JohnsBlog (articles, news, thoughts, advice)

Recently, times have been tough in the mortgage market.  Home values are rising at a snail's pace and, in some cases, diminishing.  Foreclosures are rising, lenders are falling, and we are left with fewer and fewer options when it comes to financing.

Times like these make me realize and focus on what my job really is.  I am here to get people loans and get people into homes.  From first time homebuyers to seasoned investors, my job is to help people accomplish their goals using their most valuable asset--their home.

Nowadays, my job goes above and beyond taking an application and closing a loan.  I have seen the importance of not only helping people get a loan or improve their credit today, but also to prepare them for tomorrow.  Though I can help people in a great many ways as a mortgage expert, there are clearly other financial avenues in peoples lives which need attention and assistance.

For this reason, I have employed the services of a trusted team of professionals, and have dubbed them my ACTT team.  ACTT is an acronym for Assisting Clients Today and Tomorrow.  In addition to my mortgage market expertise, I have a financial planner/advisor, Insurance experts, a college planner, a CPA, loan officers, and several realtors on hand throughout Pennsylvania and Delaware.  With this dedicated group of individuals, I believe I can help my clients plan every major step of their financial lives, from education to retirement, and everything in between.  I want my clients to be in a condition where it is not IF they can get a loan, but HOW QUICKLY it can be closed.  I want my clients financial goals to not only be reached, but surpassed, and with ACTT, I believe I can truly make a positive impact in peoples lives. 

Yes its that time of year...back to school!  For parents, a time of joy, for their children...not so much.  For some, a time of uncertainty.  For many college bound students, their financing options are limited, and that huge tuition bill presents a huge problem.  Doesn't have to be that way though.  This is the time of year when many people refinance their homes to get the money for education.  With rates in the low 6% range for a 30-year fixed rate mortgage, it's easy to see savings in refinancing as opposed to taking out high-interest student loans or praying for a scholarship.  A no closing cost 2nd mortgage is another answer for many looking for some extra funds at this time of year, and even in a shrinking market, these programs are aplenty.

Also, for high school students thinking of where they'll be headed in the future, we have your help.  With the assistance of Gary Aiken, president of College Aid USA, and member of the ACTT team, we can help you and your children plan on where to go to school, guide them through the application process, and help to find financial aid from sources that are unknown (and unused) to many.  Planning a year or 2 in advance for this huge step in life will end up saving a ton of headache and allow you great access to low-interest student loans and great scholarships that you may not even know exist!  If either of the above options is something you're interested in, give me a call and we can talk about the correct moves to take to save you both stress and money. 

September is becoming a very busy month very quickly, and our volume looks to be near-record high, and the month isn't even here yet!  In addition to loans, credit fixes, and consultations throughout the month, I will have 3 articles appearing in locally distributed papers.  The first (which I've posted in a prior blog as a sneak peek) will be available Monday, September 3 in Chester County Kids.  The second will be available in the Fall Real Estate issue of the Daily Local News, and the 3rd will be the Real Estate progress report of the Daily Local.  My second article will focus on the current housing market, the decline in home values, and will contain advice for buyers and sellers with contributions from Greg Quintiliano, a realtor from the well-known, top producing Gary Mercer Team of Prudential, Fox, and Roach in West Chester.  The third article set for release in September will be in the fall progress report, in which I'll address the decline of the market in general, and offer readers a glimpse into their current options and the most intelligent way to play the market.

While closing out this month and looking forward to a great September, I'd like to wish everyone a very happy labor day!  Hope everyone has a great weekend and gets to enjoy their days as summer comes swiftly to an end.

I'm very pleased to announce my latest partnership in constantly striving to meet my clients financial needs.  Yvonne Evosirch with Lewis Casualty is now available and willing to assist my clients for all of their insurance needs.  Lewis casualty handles life insurance, auto, home, and other services as well.  Working with over 20 insurance companies, Yvonne can find the most competitive rates and programs for individual situations.  I hope that this partnership comes to fruition as a great benefit to my valued clients and her clientele as well.

In other news, I have recently upgraded and put more focus into my FHA loan programs.  With the decline in subprime mortgages and the rise in their interest rates, the FHA program seems to be revitalized and finally once again worth the hassle of extra paperwork (which it hasn't been worth in the past couple years with lower subprime rates with minimum documentation).

