ZFG Mortgage Tulsa – 918-459-6530 – www.zfgmortgage.com

ZFG Mortgages is committed to helping you find the right mortgage product for your needs. We understand that every borrower is different, and we offer a variety of products to meet your individual requirements. We make the process of securing a mortgage simple and straightforward by offering you the latest in financial tools that enable you to make sound financial choices.  ZFG Mortgages is with you every step of the way from application to closing and beyond.  Click on the Apply Online button to the left of your screen, complete and submit the application and one of our experienced loan officers will contact you shortly.  It’s that easy!

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Contact ZFG Mortgages to find out more about the products and services we offer.  Because ZFG Mortgages serves as both a Mortgage Bank and Mortgage Broker, we have the flexibility necessary to ensure your financing goes smoothly and your home loan closes on time.  Whether you’re a first-time homebuyer or looking to buy the home of your dreams, we offer some of Oklahoma’s most competitive programs and rates while backing them up with outstanding customer service. ZFG Mortgages is with you every step of the way.  Apply online or call us today!

PURCHASE LOANS: The Oklahoma mortgage professionals at Oklahoma Refinance can assist you with your purchase transaction. Be it your first Oklahoma home, a second Oklahoma home, your retirement Oklahoma home or an investment in Oklahoma, you want to be sure to select the loan that best benefits your financial well being.

CASH OUT / DEBT CONSOLIDATION LOANS: If you are hoping to do some debt consolidation, combine a first and a second mortgage, pull some cash out for home improvement, or just take the opportunity to tap into the unused equity of your Oklahoma home, you will want to be sure to select the right Oklahoma mortgage loan to accomplish your goals. Your Oklahoma home is significant resource. This might be especially true if you have built up equity in your property.

REFINANCE LOANS: The Oklahoma home loan experts at Oklahoma Refinance can help you with your refinance. Choosing the correct Oklahoma mortgage loan can be confusing with the several refinance home loans on the market.

Oklahoma Refinance believes in “People Based Lending”. Vist My Refi for your Reverse Mortgage and Loan Modification needs.

ZFG Mortgages is Tulsa based. The company was established to originate conventional and non-conventional first and second mortgage loans. Great Plains senior loan officers have years of lending experience with bank, finance, and mortgage companies. ZFG Mortgages is licensed to close a loan anywhere in Oklahoma.

It is the mission of ZFG Mortgages to become the preferred mortgage originator in the state of Oklahoma while operating a win/win philosophy with our customers. Our goal is to listen first and after understanding our customers needs seek out the very best tailored mortgage. We recognize this can only be accomplished by dealing with others honestly and with the utmost integrity. The business plan encompasses establishing lending relationships and referrals to reduce marketing cost, which enables ZFG Mortgages to pass these savings on to our customers. We believe the professionalism and common sense approach towards mortgage lending will entice customers to refer others insuring our profitability and longevity.

Oklahoma mortgage loans are our specialty. It’s all we do. Right now you are probably searching the various Internet lenders for a great mortgage rate. The drawback with Internet lenders is that you normally have to deal with some huge company in another state or even another country. They simply aren’t as experienced with Oklahoma mortgages as someone that lives right here in Oklahoma. A mortgage loan is the largest transaction most families ever make. Do you really want to trust your home purchase or mortgage refinance to someone sitting in a cubicle hundreds of miles away?

With our latest technology, you can have the best of both worlds. We offer competitive mortgage rates AND top-notch customer service from mortgage professionals right here in Oklahoma. Give us a chance to earn your business with a FREE customized mortgage rate quote. It takes less than a minute to complete our QUICK QUOTE form. We’ll never give you any high pressure and there is no obligation. You will usually receive an answer from an experienced Mortgage Consultant by the following business day.

If you are buying a home or looking to refinance your existing mortgage, we can help. Our Oklahoma mortgage rates are among the lowest in the industry! We have funded thousands of loans in Oklahoma, and we look forward to making you one of our next satisfied clients. Simply give us a call or apply online for your FREE mortgage consultation.

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ZFG Mortgage Tulsa – 918-459-6530 – www.zfgmortgage.com

Welcome to ZFG Mortgage, home of Tulsa’s lowest rates. At ZFG Mortgage we offer Tulsans the best rates and the best terms because of our ability to fund your loan through some of America’s largest banks and lending institutions (including Bank of America, Countrywide, Wells Fargo, etc…). If you are looking for a mortgage loan, or a home refinance call ZFG today to experience the superiority of ZFG:

  • Fast Accurate Service – When you call, we will be there answer your calls with quick and informed loan officers standing by.
  • The Lowest Rates – If you are looking for the lowest rates in town, then you have come to the right place.
  • Low Closing Costs – No “Bate-and-Switch” techniques will be used by our staff. We will quote you an accurate estimate of your closing costs right from the beginning (once we have completely analyzed your unique financial situation).
  • Lending Options – When you work with ZFG, you will be working with skilled and liscensed loan officers who have your best interests at heart. Because we are here to stay, our team is 100% committed to making sure that you leave with the funds you need and a lending experience that will keep you coming back as your family and financial needs expand.

