How LIBOR Will Affect Your ARM

LIBOR (London InterBank Offered Rate) is an index set by a group of London based banks, and sometimes is used to determine the rate for U.S. adjustable rate mortgages.  In 4 years, LIBOR will be going away.  So what does that have to do with you?  Well nothing, UNLESS you have an adjustable rate mortgage.  When this changes it will create uncertainty for a borrower who can’t figure out what the rate is going to be. 

Some LIBOR loans have interest rates that adjust monthly, and others adjust much less frequently. Both principal and interest (P&I) and interest-only (IO) mortgages can be based on the LIBOR.  If you are not sure if your loan is tied to LIBOR take a look at the note you signed.  There is also an ARM disclosure that would say what the index and the margin were.

So what do we know?  That this brings about uncertainty.  When LIBOR goes away, the servicers can set the rate to any index they wish.  They will have to notify the borrower prior to the change date, but by then short and long term rates could have skyrocketed.  With both fixed and adjustable rates are still low, it may be the right time to review your mortgage with a professional.  

If you have any questions, please let me know.  I would more than happy to discuss your specific situation and address your personal questions.

Chris

Trump Wins! You the consumer of mortgages LOSE!

Yes, today there will be a quick drop in rates as the Dow panics and there is a flight to safety.  However in the weeks and months following you will see long term rates go up by .50 to 1.0% as mortgage backed securities and other bonds go out of favor with investors.  Trump has made it clear he is going to get this country's financial house in order and to do that, we need to make interest on the money we borrow and borrow less.  Long term (decades) this could be good for you as a citizen of the United States.  Short term (next 8 years) we will see rates go up and the cost of borrowing for your home will be more expensive.

My advice, if you are thinking about refinancing LOCK TODAY!  If you are thinking about buying in the near future move your timeline up. Rates will be higher in 3-6 months and you will not be able to afford as much.

Please contact me: http://www.cornerstonemortgage.com/ChrisScheer/

Is The Next Housing Crash Coming?

This is a fantastic article if you are a person who believes in trends!  As I read it, we are currently in phase II but depending upon the market next spring we could easily move into phase III.  Not only do we have the potential for hyper supply; look around you, do you see a lot of new construction?  We are also almost assured of rising interest rates.  Those are 2 of the 3 signs with a recession being the 3^rd sign.  Any significant event on the global stage could trigger the recession which would put us right back where we were in 2008.  Maybe not as drastic, but far too many homeowners are 1 paycheck away from a missed mortgage payment.

As I have the opportunity to look at borrower's balance sheets and assets regularly, there simply is NOT enough saving happening.  Too many people are trying to live the life of a wealthy person or if not wealthy, at least the life of someone they see on television.  Those that stop trying to keep up with the Joneses and live frugally will be prepared for when the next housing crash comes.

-Chris

SaveSave

Do Election Years Affect Mortgage Rates?

Wherever you look, you can find opinions on both sides.  Some say an election year has no direct bearing on interest rates while others say it most certainly does.  There is evidence to back both views.  One thing that is for certain: given that this election is unlike any other election, all bets are off.

Neither candidate has intensely focused on the issue of housing so there does not appear to be a direct policy that will largely impact the industry.  But as humans we have a fear of the unknown.  So yes, during an election year buyers tend to be uneasy.  Markets & stocks do not like uncertainty either. This could, in turn, affect job creation, unemployment and the overall strength or weakness of the economy.  That of course, trickles right down to housing.

Right now Wall Street is leaning toward Hillary Clinton being elected and the market is priced as such.  If she does become president, yes there may be a slight increase in rates but Wall Street likes someone who is not likely to make radical changes.  If Trump is elected, it will be like going back to July 3rd when we saw the effects of BREXIT, which largely affected consumer and manufacturer confidence.  

Whatever will happen we will be looking at a 4-yr cycle until the next election.  So I wouldn’t hinge my decision on an election, I would hinge it on the needs of your family and your pocketbook.  One thing I can say, in looking back at rate trends we will still most likely still be enjoying the lowest rates in history.  Just look back at 1981 where the ANNUAL AVG was 16.63% (SEE HISTORY BY YEAR AT http://www.freddiemac.com/pmms/pmms30.htm)

Weighing In On Brexit: A Loan Officer's Perspective

Thursday's historical 'Brexit' ("British exit", which refers to the June 23, 2016 referendum by British voters to exit the European Union) vote has caused panic and uncertainty in the financial markets.  Whenever something like this happens there is an immediate flight to safety.  That means that large institutional investors move their money out of stocks and buy bonds.  When bonds are in demand, their price goes up and thus their yield or effective interest rate goes down.  This is why we saw rates fall between .125-.25% on Friday, June 24th, 2016.

