MAKE IT RING

Phone calls beget phone calls just as activity begets activity.

Why are the most successful Realtors usually the listing agents? Because their phones are ringing thanks to their listings. The activity brought about by the phone calls they receive eventually turns into dollars, which turn into even more dollars as their activity breeds productivity, which breeds success.

Is your phone ringing? The number one way to get your phone to ring with people looking for your services is to ring some phones yourself. Get on the phone and call some Realtors you haven't heard from in months, call some past clients and/or old friends that you haven't heard from in years, but most importantly, just all!

They will be happy to hear from you and the rare ones that aren't, you don't need to be concerned with anyway. You have much to offer (and to gain) by staying in touch with your previous customers and referral sources. So make some calls today and watch your phone ring a little more every day going forward!

BETTER THAN KILLING A PIG

There is an old proverb that says if you want to be happy for an hour, take a nap. If you want to be happy for a day, get drunk. If you want to be happy for a week, kill and eat a pig. But if you want to be happy for a lifetime, love your work.

For some people, loving their work is challenging, which is true of any profession if one dwells on the negatives because every job in the world has its pluses and minuses. 

You don't have to enjoy having loans declined; appraisal problems; being shopped against ten other lenders; or long market downturns, but if you let them get you down they will. On the other hand, we have unlimited income potential, a flexible schedule, creative freedom and best of all we get to help people and make others happy by improving their lives every day.

So love your work. Not only will you be happy for a lifetime, but if you love your work, your work will love you back!

LET IT GO

Even though you want to move forward in life, your thoughts may have you with one foot on the gas and one on the brake. In order to be free, we must learn how to let go. Release the hurt. Release the fear. Release the past by refusing to entertain your old pain.

Most of us don't even realize where our "bad seeds" of thought come from. It can be from a book, a speaker, or even a well-meaning friend or relative. It can be the result of bad philosophy, bad theology, bad parenting or just plain bad advice.

The energy it takes to hang onto the past can hold you back from a wonderful new life. So why not just let it go?

What is it that you would let go of today?

Whatever it is, let it go right now and have a fantastic day. And then let some more go tomorrow!

THE SUBCONSCIOUS MIND

The common theory these days among psychologists is that the subconscious mind does not really exist in the form Freud theorized because there is not any part of your consciousness that is inaccessible to you.

Subconscious thought is, by definition, so subtle that it is beneath your awareness and if it's below your awareness, you're not aware of it! And if you're not aware of it, how can it affect you?

What passes for the subconscious mind are generally habitual patterns of thought and belief that are based upon your current emotional state. Kind of like a struck piano key in that the powerful vibration always swallows the weaker one, so decisions made in the present moment are always more powerful than past decisions.. Therefore, all thought which leads to action is conscious thought.

We are the sum total of our thoughts. Therefore, programming yourself for the better is achieved only one way... by reprogramming your thoughts.

For the next few days we will look at some ways to reprogram for the better!

YOU ARE WHAT YOU THINK ABOUT

That much you beautiful, intelligent, loyal LO insights readers already know, but what about our subconscious thoughts?

Subconscious is defined by Wester's as "That portion of mental activity of which the individual has little or no conscious perception."

The subconscious mind was popularized by Sigmund Freud who, in order to explain irrational behavior, developed the idea that consciousness is layered into unconscious, preconscious, and conscious. 

Because neurotic behavior had no rational explanation, it made sense to Freud that some psychic events must infiltrate the surface of the mind; then explode into conscious awareness.

In our culture, the subconscious mind has been given terrific powers over the consciousness of the individual; it has been said that from within our subconscious can come horrible emotions and impulses, forcing you to do things that you don't want to do.

Defense lawyers have been argued (usually unsuccessfully) that it was the subconscious mind of their client who committed the crime! 

To be continued...

BLAME

Blame rhymes with shame and it is no coincidence.

Whenever we blame our circumstances or worse yet other people, all it does is keep us from facing our own worst enemy and best friend... ourselves.

The first step in any type of recovery is to be willing to admit that you have a problem and to accept responsibility for it. The first step must happen before any sort of cure can occur. Too often people fall into the trap of looking to blame other conditions or other people, when accepting responsibility themselves is the only real way out.

