Overcome Limiting Beliefs

Everyone has something that is holding them back from reaching their full potential.  Some obstacle that if you could just get around everything would be better.  Sometimes it just takes someone else to help you see how to get over, under, around, or through the obstacle.  Reminds of the scene from Rocky, Adrian you’ve got gaps, but I’ve got gaps and together we have no gaps.

Tonight I watched Tony Robbins new Show on NBC “Breakthrough with Tony Robbins“.  The premise of the show is he changes peoples lives in 30 days.  The guy on the show tonight was paralyzed on what was to be the happiest night of his life, his wedding night.  He was at the reception and had walked over to the water and was dancing the next thing he new he was floating.  From that point he and his wife lost all of the dreams of their future.  He got to the point where he would just wake up take his pills eat a meal, and wait until the next meal and round of pills.  His wife had to help him with everything.  By the end he saw that he could do things by himself and for himself and his wife realized that she needed to let and make him do things himself.  Check out a preview clip of the show below.

About 12 years ago I had dislocated my shoulders multiple times within a short few moths.  My physical therapist was a quadriplegic.  He had to describe each and every exercise to me in great detail because we was not able to demonstrate or guide me in any other way than through his words.  He had to keep extensive notes on each patients progress most of the other therapists just typed out the notes.  He used Dragon Natural Speaking and had to dictate the notes to the computer along with all punctuation, returns, paragraphs, etc.  He told me that he had always loved physical therapy and he was not going to let his situation dictate what he could and could not do.

When I drop my kids off at daycare there is another dad that paralyzed from the waist down.  He drives his kids to daycare.  When he gets there, he reaches around behind him grabs his wheelchair and unfolds it onto the ground.  He lowers himself into the wheelchair and wheels around to grab both kids and takes them in.  He’s overcome the obstacles.

www.youtube.com/watch?v=yo_24_qTNac

In College at Indiana University I did Dance Marathon to Benefit Riley’s Children Hospital.  The Dance Marathon is a 36 Hour Dance-a-thon, no one i allowed to leave, or sleep, with just limited breaks.  It starts on a Friday night.  So, to add to the 36 hours, you’ve also been up since early Friday morning.  The last 5 hours it is very tough to stay awake  That’s when they bring in a bunch of the kids from Riley’s Children Hospital.  These are kids that are going through Chemotherapy, or have Leukemia and other ailments, yet they are so full of joy.  You realize that if they can find joy in this difficult time for them you have not right to be tired, or to even think about your problems.  It was great to seem them overcome.

The show reminds me of an old Parable of a Farmer and a Donkey:

Step It Up and Shake It Off

A parable is told of a farmer who owned an old mule. The mule fell into the farmer’s well. The farmer heard the mule ‘braying’ -- or -- whatever mules do when they fall into wells. After carefully assessing the situation, the farmer sympathized with the mule, but decided that neither the mule nor the well was worth the trouble of saving. Instead, he called his neighbors together and told them what had happened…and enlisted them to help haul dirt to bury the old mule in the well and put him out of his misery.

Initially, the old mule was hysterical! But as the farmer and his neighbors continued shoveling and the dirt hit his back…a thought struck him. It suddenly dawned on him that every time a shovel load of dirt landed on his back…HE SHOULD SHAKE IT OFF AND STEP UP! This he did, blow after blow.

“Shake it off and step up…shake it off and step up…shake it off and step up!” he repeated to encourage himself. No matter how painful the blows, or distressing the situation seemed the old mule fought “panic” and just kept right on SHAKING IT OFF AND STEPPING UP!

You’re right! It wasn’t long before the old mule, battered and exhausted, STEPPED TRIUMPHANTLY OVER THE WALL OF THAT WELL! What seemed like it would bury him, actually blessed him…all because of the manner in which he handled his adversity.

THAT’S LIFE! If we face our problems and respond to them positively, and refuse to give in to panic, bitterness, or self-pity…THE ADVERSITIES THAT COME ALONG TO BURY US USUALLY HAVE WITHIN THEM THE POTENTIAL TO BENEFIT AND BLESS US! Remember that FORGIVENESS--FAITH--PRAYER-- PRAISE and HOPE…all are excellent ways to “SHAKE IT OFF AND STEP UP” out of the wells in which we find ourselves!