The challenge with the rates falling is that they are near historical lows.  Realistically they don’t have much room to go lower.  The large institutional investors will get to a point where a return less than 3.5% is just not worth tying their money up and they will look for either higher returns or short term places they can wait for the market to determine when the uncertainty is over.

We have had a sellers’ market all year long with a large amount of buyers, small housing inventories and low interest rates.  That being said, the changes made to the mortgage underwriting process after the mortgage crash of 2008 has placed a significant amount of weight on accurate appraisal values.  Even with competing offers, buyers offering over list price and houses selling the first day of listing (or even before), the scrutiny in which appraisals are facing will control any potential bubble.  

Over the past 90 days I have seen 5-10% of the purchase transactions where the appraised value has been lower than the sales price.  This forces either the seller to lower their price or the buyer to pay the difference.  In both cases the mortgage industry and the country are protected from a perceived “bubble.”  The lender is lending off of the appraised value or the sales price, whichever is lower.  Thus they are certain that their risk is appropriate for the loan program that the buyer has chosen.  If there is one lesson that the industry learned in 2008 it was that collateral appropriately valued is key.  The industry is continuing to hang their hat on that and we will not see the overvaluations that occurred prior to 2008.

One thing to keep in mind though, is that if you purchased your home between January of 2013 and March of 2016 there is a good chance that your interest rate may be higher than the market and with the increase in home valuations that has occurred your equity position may have changed enough to warrant a mortgage fitness checkup.  I highly recommend that you reach out to your preferred loan officer and discuss your situation with them.  

Please feel free to contact me with questions or for a mortgage fitness checkup.

-Chris Scheer

Appraisals: Five Common Questions Answered

WHAT IS AN APPRAISAL?

A real estate appraisal is required on a property whenever it’s financed, whether you are buying or refinancing a home. (With a few exceptions, contact me for more information). It is done after an offer is made on a home, or during a refinance.  An appraisal costs several hundred dollars, and generally the borrower pays this fee.

Someone else is thinking what I am thinking!

I hate to simply rely on other people to say what I am thinking, however this article on MSN is the perfect advice for those who are getting greedy and thinking that rates are going to continue their downward trend.

http://articles.moneycentral.msn.com/Banking/HomeFinancing/dont-wait-nows-time-to-refinance.aspx

Just because your neighbor got a certain rate does not mean you will get the same rate either better or worse. The days of a simple rate are long gone. Your FICO, loan amount, amount of equity in your home, type of loan, and many other factors will determine your rate. Take the time now to get a "Mortgage Fitness Checkup" to see what is the best plan for you and your financial future!

Time to get back at it!

So I disappeared for a while as I tried to work through the holiday season. Just prior to Thanksgiving rates started falling we saw refinance activity begin to pick up. Then on December 15, 2008 we saw a huge rally on mortgage backed securities push the 30 year down to historic lows. Some were lucky enough to lock in at 4.75%. That lasted for all of 2 1/2 hours and then investors pulled pricing and rates went back above 5%. Since then we have seen little drops followed by upward pressure keeping the 30 year around 5.25%. Still lower than 2003 and now we have this news:
http://www.marketwatch.com/news/story/Banks-rise-Fed-details-planned/story.aspx?guid={EA305A84-90F7-44BF-8DF3-B0DD3687F789}&dist=hpts
Going into 2009 there will be more pressure to push the rates down to 5% or below. There is not a target number that the Fed is releasing for where they want rates, but you can be assured there will be more days like December 15, 2008 in the future.

For those wanting to take advantage of these rates I highly recommend talking to your mortgage professional and getting your application completed and all closing costs agreed upon ahead of time. Put a plan in place to lock at a rate that makes sense and then when the opportunity arrives for you to lock in to the rate it only takes a few minutes and you are locked in. Keep in mind when these opportunities arise, they don't last for days. The market or investors only want so much exposure and once they get their fill, they will pull that pricing. We never know how long it will last. Those that are prepared are the ones that benefit the most.

Have a safe and Happy New Year!

