Luxury Home Loans are Better than Ever

This may be one of the best times in recent history for home buyers looking for luxury homes in the Tulsa, Oklahoma area. The slowdown in higher price ranges of the market means home sellers who have to sell their large executive homes are often more motivated. Now, Karen Heston at BOK Mortgage sends me a note yesterday the jumbo home mortgages are being offered with rates of 5.310% up to $4 million. That’s great financing for a great market for home buyers. For more information about luxury homes in Tulsa, OK, Bixby, Owasso, and Broken Arrow, visit www.darrylbaskin.com/luxury or call 918-258-2600

Make Real Estate Part of Your Retirement Plan.

401K?s, Roth Ira?s, Stocks, bonds and annuities get plenty of attention when it comes to retirement planning but real estate may be one of the strongest vehicles you have to reach your goals. The obvious returns on real estate are appreciation, equity through debt reduction and tax credits but consider the following unique properties of real estate investment:

You can use other people’s money to invest. Unlike securities, investors can use someone else’s money to buy property. Why is that? Real estate has a more stable value than paper investments.

You use other people’s money to service debt. Yes, there is debt to pay for the money you borrowed and it is paid for by someone else- your tenant!

Profit from your total purchase, not just the amount you put down. The average increase in property value is only 5% in Tulsa so is that what you should expect as a return, right? NO! The beauty of borrowing money for real estate is that a $100,000 property purchased with 10% of your own money ($10,000) which appreciates in value to only $105,000 in one year produces a return of $5,000 on a small $10,000 investment. That’s a 50% return!

Real estate does have downsides. The beauty of downsides is that you can profit from someone else’s failure to plan for them. Expecting to always have income or failing to plan for maintenance and repairs will put an unskilled real estate investor behind the 8-ball. That seems to be the most common mistake; getting used to rent checks showing up and spending the money as it accumulates. The most powerful investors are not counting on 100% occupancy for the success of their building. Additionally, a savvy investor understands that as the economy changes, their income will decline or increase. Therefore, a bit of planning and research will make the difference between success and failure.

It is obvious why a strong investment analysis includes real estate. Visit www.tulsahousehunter.comfor a look at all properties listed for sale in the Tulsa metro area and don’t overlook the power of borrowed money and how you can use it to reach your investment goals. Consult a seasoned real estate professional who fully understands your needs as an investor and begin accumulating retirement wealth today.

Free House Appraisals Offered

Pinnacle Mortgage, a division of ONB Bank announced free appraisals for a limited time for customers who present the above certificate. The free appraisal offering is valued at more than $300. See certificate for details. Jeff Sargent of Pinnacle Mortgage can be reached at: Office: 918.392.6572 or Cell: 918.636.0630 for loan information.

What is an FHA loan

An FHA loan is a mortgage that is insured by the Federal Housing Administration, a division of the Department of Housing and Urban Renewal. The FHA will insure a lender against loss (in the event of borrower default), therefore encouraging lenders to make more loans to home buyers who might not otherwise qualify for home financing.

FHA loans are available with lower down-payment requirements, and in many cases the loan-to-debt ratio, which determines how much you can afford in mortgage payments, is more lenient than a conventional loan would allow. In our Tulsa and Oklahoma market, the FHA maximum loan amount is $200,160. Any loan above that amount would need to be a conventional or VA loan product. Borrowers who use FHA loans are required to pay a mortgage insurance premium at the loan closing (which can be financed into the loan), plus a monthly amount that is included in the loan payment. The monthly mortgage insurance premium for FHA loans is approximately ½ as much as the monthly private mortgage premium for conventional loans. There are many bond programs for first-time buyers that provide assistance towards down-payment and closing costs that can be done in combination with FHA insured mortgages. Many first home purchases in the Tulsa market are funded in this manner.

What Is a “Jumbo Mortgage?”

In Oklahoma, jumbo mortgages are any loans that exceed $417,000, as that is where the conforming conventional loan products end. Our country is considered the

wealthiest in the world because we have a strong middle class. The basic foundation of wealth for the middle class is homeownership. For those who are less well off or ranked near the bottom of the middle class, homeownership is a wealth building tool for accumulating wealth and moving up in the world.

For more information about this topic or other mortgage related questions, please contact mortgage expert Jeff Sargent of Pinnacle Mortgage Corp/a division of ONB bank @ 918.481.6833.

The Sub Prime Market is Sliding Downhill

What are sub-prime mortgages? Sub-prime loans are riskier loans in that they are made to borrowers unable to qualify under traditional, more stringent criteria due to a limited or blemished credit history. Sub-prime borrowers are generally defined as individuals with limited income or having FICO credit scores below 620 on a scale that ranges from 300 to 850. Sub-prime loans have a much higher rate of default than prime loans and are priced based on the risk assumed by the lender.

Many buyers and sellers in the Tulsa housing market should be asking that question, and all should be wondering how it could affect sales in this area. Typically, sub-prime customers are those who do not qualify for prime market rates because of a blemished or limited credit history. Sub-prime customers are therefore charged a higher interest rate to compensate for the increased probability of future default. There are deals on the table right now in our area that may not close because of the problems seen recently in the sub-prime market. We have buyers that were "approved" last month for a purchase money mortgage, but many of the lenders that had approved the mortgages have suddenly closed their doors and are in the process of going bankrupt. This has left both sellers and buyers all across the nation who are unable to close on the sale or purchase of their home. The Tulsa area economy has been stable since the mid 80s, when businesses were forced to diversify and bring new jobs to our area. There may be some buyers unable to purchase a home for a while due to credit issues and the quickly changing landscape of the mortgage industry. It is my opinion that we live in a region that will not feel the impact of these changes as severely as east and west coast cities and towns, where people were given loans that have accelerating interest rates and increasing payments that eventually will lead them to foreclosure. Should this happen in our area, it could negatively impact values.

According to the 2001 Expanded Guidance for Sub-prime Lending Programs, a sub-prime loan refers to "... the credit characteristics of individual borrowers. Sub-prime borrowers typically have weakened credit histories that include payment delinquencies and possibly more severe problems such as charge-offs, judgments, and bankruptcies. They may also display reduced repayment capacity as measured by credit scores, debt-to-income ratios, or other criteria that may encompass borrowers with incomplete credit histories. Sub-prime loans are loans to borrowers displaying one or more of these characteristics at the time of origination or purchase. Such loans have a higher risk of default than loans to prime borrowers." One of the reasons for lending to sub-prime borrowers is that, besides their profit potential, banks are obligated by law to offer lending services to clients of all income and credit levels. The Community Reinvestment Act, passed by Congress in 1977 requires that insured financial institutions such as commercial banks offer equal access to lending to all those in an institution's geographic assessment area. Before passage of the CRA, many lenders excluded low-income neighborhoods from their lending products. Many lenders not affiliated with banks have also been tightening their standards. The trend picked up after government-sponsored mortgage financier Freddie Mac said on February 27 that it would no longer buy high-risk mortgages. Ben Bernanke, the chief at the Federal Reserve is also urging Congress to boost regulation of Freddie Mac and its government sponsored counterpart, Fannie Mae.

For more information about this topic or other mortgage related questions, please contact mortgage expert Jeff Sargent of Pinnacle Mortgage Corp/a division of ONB bank @ 918.481.6833.

The government can't regulate independent lenders, but lenders will continue to tighten standards anyway over the next year to cauterize their losses, Plesser says. "In general lenders are being much more careful."