What is an APR and What did it do to my Rate?

March 10, 2011

After discussing some options and various programs with your Loan Officer you reach a plan that works for your situation.  You are satisfied with your interest rate and then you are handed that one piece of paper that shows in large, bold-faced type a number that is not what you recall discussing and the words, “Annual Percentage Rate” next to it.  Where did this number come from?  Did my interest rate change?  What will this do to my payment?

If you know nothing else about home loans and borrowing money, you understand that there is a cost associated with the money you are borrowing, specifically your interest rate.  However when presented with a new percentage and the words Annual Percentage Rate (or APR) next to it, you are left with more questions than answers.  Let us explain.

The interest rate is the cost percentage used to calculate your monthly payment.  However, there are other fees and charges associated with the set-up and origination of a loan.  The APR takes these fees and charges into account and provides the consumer with an effective rate (or total cost) of their loan expressed as a percentage.  The intent of the APR is for consumers to be able to compare competing lenders and various loan programs.

Lenders are required by law to disclose the APR to the borrower within 3 days of applying for a mortgage loan. In late 2008 further regulations were passed (effective in 2010) stating that if the APR changed by more than .125% from this initial disclosure on the Good Faith Estimate (GFE), the lender must re-disclose this information to borrower and wait another three business days before closing the loan.

The APR does not change your interest rate; rather it clarifies the true cost of your loan.  It generally includes points, origination fees, mortgage insurance and document prep fees.  It is not however, how your payments are calculated.  Your payments are still based on the interest rate you discussed with your loan officer.  We hope this helps.

Agents of Change

March 4, 2011

On a personal level the word change can be defined as making a difference in the state or condition of someone or to substitute another state or condition.  To change is to make a significant difference so that a person is distinctly different from what they were.  Change is inevitable in life for all of us.  The defining moment however, is whether or not that change is positive. 

Sometimes it is specific person or group that initiates these transformations.  They are agents of change and possess such characteristics as being sensitive, realistic, flexible, tolerant, committed, influential, confident and passionate.  Allow us to introduce you to two agents of change.

Guiding Light Mission is located on Division Avenue in downtown Grand Rapids, MI.  They provide emergency services by way of shelter and meals to anyone in need as well as overnight shelter to men.  Their long history dating back to 1929 has equipped them to provide social, physical, spiritual and intellectual needs to men in the community with the ultimate goal of allowing individuals to discover a new life in Christ. 

The START program (Spiritual Truth And Recovery Training) is a 4-6 month recovery program for men with an expectation of re-engagement into the community.  A recent example is the Recovery Runners, a group of men from the START program who are training for the River Bank Run In The Image run team.  Their stories of overcoming addictions and hardship are inspirational; and now they run to complete yet one more transformation. (You can see their personal stories here:  http://www.lifeonthestreet.org/LIVE-ON-THE-STREET/Recovery-Runners.aspx

In The Image is the other change agent in this story.  They are an organization that links gently used clothing, housewares, furniture and appliances with families in need in the Greater Grand Rapids area. Their history dates back to 1987 when a couple of individuals paid attention to the needs around them.  That same attention to detail has lead to the addition of In The Image’s SHOES program – Shoes Help Our Elementary Students.  Last year this program distributed almost 9,000 pairs of shoes to kids in Grand Rapids, Wyoming and Kentwood school districts.

Guiding Light Mission and In The Image continue to impact the community, offering people in need a hand up as agents of change.  The baton has been handed to the men running as part of the In The Image run team.  Besides running to overcome yet one more personal challenge they are running to raise awareness and funds for at-risk kids.    With every $10 raised, In The Image is able to purchase a brand new pair of shoes for an area student.  It is amazing what a simple pair of shoes can do.  Now it is your turn.  Get involved with a commitment to positively help more kids this year. 

Awareness Home Funding will be supporting a group of runners from our company who will be running for In The Image.  You can support In The Image directly by visiting http://active.com/donate/intheimage2011and donating what you feel lead to do.  Be an agent of change yourself.

Valentine’s Day…a Little Something for Everyone

February 11, 2011

Valentine’s Day has long been known as the ‘holiday’ for love and lovers.  Yet this is no Hallmark event despite the history of Saint Valentine, the patron saint for whom the day is named, being a little vague.  There are three primary legends to contend with. 

