Category: Market Updates

Paul Wheeler is quoted in a very informative article which discusses the current effect of interest rates on the housing market.

I want to take a moment to share with you my perception of the current real estate market.  I have been in the real estate business for almost two decades now and have never seen a market quite like this.  The Tulsa area has seen a five year decline in sales.  We are still selling a lot of homes, but we are seeing a decline in value of those homes by anywhere from10 to 30%.  This decline in value is attributable to the increase in foreclosures and distressed sellers – many who have sold homes through the short sale process.  With all of that said it is truly a great time to buy.  The interest rates remain low and inventory high.  There are always swings in the real estate market, so I expect values to go back up, but don’t expect it to happen quickly.  So in this market a home is like a fine wine or a good stock – classified as a BUY and HOLD. 

If you have to sell or really want to take advantage of the buyer’s market by selling your current home, it is more important than ever to hire an experienced and productive realtor.

My university degree is in psychology/sociology.  While making my way through my academic career, I remember studying an inordinate amount about the I.Q. (Intelligence Quotient).  While a measurement of intelligence may have some validity in psychological or sociological circles, I can think of few things less meaningful in the real world.

We all know people with great technical or academic intelligence who can barely survive, much less thrive, in the world in which we live.  Any successful leader or CEO will tell you that they strive to surround themselves with people who are more intelligent than they are.  Whatever value intelligence may have, it is a readily-available commodity in the marketplace that is not highly rewarded or compensated.  There is a much more valuable but far less known I.Q. known as Implementation Quotient.

 

Every month or two for the last several years, I have had a working lunch with my friend Paul Wheeler.  If you ask Paul, he would probably tell you that I mentor him, but in reality, I receive far more from our regular exchanges in personal and professional terms than Paul does.  Paul Wheeler is one of those rare individuals that I like to spend time with as often as possible because Paul is simply the best at what he does.

 

Whether it’s Steve Forbes, B.B. King, Albert Pujols, Brian Dennehy, or Louis Gossett Jr., I love observing, studying, and interacting with people who pursue their passion at the highest possible level.  Paul Wheeler is a realtor.  Paul and his company Accent Realtors are consistently among the very top performers in our city, region, and state.  Paul Wheeler sells more houses in a few days than the average realtor sells in a year.

 

I’ve had the privilege of observing Paul over a long period of time, and even though he’s my friend, I would have to state for the record that Paul is not smarter, better trained, or more talented than the hundreds of people whose performance he eclipses.

 

If you met Paul, you would find him to be very pleasant and unassuming.  But the thing most people overlook about Paul Wheeler is the fact that he has an extremely high I.Q. (Implementation Quotient).  At every one of our luncheon meetings over several years, Paul arrives with a notebook that describes the action items we discussed in our last meeting and how he has implemented them.  Then during the course of our lunch meeting as we discuss various ideas, Paul writes down the thoughts that he believes to have merit.

 

Everyone has great ideas of their own or great ideas that are presented to them.  What makes Paul Wheeler a superstar among a field of mediocre performers is simply the fact that Paul implements.

 

When it’s all said and done in our world today, there’s a lot said and very little done.  We don’t receive rewards for what we think, know, believe, or study.  We are rewarded for what we do.

 

As you go through your day today, think great thoughts, focus on new ideas, but be sure to implement them all.

 

Today’s the day!

 

Jim Stovall is the president of Narrative Television Network, as well as a published author of many books including The Ultimate Gift.  He is also a columnist and motivational speaker.  He may be reached at 5840 South Memorial Drive, Suite 312, Tulsa, OK  74145-9082; by e-mail at Jim@JimStovall.com; or on Facebook atwww.facebook.com/jimstovallauthor.

The additional tips that follow will help you save energy all year long:

Make sure that your home is properly insulated. This will reduce energy costs and keep you comfortable in summer and winter.

Plant deciduous trees around the south and west corners of your home; in summer they will provide shade, which will help to reduce cooling costs. In winter, when they lose their leaves, the sunlight will help to heat your home.

While summer presents a number of unique opportunities to make your home more energy efficient, it is important to remember that conservation is a year-round effort.

Most people don’t spend their time tracking FHA policy changes, unless of course you’re in the real estate industry. I received this information regarding some changes in the Federal Housing Administration (FHA) and wanted to share it for the benefit of those in the Tulsa area.

The bottom line is this:  FHA is tightening up its policies and instituting stricter requirements for providing mortgages. Their rationale is simple.  FHA is no longer a cash-flushed organization, quickly handing out loans to all who ask.  After the mortgage crisis, it seemed like nearly everyone wanted an FHA loan. Understandable. But, like any financial institution, the Federal Housing Administration needs to find out how it can serve the underserved while at the same time managing risk, all the while trying to assist the nation’s economic recovery.

Here is a quick snapshot of some of the major changes.

• Up-front mortgage insurance premiums will increase to 2.25% (formerly it was 1.75%). This will help increase the agency’s reserve fund, which is in dire need of replenishing.
• Successful loan applicants will have a minimum credit score of 580 to be eligible for the 3.5% down payment. Borrowers who have lower credit scores will need to find a way to provide a heftier down payment (10%).
• In addition, sellers get a shorter leash, too. Now, sellers are required to cap at 3% the amount they offer for closing costs. They used to be able to pay closing costs up to 6% of the home’s price. This requirement brings FHA loans in line with typical industry standards, while preventing the practice of inflating appraisals.
• Any lenders offering FHA mortgages must assume liability for the loans.  FHA is serious about this new requirement, and will occasionally publish lender performance reports for the general public.