Accepting responsibility and blame for who you are and what you have done in the past is not damaging. In fact, it will liberate you and free your mind for far better things as you move forward in life and on to bigger and better things. This is often a difficult paradox to understand but truly an axiom of life itself.

How many relationships of a personal or business nature fail unnecessarily because someone has the attitude that if you won't agree that it is not my fault, I quit?

Regardless of how hard we may try to change others, the only person we can really change is ourselves. So no matter what happens to you today - blame someone, just make sure that someone you blame is you!

BUREAU VS. REPORTING AGENCY

Credit Bureaus (Equifax, Experian, and Trans Union) are the source of all credit information available to us or any other creditor.

Credit Reporting Agencies, on the other hand are the companies that provide credit reports supplying credit bureau information to those of us who need it in order to determine the creditworthiness of a potential borrower. There are several of these companies including Fiserv/Credstar and First American Credco plus thousands of smaller local companies. These companies report information from the bureaus and provide credit supplements to fix credit issues that may be incorrect or not found on the bureau report.

But just because a credit reporting agency gave you a supplement showing a collection account is paid off or late payment was incorrect does not mean the account will suddenly appear differently on the borrower's bureau reports, because it won't. The issue is that the bureaus don't rely on what the reporting agencies provide because there is no guarantee of accuracy and therefore, they insist on doing it themselves for quality control reasons.

A borrower who has an inaccuracy fixed with a credit supplement should always be advised to follow up with the bureaus using the procedure outlined in yesterday's LO insights in order to avoid having the same issue rear it's ugly head the next time they apply for credit. 

HOW TO FIX YOUR OWN CREDIT REPORT

The second way to fix erroneous credit bureau information is for people to take matters into their own hands. This option is more time intensive, but the results will generally be better. The customer must contact all three bureaus directly and work through them to correct the information reflected within their credit report. the entire process usually takes 45-60 days.

First, the consumer must order their reports directly from the bureaus. Once they recieve the reports, the consumer must check them for accuracy and then send letters and/or documentation to each of the three bureaus disputing the information. The credit bureaus then have thirty days from receipt of the written information to update the individual's credit profile.

Borrowers can contact the credit bureaus by phone or internet:

EFX-Equifax: 800-685-1111 or www.equifax.com

XPN-Experian: 800-583-4080 or www.experian.com

TU- Trans Union: 800-916-8800 or www.tuc.com

The reports are free of charge unless a consumer requests their report multiple times within the same year.

FIXING A CREDIT REPORT

In order to fix incorrect credit information, a consumer has three choices...

The first and quickest choice is to deal with the creditor directly and rely on the them to update the credit information to all three bureaus, which sounds simple enough and it would be, in a perfect world.

However, like so many "quick fixes" this method works only sometimes. Unfortunately many creditors themselves are inconsistent and downright incompetent in correcting information with the credit bureaus. instances of customer service reps placating consumers and then failing to follow with the effort required to deal with the credit bureaus are as common as needles on a porcupine.

To make matters worse, to the consumer is in the dark as to whether or not the creditor has followed through on their promise to fix since the process can take months. We have all heard the laments of a borrower who thought a creditor had fixed an inaccuracy months or years ago only to find out that the negative information is still there.

Tomorrow... we'll look at putting the consumer back in charge. 

HUNTING FOR THE PRIZE

As hunting season approaches, it is worth noting that our marketing efforts have many parallels to the quest of the hunter.

Just because it is deer season, would a hunter just wander into a field and begin shooting blindly in hopes that a deer will find itself in front of a bullet? or in duck season would they go to a lake and begin showering the air with shotgun pellets in hopes that a duck will fly into the blast?

Indeed the woods are always empty if you are a poor hunter.

Whether hunting birds, small or big game, the hunter knows what they are after and they plan and strategize accordingly. They put themselves in a position for success by being in the right place at the right time with the right tools for the job.

Our business is no different in that we must hunt with skill and purpose rather than a random approach. Your business will originate from what you know and who you know, which is where your efforts should be concentrated.

Anything else is just like shooting with a blindfold!