An Open Letter to All Referral Sources

Last weekend the Federal Government announced the takeover of Fannie Mae and Freddie Mac. This is the culmination of many months of stress and tremendous losses for these companies and many in the mortgage industry. Prior to this announcement, GMAC Mortgage announced it was closing over 200 retail mortgage offices, putting more loan officers and support people out of work. Many of the very talented people in the mortgage industry have left or are no longer working for companies that could provide them the programs and support that they need to be successful. Throughout all of this Cornerstone has continued to stay strong. In July of 2007 we had 17 loan officers. We now have 25 loan officers. We have added talent and with that talent we have added programs and tools to help you become a success or help your clients achieve their goals.

For the real estate community we are rolling out the Home Buyers Scouting Report. This is a tool to help you establish a relationship with buyers and incubate them until they are ready to purchase. For my professional partners we have one of the only second mortgage programs that goes to 95% combined loan to value. In addition to that we have the Equity Accelerator to help all of our clients save thousands of dollars in interest over the life of their loans.

I want to make sure that you know that I am here to help you and your clients achieve your goals. If you know anyone who has purchased or refinanced in last 3 years, please pass their information along to me so I can schedule a “Mortgage Fitness Checkup.” They may not need to do anything now, but it is beneficial to them that they begin to build a relationship with a trusted mortgage professional that can help them achieve their financial dreams!

Sincerely,



Christopher M. Scheer
Your Residential Lending Expert

A Quick Thought on Early Retirement

For all my Anheuser-Busch friends, clients and those Financial Planners helping them make the decision on whether or not to take the early retirement offer that has been sent to them. If they are considering restructuring their debt or refinancing, they need to do that prior to accepting the early retirement. Once they have accepted the package, their probability of continued employment has ended, even if they are going to be employed at the time the loan closes. Any severance package that includes income, if the income is not going to continue for 3 or more years will not be used for qualification purposes when attempting to get approved for a loan. In the current underwriting climate, underwriters are getting better at doing their job and with all of the news coverage of the proposed merger, I would hate for some one to have a loan denied because they did not plan ahead.

For questions or comments, please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

FHA is the King!

As previously mentioned, the new economic stimulus package has allowed HUD to raise its maximum loan amounts for FHA loans depending upon the county of the property. For those in the St. Louis, Missouri area, that means we now can do an FHA loan for up to $281,250. The previous amount was $213,750, so that is a huge jump, almost a 33% increase.

So who can take advantage of this? You could spend days googling FHA loans to get all kinds of information about the FHA insured loan so I won’t waste you time covering everything. What I will do now is touch on the opportunities that I think will make the most amount of practical use for the clients that I see on a daily basis.

1) First time homebuyers: With the end of the conventional 100% financing (see previous post) now more than ever this will be the product of choice for first time homebuyers who have little or no money down. FHA requires a 3% down payment; however those funds can be gifted to the borrower from a relative. The gift does not have to come all from the same relative either. You can get part from one parent, part from another parent or their siblings such as an aunt or uncle and then you can get more from another relative. Thus on the $289,950 purchase price that the borrower needs $8,750 for a down payment, they can get that from various relatives or at least the part that they have not saved up on their own. They can also borrow the money for a down payment, as long as the loan is secured and has a repayment period of at least 5 years. That payment counts against their debt to income ratio, but makes borrowing against a car, a boat, a certificate of deposit or a 401K an option for coming up with all or some of the down payment.

2) Refinance to get out of an 80/20 loan. The second mortgages on these loans were priced higher than the rate on the first. Many people regretted getting them, but because of the change in Conventional guidelines, they were not able to refinance the loans since they owed over 95% of the appraised value. On an FHA loan, we can refinance them at 97% loan to value if we are paying off liens on the property. A great way to get those people out of 2 mortgage payments and into one at a FIXED rate.

3) Refinance for cash out. Both Fannie and Freddie have made it darn near impossible to get approved for conventional cash out loan over 80% loan to value. First your FICO score has to be over 720 and then good luck getting mortgage insurance on the loan. With FHA we can go to 95% loan to value and thus help get people out of the credit card debt or other challenges that are overwhelming them. It will also allow people to borrow money to improve their property, which in the near future will be a key to helping people hold their property values.

These are just a few of the ways the FHA loan can be used. For comments or questions, please contact Chris Scheer at cscheer@cornerstonestl.com or 314.224.9824.