To help our incredible customers to better understand the lending industry we have put together the following list of lending terms and information:

Refinancing Defined: Refinancing deals with the buyer (you) applying for another loan in order to pay off a preexisting loan that does not have the favorable rates and terms that you want. If you find that your existing loan has an interest rate that is less than favorable, we would love to help you secure a rate that will be more advantageous to your overall cash-flow situation. 

Comparison Refinance Rate Shopping (defined): At ZFG we help our customers shop for the best rates and terms. Essentially, our customers are not pushed towards one particular product or lender, because we look to help our customers find the best rates and terms.

When should you refinance? When looking into the possibility of refinancing your home mortgage it is very important that you first look at the amount of savings that you will realize (in terms of interest payments) vs. the closing costs associated with acquiring the new loan.

What are the benefits of refinancing your home? Generally speaking most Americans (unfortunately) live check to check because they are strapped with obligations that nearly exceed their ability to earn. Many Americans have 60-80% of their income spoken for (in obligations) before they ever even see their check. This can really cut down our your ability to start a new business, to afford a family vacation, and to fund your dreams. Thus, to free up extra cash, many Americans choose to refinance their existing loan to free up extra monthly cash flow that they would have been spending on interest payments to a large bank. If you need extra monthly cash and you have a mortgage rate that is unfavorable, we highly recommend that you would look into the idea of refinancing your existing loan.

While most Americans consider their home to be there largest assett, at ZFG we view your mortgage payment as your largest expense. Although owning a home is a need, it should not be a nearly unbearable burden. Call us today to see if we can help you put a little extra of your own cash back in your pocket each month.

Shortening the length of your loan by refinancing. As you begin to earn more money over time, your financial situation might change for the better. And as you earn more money, you might want to pay down your mortgage at a faster rate than you once wanted to when you first purchased your home. Thus, converting your 30 year fixed rate loan into a 15 year fixed rate loan might be a great option. Converting your 30 year loan into a 15 year loan will generally only increase your payments by 15%, yet you will cut your time needed to pay off your loan in half.

Exchanging an adjustable rate mortgage for a fixed mortgage rate & term. With rates at an all-time low, their has never been a better time to lock in a favorable fixed mortgage rate & term. Thus, if you have found that your adjustable rate has already adjusted and is continuing to climb, call ZFG now (or shortly after now). Securing a fixed rate mortgage will give you financial piece of mind, knowing that your monthly payments will not quickly climb to unsustainable and unpayable levels.

Access to Extra Cash – Cash-out refinancing. – The reality is, life happens. And sometimes when life happens it puts a large strain on all of us for some extra cash. And with our cash-out refinancing options, you can essentially use your house as a piggy bank from which you can pull out money to buy that new car, or to pay for that upcoming wedding (www.djconnectiontulsa.comwww.tulsabridalassociation.org). For more information on our cash-out refinancing options call ZFG today. 

Away with PMI. As many people have now discovered, having Private Mortgage Insurance is not fun, and making those payments is even less fun. However those of us that were unable to put more than 20% down when we originally purchased our homes have been required to purchase Private Mortgage Insurance by our lenders. However, if your house has now appreciated to a point where you now have paid down 20% of the homes value, refinancing will allow you to refinance to a rate and term that will allow you to cancel those less than exciting PMI payments.

For many Americans our home is like a piggy bank from which we can pull funds as needed to pay for the unique challenges and opportunities that our lives throw at us and refinancing your home is a quick way to gain access to those funds stored up in our piggy bank quickly. For more information on refinancing your home, call ZFG Mortgage Tulsa today at 918-459-6530.

www.zfgmortgage.com

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ZFG Mortgage Tulsa – 918-459-6530 – www.zfgmortgage.com

ZFG Mortgage & Zeshu Financial Tulsa Has The Lowest Mortgage

If you would like to take a moment to view our current interest rates, you will quickly find that ZFG Mortgage Tulsa has the low interest rates that you been searching for.

The Lowest Closing Costs:


At ZFG our super-low closing costs have saved our customers thousands, and we never charge any undisclosed fees at the closing table.

Refinance Your ARM LOAN or YOUR HIGH FIXED RATE MORTGAGE TODAY:

ZFG Mortgage Tulsa has designed a stream-lined process that makes the process of lowering your current mortgage rate and your current mortgage payments easy (and painless). For more information on how you can reduce the remaining term on your current 30 year mortgage loan, or how you can reduce your total monthly payments simply call us today at 918-459-6530.  