Bill Phillips, previous owner of EAS had a fitness challenge where he challenged people to transform there body’s in 12 weeks.  During the 12 Weeks the winners usually found that not only had they transformed their bodies but they transformed their lives as well.  One of the biggest take aways I had was that time will never be right.  There will always be obstacles.  If you wait for the right time you will never get started.  You must take the first step.  Begin.

The Story is not where you start.  It’s Where you Take it.

Tony Robbins

What is your limiting belief?  What is keeping you from reaching your goals?  What did you think of the show?

Related posts from Indiana's USDA Home Loan Expert:

1. What Went Wrong in the Mortgage Market

History Shows That Now is The Best Time To Buy

In 1971 Housing Affordability was at its highest prior to this year. Meaning that this is the best time possible to buy.

Let’s Talk Affordability

The chart below plots two things: National Association of Realtors Affordability Index (green line) and 30 Year Fixed Rates (blue line). As you can see on the far right side you have the highest Housing Affordability and the lowest Rates. So, you have the lowest prices, lowest rates, and highest affordability.

What About the ’80′s?

In the period of 1979 to 1984 you have some of the highest interest rates on record.  Yet, still a lot of people purchased homes during that period.  The people that bought homes during that time did well 15 – 30 years later.  My Mother purchased her first home during that time period even though rates where in the 12′s to 18′s.  In 1982 Housing affordability was at its lowest ever.  Inflation kicked in 1975, and rates continued an upward trend through 1979.  So, the Gap between housing affordability and Interest Rates was very wide, the widest of record.

The Best of All Scenario’s

Today we have a very wide gap as well, but in a good way.  Presently because interest rates are so low, home prices are low, and housing affordability is up, the overall risk is greatly reduced.  If the risk was so great in 1982 and homebuyers did okay, how can someone look at the chart today and say that it is riskier than in 1982.

What About the Negative News?

That’s the best part if you are a homebuyer.  Trulia recently release a report Showing Sellers Continuing to Slash Home Prices.  This means you are getting an even better price on an already reduced house.  The Department of Housing and Urban Development (HUD) just released there July report card, “The Obama Administration’s Efforts To Stabilize the Housing Market and Help American Homeowners.”  This report card shows continued affordability in the U.S. Market.

Historic low rates continue to promote affordability: Families continue to benefit from the lowest rates in history on 30-year fixed mortgages.  Since April of 2009, record low rates have helped more than 7.2 million homeowners to refinance, resulting in more stable home prices and $12.9 billion in total borrower savings.

Simple supply and Demand suggest that since there is not as great of demand now, compared to during the tax credit, housing prices will decrease thus further increasing the affordability (Read Better Deal!)  There are still large amount of houses on the market and many more still in foreclosure.  Both Federal Housing Finance Agency and Standard and Poor’s believe that House Prices are showing signs of stabilizing.

What do you think housing prices and interest rates will do in the next 12 months?

Related posts from Indiana's USDA Home Loan Expert:

1. Using a USDA Loan to Purchase a Home After a Foreclosure
2. The Ides of March: USDA Just About Out of Funds
3. Minimum Property Requirements for a USDA Home Loan

What is the difference between the interest rate and the A.P.R.?

You’ll see an interest rate and an Annual Percentage Rate (APR) for each mortgage loan you see advertised. The easy answer to “why” is that federal law requires the lender to tell you both.  By showing both this can lead to confusion, especially to those First Time Homebuyers.

The Federal Reserve wants the APR to be a tool for comparing different loans, which will include different interest rates but also different points, fees, and other terms. The APR is designed to represent the “true cost of a loan” to the borrower, expressed in the form of a yearly rate. The problem is that there are many costs associated with a loan, that are not considered in APR.

What Fees Are Included In The APR?

• Loan Origination Fee
• Loan Discount Fee
• Other Lender/Broker Fees (Application, Underwriting, Processing, Tax Service Fee, etc.) – Anything paid to the broker or lender or affiliate of the broker or lender
• Odd Days Interest
• Mortgage Insurance Premium
• Title Closing Fee

While APR was designed as an attempt to make it easier to compare loans, it’s sometimes confusing because the APR includes some, but not all, of the  costs associated with a mortgage. And since the federal law that requires lenders to disclose the APR does not specifically declare what goes into the calculation, APR’s can vary from lender to lender and loan to loan.

