Costco or 7-Eleven? Can closing fast cost you money?

Many of the homes that are being financed for purchase today are either short sales or they are foreclosures. On the Short Sales in particular you may wait up to six months to get the approval to sell the property as the offer was submitted.  The approval can initially be a verbal approval with the executed contract to follow.

The Good News: You are in contract to buy the home that you wanted.

The Bad News: You have thirty days to close from the initial acceptance and your Loan officer will not get the contract for up to a week. This will give you 20-25 Calender days to close.

The Choice: Due to the limited time that you have been given to meet the contractual terms of the agreement you have been placed in a position to have to choose whether or not this home is worth the Price.

After six months of negotiating an accepted short sale contract and waiting patiently as a buyer to hear the news you now have to decide immediately.

Point to Ponder: If you are in a hurry and you need milk fast do you:

A. Go to Costco

B. Go to 7-Eleven

Second Point to Ponder: Which one of the two costs more for the convenience?

A. Costco

B. 7-Eleven

If you answered 7-Eleven both times you are correct. As a consumer trying to meet the contractual obligation of the short sale terms you have been forced to go to a store that is fast and efficient rather than the store that you may get twice the amount for your dollar. Costco on Saturday Morning is not the fastest place on the planet to get in and out of. You may have to wait in line. Of course we are happy to do so because of the bang for our buck.

Going to 7-Eleven costs you more but because you are eager to get in the home and meet the contract you have chosen to sacrifice your overall well being to meet the standards of the same person that took six months to make a decision. You may be saying about now: Is this fair? My answer is simple Absolutely Not! The worst part is even if 7-Eleven is not fast enough they have the nerve to charge you for making them wait.

In conclusion, I certainly know that not all is fair in love and war. I also now that as a consumer we have the right to choose whether or not we want to accept the terms of the contract. However, it is the same Costco approving the short sale that is saying 20 days should be sufficient to close this escrow so I just don’t care.

Can you get in and out of Costco on Saturday in 30 minutes or less including parking, shopping, purchasing and exiting the lot?

*7-eleven costs more most of the time. This is not always the case. Wholesalers hedge markets. When they do so they may be competitive for the moment but then they are subject to creating Costco like lines. Managing their offered rates help to control the lines. Therefore to keep turn times down rates may increase to decrease the traffic and vice versa.

Where have I been? My first uncut video post explains this!

I just wanted to take 3 uncut minutes of your time to let you know where I have been. I can’t wait to get back to my blogging schedule and providing you the useful information that you have grown accustomed too. Please take a minute to watch my newly constructed YouTube work in progress. Thank you all for your patience while I work to bring you the best Mortgage Information in the easiest ways too understand. After all this is California Home Strategies “Real Estate Strategies We All Can Understand.”

Financial Planning. Dispelling Personal Finance Myths over Coffee.

The other day I was at the coffee shop with a friend of mine Johnny Kovalek. Johnny and I have done business together in the past. In fact Johnny is my Financial Planner. While we were sitting there and having a great cup of coffee I began to ask him what he thought were the major obstacles or myths about Financial Planners that he faced in his day to day operations. I know that personally I thought that Financial Planners only helped with things like stocks and bond purchases or major 401K investments before I entered into the Financial arena. For the next hour or so Johnny began to dispel many of the myths or obstacles we have when trying to get started with a planner. He made it clear to me that Comprehensive Financial Planning is less complicated than we make it out to be.

Me: Is it true that you need a certain amount of money to invest before working with a financial planner?

Johnny: Most people believe they need a lot of money or some amount of money to invest in order to work with a financial planner. While some advisors have a minimum requirement to work with them I do not. Many of my clients start with nothing, some have substantial assets and others are somewhere in between the two. Working with an advisor can help turn spenders into savers, savers into investors, and investors into wealth managers. It is about getting started somewhere. Investments are about 1/5 of what Financial Planning is about. There is Risk Management, Insurance, Income Tax Planning, Retirement Planning and Estate Planning. Reducing your insurance expenses and income taxes first and developing the discipline to save and fund your retirement must come so that you will have the ability to get advice regarding Investments.