Quickly Get “Accurate” Faith Estimates:

When you call ZFG Mortgage Tulsa our team will quickly be able to get you a Good Faith Estimate of your Closing Costs so that you’ll quickly realize firsthand that we offer the lowest interest rates and that we will be able to offer you the lowest Closing Costs in Tulsa.

To help more incredible customers like you to better reach our the ZFG mortgage offices we have compiled the following list of tulsa mortgage related terms, articles and phrases.

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ZFG Mortgage Tulsa – 918-459-6530 – www.zfgmortgage.com

ZFG Mortgage & Zeshu Financial Tulsa Has The Lowest Mortgage

If you would like to take a moment to view our current interest rates, you will quickly find that ZFG Mortgage Tulsa has the low interest rates that you been searching for.

The Lowest Closing Costs:


At ZFG our super-low closing costs have saved our customers thousands, and we never charge any undisclosed fees at the closing table.

Refinance Your ARM LOAN or YOUR HIGH FIXED RATE MORTGAGE TODAY:

ZFG Mortgage Tulsa has designed a stream-lined process that makes the process of lowering your current mortgage rate and your current mortgage payments easy (and painless). For more information on how you can reduce the remaining term on your current 30 year mortgage loan, or how you can reduce your total monthly payments simply call us today at 918-459-6530.  

Quickly Get “Accurate” Faith Estimates:

When you call ZFG Mortgage Tulsa our team will quickly be able to get you a Good Faith Estimate of your Closing Costs so that you’ll quickly realize firsthand that we offer the lowest interest rates and that we will be able to offer you the lowest Closing Costs in Tulsa.

To help more incredible customers like you to better reach our the ZFG mortgage offices we have compiled the following list of tulsa mortgage related terms, articles and phrases.

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Zeshu Financial Group
5807 S Garnett Rd Suite I
Tulsa, Oklahoma 74146
Toll Free 1-877-205-7266 | Fax: 918-459-6535

Gain Easy Access To The Best Local Mortgage Rates Today With ZFG:
 
Enjoy easy access to up to the moment rates from lenders serving your local community and surroundings.  Participating lenders have been screened for quality assurance, and have pledged affirmation of customer satisfaction.

ZFG Mortgage is an independent mortgage broker committed to helping Tulsans find the very best loan products for your needs. We provide Tulsa  mortgages, Tulsa loans and mortgages, and the lowest mortgage rates in Tulsa Metro area and all of the state of Oklahoma.

With nearly a decade of experience, we’ve earned an incredible reputation for being the fastest and most honest Tulsa mortgage company in the area. With our vast knowledge and (nearly-excessive) versatility, we will find you the best value loan products. To meet our client’s unique needs, including purchase loans, home equity loans, and loan refinancing we have developed the infrastructure to make sure that you do not have to wait on hold and that you can always quickly speak with a human when you call our offices. Our success has been built on exceeding our customers expectations. 

ZFG mortgage is committed to giving you the fastest, the highest-quality service. We’re also here to help you understand your mortgage options so that you feel confident and informed during your buying or refinancing process. ZFG Mortgage Tulsa is a local mortgage company that you can count on to supply you with sound advice and a loan product that you can feel comfortable with for the time you plan to own your home.

 

http://www.youtube.com/watch?v=G2-LxaxyF9E

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

Fixed Rate Mortgages  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

The most common type of mortgage program where your monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally your monthly payments will be very stable.

Fixed-rate mortgages are available for 30 years, 20 years, 15 years and even 10 years. There are also “bi-weekly” mortgages, which shorten the loan by calling for half the monthly payment every two weeks. (Since there are 52 weeks in a year, you make 26 payments, or 13 “months” worth, every year.)

Fixed rate fully amortizing loans have two distinct features. First, the interest rate remains fixed for the life of the loan. Secondly, the payments remain level for the life of the loan and are structured to repay the loan at the end of the loan term. The most common fixed rate loans are 15 year and 30 year mortgages.

During the early amortization period, a large percentage of the monthly payment is used for paying the interest . As the loan is paid down, more of the monthly payment is applied to principal . A typical 30 year fixed rate mortgage takes 22.5 years of level payments to pay half of the original loan amount.

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

Adjustable Rate Mortgages (ARM)  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

These loans generally begin with an interest rate that is 2-3 percent below a comparable fixed rate mortgage, and could allow you to buy a more expensive home.

However, the interest rate changes at specified intervals (for example, every year) depending on changing market conditions; if interest rates go up, your monthly mortgage payment will go up, too. However, if rates go down, your mortgage payment will drop also.

There are also mortgages that combine aspects of fixed and adjustable rate mortgages – starting at a low fixed-rate for seven to ten years, for example, then adjusting to market conditions. Ask your mortgage professional about these and other special kinds of mortgages that fit your specific financial situation

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

Standard ARMS and the Differences  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

A few options are available to fit your individual needs and your risk tolerance with the various market instruments.

