First Ohio Home Finance

Central Ohioans have known for more than a decade that Delaware County has a lot going for it. Such advantages as reasonable real estate and mortgage costs, low crime, and easy commute to one of the nicest cities in the Midwest have made Delaware County one of the fastest growing places in America.

First, Forbes.com ran this story naming Delaware County the 5th best place to raise a family and touting the Columbus Zoo and Polaris Fashion Place.

Then, CNN Money Magazine released their list of top places to live, with Delaware County ranking 13th best place to live in America.

Lately, though, we’ve really been earning attention with solid ratings from national media. Topping the list was job growth at 42% - that’s almost unbelievable! Players in that sandbox certainly are JP Morgan Chase, PPG Industries, Ohio Wesleyan University, and McGraw Hill Companies, to name a few. There’s no doubt that a booming economy helps to keep real estate and mortgages services affordable.

The Ohio Department of Development have a detailed county profile here. No other city in Ohio made the lists, so it feels pretty good to be in the hot spot of good living. Columbus had been #8 on the best big city list in 2006.
Here are the Best Places to Live from Money Magazine:
1. Plymouth, MN
2. Fort Collins, CO
3. Naperville, IL
4. Irvine, CA
5. Franklin Township, NJ
6. Norman, OK
7. Round Rock, TX
8. Columbia/Ellicott City, MD
9. Overland Park, KS
10. Fishers, IN

Hat tip to Maureen McCabe of Real Living HER for bringing this to my attention. We look forward to working with her clients on the mortgage side.

I had the privilege this morning hearing Steven Anderson talk about Thriving Under Pressure. You’d think I went because the mortgage industry is under tremendous pressure as brokers and lenders sort out who’s on first. There’s a natural tension in mortgage lending that’s accentuated when times get tough. Who drives the industry: the small businessmen and women that find and retain clients, the massive banks that control the regulations and capital, or the US taxpayer that gets to bailout every industry when times get tough? (If you are laughing at that last option, you pass the test.)

Actually, that’s not the main reason I went.

I accepted Tom Broadbent’s invitation because I am challenged by balancing work hours, home life, and volunteering with several organizations. Just like you, I would guess.

Learning to deal with stress benefits every American because, as Steven Anderson said, “We humans are smart enough to kill ourselves.” Specifically, in today’s economy, we need tools to deal with more and more stress from the financial side of our lives. Not only do we run into the aggravation of minding passwords for dozens of bill paying sites, but most Ohio families don’t have enough money to go around each month. There are urgent decisions like enrolling your children in another sport or paying down debt that we all carry.

Here are two important lessons I took away from the seminar that I thought could help you in managing your personal finance.

1. Learn the difference between Acute Stress and Chronic Stress. Making important decisions and dealing with short term problems is acute stress and is actually healthy. Planning and pushing through these experiences stretch you mentally, and can engender that team spirit that many families lack. Chronic stress, on the other hand, is the nagging burdens we carry around. These are nearly always caused by poor choices - either long-term debt like credit cards that we enter thoughtlessly or rashly, or the avoidance of major decisions in our household economy. Make good and decisive choices and your life will be better and longer.
2. Learn the difference between Stress and Anxiety. Stressors are external circumstances that pressure us - like a cucumber seed we can squirt one way when pressured and become anxious, or move right and choose our physical response. Anxiety is the internalizing of stress. Anxiety often gives rise to introversion, depression, and attempting to control others - obviously none of which are beneficial. Using stress to one’s advantage includes a plan to deal with it rather than allowing anxiety and its negative consequences.

The reason I write about this in a personal finance and mortgage blog is WAY too many people these days are allowing poor choices to dictate decisions with long-term consequences - like paying their mortgage on time.

More and more Ohio homeowners with a mortgage are walking away from their homes. Surprisingly, this is not an issue that only affects the low-to-moderate income neighborhoods. Hundreds and hundreds of above-average wage earners have invested in above-average homes with very little skin in the game, while even more Ohio families have bought homes that are at or just beyond the limit of their budget. In either case, floating these purchases becomes impossible with the smallest stressor.