Me:Is it true that there is no need to work with a planner until I am close to retirement.

Johnny: If you are waiting until retirement to make your plans you are making a classic mistake. Accumulating retirement is only half the game. Retirement income strategies or re-creating your paycheck is the other half. How you save for your retirement today will have a direct impact on how you can take your money out in retirement. Most common pitfall is how you are taxed based on the vehicles you chose up to retirement. The earlier the better.

Me: Do I need to pay off my debts before I start with a Financial Planner?

Johnny: That would be like waiting to get healthy before you go see the doctor. Financial Advisors who work in a comprehensive fashion can assist people with the strategies on the most efficient ways to pay down debts faster. This allows you to get to the saving part much quicker. If you have been trying to get out of debt for years then it is time to try something new and get a coach that can assist you in the how. The definition of insanity is doing the same thing over and over again expecting a different result.

Me: Do Financial Advisor’s only sell their own products?

Johnny: Maybe. It really depends on how your financial advisor is licensed. Some are licensed to have a fiduciary responsibility to hold your interests above their own. It also depends on company that they work with. Some advisors are licensed to look at several different investment options from multiple companies. Ask the advisor that you are working with how they are licensed and what they can offer.

Me: Some people think that they can beat the market in my business. Is that the same thing that you encounter in yours?

Johnny: In the short run there are advisors that make a handsome profit but that is solely based on luck. Over the long haul very few advisors beat the market. There would be more Warren Buffet’s and Peter Lynch’s if this were to be the case. No one can consistently predict the future or consistently beat the market. That would take consistent luck and I have not found that in my life. The role of the advisor is not to predict the future but to assist in planning for it and add some certainty to an uncertain future.

Me: What if someone already has an advisor, accountant, or they do everything on their own?

Johnny: There are no locks on the ideas and strategies in the Financial advise industry. There could be strategies or tools that you or your current advisor may not know about. Always keep an open mind. The fact is that as time goes by there is change that may be out of your control. These changes can be along the lines of tax change and rules around investments or savings goals. The problem exists when we think that we know everything and decide to stop learning. Make sure that you are reviewing your goals on a constant basis with your advisor and be proactive when changes are necessary.

Me: I have used the financial calculators on the Internet in the past. They have told me that I am saving enough for my retirement already. What are your thoughts on these tools?

Johnny:I think that a lot of people scan the Internet for this sort of a tool and these tools a rule of thumb for retirement calculations. A lot of the information is for the masses and they do not take into account your specific needs. Ask yourself a simple question. Exactly how much money do you need in your retirement account on the day of your retirement so that it will last a lifetime? Did you factor in taxes, inflation, realistic investment returns, increasing medical costs, etc.? Most people think that their expenses will dramatically decrease at the time of retirement. However the studies show that the expenses tend to increase as retired people pursue their hobbies and travel in the early years of retirement and then they level off. Make sure you planned for the possibility of tax law changes, rising medical costs, unforeseen circumstances and increasing life expectancy. A good financial advisor can help you calculate these numbers and make sure that you are on the right track.

Me: What if I already have a pension or I am covered through work?

Johnny: This fact goes back to the previous question. People often make the mistake of thinking their retirement expenses will be lower and forget that their pension benefits will be taxed like a regular paycheck. Some companies might bring the 401K guy or a random advisor to you for free. Just remember you get what you pay for.

Me: The last question is about the cost of an advisor. I think that they are just way too expensive. Is that true?

Johnny: Maybe. There are plenty examples of advisors that are charging excessive fees and not providing the value. Every advisor has a different way of getting paid and it is important that you find this out. The bottom line is to determine whether or not you are getting the value that meets or exceeds the cost. A good financial advisor should be able to help clients save money and avoid costly mistakes. Making mistakes and procrastination are a few of the biggest reasons that people do not reach their financial goals. A good advisor can help assist you in overcoming the procrastination and avoid costly mistakes. Just remember that price is what you pay and value is what you get. Retiring with the same or greater paycheck than you were receiving while working is Priceless.