Hey, the paper it appears in is free, too...but you wont be able to view that until the first Monday in September.  Here's a sneak peak for my next article for Chester County Kids, a monthly special edition of the Daily Local.  I will also be contributing to their Fall Real Estate section, and Fall real estate progress review in September, so be on the lookout for those. 

Anyway, here's the article:

760;6.3%         579;10.1%

Do these numbers mean anything to you? They should. They are credit scores and the Annual Percentage Rates on mortgages associated with them. With the average home in June costing $316,200, the difference spent on interest amounts to more than $288,000 over the life of a 30-year loan. Over a quarter-million dollars! With the additional difference in rate for auto loans, credit cards, and insurance, it’s not uncommon to hand over an unnecessary $1 million in interest to creditors over a lifetime with bad credit! Now one thing every parent knows is that kids aren’t cheap, and with the costs of living constantly on the rise, who couldn’t use the extra cash saved simply by having a good credit profile?

I’ve worked with many clients to improve poor credit, and in my experience, have found it equally as disappointing telling someone they can’t obtain a new home based on their poor credit rating as it is rewarding to obtain their loan approval. However, I wish the improvement process didn’t exist! I believe it paramount that parents teach their children financial literacy and responsibility to prepare them for a financially secure life when grown. There are several simple ways to reach this goal.

Every child loves games, and parents love games that help children learn. Money management is taught in games such as “The game of Life” and “Monopoly”, but parents rarely explain this lesson- they should! Make them realize saving money to put a hotel on Boardwalk led them to their paper-money fortune. And good thing they had money set aside for when they landed on the utility company, isn’t it? That’s the importance of savings. Small-scale lessons such as these are life lessons a child can relate to and learn from.

Does your child get an allowance? If so, they should have a savings account. Why not offer to match their saved allowance, teaching the idea of return-on-investment (it’s not a coincidence that on average people with wise investment portfolio’s and money saved have higher credit scores!)? There are now even parentally managed credit cards available to 16-year old children. Allow a child to use the card after having them outline a plan to pay back their debt, and make sure to leave room for uncontrollable circumstances. This is an outstanding way to teach financial responsibility.

When implementing these ideas, share a sense of excitement as your child’s savings grow and they become financially responsible and aware. Remember, to a young child, having $100 makes them rich! This accomplishment at a young age can lead to a lifetime of financial security, stability, and perhaps a beach home for the wonderful parents who taught them such wise lessons!

John Meussner is a Mortgage Consultant with Stonebridge Mortgage Corporation in Chadds Ford. For more ideas, information, or the ACTT (Assisting Clients Today and Tomorrow) team, you can reach him using e-mail at jmeussner@stonebridgemortgage.com, or via phone at (484) 680-4852. Also, comment on his blog at www.johnsrate.com.

So my clients I've spoken with have recently heard a lot of commotion about a potential "rate cut" and wonder will this substantially drop their rates on mortgages over the coming months.

There are a great many opinions on this coming rate cut, which looks to be scheduled between now and the next Fed meeting on September 18. Personally, I believe this rate cut will give some short term relief, and has the potential to create long term disaster.  Though my heart truly goes out to the thousands of people now out of work (Over 21,000 just this month---a few of those close friends and business colleagues), this financial mess has been a long time coming.

For the past few years, investors placed their bets on super-risky loans, and now that the risk is outweighing reward, they're running with their tails between their legs.  Liquidity is being injected into the global market at an astounding rate...we're talking billions here (can I have a piece, please?), in hopes to keep the market afloat, and keep large corporations running...in short, keeping the country out of recession.  Unfortunately, I dont see a rate cut helping to accomplish this...we may simply be delaying the inevitable trend towards a trip to the bottom of the financial-rollercoaster.  The trip up lasted a few years, and was thrilling to those in the industry pulling in incomes well into the 6 figures....the trip down is fast and scary, with companies leaving thousands jobless and without income. 

There are some terrifying aspects to this collapse...one is that thousands of innocent people are without jobs and struggling at the moment.  Another is the ripple effect that a real estate market meltown has.  Think about those involved in the sale of a home...you have a buyer and a seller...they usually have realtors.  There is an appraisal done by an appraiser, a pest inspection, a home inspection.  A county recorder is paid, a title company insures the property.  In the cases of a new home, after the sale there is landscaping and decorating.  All the people involved have less business with the lack of homes selling.  These people have lower incomes.  These people can spend less.  These people cant afford new cars...car dealers/makers suffer.  Extravagant vacations?  The tourism industry loses some big spenders, and big profits.  The wide-spread effects of a real estate breakdown are astronomoical and the damage of our current decline's results may not be determined for years to come. 