ARMs with different indexes are available for both purchases and refinances. Choosing an ARM with an index that reacts quickly lets you take full advantage of falling interest rates. An index that lags behind the market lets you take advantage of lower rates after market rates have started to adjust upward.

The interest rate and monthly payment can change based on adjustments to the index rate.

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

6-Month Certificate of Deposit (CD) ARM  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 
Has a maximum interest rate adjustment of 1% every six months. The 6-month Certificate of Deposit (CD) index is generally considered to react quickly to changes in the market. 1-Year Treasury Spot ARM  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 
Has a maximum interest rate adjustment of 2% every 12 months. The 1-Year Treasury Spot index generally reacts more slowly than the CD index, but more quickly than the Treasury Average index. 6-Month Treasury Average ARM  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 
Has a maximum interest rate adjustment of 1% every six months. The Treasury Average index generally reacts more slowly in fluctuating markets so adjustments in the ARM interest rate will lag behind some other market indicators. 12-Month Treasury Average ARM  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 
Has a maximum interest rate adjustment of 2% every 12 months. The treasury Average index generally reacts more slowly in fluctuating markets so adjustments in the ARM interest rate will lag behind some other market indicators. Introductory Rate ARM’s  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

Most adjustable rate loans (ARMs) have a low introductory rate or start rate, some times as much as 5.0% below the current market rate of a fixed loan. This start rate is usually good from 1 month to as long as 10 years. As a rule the lower the start rate the shorter the time before the loan makes its first adjustment.

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

Index  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

– The index of an ARM is the financial instrument that the loan is “tied” to, or adjusted to. The most common indices, or, indexes are the 1-Year Treasury Security, LIBOR (London Interbank Offered Rate), Prime, 6-Month Certificate of Deposit (CD) and the 11th District Cost of Funds (COFI). Each of these indices move up or down based on conditions of the financial markets. Margin  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

– The margin is one of the most important aspects of ARMs because it is added to the index to determine the interest rate that you pay. The margin added to the index is known as the fully indexed rate. As an example if the current index value is 5.50% and your loan has a margin of 2.5%, your fully indexed rate is 8.00%. Margins on loans range from 1.75% to 3.5% depending on the index and the amount financed in relation to the property value. Interim Caps  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

– All adjustable rate loans carry interim caps. Many ARMs have interest rate caps of six-months or a year. There are loans that have interest rate caps of three years. Interest rate caps are beneficial in rising interest rate markets, but can also keep your interest rate higher than the fully indexed rate if rates are falling rapidly. Payment Caps  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

– Some loans have payment caps instead of interest rate caps. These loans reduce payment shock in a rising interest rate market, but can also lead to deferred interest or “negative amortization”. These loans generally cap your annual payment increases to 7.5% of the previous payment. Lifetime Caps  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

– Almost all ARMs have a maximum interest rate or lifetime interest rate cap. The lifetime cap varies from company to company and loan to loan. Loans with low lifetime caps usually have higher margins, and the reverse is also true. Those loans that carry low margins often have higher lifetime caps. Reverse Mortgages  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

A reverse mortgage is a special type of loan made to older homeowners (typically 62 +)  to enable them to convert the equity in their home to cash to finance living expenses, home improvements, in-home health care, or other needs.

With a reverse mortgage, the payment stream is “reversed.” That is, payments are made by the lender to the borrower, rather than monthly repayments by the borrower to the lender, as occurs with a regular home purchase mortgage.

A reverse mortgage is a sophisticated financial planning tool that enables seniors to stay in their home — or “age in place” — and maintain or improve their standard of living without taking on a monthly mortgage payment. The process of obtaining a reverse mortgage involves a number of different steps.

The first, most widely available reverse mortgage in the United States was the federally-insured Home Equity Conversion Mortgage (HECM), which was authorized in 1987.

A reverse mortgage is different from a home equity loan or line of credit, which many banks and thrifts offer. With a home equity loan or line of credit, an applicant must meet certain income and credit requirements, begin monthly repayments immediately, and the home can have an existing first mortgage on it. In addition, there is no restriction on the age of borrowers.

In general, reverse mortgages are limited to borrowers 62 years or older who own their home free and clear of debt or nearly so, and the home is free of tax liens.

Borrowers usually have a choice of receiving the proceeds from a reverse mortgage in the form of a lump-sum payment, fixed monthly payments for life, or line of credit. Some types of reverse mortgages also allow fixed monthly payments for a finite time period, or a combination of monthly payments and line of credit. The interest rate charged on a reverse mortgage is usually an adjustable rate that changes monthly or yearly. However, the size of monthly payments received by the senior doesn’t change.

Some reverse mortgage products also involve the purchase of an annuity that can assure continued monthly income to the senior homeowner even after they sell the home.