As we ended the conversation I did ask Johnny if someone wanted to meet with him and see if Financial Planning was a good thing for them at this time what costs would they have. The answer was quick and to the point. Johnny stated that it was Free to meet with him and determine whether they are a good fit for each other. Johnny stated that it is his goal to earn your business and if you don’t feel that he has done that then you part ways no harm no foul.

I also asked is there anything coming up where consumers can go listen to someone talk about the state of the market and why it may be a good time to invest even with the economy being on such a hard place?

What: “Understand Today, Own Your Tomorrow: A New Perspective on Your Finances.”

When: Thursday June 11th, 2009

5:30 PM Open House

6pm -7pm Presentation

Where: 1420 Rocky Ridge Drive, Suite 200 Roseville, Ca. 95661

Cost: Free

RSVP: Johnny Kovalek at 916-789-9393

Coffee shops offer more than just coffee. I encourage you to take the first step in solidifying your financial future. It is never too early to take a step in the right direction. Johnny and I have worked together to get consumers in position to buy a home. The key is making sure that we not only consider the home and the mortgage payment but also your total financial future. Give it a shot attend the event and give yourself the knowledge to make the choice is Financial planning is right for you.

 

Foreclosures and Short Sales: “How to” remain Sane while waiting.

The market has brought us a unique opportunity to purchase Real Estate at a low price and low interest rates. This is an exciting time for a buyer to capitalize on buying not only a great home but also simultaneously make a prudent investment. Then what is the problem you may ask? With opportunity there will always be a challenge. The challenge that we face with the purchase of REO’s and Short Sales is the lack of a communicated answer. As Real Estate agents and Loan Officers we are waiting on answers from the banks themselves to see if they will agree to the conditions of our offer. They are waiting on answers themselves from the decision makers. This can be a frustrating process for the consumer because you are anxious to know if the house is yours.

Here are a few ways to remain sane while waiting on the answers:

1) Write the offer and forget about it – Many times when we make an offer on something we want to know right away whether or not it was accepted. This is not the case for a short sale and an reo. The answer can take days, weeks or months. Look at it as if you have planted a seed for a tree that you would like to grow in your backyard. You would not stand outside everyday staring at the seed waiting for it to grow. You would water it and go back about your business. Every now and again you would check to see how it was going but your expectation for a 1 year gestation was set from the get go.

2) Set realistic expectations for yourself – If you allow your self realistic expectations then you will not experience the let down of waiting for your answer. If you are going on a diet you should not expect to lose all of it in the first week. You set a goal to lose a 1/4 lb. a day and work towards it. When it does not go your way you still continue to implement the daily tasks and you refine the habits. Continue to look at other properties and continue to exercise all of you options. Don’t limit yourself to just this house.

3) Don’t Mentally Move In - This is a sure fire way to set yourself up for failure. If you mentally move in and the answer is “no” it will be very difficult to get up again. Nothing will compare to the house you lost. This is unfair to all the other homes on the market that are dying to have you as a home owner. I know that this is an emotional decision and I am not saying to not be excited but keep your cool until the offer is accepted.

4) 6 Months is not as long as 20 years – You have waited at least 20 years to start this process and many of you much longer. So do not get a head of yourself. Be patient just a little longer and you will reap the reward for at least the next 30 years in most cases. We can always talk about strategies that will help you to pay this off much quicker but for know let’s focus on the 30 years.

5) Do not try to understand the “logic” of the banks – The reasoning of the decisions of the bank one will never understand. They are many components that make up the decision of the banks and we cannot even begin to understand the first one of them. Give yourself a break and know that we will never get what they are doing and they are all in hot water. Decisions made when the wheels are falling off the truck are very difficult.

So just remember the five tips above anytime that you begin to get frustrated with the timeline of your offer. Tome is on your side and your team. Be more patient, more logical, less emotional, more realistic and without attachment more than the other party. We will guide you through the process.

As always thank you for reading,

Matt Freeman

Shopping should be done at the Mall. 5 reasons why shopping can cost you more money.