The End of 100%

In the ever changing landscape of lending, we had the latest and most significant change take place this past Monday. All of the Private Mortgage Insurance Companies announced that they would no longer issue mortgage insurance on any loan with a loan to value greater than 97%. On a side note I can remember when we could only do a 97% loan and then just one of the mortgage insurance companies said they would insure up to 100% and it was months before the others joined in when the LTV was going up, but now that the maximum LTV is going down, they are all are the same page and quick to make the move. Kind of like rats jumping off a sinking ship! But I digress! Now there are few instances that one of the companies will honor the 100% commitment but it is in such a limited scope that you have a better chance of winning tonight’s Powerball drawing than getting a 100% loan.

So why are they doing this? First of all they are all taking a bath financially in mortgage insurance claims on loans that are in default and foreclosure due to the current mortgage crisis. Some would argue that they have been making money hand over fist for years as their losses have been limited as the housing prices grew and mortgage rates were declining or low, but keep in mind that during that time that they had to fight to keep market share and revenues as the banks created the second mortgages that would go to 100% and in the industry it was common practice to do a first mortgage for 80% and the second for the remaining amount to avoid mortgage insurance. So let’s not rush to judgment on the profits of the mortgage insurance companies over the last 7 years. Secondly and more importantly, we are seeing house values in some areas decline. So if they did insure a loan that was a 100% loan in one of those areas and the house price has declined, they are now insuring for over 100% of the value of the house. How smart is that?

What does this leave us? Thanks to the stimulus package that was passed we know have higher FHA loan limits and in most cases the cost of the monthly mortgage insurance will be less on an FHA loan. Also, in the old days, before 100% financing, we did most loans using gifts, tax returns, SAVINGS, as a way to come up with the initial 3% for a down payment. Imagine that, you have to save some money to buy a house?

I will write more on the increase in the FHA loan limits and the opportunities that are presented by this later this week. For questions or comments on this please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

Market Update January 25, 2008

The very same group of lawmakers that were on a mission at the end of last year to pass a bill that “reformed” the mortgage industry by putting heavy re­strictions and potential penalties for providing consumers much needed diver­sity in mortgage products, is now “coming to the rescue” of some struggling consumers by passing a stimulus plan that includes a way for more homeown­ers with viable credit to finance even larger loans and put a few hundred dollars extra in their pockets.

Industry analysts have been saying for weeks that low mortgage interest rates are not enough to help turn away the wave of potential foreclosures that are beginning to flow into the conforming mortgage market. The “reform” scared many lenders straight back to lending guidelines from the 90’s which severely hindered many homeowner’s ability to take advantage of the current low rates.

The stimulus package that has been approved by the House, and is going to the Senate next week, will give relief to some of these homeowners. As part of the proposed package, the current conforming loan limit would be increased to as high as $729,750 which will allow many homeowners with jumbo loans to refinance at lower rates. It might also allow homeowners with combo loans to possibly refinance into one lower monthly payment and rate. These increases are also being offered to FHA loans as part of this package to allow the Federal Housing Administration to help in the recovery efforts. Additional benefits could be felt by homebuilders and realtors who have struggled to sell properties at the higher price point or who can’t get buyers off the fence due to poor con­sumer sentiment about the market.

It’s now time to hold your breathe as this package is put before the Senate. Although some Senators are commenting publicly that they would like to see it fly through as well, history shows that it only takes one person with their own agenda to stop the progress of any package. If it goes through, we might be seeing the beginning of a refinance rally which would be welcome by many in the industry.

For questions or comments, please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

A Perfect Example!

For those of you that have followed my postings you know that I warn people about going to the “Dark Side” to get their mortgage. The “Dark Side” is those mortgage companies that you see and hear advertising for business all of the time. I realize that we all have business plans and ways to generate business. Advertising is a way to do so, but when it comes at the expense of the client, especially a client that cannot afford to pay the difference then it is not the best way to do business.

On Friday evening I received a call from a lady who was referred to me by one of my professional relationships. She had applied with a local mortgage company and was trying to refinance a loan that she owed $61,000. In her history she has a bankruptcy and she currently lives paycheck to paycheck with no savings. Because she had tremendous equity in her home she is able to refinance with little or no challenges. On a scale of 1-10 with 10 being the hardest, this is about a 4 when it comes to doing her loan. Thus I really can’t justify charging her a premium to do her loan because it would be a lot of work. More on that later, but the local mortgage company had been pressuring her to close this week and call it women’s’ intuition or just a nagging feeling she felt uneasy about closing so she mentioned it to my professional partner and she then called me. When we visited it turns out that the difference in my closing costs and those charged by the local mortgage company were $2,500. Of that $1,640 was a broker fee which was being charged instead of charging 2.5 points. Not only is that rape of a person who cannot afford it but because they are charging the broker fee instead of points the broker fee is not tax deductible. The points at least can be amortized over the life of the loan if they chose to charge points.