The size of reverse mortgage that a senior homeowner can receive depends on the type of reverse mortgage, the borrower’s age and current interest rates, and the home’s property value. The older the applicant is, the larger the monthly payments or line of credit. This is because of the use of projected life expectancies in determining the size of reverse mortgages.

Seniors do not have to meet income or credit requirements to qualify for a reverse mortgage.

Unlike a home purchase mortgage or home equity loan, a reverse mortgage doesn’t require monthly repayments by the borrower to the lender. A reverse mortgage isn’t repayable until the borrower no longer occupies the home as his or her principal residence.

This can occur if the sole remaining borrower dies, the borrower sells the home, or the borrower moves out of the home, say, to a nursing home.

The repayment obligation for a reverse mortgage is equal to the principal balance of the loan, plus accrued interest, plus any finance charges paid for through the mortgage. This repayment obligation, however, can’t exceed the value of the home.

The loan may be repaid by the borrower or by the borrower’s family or estate, with or without a sale of the home. If the home is sold and the sale proceeds exceed the repayment obligation, the excess funds go to the borrower or borrower’s estate. If the sales proceeds are less than the amount owed, the shortfall is usually covered by insurance or some other party and is not the responsibility of the borrower or borrower’s estate. In general, the repayment obligation of the borrower or borrower’s estate can’t exceed the value of the property.

In general, a borrower can’t be forced to sell their home to repay a reverse mortgage as long as they occupy the home, even if the total of the monthly payments to the borrower exceeds the value of the home.

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

London InterBank Offered Rate (LIBOR)  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

LIBOR is the rate on dollar-denominated deposits, also know as Eurodollars, traded between banks in London. The index is quoted for one month, three months, six months as well as one-year periods.

LIBOR is the base interest rate paid on deposits between banks in the Eurodollar market. A Eurodollar is a dollar deposited in a bank in a country where the currency is not the dollar. The Eurodollar market has been around for over 40 years and is a major component of the International financial market. London is the center of the Euromarket in terms of volume.

The LIBOR rate quoted in the Wall Street Journal is an average of rate quotes from five major banks. Bank of America, Barclays, Bank of Tokyo, Deutsche Bank and Swiss Bank.

The most common quote for mortgages is the 6-month quote. LIBOR’s cost of money is a widely monitored international interest rate indicator. LIBOR is currently being used by both Fannie Mae and Freddie Mac as an index on the loans they purchase.

LIBOR is quoted daily in the Wall Street Journal’s Money Rates and compares most closely to the 1-Year Treasury Security index.

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

Balloon Mortgages  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

Balloon loans are short term mortgages that have some features of a fixed rate mortgage. The loans provide a level payment feature during the term of the loan, but as opposed to the 30 year fixed rate mortgage, balloon loans do not fully amortize over the original term. Balloon loans can have many types of maturities, but most balloons that are first mortgages have a term of 5 to 7 years.

At the end of the loan term there is still a remaining principal loan balance and the mortgage company generally requires that the loan be paid in full, which can be accomplished by refinancing. Many companies have other options such as a conversion feature at the end of the term. For example, the loan may convert to a 30 year fixed loan at the thirty year market rate plus 3/8 of a percentage point. Your conversion can be guaranteed based on certain criteria such as having made your last 24 payments on time. The balloon mortgage program with the conversion option is often called a 7/23 Convertible or 5/25 Convertible.

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

Interest Rate Buydowns  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

The most common buydown is the 2-1 buydown. In the past, for a buyer to secure a 2-1 buydown they would pay 3 points above current market points in order to pay a below market interest rate during the first two years of the loan. At the end of the two years they would then pay the old market rate for the remaining term.

As an example, if the current market rate for a conforming fixed rate loan is 8.5% at a cost of 1.5 points, the buydown gives the borrower a first year rate of 6.50%, a second year rate of 7.50% and a third through 30th year rate of 8.50% and the cost would be 4.5 points. Buydown were usually paid for by a transferring company because of the high points associated with them.

In today’s market, mortgage companies have designed variations of the old buydowns rather than charge higher points to the buyer in the beginning they increase the note rate to cover their yields in the later years.

As an example, if the current rate for a conforming fixed rate loan is 8.50% at a cost of 1.5 points, the buydown would give the buyer a first year rate of 7.25%, a second year rate of 8.25% and a third through 30th year rate of 9.25% , or a three-quarter point higher note rate than the current market and the cost would remain at 1.5 points.

Another common buydown is the 3-2-1 buydown which works much in the same ways as the 2-1 buydown, with the exception of the starting interest rate being 3% below the note rate. Another variation is the flex-fixed buydown programs that increase at six month interval rather than annual intervals.