I love going to the mall. There are so many stores to choose from. I    get  the opportunity to check out all the stores looking for the greatest price. I am there for jeans and I do not have the need for the customer service team to assist me in trying them on. There is little value that staff at the retail stores can add other than an occasional explanation of the product. If I leave a store and then I decide to go back two hours later the price is still the same. Malls are great for a one stop shop and one size fits all type of product. My only question would be: Do you get your suits at the mall? If answer is yes then answer the follow up: Do you leave that day with the suit that you just bought?

Mortgages are an items that need to be tailored to your specific dimensions. They are not something that you can just pick a store and then check with another store and say the price tag was cheaper over here. Price Tags can be deceiving. In our industry they are called the “Good Faith Estimate.” Here are 5 reasons why shopping can cost you more money:

1. Rates are a moving target – In the mall you can go from store to store and then back to the original store and purchase the item that you found to be the most well priced. However, imagine if as soon as you left the store they had a price change for the worse. When you went back to buy the item that was initially $100 you found out it was $125. Had you committed ealrier in the day you would have paid $100. The flip side is you could come back and find the item to be $75 and feel like not only did you make the right choice but you got a deal. This is what is going on with rates. They change daily and in many cases multiple times a day. A Good Faith Estimate is exactly that an estimate. Some will give the the absolute best case scenario and others will price in the volatility of the market. The latter is done to prep you for the worse so that you avoid let down or shock late in the game.
2. Mortgages are Custom – There is not a one size fits all mortgage. They are custom tailored to meet the needs of the individual applying for the loan. When  you are looking at every store and comparing our GFE’s (small part of what we do) there will not be an extraordinary amount of work put into your file. Our job is to shop the best deal for you. This is what brokers do. See the definition of Broker brought to you here compliments of the free dictionary. In short we organize deals and negotiate contracts for a commission. The tailor is not going to begin cutting the suit before you buy it. You may get measured and fitted but the real action will not take place until you have committed. Common ways to show your committment are paying for the credit report and the appraisal for starters and providing all the documents to give you an accurate assessment.
3. Change in the Guidelines – While you are out looking at other stores to find the right deal for you other stores are changing what they offer. Imagine going back to the store and the item that you were looking to purchase says no longer in stock or discontinued. You may be able to find a used version online or from a store that you do not trust but you would have to weigh that risk on your own. Today’s climate has led to many changes in our guidelines. Many consumers missed the boat on Nehemiah. This was seller funded down payment assistance and it has been taken off the books. When you look so hard for the deal you may miss out on the opportunity of your life time. Don’t pick the fleck out the pepper!
4. Credit Scores – Each month just after the 3rd or so your active credit will report to the bureaus. If you have had new charges post to your debts or bought something new or inquired about a new car your score may suffer the consequences. If you were borderline 620 and your score drops below this mark your chances for an FHA have just taking you away from the Mall of options and sent you to one of two specialty stores. You know what that means right? Higher Prices. You are now going to pay more for your product through the specialty store and there is no guarantee that they will be able to stay in the market long. You have to protect your score and when you have it pulled by a Broker they have that score and can use it for up to 90 days before they would have to re-pull a new report.
5. Price is what you pay value is what you get – Often times as a consumer we are shopping for the best price. I can understand and respect this. I don’t want to pay more than I have to either. However, there are many more elements to the whole customer experience. You want to feel comfortable, informed, in the know, respected and Valued. Often times when you get a victory so to speak on the price you take a hit on the value. You will get the bare minimum but that is to be expected considering you paid the bare minimum. So I like to subscribe to the wise saying “Price is what you pay and value is what you get.” You cannot shop value in our market.

If you take nothing away from this at all please understand this: Shopping can cost you more than committing to the individual you feel most comfortable with. Shop for trust and information not for price. Ask someone to refer you to someone that you can be excited to work with. You will find by doing this you will get exactly what you are looking for. Malls are a moving target and are not a fair representation of our industry. We do not sell retail and therefore your rate and price may not be waiting for you when you come back. Leave the mall as something you do on the weekend with the family or friends. We are here to work with and for you not against. Businesses built by Referral receive nothing from charging you an unfair price for their product or service.