One legend weaves a tale of a priest who valiantly defied Emperor Claudius II’s decree that young men remained unmarried so that they would be more focused soldiers in his army.  Rumor has it that he continued to perform marriages in secret until he was martyred.  Another story paints Valentine as a rogue agent helping Christians escape the ruthless treatment they faced in Roman prisons.  The third account suggests that the young Valentine was responsible for starting the tradition of valentine cards by writing a letter to his jailor’s daughter whom he had fallen in love with.  Regardless of the story you find most accurate, Saint Valentine was a heroic figure sympathetic to the appeal of romantic love.

Today, nearly 192 million cards are exchanged on Valentine’s Day ranking second only to Christmas cards; and a figure that doesn’t include the cards traded in classrooms around the world.  Interestingly though, despite our desire to tell our loved ones how we feel about them, over half of us procrastinate in finding the perfect card until just before the day.

Don’t forget the flowers though.  Last year an estimated 198 million roses were produced for this single day.  After roses – carnations, tulips, orchids and lilies were other favorites chosen to express affection, desire, admiration and love.

Now if candy, specifically chocolate is more your taste you are not alone with over $1 billion being spent on chocolate confections of all styles, shapes, sizes and combinations for the occasion.  And, while 75% of all chocolate purchases are made by women throughout the year, at Valentine’s 75% of the purchases are made my men.

Of course, we would be remiss if we didn’t mention one other top gift choice for the holiday – jewelry.  Sales of these sparkling baubles easily approach $3 billion during the month of February.

No matter how you choose the spend Valentine’s Day this year, let the people you love know that you care about them and how much they mean to you.  Your honest and sincere words will have more value than anything else.

Gaining Perspective

February 9, 2011


There are times when you need to view something from a different angle to better understand it.  We tilt our heads when appreciating abstract art.  We walk around a new car to take in all the lines.  We step back when we place an arrangement on the table.  Changing the view gives us new perspective in order to better understand what we are looking at.

 

The same can be said when looking at factors and indicators of the economy, housing sector and interest rates.  We have all heard that interest rates are at historic lows, but just how low is that?  Did you miss out on this recent refinance boom?  Is this refinance boom even over?  Just where are rates right now anyway?

 

Interest rates have been tracked and recorded for the past 39 years.  In that time if there has been one constant, it would be change.  Consider these facts on 30-year fixed rate loans:

 

  • The average interest rate from one month to another has only held unchanged 14 times in 39 years.
  • Interest rates have dropped 2.69 points from 1972 when the average rate was 7.38% to 2010 where rates ended at 4.69% on average.
  • Over the past 39 years interest rates climbed as high as 11.07 points above the yearly average of 1972.
  • Interest rates have dropped as much as 14.22 points since their highest in October of 1981 when that single month boasted rates at 18.45%.
  • The highest yearly average interest rates occurred in 1981 at 16.63%.
  • The lowest rates on record happened last year in 2010 at just 4.69%.
  • Over 39 years the average interest rate was 8.92%, almost double 2010’s yearly average.

So yes, we really are at historically low interest rates!  Yes, this is still a fantastic time to review your current home loan to see if refinancing makes sense for you!  No, you most definitely have not missed out on these low rates!  And yes, it is a fantastic time to buy a home.  Not a bad view from that perspective.  Give us a call to review your current loan or to help you with a pre-approval for your new home.

A Cause, A Story & An Opportunity

January 17, 2011

As a home loan lender you know that what you doing impacts lives.  Buying a home is not something that people do everyday.  Building a relationship with a client and walking with them through the process is very rewarding.  Added to that is our business philosophy to give back with every home loan we close.  This fact brings us in contact with some amazing groups.  Allow us to introduce you to a recent opportunity we had and invite you to join in.

This year we were again invited to participate with the Grandville/Byron Center Varsity Hockey team in their quest to not only be a winning team, but to also support a local charity.  This is a project the entire team gets behind.  The organization chosen this year is the Juvenile Diabetes Research Foundation (JDRF).  JDRF is a global leader in diabetes research, the go-to organization for the diabetes research community, and the best source of hope for better treatments and a cure for people with type 1 diabetes and its complications.  Most people know of diabetes, but really don’t understand the disease. 