WE GIVE, WE GET, WE THRIVE

Expecting smiles before you give one up yourself is an expectation that will set you up for disappointment more often than not because of the universal laws of give and take. And while it happens occasionally, we cannot ever expect to take before we give or we will be disappointed regularly.

A relationship is no different, though far more complex than a simple smile.

Most successful relationships start with a smile but the most important rule of relationships is that it must be good for both parties or there will not be much of a relationship.

Friends are friends because they both get something beneficial from the relationship. If not, it fades away very quickly.

The same rules apply to business relationships as well. Therefore you must have something to offer. You must take the lead and give first. Expecting gifts from those to whom you have never given to is crazy.

And expecting relationships from those to whom you give nothing is beyond unrealistic.

So be sure to ask for the business but first be a giver. It's the only way to thrive!

THE TWO DEGREES OF SEPARATION

We see them whenever we leave home. They're everywhere; at the store, on the road and even in your office. They are all over and how we interact with them says a lot about who we are. And while meeting every stranger you see is a ridiculous notion, we can all make a better effort in the areas of friendliness and compassion for our fellow strangers.

Behind that unfamiliar face may be someone who teaches your kids, works with your best friend, partied with your mom or knows your boss. Most likely a very decent human being that may have been one of your favorite people had the paths of your respective lives deviated only slightly.

And if we had the time to meet them all we would probably  discover that most of us have no more than one or two degrees or separation if we live within 100 miles of each other.

So why not be nice and at least give up a smile?

Some think there is emotional risk to smiling at strangers but the opposite is really true. You'll feel better by smiling and your emotions will be raised to a whole new level because of all the return smiles you will receive as dividends for your simple investment of a smile.

More on smiles tomorrow....

LADDER LISTENING

The six steps to becoming a better listener from a ladder...

L: Look at the person speaking to you.

A: Ask questions.

D: Don't interrupt.

D: Don't change the subject.

E: Empathize.

R: Respond verbally and nonverbally 

RESIST THE URGE

You can't put it down. It's addictive. It has to be near you at all times. If you don't have it, you feel lost and god forbid you temporarily lost it. Your world is instantly turned upside down because you feel like you can't survive without it.

Those who own one know what I'm talking about - a cell phone with email capabilities.

Whether it's a Treo, Blackberry (sometimes nicknamed "CrackBerry" for it's addictive qualities) or some other device, more and more people stay connected with email via their cell phone. Email on the go is one of technology's greatest gifts, but it can be a tremendous curse if not used with discretion.

If you are a "user", please be careful not to use your email phone at inappropriate times. This is even become a social issue among the closest of friends. Checking your email while in the company of others will send the impression that you are uninterested in their company which is rarely true, but often interpreted that way.

Also, it should go without saying that checking your email whilst trying to operate an automobile is just a very bad idea. Did you know that the runaway number one cause of car accidents is drive inattention? Yet nearly everyone who owns a BlackBerry has committed this foul at one time or another and some are guilty almost every time they get behind the wheel.

Like many other thins in life, cellular email is meant to be enjoyed responsibly!

THE IRA BRIDGE

Another form of "bridge financing" that is unknown to most is that a temporary IRA withdrawal, which if used properly, can be a virtually cost free means of raising cash for a down payment.

Did you know that funds can be withdrawn from an IRA for up to sixty days penalty free as long as it is replaced in the same or another qualified IRA account within the 60-day period?

This is a slightly more risky form of bridge financing because if the money can not be placed, it would be taxable and subject to the 10 percent penalty if the customer is under age 59-1/2. However, this is not an all or nothing transaction as the taxes and penalties would apply only to the amount of the initial withdrawal that was not replaced rather than the full amount in the event the customer was unable to repay only a portion of the amount.

A borrower can also tap their IRA penalty-free if the money is used to pay up to $10,000 of qualified acquisition costs for a principal residence of a first-time homebuyer.

***As you might expect, the usual disclaimers have to appear here such as advising your customer to seek the advice of their tax or investment professional before taking advantage of their IRA for funds to close.

WHAT'S THE DEAL?

The word "deal" is defined in business as an agreement or transaction that usually has benefits for all the parties involved. And while the "deals" that we help put together clearly fit into this definition, we should be careful in how we use the word "deal" especially with our borrowers.