The Mall in Motion!

Risk Assessment Tools: DU and LP Automated Underwriting Definitions

In today’s market, the need for an automated underwriting approval prior to submitting an offer has become common practice. To be competitive the Listing agent or the bank that owns the property would like to know that you have been ran through our automated underwriting engines. Yes, they are computer programs that assess the risk of the file and determine the viability of the loan. It is only as good as the inputter and that is why in most cases brokers and loan officers are asking that you provide a backpack of information. In continuing our trend of Mortgage Definition Monday I have defined these terms below:

Hud has defined Automated Underwriting in their terms and glossary section as follows.

Automated Underwriting - loan processing completed through a computer-based system that evaluates past credit history to determine if a loan should be approved. This system removes the possibility of personal bias against the buyer.

Additionally, I will add that the computer is assessing the total credit risk of the buyer. The loan can still be declined even if it receives an automated approval for multiple reasons. Some of which may include but are not limited to: unacceptable collateral, unacceptable income documentation, drop in the borrowers credit, unacceptable asset documentation and wholesaler overlays that would override the automated approval for the specific wholesaler.

Automated Underwriting Systems has been defined well on Mortgage Professor’s website.

This definition is as follows:

Automated Underwriting Systems -A particular computerized system for doing automated underwriting.  Mortgage insurers and some large lenders have developed such systems, but the most widely used are Fannie Mae’s “Desktop Underwriter” and Freddie Mac’s “Loan Prospector”.

I will add that the systems are very accurate however again each of the approvals will be reevaluated manually by an underwriter to determine the completeness of the documentation. The underwriting systems are constantly being tweaked to include the newest guidelines however it would be appropriate to double check prior to issuing an approval letter. DU Refi Plus is one of the new programs that took a minute before it was available in the system. When this is the case you make get feedback that is not consistent.

I will continue to bring Mortgage Definitions to you each and every Monday. Until then have a great week.

God Bless,

Matt Freeman

Definitions taken from the HUD glossary and Mortgage Professor glossary. I have added to these definitons and included links to their sites for further verifications.

Happy Mother’s Have “Clean” Homes!

Now that you have the home who gets the honor of cleaning it?

In honor of the Mother’s day weekend, I wanted to take a second to talk about what happens when our families do get that home we have been searching for. Who is the one  that takes care of the house, does the laundry, washes the dishes, makes dinner, organizes the family room, scrubs the toilets, cleans the showers and many other fun tasks? You guessed it Mothers and soon to be Mother’s.

Mother’s are so very Special

Mother’s have a special place in our heart. They have a unique way of making their children feel special. After all isn’t my mother why I grew up knowing that I can be anything that I wanted to be. They care for us and they take care of all the little things that get forgotten about. Many times we do not even notice all the things that they get done in a single day. It is like a marathon for mother’s. A great pace from the start but very unassuming. It never slows down and by the time we are nearing the finish line they are still running at the same pace and many times speeding up a bit.

The best thing that the kids and I did for Mother’s day

One of the best things that the kids and I did for their mother on mother’s day was write all the words that we could think of that make Nicole so special. We cut all of them out and we hung them all over the house in the most incospicuous places. (the funniest being under the toilet seat). We then took flowers and put them by the bedside and all down the stairs leading to the breakfast table. At the table she had coffee, breakfast and some homemade gifts from the kids and I. The rest of the day was hers to choose. Man that was a great day. This year we have done the homemade thing again with the cards and we spic and spanned the house while she was at school. Doing all the things that a mother does and hates to have to do.

So I have a question for my readers today:

What is the best thing that you have ever done for your mother on mother’s day?

Please comment with your answer.Share with everyone the special thin gs that you have done for those special mom’s out there.

Happy Mother’s Day to all the Mother’s out there. For those of you who are trying to think of something to do for your mother or wife on Mother’s day remember this: Happy Mother’s have “clean” homes.

With or Without Harp here are 5 ways you might Refinance your Home!