As an example, for a flex-fixed jumbo buydown at a cost of 1.5 points, the first six months rate would be 7.50%, the second six months the rate would be 8.00%, the next six months rate would be 8.50%, the next six months rate would be 9.00%, the next six months the rate would be 9.50% and at the 37th month the rate would reach the note rate of 9.875% and would remain there for the remainder of the term. A comparable jumbo 30 year fixed at 1.5 points would be 8.8Cost of Funds Index (COFI)

The 11th District Cost of Funds is more prevalent in the West and the 1-Year Treasury Security is more prevalent in the East. Buyers prefer the slowly moving 11th District Cost of Funds and investors prefer the 1-Year Treasury Security.

The monthly weighted average Eleventh District has been published by the Federal Home Loan Bank of San Francisco since August 1981. Currently more than one half of the savings institutions loans made in California are tied to the 11th District Cost of Funds (COF) index.

The Federal Home Loan Bank’s 11th District is comprised of saving institutions in Arizona, California and Nevada.

Few people who use and follow the 11th District Cost of Funds understand exactly how it is calculated, what it represents, how it moves and what factors affect it.

The predecessor to the 11th District Cost of Funds index was the District semiannual weighted average cost of funds published for a six month period ending in June and December. The San Francisco Bank was the first Federal Home Loan Bank to publish a monthly cost of funds index.

The funds used as a basis for the calculation of the 11th District Cost of Funds index are the liabilities at the District savings institutions: money on deposit at the institutions, money borrowed from a Federal Home Loan Bank (known as advances) and all other money borrowed. The interest paid on these types of funds is the cost of these funds.

The ratio of the dollar amount paid in interest during the month to the average dollar amount of the funds for that month constitutes the weighted average cost of funds ratio for that month.

The average cost of funds is said to be weighted because the three kinds of funds and their costs are added together before a ratio is computed rather than calculating averages individually for the three sources and using a simple average of the three ratios. This gives the greatest weight to the interest paid on deposits, and explains the delayed reaction of the index to rising fixed-rate mortgages.

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

Graduated Payment Mortgage (GPM)  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

The GPM is another alternative to the conventional adjustable rate mortgage, and is making a comeback as borrowers and mortgage companies seek alternatives to assist in qualify for home financing

Unlike an ARM, GPMs have a fixed note rate and payment schedule. With a GPM the payments are usually fixed for one year at a time. Each year for five years the payments graduate at 7.5% – 12.5% of the previous years payment.

GPMs are available in 30 year and 15 year amortization, and for both conforming and jumbo loans. With the graduated payments and a fixed note rate, GPMs have scheduled negative amortization of approximately 10% – 12% of the loan amount depending on the note rate. The higher the note rate the larger degree of negative amortization. This compares to the possible negative amortization of a monthly adjusting ARM of 10% of the loan amount. Both loans give the consumer the ability to pay the additional principal and avoid the negative amortization. In contrast, the GPM has a fixed payment schedule so the additional principal payments reduce the term of the loan. The ARMs additional payments avoid the negative amortization and the payments decrease while the term of the loan remains constant.

The scheduled negative amortization on a GPM differs depending on the amortization schedule, the note rate and the payment increases of the loan. GPM loans with 7.5% annual payment increases offer the lowest qualifying rate but the largest amount of negative amortization.

On a loan of $150,000, with a 30 year amortization and a note rate of 10.50% with 12.5% annual payment increases, the negative amortization continues for 60 months. The qualifying rate is 5.75% and the negative amortization is 11.34% (approximately $17,010).

The note rate of a GPM is traditionally .5% to .75% higher than the note rate of a straight fixed rate mortgage. The higher note rate and scheduled negative amortization of the GPM makes the cost of the mortgage more expensive to the borrower in the long run. In addition, the borrowers monthly payment can increase by as much as 50% by the final payment adjustment.

The lower qualifying rate of the GPM can help borrowers maximize their purchasing power, and can be useful in a market with rapid appreciation. In markets where appreciation is moderate, and a borrower needs to move during the scheduled negative amortization period they could create an unpleasant situation.

75%.

   

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

Choosing A Mortgage Program  

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

There isn’t a single or simple answer to this question. The right type of mortgage for you depends on many different factors:

  • Your current financial picture.
  • How you expect your finances to change.
  • How long you intend to keep your house.
  • How comfortable you are with your mortgage payment changing.

For example, a 15-year fixed-rate mortgage can save you many thousands of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may get you started with a lower monthly payment than a fixed-rate mortgage — but your payments could get higher when the interest rate changes.

The best way to find the “right” answer is to discuss your finances, your plans and financial prospects, and your preferences frankly with a mortgage professional.