It is needless to say that this lady has canceled her transaction with the local mortgage company and is proceeding with Cornerstone. That is why I tell people to steer away from the “Dark Side”!

Now back to the premium for doing excessive work. On Tuesday of this week I received a phone call from a Realtor who was in a panic. Her client had been trying to back out of his purchase contract and the lender he was working with had canceled his transaction. When the client found out he had no legal grounds to get out of the contract and had to proceed or risk being sued he agreed to proceed but could not find a lender that could get him a loan in 2 days. The lender he had applied with was a national lender working his deal out of state and because they have no desire to have a relationship with either the borrower or Realtor they didn’t want to go the extra mile to get the job done. This is the type of challenge I love and I told the realtor and the client that as long as they did exactly what we told them I would be able to close in 48 hours. Since we had to drop everything we were doing to get this loan done we did charge a premium in the interest rate. Instead of making what we normally make we made an additional 1 point. I explained this to the client and they understood completely. Closing happened on time and all the parties were completely satisfied.

So there are times when people should pay a higher cost to acquire a mortgage, but unfortunately the people that should pay a few and far between and the ones that shouldn’t usually make the mistake of going to the people that will take advantage of them either because they don’t have their best interest in mind or simply their business plan does not allow them the flexibility to treat people fairly!

For comments or questions please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

Are Rates Falling?

Well the year has started off with interest rates heading lower, but have they really? With Fannie Mae and Freddie Mac adding risk based pricing to their delivery fees for all loans delivered after March 1, 2008 see https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2007/0716.pdf. Who knows what the rate will be at any given time. Couple that with this announcement; https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2007/0721.pdf

And the interest rate that I thought we should have is now at least .125% higher and in some cases .375% higher. Even though the price of mortgage backed securities continues to rise and the yield or effective interest rate is falling, the interest rate for most consumers is actually going up or staying the same!

Economic news favored rates falling and currently the trend has been favorable. However this week we have at least 3 Fed Governors speaking at various functions and the minutes from the December Fed meeting will be released. The market watchers will spend far too many hours dissecting the comments from these and we will see the bond market either give up its gains or take on a whole new energy as anticipation of the next Fed meeting begins. Either way, at this point it is going to take a strong push to get the 30 year fixed back down to 5.5% or below. Mostly due to the above mentioned pricing by Fannie and Freddie, but also keep in mind that the secondary departments of the major investment banks are under pressure to be profitable with the REO departments getting killed with all of the foreclosures. Thus when they do their pricing models, expect them to error on the conservative side.

For comments or questions, please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

All I Want For Christmas

So imagine if you will; you are one of the many mortgage originators who have managed to stay in this industry through the last 3 years of cutbacks, layoffs, companies going out of business and income less than you have seen in a long time. Over the last 2 ½ weeks you have seen the 30 year fixed rate drop below 6% more than once and actually get to 5.75% for 24 hours before heading north again. You have glimmers of hope of making money again; real money! Not just closing enough loans to pay off your draw and keep your job, but enough money to justify all the pain and heartache you have experienced lately.

Wall Street is in your corner. They are pushing for the Fed to continue to lower short term interest rates. They need the lower costs of money to offset their huge losses in the Subprime Mortgage fiasco that they created. Your consumers are clamoring about the most recent Fed rate cut “does this mean that my interest rate dropped?” Instead of being able to say yes you have to say no and then spend 10 minutes on economics, Wall Street, mortgage backed securities and Japanese candlesticks to try to get them to understand the difference between short and long term rates and that one moving doesn’t mean the other will move.

You are exhausted and leave the office to try to find a real estate agent to talk to in hopes of getting a deal from them only to find that you either can’t get into their office or the agents you can find spend the entire conversation telling you how bad the real estate market is and no one is doing any business. You grow weary of bad agents and bad attitudes and get back into your car only to find that no matter what radio station you turn on you hear a commercial for a mortgage company, one of the “Dark Side” lenders who continue to prey on the unknowing and confuse most of the average and below average consumers with their lies and misleading information. Thoughts of George Bailey jumping off the bridge in “It’s A Wonderful Life” dance through your head. As you think of that you realize that the story ends happily and George gets to live his life with happy endings. Where are your happy endings?