Diabetes is a chronic and debilitating disease that affects every organ system.  There are two types of diabetes – type 1 and type 2.  Type 1 diabetes is an autoimmune disease in which a person’s pancreas stops producing insulin.  Insulin is a hormone that enables a person to get energy from the food they eat.  Type 2 diabetes is a metabolic disorder in which a person’s body still produces insulin, but it is unable to use it effectively.

Nearly 24 million Americans have diabetes with a new case being diagnosed every 30 seconds on average.  Worldwide, 285 million people currently have the disease and that number is expected to grow to 435 million by the year 2030. 

Diabetics do have to make changes in their life.  It requires constant attention to diet, exercise, stress, fatigue, medication, illness and more.  But, it doesn’t have to stop life.  Following is one person’s personal journey.

My Journey With Diabetes

By Stephen Flood

 I was just the normal high school student living the life.  I had no worries in the world when I was on my way to South Carolina for spring break with the baseball team.  I was just a sophomore traveling with all upper class men in a minivan.  I never felt so embarrassed when I started to have the feeling to pee…ALOT.  I would have never thought that I had diabetes then, so there I was eating starburst and chocolates.

We finally made it to our home in South Carolina, and I never felt so relieved when I could finally pee whenever I wanted to.  But it only got worse and worse. During my practices, I was taking a knee just to catch my breath while doing simple drills.  I never felt so physically exhausted in my life.  I also had the worse case of cotton mouth, my lips were so dry that I had to make an effort to open them.  My legs were dead.  My lungs felt like they were going to collapse. Sleeping was nonexistent since I was getting up every 30 minutes to go to the bathroom.  I felt bad for my roommate because I kept waking him up getting out of the bed or flushing the toilet.  I told my mom what was going on, and she told me to drink cranberry juice because she thought I had a bladder infection.

We got home from our trip, and I started to feel better so we kind of just let it be for a little bit, and if it came back again we would go to the med center.  Well, it came back, and there we were sitting in this little room waiting for the doctor. I told him my symptoms, and we ran some tests.  The blood test is what had the doctor worried.  The blood sugar level wasn’t processing.  So we tried it again, and still nothing.  The meters that the doctors had only went up to 500.  The doctors sent me right to the E.R room and told me good luck.  I was confused on why they were saying good luck, because I still had no idea what was going on.

I was laying down on this bed built for 10 year olds, I had my legs dangling from the end of the bed and a needle in my arm.  Yet I was still able to enjoy myself since we were watching the Detroit Red Wings playoff game.

 The nurse made me very comfortable and I still am very thankful for him as he calmed me down.  I asked for a pillow and he jokingly hit me with the pillow.  It was now 11:17 pm when the doctor dropped the ball.  “You do have diabetes Stephen.” The doctors explained.  It didn’t really hit me when he told me.  I just had no clue what to do.  I didn’t know what was going to happen, no clue on how everything was going to change.

Lying in my own bed that night after the doctors let me go home, it hit me.  The doctors told me that I couldn’t eat anything that night, and the last time I ate was in the morning.  I thought to myself “Wow, this stinks!”

The next day, I didn’t go to school.  I had the whole day basically learning about everything there is to diabetes.  I was there from 9am in the morning to 2 pm and I had a baseball game that day.  My dad rushed me back to the game, where I started in left field.  That’s when I realized that I can make it easily.  It’s just another new challenge I have to face every day now.

Now, I’m a senior at Grandville High School, playing three sports this year.  I’m just a little bit different than a normal person, and yet I’m still living the life.  

 So what can you do?  For starters gain a little information.  The JDRF website  has information on the disease, the latest research, support, and tips for living with diabetes.  You can also stay informed to what is happening locally on their Facebook page .

Second, get involved!  January 29, 2011 the Grandville/Byron Center Varsity Hockey team will be hosting the Second Annual Charity Game.  This is a great evening of hockey all while supporting JDRF.  Game starts at 4:00pm at the Georgetown Ice Arena in Hudsonville, MI.  An auction of collectable sports memorabilia and more will take place after the game.

