus says, in his book Flash Foresight, being PREactive is both anticipatory and opportunity based. It is working from the inside-out, as opposed to being ruled by the things that happen from the rest of the world. It is creating change rather than having to change.

We live in a world of Crisis Managers. For some it is almost a badge of honor. Being preactive lets us be Opportunity Managers. That would make a great customer service model.

Anyone (well, most anyone who tries) can give reactive customer service. While reactive service is okay and proactive service is better, I think most of us prefer someone who isn’t making us ask for help, or beg for service. I’m more satisfied when my service provider actually looks at my needs – my best interest and anticipates how they can help.

The greatest service providers, places like Nordstroms and the Ritz Carlton, understand that this phenomenon does not just happen without effort. That’s why they work at it daily. We could do the same.

John Ruskin, English author, poet and artist once said, “Quality is never an accident. It is always the result of an intelligent effort.” So let’s work on our service, let’s skate to where the puck is going, let’s be preactive.

I’m sure Mr. Korowin would have liked that better anyway.

More Home for a Lower Cost of Housing

What if you could live in a larger and possibly newer home for less than you are currently? Would you consider moving? Do you want to hear more?

QUALITY COSTS3.pngInterest rates, while they’re expected to go up, actually took a small dip and are still hovering at the 4% or below mark for a 30 year mortgage and almost one percent less for a 15 year term.

Let’s assume that you have a $225,000 mortgage currently at 6% which has a principal and interest payment of $1,348.99. With a 4% rate, you could have a $282,561 mortgage with the same payment. A $57,000 more expensive home could help you get what you need most such as more square footage or a different location or a newer home.

If you’re going to be making that payment for years to come, why not allow lower interest rates to help you get the features you want without having to necessarily pay a higher payment. Taking that logic a little bit further, let’s see how utilities can make a difference too.

A newer home could easily have lower monthly utility costs than your current home due to being more energy efficient. Construction materials, windows, doors, insulation, modern HVAC systems and energy efficient appliances all contribute to lower utility costs. A new home with these advantages could easily save a homeowner up to 25-50% on utilities for the same size home.

The concept is simple: get the most home you can for the amount you spend on the payment and utilities. It will take some investigation and your real estate professional can help.

Get Ready for College

rental advantages.pngOne of the important things as a parent is to plan for their children’s education. Let’s look at two different approaches: a savings account or investing in rental real estate.

Assuming your child is five years old and you start putting $250 a month in a savings account earning 2%, in 13 years you’d have $44,497.41 to pay for their college. Anticipating that isn’t going to be enough, you’d have to save $500 a month to end up with $88,995.

Another way would be to make a lump sum contribution of $20,000 today in a mutual fund earning 5% that would be worth $37,713 in 13 years. You’d have to make a $47,196 initial contribution to end up with the same $88,995.

An alternative to savings would be to invest in a $100,000 home in a good area. Assuming a three percent appreciation and rent of $1,000 a month, an initial investment of $23,500 could have a future wealth position of $83,838 at the end of 13 years.

Obviously, this is just an example of why rental homes are the IDEAL investment providing Income, Depreciation, Equity build-up, Appreciation and Leverage. While rentals certainly have more risk and management than a savings account, they do provide an opportunity for a higher rate of return.

If you’re concerned about paying for college tuition in the future, it is certainly worth investigating the possibility of investing in rental homes today.

Wait a Year…It Won’t Matter?

There is a frequently quoted expression “more money has been lost from indecision than was ever lost from making a bad decision.” Regardless of the extent of its accuracy, most people can recall when procrastination has cost them money. 2015-16-250.jpg

There are markets so short of inventory that buyers have become frustrated after losing bids for several homes and have decided to wait until more homes come on the market. In the meantime, the shortage of homes is driving the prices up more by the month.

There are buyers who can’t find what they want for the price they want to pay and think that waiting will somehow change things. In some cases, what they want just keeps moving farther and farther away from them.

The other dynamic in play is, of course, the mortgage rates. While they’ve remained low for several years, most experts agree that they’re going to rise; it’s just a matter of when. If you look at what positive increases in both of these would do, it becomes apparent that waiting will matter.

A $250,000 home purchased today on a FHA loan at 4% for 30 years will have a principal and interest payment of $1,151.76. If a buyer were to wait a year and the price increased 5% and the rate went up by 1%, the payment would increase by over $200 a month. In a seven year period, the increased payment alone would cost the buyer over $17,000.

Use the Cost of Waiting to Buy calculator to see how much it will matter based on the home you want to buy and what you think the prices and rates will do in the next year.

George/Mary Ann Was Right!

Screen Shot 2015-08-01 at 10.01.25 PMIt’s been one of those weird weeks. Torn. That’s what I’ve been. Torn. Yes/No, Too Old/Just Right. Shoulda/Coulda/Woulda. What’s he talking about?

