Weekly Rate & Market Update 9-30-16
Question: Why would someone use an app for something as important as a mortgage?
Answer: Great question from a 9th grader sitting on the couch when an ad came on the television. It was prefaced with, “when I first saw this ad I thought, ‘this company could put dad out of business. Then I thought, ‘why would someone use an app for something as important as mortgage?’”
There is most likely some environmental bias having spent her 14 years listening to Dad talk about mortgages, but it is still a great question, why would someone entrust something as important as their most expensive financial obligation to a computer program and some unknown person or people perhaps in some foreign company?
The personal computer revolution has commoditized many segments of the economy and combined with the advent of big box stores has brought to the forefront for most consumers the instinct to get something for less. But what have we sacrificed in doing so? Quality? Service? Accountability?
Airline tickets, groceries, books, ratchet sets, cabinet fixtures, beds and more can be purchased and delivered to you without ever speaking to anyone or actually seeing or touching the product—in the case of books without ever touching the book. Even medical and legal advice can be had with the click of a mouse. And of course mortgages are also available in the click-click economy.
But is diagnosing a skin rash that could be skin cancer, setting up a trust for your estate or financing your home on a similar level of importance as getting a flight to and a hotel in Nashville or a set of high ball glasses for your brother’s birthday?
When someone uses an on-line app or large call center for their mortgage this is what they miss:
Personal service: When we speak with clients about their mortgage, whether purchasing a first home, investment property, refinancing or whatever their need is, we engage in a conversation that is more than how much do you owe, how much do you make. What is the purpose of the mortgage? What are your long term plans? Would it make sense to pay bit more and get a lower rate or increase your payment a little and save on costs? Are there special considerations regarding your income, employment, credit, source of funds to close, property with unpermitted rooms? In essence much like a doctor reviews your medical history during an examination before completing a diagnosis and suggesting treatment a good mortgage professional will also engage in a thorough examination before presenting mortgage options. My Samsung Galaxy cannot do that.
Accountability: You can touch us, come into our office and shake hands, have a cup of coffee or other beverage and talk about what you need, or what problems may or have cropped up. Should something go wrong or need immediate attention you have our phone numbers that are direct dial and not through a myriad of push 1 push 5 push 3 then hold. There is only one point person for your mortgage and it is the same person you initially spoke to when discussing ability to qualify and mortgage options through the application and collection of supporting items through ordering and signing loan documents through closing and for any questions you may have for as long as you need after your loan is funded—be it five days or five years. Every step of the way we are accountable to you for ensuring you are informed on what is happening and why, when the current step in the process will be completed and when the next is expected to start and be completed. Because our business is solely referral based we go the extra step to make sure everything occurs as planned with you, we know if it doesn’t then we not only failed you but also failed to possibly secure future business.
Knowledge: Yesterday was the 17th anniversary of Stratis Financial, next year will mark 30 years since I received my license from the Department of Real Estate and began in the mortgage industry (sidebar real estate licenses are chronological, mine is 00966315, today licenses being issued are above 01999980—that means over one million licenses have been issued since I received mine). Our company has hundreds of years of experience in the industry between our originators and staff. We have funded thousands of loans at Stratis Financial and tens of thousands of loans if counting the totality of our careers. There are very few circumstances we have not encountered before, and if we do come across an issue or problem we personally have not seen the depth of experience we can draw upon for solutions is as deep as any mortgage company in the region, much state or country.
Value: I tell clients you can get on the phone or internet and always find someone marketing a “cheaper” loan. But there is a big gap between marketing and closing, and between closing when and how intended and just getting it done when it gets done. Do some companies have lower rates, fees, costs? Most likely. Are we competitive with the market? Absolutely. And when you add in the support, service, ability to minimize the amount of time and resources you need to expend to get your loan closed then we are perhaps the best value in the market. Not saying we are comparable in regards to the big picture of life, but your shelter and biggest financial commitment is a pretty big deal, that said would your shop the cost of doctors and hospitals if you or someone in your family needed an very delicate operation? Most likely not. The advantage we provide is our ability is akin to the top surgeons in any field but the rates and costs we provide are closer to your family doctor than the best surgeon. (That’s probably a poor analogy but I hope you get my meaning.)
Relationship: As mentioned above, once we fund your loan you are not a file number, you are a client for as long as you choose to be one. We have clients that we first met decades ago, worked together on several home purchase and refinances and now working with their children on their mortgages. This is because we care, if we did not care all of our transactions would be one and done and looking for the next one—in which case we would be spending significant money on media advertising, on-line presence and marketing to capture that one phone call or on-line application for another client we will never speak to again. That is not us. You will not hear our ads on the radio or television. You will not see pop up ads when you go on-line. You will not receive telemarketing calls. Because the business we want, the business we get and the business we do very, very well is referred to us from clients and business partners. And they refer us because we are very good at what we do, we provide tremendous service and personalize that service and we succeed at funding the mortgages you need.
Why use an app? I use one to get Dodger tickets, but when it comes to my home and biggest check I write every month I’d rather have someone I trust to speak with and work with through the process.
Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.
A bit of positive news for the economy this week as the second revision for 2nd quarter Gross Domestic Product up GDP growth to 1.4% from its prior estimate of 1.1% and the estimate for 3rd quarter growth is 2.5-3%. The news is slightly mortgage rate unfriendly, especially if the estimates for 3rd quarter growth are accurate.
Not as positive was data released today for personal income and spending. Since consumer spending is 65-70% of our economy future economic growth is very dependent on people buying goods and services, and to do that they need to earn money. Personal income in August just 0.2% in August and spending for the month was flat, as in 0.0% growth. Prices inched up 0.2%, negating income comes and year over year prices are up 1.0%, though the core price index (strip out food and energy) rose to 1.7% annualized approaching the Fed’s 2.0% inflation target. The news is mostly mortgage rate friendly.
Rates for Friday September 30, 2016: Rates remain unchanged from last week and we remain in our tight little band where rates have been for several months. Technical factors are pointing to a possible drop in Mortgage Backed Security prices in the near future which could lead to higher rates. My advice remains to lock in your mortgage rate when you can through the end of your escrow period.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.25% Flat
30 year high-balance conforming 3.50% Flat
30 year FHA 3.00% *** Flat
30 year FHA high-balance 3.25% *** Flat
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages. ***FHA rates have may have no points and credit towards closing costs, changes daily.
Tomorrow kicks off the best month of the year for sports fans as all four major sports are underway. Baseball playoffs and World Series, professional and college football seasons enter there midpoints, the NHL and NBA start their seasons. Before cable my friends and I would spend many a weekend with two or three televisions stacked up in a dorm room or someone’s apartment constantly changing which game was on the color t.v. and moving antennas to get clearer pictures. I still wonder why our grades tended to dip a bit in October….
Summer is still clinging to us this weekend, I am ready for it to let go and give us the cool, crisp mornings and afternoons.
Have a great week,
Dennis
Missed a Weekly Rate & Market Update? You can catch up as all the updates are posted on my website at http://www.denniscsmith.com/MyBlog .