Bottom line is making the hard decisions with an eye to the risks of the future is critical to long term homeownership and overall financial success for Ohioans. If you are having trouble making your mortgage payment, call me and let’s talk about the options. Call your lender. Call someone who isn’t afraid of telling you the truth - I will, even if it means a hard decision for you or a non-profit moment for First Ohio Home Finance. We’re in this together, and we’ll only get out of it together - using all the resources we have.

Thanks to Integrated Leadership’s Steven Anderson and Precision Printing’s Tom Broadbent for today’s inspiration!

As inflation fears eased on Wall Street, mortgage rates fell this week. It seems a new equilibrium is being reached in financial markets as the US dollar finds a bottom.

Credit guidelines are still tight but we are not seeing the rapid tightening that occurred through the winter and spring months. Some examples of the changing guidelines include the end of many subprime and 0-down programs, the end of 100% LTV lender-paid mortgage insurance, and a stronger scrutiny of most appraisals.

There are doors opening, too. Get this; you can now buy a HUD-owned home with only a $100 down payment AND use the FHA rehab program (loan amounts up to $340,000) to roll in as much as $35,000 in repairs!

Turn your nose up at HUD homes? Not so fast. There are more than 75 short sale or bank owned homes listed in Westerville now OVER $300,000! You can buy a mighty nice home with very little down.

If you have a substantial down payment for a large home, you can still get a jumbo adjustable below 6%, too.

I know the market is slower than sellers and professionals would like. But the bright side really is quite remarkable right now.

I have to say April is one of my favorite months of the year. It contains one of my favorite family birthdays. And you gotta enjoy sunshiny blue skies, breezy days and crisp nights, flowering bulbs and trees, watching the kids hunt for Easter eggs - even the occasional shower.

It’s also tax day. But April means more than this for Ohioans.

This collection of fabulous spring days has been designated as Financial Literacy Month in Ohio, which makes it a great time to re-focus on getting your finances in order. I don’t mean to encourage the kind of stress that comes from worrying about bills, fighting with your spouse, or trying to figure out how you are going to pay for college years in the future.

There are some great ways to get a clear picture of your financial health. And then take simple and clear steps toward improving the future for yourself and your family, if you have one.

A good place to start this process is at Your Money Now web site established by the Ohio Treasurer’s office. While many people are cynical about government officials actually helping the average citizen, I don’t write about this because Cordray is a ‘Public Official’. After following his career for almost a decade, I see a very smart individual who uses all available resources with a genuine interest in helping others.

With knowledge comes control – and it can be even be fun. This site does have some helpful information about avoiding fraud, tracking your cash flow, teaching your kids the basics, and managing debt. They even have a section in Espanol.

Other fun resources include personal finance blogs like here, here and here. There are even some focused on singles, marrieds, women, news, the heavily-indebted, and goals. Pick the one that meshes with you or put them all into a feed reader.

We recommend getting an annual mortgage review to make sure your loan is still the best for your ever-changing situation. And now is a great time of year to do that. If you’ve had changes recommended by your tax preparer, inherited money, changed jobs, or are even having trouble making your house payment – now is a great time to talk with a loan officer. The worst thing you can do is ignore the problem.

Here’s the Your Money Now website link. YourMoneyNowOnline.org Oh, and enjoy the fantastic spring!

In between the stock market volatility and emergency rate cuts and recession talk, last week was full of headlines like talking about home prices at decade lows, linking investment losses to housing gloom, and drawing parallels between current markets and the Great Depression.”

So what is all the noise about?

I find Joe Peffer’s blog particularly helpful as a window into the local markets. There aren’t many Realtors having these kinds of open conversation online, and his is certainly one of the best. Here’s a brief excerpt from Friday’s “nutshell” post.

“Remember that most media stories are greatly effected by larger east and west coast markets and that all Real Estate is Local. Here are some facts and figures on our market, here in Central Ohio.

• Last year was the third highest number of sales ever in Central Ohio. Yes, it was down 4.5% from 2005 and the average sale price is down a `whopping’ 1%, but it was still a good year. Today, compared to 2004, only 3 years ago, we have sold close to the same number of houses and the average sales price is up nearly 3%.
• Inventory levels are at record highs providing prospective homebuyers with the best selection of homes in the history of central Ohio!
• Our home prices are very competitive. Right now, there are more homes for sale than buyers to buy them. The result is that sellers are pricing their homes to compete. As the market corrects itself, home prices will start to increase again. So, buyers should act now while homes are priced to sell!!!
• There are still many great loan programs for deserving buyers.
• The recent Fed cut is good news! Even though a Fed rate cut doesn’t necessarily spell lower mortgage rates, it does mean good news for housing.”