They are right where they should be! This career, this job you have chosen to continue to pursue is your Christmas wish. It isn’t about the money. It isn’t about confused borrowers. It isn’t about competitors that don’t play the game fairly. It isn’t about realtors who let others control their minds and outlook on their career. It isn’t about whether the Fed lowers or raises interest rates. No it is about each and every borrower you do get to help finance or refinance their home. Not house, but home! You get to help people live the American Dream. It is about being the person who touches the lives of everyone you meet in a positive way. You can only be measured by how you made the lives of the people around you better. Accept that as your calling and reap the rewards of a life worth having and living!

Happy Holidays!

For your questions or comments please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

You Can't Wait!

Guess What? You Can’t Afford to Wait!

If you had a crystal ball and could see what direction interest rates and house prices where going you wouldn’t be reading this blog. Now that you have had a chance to think about that and agree with me on that premise, let’s move on to the bigger issue which is “You Can’t Afford to Wait!”

If interest rates go up while you are reading this blog you will lose money! Why you ask? Because you could have locked into an interest rate for a period of time and by waiting you may have missed that opportunity.

What are you waiting for? When are you going to:

Purchase your first home?

Purchase your next home?

Invest in real estate?

Refinance your home?

Get a home equity loan to improve your home or pay off bills?

Do anything?

If rates go down while you are reading this you will lose money. Why you ask? Because now you will get greedy and wait for them to go down further. By the time you figure out they are at their lowest point they will be on the way back up again. Remember, pigs get fat, hogs get slaughtered.

If you don’t make an offer on that house you like, someone else will. Maybe not today, but sooner or later someone will purchase that house. The sooner you do it, the sooner you get a chance to lock into building equity and creating wealth. I subscribe to the theory that there is a house out there for everyone and sometimes you want to buy the wrong house. But that is why you should have a good buyer’s agent representing you. They will make sure that you buy at the right price for this time and that the house is the right house for you at this time.

If you are thinking about buying investment property, what are you waiting for? The next 12-18 months will be the best time to purchase single family investment property here in the United States for at least the next 20 years. Every day that you wait to start you are passing up the chance to build your real estate fortune!

If you wait to get that home equity loan it might not be available to you when you want. The loan programs that were available in March 2007 have changed. Credit score minimums have changed, loan to value limits have changed. House prices may have fallen your area limiting how much you can borrow. Waiting will cost you $$$$$$$$$$$$$$.

For comments on this or other postings please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

The Dark Side Part 2

So how do you avoid the “Dark Side?”

Let me first say that I believe that everyone should have the opportunity to make money. The Mortgage Industry is a great place to earn a living, provide for your family and help people make dreams come true. However, with every industry there are always people who are in it only for themselves. These people prey on others who are less educated, less intelligent and sometimes less qualified. When they do, they usually abuse the system, creating large incomes for themselves while staining the reputation of their entire industry. Not to mention that the people who are usually their prey are the people who need to have a lender who will treat them fairly as opposed to taking advantage of them.

Once a “B” always a “B”. When the sub prime lending market was in its beginning, there were borrowers who would not qualify for the “A” paper loans. On more that one occasion I would hear an account rep say that “B” borrowers don’t change their habits and they don’t learn their lesson. That may be true about some people, but I believe that people can learn to manage their credit and they can learn to manage their finances. All they have to do is have an honest chance!

So what is an honest chance? Well it is putting someone into a loan program so that they can develop a budget off of. It is creating a mortgage solution that will not penalize the client in a short period of time. It is not gouging them in fees when they do come back to you eating all of their equity up with refinance fees. It is treating people the way that you would want to be treated.

As we see mortgage delinquencies rise and foreclosures happening at an alarming rate, there is a change that must take place. But it is going to have to be consumer driven. Legislation is not the key. Education of both the consumer and of the mortgage sales people will be the basis of this revolution. The consumer must learn not to fall into the trap of working with people who spend tremendous amounts of money on advertising. Mortgage originators need to learn that if you are going to stay in this business for a career, relationships are a necessity. To nurture those relationships you must take care of people so that they want to come back and refer other clients to you.