What Fees Are Not Included In The APR Calculation

• Escrow Setup
• Appraisal Fee
• Title Insurance

Let’s Throw Adjustable Rate Mortgages In The Mix

The APR on an Adjustable Rate Mortgage (ARM), a loan tied to a financial index, like a 5/1 ARM, assumes the index will never change. The interest rate on an ARM is composed of the index and margin.  Because of the underlying assumption that the index will not move over the life of the loan, the APR can be grossly under or over stated on an ARM depending upon if the index moves up or down over the life of the mortgage.  ARM’s loans were created because the Bank does not have to assume the interest rate risk of a Fixed 30 Year Mortgage, allowing the consumer to get a slightly lower rate, and assume the risk that rates will rise.  These financial indexes have always moved over the course of a 30 year mortgage thus making the APR a difficult tool to compare a fixed rate mortgage to an ARM.

So, APR’s are at best inexact. The lesson is that APR can be a guide, but you need a mortgage professional to help you find the truly best loan for you.

Show What Should You Do?

You as a consumer need to look at two things when considering a mortgage loan

• The front end costs associated with obtaining the loan, not just those deemed pre-paid finance charges, and thus included in the APR calculation
• The interest rate, and the total cost of the loan over time.

Here is a Comparison of two different mortgages, both 30 year fixed rate mortgage.

The first mortgage has an APR of 5.03%, and the 2nd has an APR of 5.25%.  So, if you were to choose a loan simply based on the APR the typical choice would be the 1st mortgage; however, if you will be staying in the home less than 90 months (most loans are only held for 60 months) then the best choice is Loan 2, because the total cost is cheaper.

Make sure you are dealing with a mortgage professional that doesn’t just throw rates and fees at you over the phone. I’ll take the time to prepare a total cost illustration and determine that the loan you select meets your long term objective.

Related posts from Indiana's USDA Home Loan Expert:

1. The Good Faith Guarantee – What You Need to Know as a Borrower and a Realtor
2. Regulation Z Proposed Rule Would Mean More Cash to Close
3. Mortgage Tuneup

When shopping for a home, there are quite a few things that can snatch your attention.  When you look at a home, it’s very easy to fall immediately in love with it.  New homes are clean, decorated perfectly, and many are what you pictured in your dreams.  If you don’t shop the smart way though, you’ll end up like many other home owners and find faults shortly after you move in.

Look at the Size of Rooms

When you look at your potentially new home, you’ll want to check and see if you can fit your furniture in the way you want.  A lot of homes these days are configured so that the furniture will only fit in one position.  Often times, this leaves a television or other device in a weird location, sometimes making your furniture nearly impossible to fit through the doors.  This is surely something to bear in mind, as you certainly don’t want to have to buy entirely new furniture.

Think of Your Family Now and in the Future

You’ll also want to be sure that you get the right home for yourself and your family.  Even though you may be a young couple now, you may want to get a house with enough room in case you decide to have kids later on down the road.  If you don’t get a big enough house and end up having to move, you’ll find that moving with kids is a hard task indeed.  If you have babies when you move, you’ll find moving to be even more difficult.

Once your children start to leave home, you may want to look into getting a smaller house.  The choice is entirely up to you, and what will work the best for your needs.  Anytime you purchase a house though, you’ll want to think about the size of your new home and consider the future needs of your family as well.  This way, you’ll have everything covered for years to come and won’t have to look into getting a new home.

Look at the Extras

Things like a pool and a hot tub may be a great thing to have, although you should look into the money that regular maintenance will cost you as well.  There are a lot of things that may be great to have along with your home, although you should always look at long term costs before you purchase.

Location

Some prefer to live out in the country, while others prefer the city life.  Some prefer to be close to stores and such, while others prefer to be miles and miles away.  The location of a home is very important, and in most cases will have a big impact on the price.  Living in the city will cost quite a bit of money, although a home out in the country can cost just as much if there is a lot of land included with the property.  Keep in mind that location is very important for a USDA Home Loan.

Whenever you decide to buy a house, there is a lot of things that you’ll need to consider.  Buying a home is no easy feat, with a lot of things you’ll need to decide on.  If you give yourself enough time and plan out your budget and the type of home you want, you’ll have plenty of time to make that very important decision.  You never want to rush the process, as you could end up with a home that is less than perfect.  If you take your time and look at several different houses, you’ll end up in your dream home before you know it.