To better help incredible customers (such as you) to better reach our website we have put together the following list of mortgage related terms, verbage and what-not:

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Zeshu Financial Group
5807 S Garnett Rd Suite I
Tulsa, Oklahoma 74146
Toll Free 1-877-205-7266 | Fax: 918-459-6535

At ZFG Mortgage We Are Proud To Offer The Various Refinancing Tips:

When Is The Right Time To Refinance?
At ZFG we realize that the decision as to whether you should refinance your home mortgage can be an agonizing one. Thus, we have put together the following questions (in a checklist form) that you should ask yourself before you decide to go forward with a home refinance or not. In many circumstances, refinancing can be an incredible option that can free up considerable amounts of cash flow for you and your family (based off of the reduced amounts that you will be spending on your monthly mortgage payments). However for some other candidates, refinancing might not make sense for you at this time. Before you decide to refinance or not, answer the following questions: 

  • How long do you plan on living in your home?
  • How much equity do you have built up in your home?
  • Do you plan on utilizing a home equity line to pull cash out of your home?
  • How much of a rate discount will you be able to realize through by refinancing?
  • How much will your closing costs be for refinancing your loan (generally speaking your closing costs will be 3-6% of your total mortgage)?


If you are still unsure of whether refinancing makes sense to you in your current situation, we strongly encourage you to factor in the following variables:

  • If you are not going to live in your current house very long, refinancing generally does not make much sense financially.
  • If you cannot reduce the interest rate that you are currently paying the refinancing usually does not make much sense.
  • If you cannot free up considerable amounts of cash flow by reducing your monthly payment amount, refinancing might not make much sense for you at this point.
  • If you have an ARM (adjustable rate mortgage) and you anticipate your rates dramatically increasing over the next few months (thus dramatically increasing your monthly mortgage payments), then refinancing your home mortgage should be your top priority.
  • If you are currently throwing money away each month by paying private mortgage insurance, then refinancing definately is something that you should strongly consider.
  • How much will your closing costs be? Closing costs can be expensive. If your closing costs are going to be huge, it might not make much sense for you to consider refinancing your current home mortgage.
  • Do you need cash now? If you do their are 2 primary types of financing available to serve you and your cash needs. (a “home equity loan” or a “cash-out refinance loan”…for more information about these programs, call your ZFG mortgage specialist today.
  • Are you using a mortgage lender that you can trust? If you are attempting to refinance with your cousin Larry’s best friend who is just getting into the mortgage lending business, then that might not be a good idea. Stick with a reputable company that you can trust to help you correctly refinance your mortgage (this will greatly affect your financial future).
  • Do you have bad credit? If you do have bad credit, then you will want to find a lender who is willing to work with you to offer your terms that are reasonable for you and your unique situation.
    Listed Below Are Various Words That We Have Put Together To Help Customers Such As Yourself To Reach Credible Lending Institutions Such As Us:

Zeshu Financial Group
5807 S Garnett Rd Suite I
Tulsa, Oklahoma 74146
Toll Free 1-877-205-7266 | Fax: 918-459-6535

 

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Zeshu Financial Group
5807 S Garnett Rd Suite I
Tulsa, Oklahoma 74146
Toll Free 1-877-205-7266 | Fax: 918-459-6535

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Zeshu Financial Group
5807 S Garnett Rd Suite I
Tulsa, Oklahoma 74146
Toll Free 1-877-205-7266 | Fax: 918-459-6535

Zeshu Financial Group
5807 S Garnett Rd Suite I
Tulsa, Oklahoma 74146
Toll Free 1-877-205-7266 | Fax: 918-459-6535

Please contact us with questions regarding our licensing.

The Oklahoma Department of Consumer Credit is a unique organization designed to service customers and creditors about the various aspects relating to protection, regulation and education.

The “Commission’s” purpose to to administer the Uniform Consumer Credit Code. This code deals with the maximum charges, rate ceilings, enforcement rights, advertising requirements, administrative controls and various other aspects of the lending industry. Basically the “Commission” works tirelessly to make sure that you and your family do not get taken advantage of by unethical corporations who actively participate in predatory lending.

The “Commission” investigates and liscenses creditors who are actively operating as “Supervised Lenders” (finance companies). The Commission also enjoys investigating, licensing and overseeing various duties under the Pawnshop Act, Precious Metal and Gem Dealers Act. The Commission also now oversees the Health Spa Act, Rental-Purchase Lessor Act and the Mortgage Broker Licensure Act, and the Credit Services Organization Act. The Commission conducts works hard to standardize the Supervised Lenders, Credit Service Organizations, Rental-Purchase Lessors & Pawnbrokers (you have to have examined a Pawn Broker to appreciate this).

The goal of the Commission on Consumer Credit is to understand and oversee the terms of credit transactions in a way that protects consumer buyers, borrowers, lessees, and various humans who are attempting to borrow money on credit. The Commission permits and encourages the development of ethical and financially prosperous consumer credit practices in the State of Oklahoma. The Commission recognizes that its purpose is to: implement and regulate the laws and duties relating to education, enforcement, and assisting consumers in Oklahoma in a spirit of fairness and integrity.