Thank you to Tracy Nolan for referring Andy Revelle.

Thank you to Andy Revelle for referring Joshua McDowell.

Thank you to Klaus Bank for the referral of Sarah Stroup and Pete Wilkens.

Thank you to Libby Emmer for referring Rob Steinkuehler.

Mortgage Fitness Checkup

When was the last time you had a “Mortgage Fitness Checkup?”

For most people, their house is the single largest investment that they will ever make. In most cases it is also the single largest amount of money they will ever borrow. In addition to that, each and every day they are bombarded with advertising from companies trying to get them to refinance their first mortgage, second mortgage and in some cases even a third mortgage. Why is it that the majority of these people don’t invest the time to visit with their professional mortgage banker or broker to review their mortgage. If life happens, and it does for most of us, don’t our plans, goals and family situations change on a regular basis? All of a sudden the spouse wants a pool in the backyard. They want the basement finished. They want to go back to school to get a better job. Their company is planning on moving its headquarters and that may mean a career change. No longer are we dealing with people getting a 30 year fixed rate loan and paying all 360 payments to pay the loan off.

Most people are keeping their mortgage for an average of 3-5 years, even after the last refinance boom that ended in 2003, over 65% of the people who refinanced or purchases during 2002-2003 have refinanced or will refinance all or part of their mortgage in the past 12 or the next 12 months. Why is that you ask? Two reasons: the first being that many of those people took advantage of the historical low interest rates and financed into adjustable rate mortgages which are now coming up on their first adjustment period. The rest are people that I have previously mentioned, life happened to them and they decided to act. It is that simple. So what are the benefits of a “Mortgage Fitness Checkup?”

Benefits of Mortgage Fitness Checkup

• Determine clients’ current financial goals pertaining to mortgage payment.
• Review interest rate with current market.
• Discuss new programs that have been introduced in last 12 months. Educates borrower to help them from falling prey to the “Dark Side.”
• Prepares potential buyers for upcoming opportunity to purchase.
• Prepares potential investors for the opportunity to build wealth through real estate.
• Prepares current homeowners for possible moves, including assisting in developing strategies to maximize equity in current home.
• Provides credit theft screening.

How long does it take to complete? Depending upon the clients’ questions, a Mortgage Fitness Checkup can take as little at 10 minutes or up to 1 hour if the client wants to spend time strategizing ways to create wealth by using their mortgage as tool. For more information on the Mortgage Fitness Checkup, contact Chris Scheer at 314.223.9824 or chrisscheer@firstintegrity.com.

Special thanks to Bill Cooper of XO Communications for the referral of Sonya Kennedy. Also thank you to Amy O'Brien of Agape Construction for the referral of Juhn Mendin.

Why a Blog?

Why a blog? After having tried many things to market myself and my services over the years, the single most successful way that I have found is word of mouth. I have built a business on referrals and taking care of the people who have placed their trust in me and my ability to help them achieve their financial goals. I have toyed with the idea of creating a Myspace.com web page for a while; however I never took the time to pursue that marketing concept. Recently I had the chance to see Ben McConnell speak on “Citizen Marketers.” http://www.creatingcustomerevangelists.com I was overwhelmed by the power of the web and how one person speaking out can create either a positive or negative image of a brand or company. With that type of power at my fingertips, I knew that I had to take action and do something. Since I tend to have random thoughts that flow through my mind, creating a blog seemed like a good way to help me put those thoughts down on paper. Giving me an opportunity to toss out the bad thoughts and build on the good ones. So here it is, coming to you at the speed of the internet. The rambling thoughts of a professional mortgage banker who is looking to create a positive buzz about the service he provides.

Personal Mission Statement

My mission is to touch the lives of all I meet in a positive way.

As your Mortgage Banker I will:

• Help you find the right loan for you at this time for your financial goals.
• Return your phone calls and e-mails in a timely manner.
• Attend or have someone from my team attend your closing to ensure a smooth transaction.
• Provide an annual review (Mortgage Fitness Checkup) of your mortgage with you to help you stay on track to achieve your dreams.

I am not promising the world, only promising to do the things that each and every one of us would like to have done for us. It seems to me that my parents beat that “Golden Rule” thing into my head as a child.

A special thanks goes out to Jack Ortbal of Concord Bank for the referral today.

By the way, if you know of anyone who can benefit from this type of service, I am never too busy for a referral from you!