Related posts from Indiana's USDA Home Loan Expert:

1. Buying a Home For Your Family
2. Using a USDA Loan to Purchase a Home After a Foreclosure
3. Before You Sell: Is It Time to Remodel

The very best and most enjoyable reason to purchase real estate is having a home in which your family will live and grow together. There is a lot of fun involved in finding the perfect place for you and your family to call home. There is also a great deal of stress involved as well and that should not be overlooked.

Some things to keep in mind when searching for the perfect property for your family are the following:

1.  Find a Realtor: Finding a realtor or buyer’s agent that you are confident has your needs, desires, and best interests at heart. Your realtor can prove to be a lifesaver when you’ve reached the final hours before closing and the sky looks as though it’s going to fall. Your realtor can help you find the home that you simply cannot see your family living without.

2.  Establish a Budget:  Once you’ve found a real estate that you trust to help you find a home for your family it is time to identify the things that are absolute necessities in your search and those things you can live without. The most important thing to decide upon is a budget that you are comfortable living with.

3.  Identify Your Property Needs:  Once you’ve established a budget you need to decide the features that are important to meet the needs of your family. The number of bedrooms, bathrooms, square footage, and yard space. Do you need a fenced in yard or a basement? These things are important as they do affect the comfort and in some cases safety of your family.

4.  Determine Your Neighborhood:  Another important thing that must be considered when purchasing a home for your family is the neighborhood. This is more important than many people may realize. It is well worth having a smaller home in a neighborhood that is poised for growth rather than a larger home in a neighborhood that is in the state of decline or on the verge of the state of decline. Crime rates in the neighborhood and the school district are other things that need to be considered as well before deciding to view a potential home.

5.  Look at Several Properties:  You should also take the time to look at several properties before deciding on one property over another. The more properties you see, the better the chances are that you will actually find the one perfect property for the needs of your family home. The more homes you see the more you will learn about your likes and dislikes. You will also get ideas about possibilities and things that can be added on to the home you eventually select. Regardless, the more homes you see, the more choices you have when the time comes to make a decision.

6.  Decide on an Offer Price:  Never offer the asking price right away. Even if you are willing to pay the full asking price, offer something a little lower and allow some negotiating room. Be sure, if you truly want the house in question not to be insulting with your offer but make the offer just the same. Some things you may want to consider when you make your offer is how quickly you are likely to need a new roof, new flooring, new heating or air conditioning, and countless other improvements that may need to be made on the property. Each of these things costs money and they add up over time. If everything is fairly recent and in good working order you may want to consider that when making your offer as well.

You will find many houses along the way but few will reach out and impress themselves upon you as home. Those are the ones you should consider long and hard. Weigh the options, the prices, and your likes and dislikes. If you do all of this you should be well on your way to the home of your dreams.

Related posts from Indiana's USDA Home Loan Expert:

1. Home Buying Process for a First Time Homebuyer
2. Home Shopping The Smart Way
3. Minimum Property Requirements for a USDA Home Loan

Every consumer dreads shopping for a mortgage. Not only is the consumer afraid of paying a rate which is too high, they are uneasy regarding the right program for their situation. To make matters worse, they are totally confused about the rules of the mortgage interest rate “game.” For example, when asking a lender about their rates, the lender is likely to respond with a question: “Are you going to lock the rate or float?

Many consumers do not even know what these terms mean, let alone how they may apply to their particular home purchase or refinance situation. It is important to understand the meaning of the terms before we can more fully appreciate the nuances of the rate game–

• To lock a loan means that the lender will guarantee a rate for a certain period of time. For example, if you complete a mortgage application on June 1, the lender might lock the loan in at 5.0% and guarantee that rate as long as you close before the last day of July.
• To float a loan would be to complete an application without the lender guaranteeing any particular rate. You basically complete loan application with the idea that you will lock a rate sometime before settlement.

It is quite obvious that locking a loan or floating a loan involves risk. The risk is that rates will move in the future—during the period between loan application and settlement. If the applicant floats the loan, there is a risk that rates will move up before the purchase or refinance transaction is closed.  If the applicant locks the loan, there is a risk that rates might move down.  For a lender there is a very similar risk—if the loan is locked and rates go up in the future, the lender is subject to losing money.