Are you considering refinancing your home? You cannot listen to all the the talk of low Mortgage rates and not consider looking into it. Maybe you have some equity and would not mind taking out a little cash right now. The problem is the devil that is on your shoulders. Yes, there are naysayers out there that say that it cannot be done or that you would be crazy to cash out of your home right now. I know I get it. Jealousy is a disease of the worst kind. The bottom line is that if you are considering refinancing there are a few different options that you have.The following is a list of opportunities that may be available to you:

1. Streamline FHA – This is a simple and effective way to lower your rate on your FHA mortgage. If you currently have a rate that exceeds 5.875% then you may want to talk to your professional. There are limited costs such as title insurance, processing and few miscellaneous. You will receive a refund from the upfront MIP that you paid or financed initially and that can be applied to your costs. In most cases that I have done or seen the borrower brings their monthly payment to the close of escrow or less.
2. VA IRRL or VA Cash-out Refinance - The VA IRRL is similar to and FHA streamline. The goal is to minimize the cost of the refinance so the Veteran can lower the rate on their note. A Cash Out VA loan is the same as a traditional cash out mortgage but for Veteran’s only and with certain restrictions.
3. DU Refi Plus - This program is part of the HARP (Home Affordability and Stability Plan) that was recently released. If your loan is owned by Fannie Mae you can refinance your first Mortgage to 105% of the homes value. If you have a second in place then that second can be subordinated to an unlimited CLTV. This will vary case by case and lender by lender and many of the wholesalers have their own overlays. Overlays are added guidelines to protect their investors. Essentially stricter underwriting.
4. Freddie Mac’s Relief Refinance Mortgage – This Program is the same as the DU Refi Plus but Freddie Mac requires that you return to the current servicer of the loan. What this means is that if you have a Freddie Mac owned loan and that loan is serviced by Countrywide you will have to refinance with Countrywide. In my post Breaking News Fannie Mae and Freddie Mac to the rescue? I have listed the sites where you can find out who owns your mortgage.
5. Traditional Refinance – If you are one of the few that have equity in your home you have the ability to capitalize on today’s low rates. The one concern is the appraisal on many of these loans because often times the lender will do an AVM or Desk Review of our appraisal. This is especially common when you are looking to take cash out of the property. Here are a few ways to refinance traditionally:

• Rate and Term Refinance – A rate and term refinance is simply as it states. It is when you refinance to lower the rate or the term of you mortgage. Many cases you can do both at the same time. I have several clients that are taking advantage of this opportunity right now. They are cutting the term of their mortgage from 25-30yrs to 15-20 yrs.
• Cash-Out Refinance – A cash out refinance occurs when you borrow equity from your home. The cash may be used to pay off debt, home improvements, vacation, investing or whatever else you choose to do with it. WARNING – The appraisal on a cash-out refinance will be scrutinized the higher the LTV. Also, there are costs that are associated with a cash-out refinance that you will not incur on a rate and term refinance. It is part of the risk based pricing that Fannie Mae and Freddie Mac have gone to.
• Government Cash Out or Rate and Term Refinance - This is the same as the traditional except that it is bound by Government Guidelines. For Example FHA has limited refinance transactions to 85% LTV.

As always this information is to help you gain a better understanding on what may be available to you. I strongly encourage you to consult you mortgage professional and find out your options today!

Thank you,

Matt Freeman

Don’t Go Assuming Nothing. Or Maybe you Should? Mortgage Definitions: Assumption

As the series on Mortgage Definitions continues we are going to take a look at Assumption. In most cases the root word assume can bring a negative connotation. For Example: “Honey, I assumed you were going to pick up our son from practice.” Another could be “I was under the assumption Michael was going to block the defensive end.” Either case the word is most commonly used in a way that we do not perceive to be a benefit. 

Assumption - The act of taking to or upon oneself – One of many of the definitions in Merriam-Webster pertains to the assumption of a new obligation. 

In the world of Mortgage Government loans are in many cases assumable. Hud defines an Assumable Mortgage in their Mortgage Glossary well. In short a mortgage that may be assumed simply means that the buyer can take over the mortgage of the seller under the same terms and the same balances. The buyer will have to credit qualify for the mortgage and there may be a small fee but this can be very attractive. 