Please know that many of them will take offense to your use of the word when referring to their transaction because to them this not just a "deal".

This is their new home you are talking about. The culmination of years of hard work, planning and dreaming they have experienced and it is probably the biggest financial transaction of their lives.

And when people have so much time, money and emotion invested in a transaction, the word "deal" tends to trivialize that which is anything but trivial to them.

So try altering your vocabulary with a more sensitive and important word such as purchase, transaction or agreement because a deal is just a deal but a home is a bigger deal!

3 YEAR APR

These days a 3 year APR calculation is a more likely reality for most people than keeping their mortgage for all thirty years.

Here is how to perform this unofficial but incredible valuable calculation using your financial calculator to demonstrate your expertise to your customers...

Using yesterday's example of a $200,000, 30 year loan at 6.5% with $5,000 in closing costs, take the closing costs and divide them by the number of months the loan will be outstanding or in this case 36 months.

$5000 divided by 36 months equals $138.89 per month. Add the $138.89 to the P&I payment of $1264.14 and recalculate the interest rate based on the full amount of the loan of $200,000. You will then find the real APR is now a significantly higher 7.53%. Shorten the loan life to two years and your real APR is now a robust 8.04%!

Also, keep in mind that this calculation does not account for the time value of money so the real APR is still slightly understated but much more accurate than the 30 year calculation.

Understanding these numbers and showing them to your customers will set you up for success especially in times like these of higher interest rates. Because while interest rates are important, in the end the best mortgage plan is the one that costs the least during the time that the mortgage is outstanding.

APR CACULATIONS

APR is calculated by taking the amount of the loan minus the finance charges to determine the amount financed. Then the APR is calculated using the actual payments for principal, interest and mortgage insurance on a loan amount that has been adjusted to equal the amount financed.

Here is an example...

$200,000 loan amount at 6.5% fixed and $5,000 in closing costs. The P&I payment is $1264.14.

$200,000 loan amount minus $5000 closing costs equals $195,000 amount financed.

A loan of $195,000 with a P&I payment of $1264.14 equals an interest rate or APR of 6.758%. However, the APR is really one accurate if all 360 payments are made as scheduled.

Something more alone the lines of a 3-5 year APR calculation is a more likely reality for most our customers and right now it could be argued that a 1-2 year APR is a more likely scenario if interest rates decline as expected in the near future and the loans we make no are refinanced sooner rather than later.

Tomorrow we will look at how to calculate an APR based on a shorter time frame and show your customers the real way to save some money in this market.

TRUTH? IN LENDING

FACT: Any borrower who pays closing costs on a mortgage and then makes less than 360 payments actually pays a higher APR than what we disclose to them even though we disclosed it properly.

The assumption inherent in all APR calculations is that the borrower will make all of the scheduled payments for the entire term of the loan. This significantly minimizes the affect of closing costs on the APR and understates the true APR for any borrower paying closing costs and paying off their loan early.

The truth is that closing costs are really far more costly to the average borrower than the Truth in Lending disclosure would lead them to believe.

This is vital information that you should be conveying to your borrowers since the chances of them making all 360 payments are so remote. Your job is to be able to explain this to your borrowers in order to do right by them and further set yourself apart from the competition.

Tomorrow we will look at the numbers and then later we will look at how to calculate the real numbers...

FANTASY FIGURES

The Truth in Lending Act (TILA) is a United States federal law designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs. The statute is contained in title I of the Consumer Credit Protection Act. The regulations implementing them are known as "Regulation Z".

The purpose of TILA is to promote the informed use of consumer credit by requiring disclosures about its terms and cost. TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling. The APR calculation is the primary component of TILA. And while the intention of this disclosure is admirable, the APR output is misleading in the practical world.

The first practical inaccuracy of APR is that the only lender fees are factored into the equation which, as you know, leaves out plenty of expenses. Most notably (and expensively) attorney, appraiser and title fees.

The real trouble with the APR calculation though is that it assumes that the borrower makes all 360 payments as scheduled and without a single dollar in excess principal payments. I think you would agree that anymore people have better odds of winning Survivor or piloting the space shuttle.

This is what is known to most folks as fantasy. And the APR numbers we give our borrowers while technically correct, are really just fantasy.

To be continued...