The bright side?  Many people who were throwing money into these risky loans and "securities" without great credentials or responsibility are being slowly but surely squeezed out of the market.  Those in charge of issuing 50-year, interest-only 100% financing mortgage programs to people with less than appealing credit are going out the door, and to them, I say good riddance.  A homebuyer loves a lender and broker when they can get into a new home.  But when a 2-year loan adjusts and  a 5% rate becomes a 7% rate, and then an 8.5%, and a homeowner cannot refinance due to the lack of equity, and they cannot manage their payments, who is at fault?  The borrower, who is not a financial expert, who were told "Take the 2 year program, then refinance", or the mortgage "professional" and lender who sold this product to someone who had no business obtaining it?  There lenders focused solely on volume have crippled the market, and many individual households in the process....but I digress

Back to the rate-cut. Injecting liquidity into a market that has killed itself is not a wise move in my opinion.  Why bring a company out of a crisis they created?  So they can learn and do it again, cutting jobs and causing foreclosures in the process?  This is a natural cycle of the real estate market, an up and down ride with its highs and lows.  It is the excess in the industry which we're losing, and hopefully these terrifying times will frighten anyone from participating again...builders who built more homes than they could sell...mortgage companies who hired and barely trained new LO's to offer these highly volatile programs without truly knowing their nature.  So while I see a slight benefit of a rate cut (and hey, Mr. Bernanke could pull off a miracle and save the market, and restore everything to tranquility....I hope he does!), I believe it is a delay of the inevitable.  We may see rates drop, but guess what folks?  We're going to see them rise again, too.  At some point, they will rise, and history has shown, its a cycle better left to pass than to fight.  The quicker we fall through the trough of the wave, the faster we can rise to the crest.

Planning for Tomorrow, Today

Summertime Cents

By John Meussner

A little more than a month into the official beginning of the summer season, and it already seems that the cool fall air and winter snow will be here before we know it. Thoughts of warm ocean breezes and weekends at the shore will be a thing of the past for 8 chilly months. Remember when you were a kid, and the time lapse between the last day of school and the start of a new year seemed to pass in a week’s time? Nowadays, with many people working more than 40 hours a week and focusing more time on their careers and financial well-being, summer seems to be a brisk 24-hour celebration of warm weather, and we’re lucky to squeeze in that annual vacation. If it’s on your mind, I can guarantee that it’s on your children’s thoughts twice as much. Have you had your well-deserved week of family fun yet this summer? Why not?

Studies have shown that time away from the workplace and with the family, even for a short while, results in greater productivity upon your return, helps prevent burn-out, and enhances your overall health and well-being. With these findings, it’s clear that time away from the desk will help you multiple times over upon your return. Even better, a great family vacation doesn’t have to leave you strapped for cash.

One option, a home equity line of credit, is similar to a credit card, but with a substantially lower interest rate. You can pursue a home equity line of credit and use it in the same fashion as a credit card. This financial tool allows many people the convenience of a credit card, with no worries about high finance charges. Many programs even come with a no closing cost, fixed rate option.

Another alternative is restructuring your current mortgage. If you’ve been on the fence about refinancing, consult with a mortgage professional to find out if now is the time! Rates are still historically low, and one of the many benefits of a good refinance is that you get a month free from making a mortgage payment. This instant addition to your monthly cash flow is the perfect source for vacation money!

If you’re a homeowner who’s been stuck indoors so far this summer, consult your mortgage or financial expert today to see what you need to do to get your family to paradise. A good mortgage advisor can help put you under the sun in a few weeks time. Labor day weekend, the knell of summer, will be here before you know it, so stop putting off that much needed and well-deserved time to enjoy the greatest time of year.

John Meussner is a Mortgage Consultant with Stonebridge Mortgage Corporation in Chadds Ford. For more information on using your home as a financial asset, or to speak with a Financial Advisor, you can reach him using e-mail at jmeussner@stonebridgemortgage.com, or via phone at (484) 680-4852.