Example: The seller of a property has an FHA loan which can be assumed at the rate of 4.875%. Rates at the time of the sale of the property are around 7.5%. The seller may advertise that they have an assumable first note at 4.875% making the home more affordable for any potential buyers. The buyer will still have to get a second mortgage for the remainder of what he does not have as a down payment. 

Example: Seller is selling the property for 200K and has a first mortgage for 140K at 4.875%. The buyer will either have to put 60K down or get a second mortgage . Since 100% financing is no longer a viable source and seconds are hard to come by the best case is the buyer has the money down. 

The Assumption Clause  is the provision written in the note that allows the assumption to take place. 

If you are wondering whether or not your loan is assumable check for the assumption clause in the note or contact your Mortgage Professional and they can help you. 

Assumption is another reason amongst many that I think that FHA in most cases is better than a conventional loan. It provides a unique selling proposition that the Conventional Mortgage cannot provide.

 

Grandma and Grandpa Learned me Good!

Death is an inevitable part of life. Everyone will experience losing a loved one at some point of their life. Losing a loved one is a very difficult thing to process. It can stop you in your tracks and send your mind into warp speed. As your mind is warping you think about what I should have done, need to do, regret doing, and all the ways that you failed to connect to the loved one you have lost. Then you step back for a moment and begin to remember all the good things that you did with the loved one. You begin to see all the things that they had taught you that you did not know were lessons at the time.

As many of you already know I recently lost my Grandmother. Evelyn Freeman was one of the greatest people that I have had the opportunity to be influenced by. She was a mother, daughter, wife, grandmother, great-grandmother, friend, confidant, disciplinarian and most of all a teacher. It is because of my Grandparents that I am so sharp with my math skills. We would sit down at the table and play 10,000 which has various forms. We play with seven dice and have for the last 30 years. The game requires addition, quick number recognition and some luck if you want to beat my grandfather. After we took each other’s money playing 10,000 my dad and grandpa would begin to snore and grandma and I would sit up and play Skip-bo. This was another game that required math skills and the ability to plan ahead, have a strategy, notice potential obstacles, and be crafty and alert. I lost a lot but my grandmother would give in and let me win a few to keep me going. Many times she would stop and say did you see this Mathew? You could have done this if you would have been patient.

Here are a few things that Grandma and Grandpa taught me:

Commitment – 68 years my grandmother and grandfather were together. They were committed to their relationship that may not have always been just peachy. Through the good and the bad they stuck by each other and worked through it. Grandpa was a farmer and crops were not always plentiful. There were many times that their home value tanked and others when it sky-rocketed. Grandma and Grandpa knew a few things.

1. They always needed a place to stay and so they saw their place as “home” first and an investment second(it’s worth 77 times what they paid for it years ago).
2. Slow and steady wins the race. They were never in a hurry to make significant upgrades that they could not pay for with cash. Their “home” provided everything they needed. Although many of their friends were building palaces that eventually crumbled they stuck together.
3. Maintaining the goal of paying off the mortgage so they had to answer to no-one when they could have pulled out lot’s of money to do what they loved, Gambling.

Price is what you pay value is what you get – Grandma and Grandpa paid the price of hideous wallpaper that still resides on the walls in exchange for the ability to live without financial fears. As the crop failed they knew that they had enough seed stocked away to get them through the times. The wallpaper can wait. They did not rush to buy the next big thing. They also always stuck with a fixed rate mortgage. One term and done. If they refinanced they made sure they they stayed on track to pay off. Never backwards.

A slow start is a good start – This was a saying during every dice game when grandpa was losing. What he was really saying was: Every strong household needs a solid foundation. There is no need to rush anything in life. Live in the moment and understand what the future may bring. Know your history and be prepared for it even if it requires you to stay in second gear a little longer. “Don’t be lightning McQueen and allow your tires to blow!” When you build a foundation that is solid you will always catch up to the others. Just think about the three little pigs:)

Exercise good Judgement – Going back to skip-bo grandma was trying to tell me not to get ahead of myself. Study the board and my opponent, my market, prepare and seize the opportunity when it presents itself. Today’s market is that opportunity. Low prices and low rates. A perfect storm if you will. The government will pay you to buy your first home. Let your opponent show their cards and then make your first move. Always have a counter and never be too desperate.