Why all the changes? As I mentioned above, FHA needs to protect its assets (and thus its mortgages) as best it can. Everyone is adapting to the new economic climate—individuals, big business, and government alike.  As an indicator of their tenuous status, nearly 15% of all FHA loans were delinquent at the time of last year’s third quarter reports.  Don’t worry, FHA will probably not lose its stature as the biggest lending agency.  Almost half of all first time homebuyers use FHA loans, and last year, 30% of all loans came through the FHA.

When you apply for a mortgage loan, you expect your lender to pull a credit report and look at whether you’ve made your payments on time. What you may not expect is that they seem to be more interested in your “FICO” score.

“What’s a FICO score?” is a common reaction.

Each time your credit report is pulled, it is run through a computer program with a built-in scorecard. Points are awarded or deducted based on certain items such as how long you have had credit cards, whether you make your payments on time, if your credit balances are near maximum, and assorted other variables. When the credit report prints in your lender’s office, the total score is displayed. Your score can be anywhere between the high 300’s and the low 800’s.

Lenders wanted to determine if there was any relationship between these credit scores and whether borrowers made their payments on time, so they did a study. The study showed that borrowers with scores above 680 almost always made their payments on time. Borrowers with scores below 600 seemed fairly certain to develop problems.

As a result, credit scoring became a more important factor in approving mortgage loans. Credit scores also made it easier to develop artificial intelligence computer programs that could make a “yes” decision for loans that should obviously be approved. Nowadays, a computer and not a person may have actually approved your mortgage.

In short, lower credit scores require a more thorough review than higher scores. Often, mortgage lenders will not even consider a score below 600.

Some of the things that affect your FICO score are:

• Delinquencies
• Too many accounts opened within the last twelve months
• Short credit history
• Balances on revolving credit are near the maximum limits
• Public records, such as tax liens, judgments, or bankruptcies
• No recent credit card balances
• Too many recent credit inquiries
• Too few revolving accounts
• Too many revolving accounts

FICO actually stands for Fair Isaac and Company, which is the company used by the Experian (formerly TRW) credit bureau to calculate credit scores. Trans-Union and Equifax are two other credit bureaus who also provide credit scores.

Estate planners often recommend “Living Trusts” as a viable option when contemplating the manner in which to hold title to real property. When a property is held in a Living Trust, title companies have particular requirements to facilitate the transaction. While not comprehensive, following are answers to many commonly asked questions. If you have questions that are not answered below, your title company representative may be able to assist you, however, one may wish to seek legal counsel.

Who are the parties to a Trust?

A typical trust is the Family Trust in which the Husband and Wife are the Trustees and, with their children, the Beneficiaries. Those who establish the trust and transfer their property into it are known as Trustors or Settlors. The settlor’s usually appoint themselves as Trustees and they are the primary beneficiaries during their lifetime. After their passing, their children and grandchildren usually become the primary beneficiaries if the trust is to survive, or the beneficiaries receive distributions directly from the trust if it is to close out.

What is a Living Trust?

Sometimes called an Inter-vivos Trust, the Living Trust is created during the lifetime of the Settlors (as opposed to being created by their Wills after death) and usually terminates after they die and the body of the Trust is distributed to their beneficiaries.

Can a Trust hold title to Real Property?

No; the Trustee holds the property on behalf of the Trust.

Is a Trust the best way to hold my property?

Only your attorney or accountant can answer the question; some common reasons for holding property in a Trust are to minimize or postpone death taxes, to avoid a time consuming probate, and to shield property from attack by certain unsecured creditors.

What taxes can I avoid by putting my property in trust?

Married persons can usually exempt a significant part of their assets from taxation and may postpone taxes after the first of them to die passes. You should check with your attorney or accountant before taking any action.

Can I homestead property which is held in a Trust?

Yes, if the property otherwise qualifies.

Can a Trustee borrow money against the property?

A Trustee can take any action permitted by the terms of the Trust, and the typical Trust Agreement does give the Trustee the authority to borrow and encumber real property. However, not all lenders will lend on a property held in trust, so check with your lender first.

Can Someone else hold title for me “in trust?”

Some people who do not wish their names to show as titleholders make private arrangements with a third party Trustee; however, such an arrangement may be illegal, and is always inadvisable because the Trustee of record is the only one who is empowered to convey, or borrow against, the property, and a Title Insurer cannot protect you from a Trustee who is not acting in accordance with your wishes despite the existence of a private agreement you have with the Trustee.

By asking the right questions, and knowing exactly what your needs are, you can find the right loan for you. There are certain approaches that you can take while mortgage shopping that can cost or save you money.

It is still true that the better qualifications you have, the lower your interest rate will be. However, there are mortgages available for almost everyone; it’s the interest rates or the down payments that vary.

Before speaking with a lender, know what monthly dollar amount you feel comfortable committing to. Then when you discuss mortgage pre-approval with your lender, it is easier for you to determine the monthly amount and what value of home the monthly amount translates into. Do not put yourself in the position where you will be paying more each month than you intended simply because the “dream” house requires it.

Do your research on the types of mortgages available to you and find the one that best suits your needs. There are a number of considerations to be made in terms of finding the best mortgage for each individual:

*What type of market are you in? Are the interest rates falling or rising?
*Do you want a fixed mortgage rate, where you will always know what your payment is going to be?
*What are your long-term goals? Do you intend to resell the property? Do you only need the mortgage for a short time?

If you need to get in touch with a reputable lender, we can help 665-8559.