What is your why?

Question of the week: What is your why?

Answer: This is a question that has come up a few times in past few weeks. Most recently it was posed by Rotarian Dan Ouweleen, who is the District Governor Rotary International District 5320; the district which includes the Rotary Club of Long Beach, of which I am a member.

Dan gave a short presentation titled, “What is My Why?” the purpose of which was to have each of us in the audience ask ourselves the same question. Listening to Dan and then pondering the question, on my way back from our meeting on Wednesday I thought, “I should have this be my question of the week.”

We have many roles in our life, and each role has its own “why.”

In January 2007 I wrote personal value, mission, and vision statements. My mission statement is, “My family, personal, work, and community commitments are in balance and congruent to allow me to bring happiness into the lives with whom I interact.”

This week I would like to share my “why” for being a mortgage professional. It took me quite a while to understand my why, but once I did my job satisfaction increased considerably.

I started in the mortgage industry in 1987 because a friend of mine was in the business and was making very good money. My motivation was that, making money. After several years I realized I was not very satisfied with what I was doing and thought about another career. The source of my dissatisfaction was I felt that I didn’t produce anything, at the end of the day, week, month…I couldn’t see tangible number of units that I produced.

Then in 1994 a few things happened to change my perspective. First, and most importantly, within nine months Leslie and I began dating, bought a home, got engaged and then married. I was a homeowner.

In the beginning of the year, I received a letter from a client who had been somewhat gruff, and frankly challenging to communicate with through our transaction. In his letter, he thanked me for helping he and his wife purchase their first home. He did not realize how important it was until before Christmas as they purchased a home with a fireplace. His young daughter kept saying how now that they had a fireplace Santa would be sure to find them and bring presents. He did not realize how quickly having their own home would change their family, knowing that they would raise their children in the home, removing some anxiety that he always had about where would they be living in a year, two years, or more at the whim of a landlord.

Being a new homeowner, without yet having children, and reading his letter really opened my eyes as to how important my work is to ensure homeownership. Yes, I realized before this time that homeownership is important, but I did not fully understand the depth of importance it has.

My “why” started to come more into focus. It became crystal clear a few years later after we had purchased a bigger home and started our family.  

Growing up we moved around. A lot. My mom was married to my dad for twenty-four years before she passed away and, in that time, they shared around twenty addresses as he moved around in the petroleum industry. Some addresses were a hotel in some small oil town for seven to eight months, others were home for longer as he rose in the industry and stayed in one place longer. Of those many addresses, by the time I graduated high school I lived in six of them. Home to me was a temporary place with new friends who would become old friends when we moved again.

In March 2004 Leslie and I had lived in our home for five years and seven months, equally the longest I had ever lived in the same home. We had two young daughters, who I knew would live in this home through their childhood. By then I got it. I got that importance of homeownership, the security, the stability, the comfort, that everyone has knowing we would be in this home as long as we wanted to be in it.

My why is to do all I can to help other families attain homeownership and enjoy the same security, stability, and comfort. My why is to provide education and information to prospective homeowners so they can purchase the best home they can afford in such a way they that they can own that home as long as they like.

We started losing business before the real estate and mortgage market meltdowns that started in 2008. We lost business because our philosophy is that we are helping you buy a home not a get-rich-quick investment. Because of this we stressed 30-year fixed rate mortgages. We had the opportunity to use stated-income, or no qualifying mortgages to help families purchase more expensive homes; but doing the math on their payments and their incomes we could not in good conscience put people in mortgages that they could not afford and would lead to trouble down the road. Our goal was to support and enable homeownership that would last as long as the family wanted to keep that home, not to get into a home and figure out to pay for it later.

My why is to enable and support homeownership by working with individuals and families and presenting them options to purchase their home within their financial capabilities.

Our business is generated completely from referrals. We get referrals because we care about the families we work with and listening to them about their wants and needs and then showing their capabilities.

The most important purchase of your life needs more assistance and guidance that purchasing a car, or an appliance. We provide that assistance and guidance.

If you, or someone you know, are in the market for a new home, or considering a mortgage for other non-purchase, contact me.

Have a question? Ask me!

A lot of economic data this week that impact rates. On Wednesday data was released showing consumer confidence dropped for the third month in a row. This is somewhat good news for rates as lower consumer confidence can lead to less consumer spending, which can lead to lower inflation as economy slows due to less spending (consumer spending is about 70% of our economy).

Unrelated to the consumer confidence data, but also announced Wednesday, was the Federal Reserve announcing it was increasing its benchmark interest rate by 0.75% for the second month in a row. This was met very positively by the markets and resulted in a rally in mortgage markets pushing rates down.

Yesterday data was released that created much debate. Like many issues these days, the 2nd quarter Gross Domestic Product data enabled pundits, politicians, average Joe’s and Jane’s to become economic experts. Our GDP shrank by 0.9% in the 2nd quarter, this follows a 1.5% contraction in the 1st quarter. The debate is “are we in a recession.” When I was getting my economics degree in the early 1980’s a recession was defined as two consecutive quarters of negative GDP, and that remains the technical definition. The argument, that is centered around politics, surprisingly…, is that while that is the technical definition, in the United States the official determination of whether the economy is (was) in a recession comes from the National Bureau of Economic Research. The NBER looks at several factors beyond GDP to determine whether there has been a recession, so some are saying we don’t know yet if we are in a recession or not. I use past tense because it can take months before the NBER makes its determination.

In my view, if it looks like a duck, whether a mallard, a canvasback, or a white-faced whistling, it is still a duck. Having two consecutive quarters of negative GDP has us in a recession, a shallow one at this time but in one, nonetheless. This is positive news for mortgage rates as it portends slower economic activity, therefore a drag on inflation and the return of lower rates in the future. How long into the future? It depends on how slow inflation is to respond to a slowing economy.

Today we received news on inflation, spending and income. The personal-consumption price index (PCE—why not PCP I don’t know unless the government doesn’t what people to think they are giving prices for illicit drugs) spiked by 1% in June, pushed by fuel prices. The “core” rate (fuel and food taken out) was up 0.6% for the month. Year over year the PCE increased 6.8%, 4.8% for the core rate. The somewhat good news is that with a large part of the increase being higher gas and oil costs in June, with those costs dropping in July we should see a tamer inflation number. The PCE is used by the Fed when gauging inflation as it takes into account how consumers change their spending habits due by buying cheaper goods.

Finally, we round out the week with spending and income data. Both increased in June, before inflation is considered. Consumer spending increased 1% in June, accounting for inflation the increase was only 0.1% above spending in May. Personal incomes continue to grow, up 0.6% in June, but as can be seen if inflation was 1% and your income increased 0.6%, you are making more not enough to keep up with your expenses due to inflation.

Rates for Friday July 29, 2022:  The result of all the data this week was that rates dropped for the third straight Friday, with the conforming rate down 0.75% since the first Friday of the month.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:

30-year conforming                              4.625%        Down 0.375%

30-year high-balance conforming        5.375%        Down 0.25%

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 with 740 FICO score for purchase mortgages.

I hope you don’t mind that I used the Question the Week for what usually goes into this part of the WR&MU, personal information and not mortgage or real estate related. One thing Dan said on Wednesday when talking about his “why” was that he realized it didn’t mean anything unless he let others know. Following Dan’s example, I feel I need to let others, you, know my why for being in the mortgage industry. Thank you for reading and understanding!

Have a great week,

Dennis

Past Weekly Rate & Market Updates can be found on my blog page at my website www.DennisCSmith.com/my-blog