Archive for December, 2010

Rewarding Benefits

December 27, 2010

This past spring we posted an article titled, “Paying It Forward”.  Besides the obvious theme based on the title, we touched on the fact that giving benefits both the receiver and giver because helping someone else is empowering.  You can read our full article, but one of the points was that paying it forward or initiating a random act of kindness isn’t about the size of the gift or act.  There is a great sense of accomplishment and goodwill when you put someone else’s needs before your own. 

This past Saturday, the Grand Rapids Press ran an article written by Debra Levi Holtz on the same topic that gives credence to our conclusions.  Based on studies conducted at UC Berkeley, people give because of a deep desire to benefit others.  The interesting part was what motivated that desire. 

For some it was because of their personality, upbringing or just personal experiences.  For others, giving was a way to earn respect and gain influence.  Giving was also found to be contagious in that people tend to give when they have been on the receiving end at one point themselves.  Why do you give?  Why do you help?  Perhaps you don’t even know why.

Regardless of the why’s though, giving is something that just offers benefits all the way around.  Whether you are blessed with the gift of hospitality and a smile that warms hearts or are able to give financially, find some way to give.  For when you empty your hands of the blessings you have received, you open yourself up to receive so much more.

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Christmas Gift Suggestions

December 21, 2010

I would suspect that my family is like most at Christmas time.  We give each other a list of things we would like to receive as gifts.  These lists are never created out of selfish, wanton desire; but simply suggestions to get the creative juices of the gift giver going.  But have you ever had to shop for that one person who seemed to have everything?  What do you give them?

My cousins and I faced this challenge when it came to my grandfather.  Grandpa was a man who really did have everything – especially the things that mattered most.  So we granddaughters decided to go outside the box one year – literally, and it was an idea that really fit.  During that year, Grandma had passed away after losing her battle with cancer.  We made a donation in her honor to the local chapter of the American Cancer Society.  Grandpa was deeply moved by our act.  We were reminded that a gift isn’t always about the thing, but the thought and meaning behind it.  This was the perfect gift.

Unfortunately, there are many other families who have a completely different challenge.  How do you create the feeling of Christmas and participate in the exchanging of gifts when the budget has nothing left to offer in the way of Christmas shopping, let alone any type of lavish meal?  Thinking outside of any boxes seems to fit here too.  Gifts that aren’t about things, but ones that have real meaning and permanent value.  Gifts that aren’t about writing a check, but ones that offer the gift of you. 

I’m talking about giving your time, your abilities, and your expertise.  Our Awareness Works 4 U program has introduced us to many non-profit organizations.  Some are more formal in their structure; others are simply the result of a couple individuals.  But all of them can be described as passionate people, called to champion a cause.  Most of whom are volunteers. 

Non-profit organizations need monetary contributions to keep going, but they also need help to get the work done.  Think about the amazing gift you could give by donating your time.  Think of the impact you could have on your community.  Think about the values you could be teaching your kids.  Think about the fullness your own heart would feel.  Christmas is the season of giving.  But no one ever said that gift had to come in a box.

Repair Escrows – a nice solution

December 8, 2010

What is a repair escrow and why would you need one?

When purchasing a home there are certain expectations and requirements for living conditions that must be met.  Most of these requirements address the overall health and safety of the home.  Different loan programs have different standards.  For example, homes purchased through an FHA or Rural Development program require that any and all health and safety repairs be completed prior to closing on the home.  If you are purchasing a home from a private party this can usually be negotiated, scheduled and resolved before the closing date. 

However, making repairs before the closing date can sometimes create a challenge.  For example, repairing brick work on a home can be a bit of a challenge with a foot of snow on the ground.  A repair escrow can easily resolve this challenge; and most lenders offer this option. 

However, a larger challenge can occur with the purchase of a foreclosure home.  With a foreclosure sale the seller is an institution who most likely has never seen the property.  For liability reasons, the seller does not allow access to the property for repairs to be completed prior to closing.  Plus you may not want to make repairs on a home you do not own yet.  Awareness Home Funding is a unique lender that offers you a repair escrow in this situation also.

A repair escrow is a temporary account with funds specifically set aside to pay for any required repairs that a licensed inspector has deemed necessary, and that must be completed within a certain timeframe.

How does it work?

