The Lending Coach

Coaching and teaching - many through the mortgage process and others on the field

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Hitting Mental – Planning to Hit

baseballreturns

The mental game of baseball is always a great topic – because it is important, clearly has value, and players perform better the more time they spend on their mental game.  One of my favorite reads is Justin Dedman’s “Hitting Mental” blog – he has great content for players looking to better themselves at the plate.

“Failing to prepare is preparing to fail.” – John Woodenslid-show-pic-of-batting-practice

Says Dedman “Wooden nailed it when it comes to hitting, too. Whether you are a college, high school or travel ball coach, or a hitter working on his craft during the summer or winter months, you better have a plan.”

Year-Round Planning

Dedman talks about how his team plans for the fall – they plan in segments.

“Over the course of a fall season, we have a skill work segment, team practice segment, and then more skill work. Our first set of skill work is three weeks, with one hour each week to work with a hitter, divided into two, thirty-minute sessions. Without a distinct focus and direction, we couldn’t optimize the time allotted to help our hitters improve.”

They then begin video work of their mechanics, although there is very little talk of mechanics in the first three weeks. Their plan is to develop rhythm, tempo and timing (their approaches) first. Justin believes that when a hitter implements these things first, there are fewer mechanical adjustments needed.

“Our plan also includes side work (next to the main BP cage) of exit velocity testing, forearm/grip strength development, mental game training, breathing techniques and mirror work. In the cages, during those two weeks, hitters throw to each other, work tee drills, overload and underload train, front toss, do mirror work and hit mini wiffle balls with a taped broom handle.”

Source: Justin Dedman’s Hitting Mental Blog

DeadmanThe Mental Workout

Secondly, Justin shares his “Mental Workout” – a pre-game process that will help players focus on the tasks at hand:

1.) Centering breath: Breathe in for six seconds, hold for two, breathe out for seven.
2.) Identity statement. Say a preconceived personal mantra to yourself that reflects your strength and desire for success.
3.) Personal Highlight reel: Spend 30 seconds visualizing three “done-wells” from the previous 24 hours, and then spend another 30 seconds visualizing three things you want to do well in the upcoming 24 hours.
4.) Repeat your identity statement (same as Step 2)
5.) Centering breath: Take another centering breath to prepare yourself for the upcoming performance. Again, breathe in for six seconds, hold for two, breathe out for seven.

If all hitters would take the time to see themselves doing great things – and breathing effectively to slow things down, I guarantee their success rate will go up!

 

There’s No Rule Against Re-Applying For A Mortgage

dont-give-up-on-your-mortgage-approval

According to Ellie Mae, the 75% mortgage loan approval rate is at its highest level in more than a decade. That is obviously great news for those purchasing a home and for those existing homeowners who are taking advantage of the robust refinance market.

Source: The Mortgage Reports

What Do The Other 25% Do?approved

Denial of credit is, usually, not permanent.  This is good news.  Loan offers and underwriters analyze many financial factors in every loan file. Automated underwriting systems (AUS), FICO scores, debt to equity ratios, loan to value ratios, and the appraised vale of the home are indicative of a borrowers ability to repay a mortgage.

None of house_on_cashthese factors are permanent and all can be improved with good financial planning.

A reputable lender will work with borrowers who are denied credit.  The loan officer must take time to explain the reasons for the denial and offer suggestions for improvement.  For a nominal fee, credit repair companies  provide recommendations for retiring debt that is responsible for the mortgage denial.   Frequently the loan officer will check the AUS findings and make recommendations that will improve FICO scores.

Small Changes, Big Impact

Most lenders approve or turn down a loan based an Automated Underwriting System, or AUS — software that weighs all factors of your loan profile.

The algorithm is not super predictable. In fact, a small tweak can move you to “approved” status.

For example, an applicant might have perfect credit, but a high debt-to-income ratio, and a small downpayment. He does not receive an approval.

But he pays off a high-payment credit card. His debt-to-income drops, and he is approved.

Lenders see these reversals in fortune all the time. Often, they keep mental notes of what works and what doesn’t. If your loan is not approved, ask your loan professional if there’s anything you can change quickly to get approved, such as the following.

  • Make a slightly bigger downpayment
  • Buy down the interest rate by 0.125%minimum-down-payment
  • Obtain a rapid rescore to raise your credit score a few points

You could be surprised at what a seemingly small change can do to your approval status.

Remember, the financial factors that result in credit denial are not permanent.  Credit can be improved.  In many situations the borrower can improve credit within a month or two – quick enough to change the denial to approval.

The attached article  provides a road map for next steps when you or a customer are denied credit.  Make sure you are working with the right lender as well.  A reputable lender welcomes the opportunity to help a potential buyer improve their credit so they can own a home.

The Bank Statement Mortgage – A Great Option

Borrowers that have incomes that are less documented have a much more difficult time qualifying for a traditional home loan.  In general, self-employed borrowers or those who write off 2106 un-reimbursed expenses will be the most likely to benefit from the bank statement program.  These programs can be used for a primary residence, a second home or an investment property.

“Bank Statement loans are designed specifically for the self-employed and others whose tax returns and employment history may not adequately express their financial viability”

As its name would suggest, the concept is predicated on providing evidence of future payment ability, in the form of bank statements from the past 12 to 24 months. These can serve as the means for a down payment, in addition to taking the place of a traditional employment history for the years of W -2 forms typically required of buyers during the application process. Freelancer-Finances-810x552

The bank statement program is designed to alleviate this shortfall of standard documentation.  We will determine an applicant’s ability to repay based on a more pragmatic, case-by-case approach.