1. Exit Strategy – So much of the market mess was created by the lack of an exit strategy. We knew how to get in and capitalize if the market stayed the course. We did not plan a strategy to get out. Long term hold, investment that pencils out from the gate, ability to stay the course as things go awry, and the ability to avoid panic. A carefully crafted exit strategy can be the difference. Grandpa and Grandma stayed the course and were always in a position to sell if they needed to simply because they did not leverage their home for toys.

Risk only what you are willing to lose - As I said earlier my grandparents loved to gamble. They always seemed to win although I know that this was not always the case.  What I began to realize as I grew older is that they only gambled with what they were willing to lose. This gave them the ability to to play freely. They did not have to worry about the downside of a bet. Lose and go home to play again another day. They did not gamble what they could not afford to lose. Many of us gambled with the very thing that we could not afford to lose. We took major risks, we rushed, bought more of a home than we ever deserved to own and now we are hoping that others can bail us out. Believe me when I say I am not criticizing. This was a hard learned lesson. For those that read this and say I have done everything right. My home is upside down and now I have to bailout all the others that made the mistakes my grandparents would have said:

1. No-one else matters. Are you selling your home? If no then remember that our home is worth 77 times what we paid for it. Have you lived in your “home” for 45 years. Be patient and you will be rewarded for your patience.
2. A slow start is a good start – so you started backwards – you are now only left with forward – cherish it!
3. Owning a home is like marriage. It is a commitment that you must stick with. Don’t divorce your home at the first sign of adversity. Remember what you loved about it in the first place and focus on that. In the waning moments of my grandmother’s life she looked over at my grandfather and said, “I always had an eye for that man.” She remembered that her commitment was to the very end.
4. Remain childlike. Continue to question until they day that you are gone. My grandpa said to me the other day, “Mathew I am always learning something new. I know a lot about farming but the things that they can do now days. I just finished learning about a new almond tree that does not require pruning or bees. Bees are $145 a hive driving the profit down. We will see how they yield in comparison but they are the new thing.” Perspective for a moment, this is my 93 year old grandfather who can spit out the number of days before corn will produce good silage. 105 days if you were wondering.
5. Use or lose it! Freeman’s live long and it is mainly because they continue to challenge themselves to the end. We are a stubborn bunch who are strapped with curiosity. That game 10,000 not only taught me the sharp arithmetic skills that I have come to love but it kept my Grandparents learning and teaching.

If you are one of the many that lost your home to foreclosure or had to short-sale just know that this does not define you. How you bounce back will. I strongly suggest Dave Ramsey’s Total Money Makeover it will change the way that you look at money management forever. Three years and some guidance from one of the most sought after finance educators in the country and you will have positioned yourself to buy again. If you are one of those that has done everything well and were a victim of the market answer this: Do you open your 401K statements and look at the balance weekly? If you answered know then stop thinking about the house.

In conclusion, when I was reflecting back on the life of my Grandmother I began to realize that I am in such a hurry sometimes. Why the rush? My grandmother lived 89 happy years and one of the last things that I heard her say was I always had an eye for that man. Take care of him. She knew what was ultimately important. She also asked to go in her home. Not a convalescent or a hospital room. No, she wanted to go in the very home that she spent her life in. Home-ownership to my grandmother was a commitment. One that was not rushed, doctored up, neglected, but one that was honored. She was humbled by the fact that she was allowed the opportunity to own acreage in the heart of the valley. Prime agricultural Real Estate. She was not willing to risk that and move to bigger and better. She gambled only what she was willing to do without.

In loving memory of Evelyn Freeman. You will forever be missed but never forgotten. May your lessons continue to be passed on for generations to come.

Next Page »