Planning for Tomorrow, Today

By John Meussner

Rising gas prices, increasing college tuition, declining real estate markets; it’s getting more and more difficult to put money aside for parents who own homes in today’s world. At the same time, the importance of saving and investing in your child’s future is augmenting at an astounding rate. It doesn’t seem fair, does it? I attended both West Chester University and University of Connecticut, and graduated with both a degree- and about $30,000 in debt (a small amount, compared to some of my colleagues!). My parents did not understand the investment process, and the thought of portfolio returns was confusing to them, to say the least. This is what has shaped my business practice.

Every one of my clients is different, but most of them have a few things in common. Most are homeowners and parents with at least a little bit of equity built up in their homes. All of them want their children to have access to the tools for success in life, namely a good education, but not too many are sure of exactly how to get there. With average 4-year college costs currently between $70,000(public school) and $145,000(private school), it is extremely hard to put a child (or 4!) through school without loans in addition to financial aid. With forecasts of inflation estimating costs to increase to $169,000(public) and $345,000(private) by 2024, it certainly will not get any easier. Fortunately, there are tools available to adapt to these prices, and leave a $250,000 college bill paid in full come graduation day.

There are investment opportunities and plans that allow many Americans’ largest asset to be used, turning a small deposit into a large return. What asset could you possibly have that would help pay for these colossal fees? Your home! Working with financial planners and a qualified mortgage consultant to develop a plan for your child’s future, you can utilize a cash out refinance, home equity line of credit, or an investment mortgage product as a way to take necessary funds, place them into a low-interest mortgage, and invest the monies in customized portfolios. This offers substantial returns to help pay for college without taking out high interest private loans or relying on the hope for scholarships. With many of these investment products being tax-free, returns of 400% or higher are not uncommon. Imagine putting $100 into a piggybank, breaking it open, and finding $500. That is what these programs are designed to do, and they are invaluable to financially aware parents. Whether your child is 17 and almost ready for college, or a newborn, it’s never too late to start planning for tomorrow, today.

John Meussner is a Mortgage Consultant and Loan Officer at Stonebridge Mortgage Corporation in Chadds Ford. For more information on investment opportunites, or to be put in touch with a Financial Advisor, you can reach him via e-mail at jmeussner@stonebridgemortgage.com, or via phone at (484) 680-4852.

The 2nd largest privately held home lender, First Magnus, has announced they will no longer be taking loan applications or funding loans.  Joining American Home Lending and New Century as major companies that have run out of options---and time--- in the recent mortgage crunch. 

In addition to these major players, there have been thousands upon thousands of layoffs over the past few months, raising initial jobless claims to the highest levels seen in a while.  Many subprime lenders have closed their doors, often times declaring bankruptcy and raising the white flag after a few years of lackadaisical lending guidelines holding a strong place in the market.

Even major lender Countrywide is showing signs of weakness and trouble, today withdrawing $11.5 Billion--the entirety of their available credit lines from major investors on the market...this is a last-ditch effort, and hopefully they'll pull through...though saying that their lending guidelines will be strict is more than a slight understatement...perhaps their new slogan will be "No one can do what Countrywide did".

Good news is that there ARE lenders out there doing okay, acquiring the weaker lenders, and gaining market strength.  These lenders may have been disliked by brokers due to their strict guidelines in the past, but these guidelines are what have them still up and running in a market that has imploded over the past 8 months.

I work with many of these lenders, and its nice to see that in a struggling market I can do many of the same things I could a few months back, just by falling back on different avenues of lending.  Where subprime used to carry a majority of power, FHA and community programs have stepped up to the plate.  Expanded approvals allow for close to subprime rates on Fannie loans, and I haven't seen a huge fallout of loans due to these other options. 

Now for a little self-serving promotion---its even nicer to know I work for a company that has used strong lenders over the past year and will continue to do so.  Stonebridge has not greatly been affected by lenders falling out of the market, as our lenders have incredibly strong financial backing and have always been responsible in their lending guidelines.  Though I can no longer offer somone with a 580 credit score 100% financing on a cash out refinance despite their repeated credit and mortgage delinquencies, I can STILL offer a client funding if the loan makes sense.  My company has been strong enough and smart enough to not only weather the storm, but continue to grow throughout a shrinking market.  Hopefully as this beast of a market continues to bear its teeth, the weak will be weeded out and the strong, responsible, and best lenders and brokers will be left standing to help restore the market.

PS..Ill be here awhile.