Bank Statement Program Verification

Lenders may allow the use of personal or business bank statements to support a self-employed borrower’s income for qualification purposes. The documentation provided needs to document that the income is stable, likely to continue and sufficient to enable the borrower to repay the debt.

The income presented must be reasonable for the profession or type of business.  In addition, when using business bank statements to support the borrower’s income, the nature and structure of business must be evaluated to determine if the applied expense assumptions are reasonable.

The borrower’s business may be a sole proprietorship, a partnership (general or limited), or a corporation. They may also receive income documented by Form 1099, or filed on a Schedule C.

Borrower must have been in the same line of work or own the same business for two years. Self-employed borrowers must be able to document by a neutral third-party that the business has been in operation for the last two years and that they have had ownership for that period of time. Third-party verification generally includes:

  • A letter from a certified public accountant (CPA)
  • A letter from a regulatory agency or professional organization
  • Copy of business license

stick figure on cashBorrowers that are employed by the seller, property seller, realtor, or receive foreign income are ineligible.

Income Documentation Requirements

The Borrower’s application must include all sources and amounts of income. The bank statements must support income listed on the application.  Deposits from income sources that are not reflected on the 1003 or those not needed to qualify will not be included in the qualifying income calculation.

Income sources separate from self-employment must be verified. Examples of verification include social security letter, employment verification, or divorce decree. If tax returns are provided for the borrower using bank statements to support their income, the loan must be fully documented.

Income may be documented by either personal or business bank statements. However, the co-mingling of personal and business or multiple business accounts is prohibited. If multiple accounts are used to show income and reserves, documentation must be provided to show evidence that the funds are separate and distinct.

Here are a few of the key features of this type of loan:

  • Up to 45 percent debt-to-income ratio
  • 5/1 & 7/1 adjustable-rate mortgage options
  • Loan-to-value ratios of up to 75 percent
  • Cash-out options of up to $350,000 for a primary residence
  • Loan amounts of up to $2 million

While the bank statement program is truly unique, there are signs the rest of the mortgage market is catching up to the evolution. These types of transactions are becoming more and more common – and for good reason!

 

Find A Lender That Will Take the Time to Know You – A Mortgage Is Personal

Another-Happy-Homeowner1

A real estate transaction and mortgage is personal.  The right mortgage, for example, should reflect your goals – both long and short term.  A mortgage is certainly not 15 minutes on the web with a completed application and a rate ready to lock.  Especially for the self-employed borrower.

In the past weeks, I’ve had multiple questions from Realtors and borrowers asking me about the “quick and easy on-line loan application”.  On the face of it, the filling out of the application is relatively quick and it seems to be pretty easy.

The problem is this process can actually be more expensive – and, most importantly, almost never reflects the goals of the borrower.

Source: The Mortgage Reportsrefinance totter

Which brings me to the article linked above.  Give it a read – it’s a good one.  Towards the end of the article, the author discusses the differences in loan underwriting systems. It’s a little bit of “inside baseball”, but one of the key differences between these systems is the need for tax returns.  In many cases, one will yield an eligible finding with only one year of tax returns – while the other requires two.  The subtle difference in two underwriting programs can be the difference between credit approval and denial.

The point is this, you must have a relationship with a loan officer who knows the subtle details.  The subtle details of borrower qualification relative to the borrower’s circumstances can be the difference between getting the loan approved or being denied.

piggybanks marchingI spend a lot of time working with real estate agents.  I want to build profitable relationships with the agents to help them grow their business.  Key to these relationships is my ability to know a borrower and find a way to secure funding within the limits of regulation and law.  This requires both product knowledge and understanding of borrower needs.

“The Champion’s Mind” – Dr. Jim Afremow

Gold Medal Mind

“What separates the top few from the many in a sport?  Mentality.  The importance of the mental side of athletics was once brilliantly summed up by basketball legend Kareem Abdul-Jabbar: ‘Your mind is what makes everything else work.'”

Dr. Jim Afremow is a mental game coach, licensed professional counselor, and the author of The Champion’s Mind: How Great Athletes Think, Train and Thrive. He is the founder of Good to Gold Medal, PLLC, a leading coaching and consulting practice right here in Phoenix, Arizona.  His book (it’s also available as an audio book) is really worth checking out.Champions Mind

Dogged determination requires keeping your feet moving forward through inconveniences, discomfort, and insecurities to reach your goals.”

Here’s an excerpt from his book:

“Mental toughness is built by doing something that is hard over and over again, especially when you don’t feel like doing it. Our society has conditioned us to believe that there should be no discomfort, to stop when we are uncomfortable. But the discomfort we feel when we’re doing a challenging workout is an important part of the strengthening process. Push through your down days when you’re not feeling your best (unless, of course, you are injured or ill).”

I’d encourage you to learn more about  Dr. Afremow’s book here.

Dr AfrenowFor over 15 years, Dr. Afremow has assisted numerous high school, collegiate, recreational, and professional athletes. Major sports represented include MLB, NBA, WNBA, PGA Tour, LPGA Tour, NHL, and NFL. In addition, he has mentally trained several U.S. and international Olympic competitors. He served as the staff mental coach for two international Olympic teams, the Greek Olympic softball team and India’s Olympic field hockey team. From 2004 to 2013, he served as a senior staff member with Counseling Services and Sports Medicine at Arizona State University.

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