Because the risk involves the movement of interest rates sometime in the future, the lender must find a way to mitigate these risks—otherwise consumers would not be offered the opportunity of rate protection through locks.  The lender does this by participating in a futures market.

The futures market enables a participant to sell a commodity sometime in the future. In this case, the commodity is a mortgage loan with particular characteristics (such as a conventional 30 year fixed) and a particular interest rate. It is no different than a farmer selling corn at the beginning of the planting season to mitigate the risk of the corn falling to prices which are below the costs  incurred to produce the corn. When the lender sells the mortgage in the futures market, that lender is guaranteeing delivery of the loan at a certain interest rate. Within the secondary markets that exist for mortgage loans, larger lenders pool many loans together to form mortgage securities.

The risk for the lender does not end with the selling of the mortgage loan in the future. What if the loan does not close? This could happen for several reasons, including a purchase agreement falling through or the loan not being approved. The lender has agreed to deliver a loan, and now the lender can’t. In a perfect world, the lender would now be liable for purchasing a similar loan and delivering it. If rates had moved down, it will cost that lender more money to purchase a replacement mortgage because the commodity is now more valuable. In reality, the lender guarantees delivery of a certain amount of mortgages that includes a pre-calculated amount of fall-out. The real risk involves major interest rate moves which would cause more or less fallout than originally predicted.

What does this mean to the consumer?  For one thing,  because locking in a loan involves risk to the lender, the consumer may be charged a fee up-front to lock the mortgage. The fee paid up-front may or not be applicable to the closing costs quoted. It is more common to pay lock-in fees for longer term locks (a 90 day is more likely to require a fee than a 15 day lock).

In addition, because locking a mortgage loan involves futures risk, the longer the lock period, the higher the rate quote.  For example, if a consumer would like to lock a loan in for 30 days, the quote may be 7.0%.  For 90 days, the quote may be 7.125%.  The shorter the lock period, the lower the risk to the lender.  Of course, consumers purchasing new homes are in need of the longest lock periods because of the longer delivery times associated with new homes.

The ultimate protection for the consumer?  This involves a lender offering a locked rate that will move down if rates move down before closing. The lender offering this option would have to purchase an optional delivery in the futures market which is more expensive and this cost is likely to be passed on to the consumer. Cap protection?

Related posts from Indiana's USDA Home Loan Expert:

1. Determining the Right Rate Lock Period
2. Rates and APR: What Do They Tell You
3. Boost Your Credit Score to Get the Best Rate

What’s Up with USDA Funds

With all the back and forth lately from USDA it would be easy to understand if people were just a little confused over whether or not a USDA Loan is available.

Round and Round

The past couple of months have definitely felt like a ride on a Ferris Wheel, first your at the bottom, they’re running out of money, you get to the top – they’ll issue revised commitments, half way back down no commitments and they’re out of money.  We are back at the bottom and on firm ground USDA will issue modified conditional commitments.  They will issue these modified commitments to the first 2.5 billion that gets submitted, that is through either the end of the Fiscal Year End, or until Congress pass Bill H.R. 4899 authorizing additional funds and an increased guarantee fee.

Why Your Are Receiving Mixed Answers from Others

The main reason that some loan officers are stating that USDA Loans are not available because their company is not set up with the right investors.  A lot of mortgage bankers warehouse lines have covenants that require them to have at least two sources to sell any product offered, with the recent shake up that is very difficult.  There is risk for those that make USDA Home Loans since they will have to hold the loans potentially a lot longer than ever before.

The Take Away

If you aren’t getting an answer on your USDA Loan or thought USDA was out of money; you can get a USDA Loan.  Give me a call let’s get started on your USDA Home Loan today

Related posts from Indiana's USDA Home Loan Expert:

1. USDA Funding Update
2. The Ides of March: USDA Just About Out of Funds
3. The Benefits of a USDA Guaranteed Loan to Purchase

What’s up with Funding for USDA Loans

While USDA Guaranteed Rural Housing hasn’t received any additional funding for the remainder of 2010 yet, you can still close with a USDA Loan.  USDA has begun issuing Modified Conditional Commitments. So cue up the music, AC/DC “Back in Black” or Aerosmith “Back in the Saddle“.