I’ve been doing two things this week: booking classes for the rest of 2015 and trail running lots of miles while focusing on getting extremely fit. Outside of those things and my wonderful evenings hanging out with my wife, Linda, not much else is happening. In a lot of ways I like that. Keep it simple, right? Well, both of those things have been going so well that the overriding theme of the week, at least in my mind, has been, “Why wasn’t I doing these things twenty years ago?”

Twenty years ago, had these activities been squarely on my plate, I could have “been a contender, I coulda been somebody.” Well, I was somebody twenty years ago and still am, but maybe you know what I mean. I think it can be difficult in life to find new passions in your, so called, twilight years. There is a part of the brain that says, “you’re doing well, you’re having a blast, but guess what? You are 63 years old and you can’t do this for much longer. You missed your chance.”

It’s the classic devil-angel confrontation (see picture above).

Screen Shot 2015-08-01 at 9.54.51 PMGeorge Eliot said, “It’s never too late to be what you might have been.” George Eliot, by the way, was really named Mary Ann Evans. George/Mary Ann was an author, probably most famous for the book Silas Marner. Well, George/Mary Ann not only hit the nail on the head, but showed up right on time. It is NEVER too late to become what you might have been, it is NEVER too late to have passion for life, it is NEVER too late to maximize the moment. Take THAT, devil shoulder!

So with George/Mary Ann firmly attached to the winning shoulder, here’s what I did this week: I booked five classes for the remainder of 2015 AND four for 2016. I will, by weeks end, run 90+ miles for the seven days, the most in AGES. I have entered my first Ultra Marathon, the North Face Challenge 50K (31+ miles) in December. And…… I feel like I’m just getting started. Busy ass, trail running Rich.

Yeah baby, we’re on a roll. And what do you do when you’re on a roll?

You keep rolling. 

It’s Hard to Imagine

iStock_000064771413_300.jpgMortgage rates below 5% since 2009, you’d think any homeowner who should refinance would have already. However, it is estimated, there are approximately 6.5 million borrowers who would benefit with significant monthly savings by refinancing.

Rodney Anderson of Supreme Lending, on his weekly radio program, described a recent pipeline meeting where they reviewed every pending mortgage application his company was processing. They had seven refinancing applicants whose current mortgage was over 9% and twelve with a rate between 7% and 9%.

“Some 550,000 American homeowners with a mortgage could save $500 or more each month by refinancing at today’s rates. Over three million could save at least $200 per month.” said Ben Graboske, CTO with Black Knight Financial Services.

Getting a lower interest rate should be reason enough but eliminating the mortgage insurance should make the decision a no brainer. With increased home values, the loan-to-value ratio may no longer require mortgage insurance which would add additional savings.

Homeowners need solid information about what their home is worth and whether they’d benefit from refinancing. The most reliable solution is to talk with a qualified mortgage professional. The internet is a great place for generalized info but each person’s situation is unique. Call if you’d like a recommendation of a trusted mortgage professional or would like to know what your home is worth.

Converting Leads Two Minute Tip 38 Part 1 of 2

Whether you are a new agent building your business or an established agent keeping your database fresh, maintaining a flow of potential customers is crucial to your success.

Attracting leads is key, but if you don’t have effective systems for converting them into closings, you’re leaving money on the table.
So let’s take a minute (or TWO….) to look at two of the four steps to successful Lead Conversion. We will complete the four in Tip 39.

Grilling Safety

iStock_000065187147-250.jpgMore people grill in July than any other month. While grilling is all about good food, fun, friends and celebrations, it is important to make sure that accidents don’t interrupt your activities. Approximately half of the injuries involving grills are thermal burns. If you work with fire, there’s a chance of getting burned.

  • Only use BBQ grills outdoors and in ventilated areas.
  • Place the grill away from home or anything that could be flammable.
  • Keep grill stable.
  • Keep fire under control.
  • Keep children away from grill.
  • Never leave the grill unattended.
  • The grill lid should always be open before lighting it.
  • Grease should not be allowed to build up in the grill.
  • Use long-handled utensils.Gas/Propane
  • Check the tank hose and connections for leaks before using it for the first time each year by using a light soapy water solution to see if bubbles appear.
  • If you smell gas when the grill is lit, move away from the grill and call the fire department.
  • If the flame goes out, turn off the gas for 15 minutes and open the lid before re-lighting it.Charcoal
  • Never add any starter fluid or other flammable liquid to a fire.
  • Only use charcoal starter fluid and not gasoline, kerosene or other flammable liquid.
  • Keep starter fluid away from heat sources and out of reach of children.
  • Electric charcoal starters do not use fire but have a coil to ignite the coals.
  • When finished cooking, close off the grill vents to suffocate the fire and save some of the remaining charcoal.

Practice safe grilling and enjoy the occasions to cook outdoors and share with your family and friends.