One Really Good Day

January 6, 2011

Yesterday was awesome!  Let me start by saying it wasn’t due to the sun shining on newly fallen snow or that I won the lottery.  (Just for the record I didn’t even play.)  Yesterday was a truly great day because I was able to visit three area non-profits with gifts of support to help them continue their efforts.  For extra measure I even threw in a visit to a new friend who is organizing an upcoming event you really should attend.

The reason for these visits was the result of the AHF Charity Gridiron Challenge game we have been playing this NFL season.  Every week we encouraged friends, family, co-workers and supporters of all non-profits to register and play by picking the teams they felt would win their respective games.  The player with the most correct picks received a $50 gift card.  The non-profit organization they were playing for received $250 from Awareness.  While the game created some friendly competition and interesting office dynamics, the most important part was the ability to support some great organizations. 

The day started with a brief stop to see Jay Starkey, Executive Director at In The Image.  This is an organization that connects families in need with donated clothing, furniture, appliances and more.  Every year they also help area at-risk kids get a new pair of shoes for school.  Last year they were able to help nearly 9,000 kids and have a goal of helping 12,000 kids this year.  Jay, his staff and many more friends played with great enthusiasm all season long with a desire to win “at least just one week”.  That was just what they did the last week of the regular season thanks to a long-time friend of Jay’s.  $250 to In The Image means helping 25 kids with new shoes.  This day was getting brighter as I began to see what these organizations can do with a relatively few bucks.

I then made my way across town to Gilda’s Club Grand Rapids.  If you have not heard about all the excitement going on there lately where have you been?  Gilda’s Club is a place where people of all ages gather to learn about cancer, share experiences with others, and have the opportunity to laugh along the way.  This March Gilda’s Club Grand Rapids will celebrate 10 years of keeping that signature red door open and warmly welcoming all who want to enter with Laugh Fest.  This is the first annual 10 day event that is sure to tickle every funny bone you have. 

I was extremely honored to deliver to them as our grand prize winner, a check for $2500.  It was fun to watch the faces of three weekly winners who also happen to be on the staff of Gilda’s Club beam with pride at their successful efforts.  However, it quickly sank in that this money also meant they had more work to do, more lives to help, more smiles to share.  Incidentally I also had another contribution for them.  You see the real difference in the Awareness business is that we make a contribution of $250 with every home loan we close; and a client had  just asked us to help Gilda’s Club as a result of their loan.  That is one part of my job that will never grow old.

I took a slight detour from delivering checks from the Charity Gridiron Challenge game to deliver one for the next event we are sponsoring.  The Grandville/Byron Center Varsity Hockey team is hosting their second annual charity game.  This year they are raising funds and awareness of Juvenile Diabetes by supporting JDRF (Juvenile Diabetes Research Foundation).  A team mom decided to chair the event this year since her son, a senior on the team, has type 1 diabetes.  (If you missed his story in our January e-newsletter, sign up to receive it for free.)  The charity game is January 29 at the Georgetown Ice Arena.  Visit our Facebook page for all the details under the Events tab.

By now I wondered if there was anything to top my excitement.  I had already brightened the day of 3 groups and had one more stop to make – Harbor House Ministries.  Peg Driesenga is the Executive Director of a Christian residence for people with severe mental and physical disabilities.  Like Gilda’s Club, Harbor House is not a place of dimmed lights and hushed tones.  The rooms are open and bright with an air of energy and excitement.  Laughter and conversations drift from all around.  Life is in full swing here.

Peg showed me The Cove, a new activity and physical therapy building on their property.  They have a personal goal of remaining debt free and our contribution was another partner making sure that stayed a reality.  I was really impressed by the love and compassion the staff at Harbor House possesses to care for their residents.  Hopefully we can bring you their full story sometime.

This was one really good day.  And to think it all started with a simple game of picking football teams.  I guess the bottom line is that it’s not about how big the act of kindness is, but that you do act.  It’s not about the value of the check, but the value of the intention behind it.  We all have the same 24 hours in a day, what are you doing to make a difference with yours?

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.

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.