It’s time to get those USDA Home Loans closed.  If you thought you missed out on buying a new home with USDA Home loan, think again, it’s time to start shopping for your new home.  We are still accepting and Closing USDA Home loans.

These Modified Conditional Commitments come with two caveats:

1. Availability of Funds and the authority to obligate the funds
2. The Authority to charge a sufficient guarantee fee, if any is needed

What does a Modified Commitment Mean to Me the Customer

From a customers standpoint the entire transaction will be the same as before. The conditional commitment issued by USDA are the conditions for them to insure/guarantee the loan, not to approve your loan. So, you can close your loan as normal. However, one Big problem is that when USDA first announced they were running out of funds is that a lot of the investors stopped making USDA loans, and a lot of those left stopped when funds did run out. So far those that have stopped USDA loans have stated they do not plan on re-entering the USDA market until either:

1. The New Fiscal Year and more funds are appropriated, or;
2. The Passage of H.R. 4899, and USDA changing their commitments back to normal

The good news is that we are Still Doing USDA Home Loans. I have to admit there are not a lot of people doing USDA loans with the modified conditional commitments, but we are one of them.

So Why are Some Lenders So Hesitant

So, why are some lenders so reluctant to lend based on these modified conditional commitments?  The Guarantee from USDA is one of the best available to a lender. They basically cover 90% of the loan amount. Meaning if you default the most they could lose is 10%, obviously the numbers are simplified. With the modified Conditional Commitments the lenders have to meet the new conditions more funds, and ability to charge higher guarantee fee before USDA will offer them full protection. Also, USDA will not issue the guarantee if you default on the loan prior to those two additional conditions being satisfied. So, lenders that close USDA Home Loans under these modified commitments are taking on extra risk, and as we all know all lenders have been very risk averse for the past few years.

Give me a call so we can get started on your USDA Home Loan Today.

Related posts from Indiana's USDA Home Loan Expert:

1. Yes, You Can Get a USDA Loan
2. The Ides of March: USDA Just About Out of Funds
3. The Benefits of a USDA Guaranteed Loan to Purchase

USDA has announced the income limits for Section 502 Guaranteed Rural Housing Program have changed, effective June 2, 2010.  The new income limits can be found at the USDA Rural Development Eligibility Home page by following either of the links provided below.

http://eligibility.sc.egov.usda.gov

(click on “Guaranteed Housing” under the “Income limits” tab on the left side of the page)

or

http://www.rurdev.usda.gov/rhs/sfh/sfh%20guaranteed%20loan%20income%20limits.htm

(Direct link to the 2010 Income Limits)

The number of people used for income eligibility is the number of people living in the home,  including foster adults and foster children, not the number of applicants on the file.

The basic income limit for non-high cost counties are:

So, regardless of whether you are purchasing a home in a high-cost area or a non-high cost area the benefit is that if you only have 1 – 2 people in your household you get the benefit of a 4 person household, and if you have 5 people in your household you get the benefit of an 8 person household.

Don’t assume just because you income is over the income limit that you don’t qualify. USDA allows for deductions to income, these are only for income limit qualifying not debt ratio qualifications; so, you still get the benefit of your full income. Each household member under 18 Years old, Disabled, or Full Time Student receives a $480 deduction to your annual income. There is also an allowance for documented child care expenses.

Related posts from Indiana's USDA Home Loan Expert:

1. The Benefits of a USDA Guaranteed Loan to Purchase
2. The Ides of March: USDA Just About Out of Funds
3. USDA Funding Update

With 25 percent of mortgages underwater and high levels of delinquencies, James Lockhart, former director of The Office of Federal Housing Enterprise Oversight (The Great Wizard Behind the Curtain for Fannie Mae and Freddie Mac), says the housing market will need another year or more before it shows signs of recovery.

This all comes before the hangover hits from the homebuyer tax credit, and all the pay option ARMs hit their maximum negative amortization forcing a payment recast and causing more loans to go delinquent.  Least we forget the shadow inventory.

Related posts from Indiana's USDA Home Loan Expert:

1. What’s a Credit Score Got to Do With It?
2. The Benefits of a USDA Guaranteed Loan to Purchase
3. The Ides of March: USDA Just About Out of Funds