When an appraisal is done on a home, the appraiser will include repairs that will need to be corrected.  Since the appraiser is not an inspector, he may require an inspection be done for certain areas, i.e., roof, electrical, etc.  The inspector will give a detailed report of the problem(s) that will need to be corrected.

Once you have this list of repairs, 2-3 quotes from a licensed contractor must be obtained for each area of expertise (mechanical, electrical, plumbing, general contracting).  The estimated cost of the repairs will determine the amount needed to set up your repair escrow.

An agreement will be drafted to be signed at close.  Funds for the repair escrow will be part of your cash-to-close.  Repairs must be completed within 30 days from your closing date, unless otherwise noted in the agreement.

What happens next?

After you have closed on your home the next step is to start on the repairs.  There may be repairs that are minimal that you can correct yourself, such as scraping and painting, replacing outlet covers, etc.  Please note:  any repairs that do not pass re-inspection will have to be repaired again, which can cost you more money.  It is always best to hire a licensed professional for any repairs that you are not completely familiar with and know how to handle.

Once all the repairs have been completed, contact your Home Loan Specialist at Awareness Home Funding.  We will request a re-inspection of the work required.  You will need to submit any invoices that are to be paid, which will be forwarded to Polaris Home Funding for payment.  Once Polaris has received the approved re-inspection report, invoices will be paid within three to five business days.  Any funds left over from the repair escrow account will be returned.

Additional Factors

  • There is a maximum limit on repairs of $5,000.
  • Individual bids or a combination of bids for different repairs totaling more than $5,000 are considered major structural and must be completed prior to the closing of the loan.
  • Roof “repair” is acceptable, but roof “replacement” is considered major structural and will not be allowed.

 If you have additional questions on repair escrows or any other home loan question, please contact us at Awareness Home Funding.  We are here to help you.

Handling Credit After a Bankruptcy

December 1, 2010

Enduring a personal bankruptcy can be a very traumatic event in a person’s life.  Those who have faced this process often find they are extremely fearful of using any sort of credit, such as a car loan, mortgage or credit card, ever again.  However there are two critical steps that must happen to begin repairing the damage done to your personal credit.  We should disclose here that we are discussing a Chapter 7 Bankruptcy where debts are discharged and not a Chapter 13 Bankruptcy where debts are paid under a monitored repayment plan.

The first step is to make sure that your debts are fully discharged by your creditors.  At this point, there is no financial motivation for them to continue reporting to the credit bureaus so your credit report may still reflect a remaining balance owed.  This can easily be confirmed by requesting a copy of your credit report from all three credit bureaus.  Our website has information on how to do this.  If anything is incorrect, you will need to challenge the information.  Don’t let the sound of this intimidate you.  We also have details on how to handle this step with a sample dispute letter you can use on our website too.

The second significant step, and maybe the part that causes the most concern, is re-establishing your credit.  As scary as this seems, you cannot just ignore the financial world.  So many things are linked to your credit score like auto insurance and even future employment that you really can’t afford to ignore this.  Here are ten tips to get you started on re-establishing and maintaining good credit.  

  1. Apply for a credit card.  To establish a strong credit history you need a line of credit with consistent activity for at least 12 months after the date of discharge.  You don’t need a large line of credit or to charge high dollar amounts, just consistent use and timely payments.
  2. Make all your payments on time.  This not only includes lines of credit, but utility payments as well.
  3. Avoid late fees.
  4. Stay current on all payments.  Since you are starting over to rebuild positive credit there is little history to work with.  A single late payment on even a $20 balance can lower your credit score by as much as 100 points at this time.  The due date is when your payment must be received, not mailed.  Make your payments early whenever possible.
  5. Keep your credit card balances at less than 50% of your credit limit.  This is a little secret with huge implications. Staying below that 50% level has a strong and very positive affect on your credit score.
  6. Do not open new credit cards as a means of increasing your overall available credit.
  7. Review your credit annually.  You can obtain a free credit report once every 12 months from each credit bureau by visiting www.AnnualCreditReport.com
  8. Establish a realistic budget.
  9. As for help if you need it.  No one has all the answers, seek support if you have questions.
  10. Start now.

Facing a bankruptcy is traumatic, but it doesn’t have to define or limit you.  Our website has more details on these tips plus other information on building and maintaining your personal credit.  You are also invited to call us with your questions too at 866-982-9273.