Here’s another great point from Joe:

“Why was the average sales price in Central Ohio down 1%?

• First, because for much of the year we had roughly ten homes on the market for every buyer, many homeowners were forced to drop the selling price of their home in order to compete.
• Second, we had 22 percent fewer homes sell in the $1 million dollar range. Homeowners resistance to drop the price as well as lenders’ temporary aversion toward jumbo loans likely had impact here
• And third, we saw 124 percent more homes sell for less than $30,000. Many of these lower priced homes were purchased by investors who recognized just how favorable the 2007 housing market was and took full advantage of these conditions.”

One last note you will find interesting is this controversy in Massachusetts (and probably a great deal of other places now) where a bankers’ trade group is reporting single-family home sales were down twice as far as the Realtor’s association reported. And average home prices were down 5 times what the Realtor’s reported. The discrepancy apparently stems from the Realtor’s group NOT including homes sold by owner - without a real estate agent.

In my mind, what this issue highlights is that the RESULTS of one’s home sale are much worse when you try to save money by cutting out reputable local professionals. There are dozens of good Realtors in our market. Chances are you will sell your home faster and for more money if you use one.

Ask me if you are interested in buying a home. We will make sure you get a thorough pre-approval and one of the best Realtors in our market. Nothing makes your home purchase smoother!

Congress and the Federal Reserve Bank are both hard at work in working to stem the tide of foreclosure in our country. They have proposed increased regulation and disclosure to attempt to persuade homeowners and home buyers from the current mortgage system.

On one front, the Federal Reserve governors have issued the most sweeping reforms of the HOEPA in decades in an attempt to reduce losses. These reforms speak ONLY to high-cost loans, although most of the media is translating that to ’subprime.’ The underlying change is re-defining high-cost as an APR 5% above a similar Treasury bill. For example, a 30-year fixed rate loan would fall in this category if the APR topped 9.6% today, or a 5/1 ARM topped 8.6%. Clearly these ARE high-cost loans, since conventional borrowers are finding APRs in the 6.5-7.5% range.

Essentially, the bankers want to end stated-income lending, mandate escrow of taxes and insurance, halt prepayment penalties before an adjustable loan resets, and disclose to borrowers dollar-specific compensation that would go from a lender to a broker. Furthermore, the lender would have to “consider” a borrower’s ability to repay.

Another important point consumers need to be aware of is more and more conventional borrowers are becoming subprime or non-conventional because of a decline in available mortgage products. This is b/c credit score requirements are being raised - you’ve probably already heard that 720 is the new 680. As you can imagine, this is EVEN more true for subprime and alternative credit loans.

So, what would these changes mean for the average conventional borrower? What would the changes mean for the average subprime borrower?

For conventional borrowers, the only change would be the upfront disclosure of compensation. Most of the controversy surrounding this issue is b/c most brokers have not chosen a lender or locked an interest rate at the time of initial disclosures. To require them to disclose is essentially a requirement to estimate and then re-disclose later in the process. Bottom line, more paperwork and more consumer eyes-glazed-over.

For subprime borrowers, there will be devastating consequences. As hundreds of lenders have hit the fan in the last 12 months, finding an appropriate, reasonably-priced subprime product is very difficult. When you kick out prepayment penalties, end stated income, and require escrows, there will be fewer loans available for those with bruised credit or unusual circumstances. That means fewer homeowners among those with low-income or not particularly financially savvy - the opposite of what the establishment wants.

All in all, the solution is not more government intrusion. Financial institutions have successfully facilitated American home ownership for decades.

The current web of crises are directly linked to the Federal Reserve keeping low short-term interest rates for TOO LONG following the dot-com bust of 2000, which led to a warping of the world economy. Ending the manipulation of financial markets is the ideal answer.

President Bush sent his Treasury Secretary out with a proposal yesterday to try to stem the tide of subprime mortgage defaults and foreclosure. The America Securitization Forum, which represents mortgage investors and mortgage servicers, recommends mortgage servicers freeze interest rates for borrowers Read the rest of this entry »