For more information on licensing and industry regulation for the protection of consumers call the OKAMP offices today at:

OKAMP – (405) 255-9007 – www.okamp.com
Training Pro – (877) 878-3600 – www.trainingpro.com

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5807 S Garnett Rd Suite I
Tulsa, Oklahoma 74146
Toll Free 1-877-205-7266 | Fax: 918-459-6535

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Zeshu Financial Group
5807 S Garnett Rd Suite I
Tulsa, Oklahoma 74146
Toll Free 1-877-205-7266 | Fax: 918-459-6535

More information about commercial loans:

Intro to Commercial Mortgages How Do Commercial
Loans Work?
Qualifications for a Commercial Loan Is a Commercial Loan
Right for you?
Advantages of a
Commercial Loan
Apply for a
Commercial Loan

Qualification for a commercial mortgage depends largely on the type of property or building that is being applied for. For a more in-depth look at qualifying commercial properties please check out our commercial loan type page.

Despite some specifics on certain properties there are general criteria for qualification. As a business owner it is important for you to be able to show that your company has an appropriate debt to cash ratio. Even a company with a poor credit rating can still receive a commercial mortgage if the primary owner can show good personal credit as well as sufficient liquid assets.

Additionally, your company will need to show a continued and stable pattern of profitability as well as plans for future growth. This might include, but not limited to, copies of your business plan, earning projections and long-term business goals.

For a more detailed and personalized assessment of commercial mortgage qualifications please email or call 918-459-6530 today and speak with one of our commercial loan specialists.

Zeshu Financial Group
5807 S Garnett Rd Suite I
Tulsa, Oklahoma 74146
Toll Free 1-877-205-7266 | Fax: 918-459-6535

At ZFG Financial we realize that the lending process can be both confusing and frustrating. , to help you better connect with our stress-free and frustration-free lending team we have put together the following list terms that our clients commonly use to find us on the internet.

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 Tulsa's most trusted name in the Tulsa Mortgage Industry.

ZFG Financial: Toll Free 1-877-205-7266

5807 S Garnett Rd Suite I
Tulsa, Oklahoma 74146
Toll Free 1-877-205-7266 | Fax: 918-459-6535

“Be courageous. I have seen many depressions in business. Always America has emerged from these stronger and more prosperous. Be brave as your fathers before you. Have faith! Go forward!”
Thomas A. Edison

(December 11th 2008)

At ZFG Mortgage we acknowledge that the American (and the Global) economy is currently undergoing a painful market correction, however we are optimistic about the future for Tulsa and the future of the Tulsa home market. The American economy has always had up and downs in its history, but the leaders of our country have always remained optimistic about our future because America is a land of opportunity. To help build your morale and your confidence, we have decided to post Warren Buffet’s thoughts on the American economy in his vintage “non-sugar-coated” and “tell-it-how-it-is” style.

 

(Fortune Magazine) — If Berkshire Hathaway’s annual meeting, scheduled for May 3 this year, is known as the Woodstock of Capitalism, then perhaps this is the equivalent of Bob Dylan playing a private show in his own house: Some 15 times a year Berkshire CEO Warren Buffett invites a group of business students for an intensive day of learning. The students tour one or two of the company’s businesses and then proceed to Berkshire (BRKA, Fortune 500) headquarters in downtown Omaha, where Buffett opens the floor to two hours of questions and answers. Later everyone repairs to one of his favorite restaurants, where he treats them to lunch and root beer floats. Finally, each student gets the chance to pose for a photo with Buffett.

In early April the megabillionaire hosted 150 students from the University of Pennsylvania’s Wharton School (which Buffett attended) and offered Fortune the rare opportunity to sit in as he expounded on everything from the Bear Stearns (BSC, Fortune 500) bailout to the prognosis for the economy to whether he’d rather be CEO of GE (GE, Fortune 500) – or a paperboy. What follows are edited excerpts from his question-and-answer session with the students, his lunchtime chat with the Whartonites over chicken parmigiana at Piccolo Pete’s, and an interview with Fortune in his office.

Buffett began by welcoming the students with an array of Coca-Cola products. (“Berkshire owns a little over 8% of Coke, so we get the profit on one out of 12 cans. I don’t care whether you drink it, but just open the cans, if you will.”) He then plunged into weightier matters:

Investment Guru and Financial Guru

Before we start in on questions, I would like to tell you about one thing going on recently. It may have some meaning to you if you’re still being taught efficient-market theory, which was standard procedure 25 years ago. But we’ve had a recent illustration of why the theory is misguided. In the past seven or eight or nine weeks, Berkshire has built up a position in auction-rate securities [bonds whose interest rates are periodically reset at auction; for more, see box on page 74] of about $4 billion. And what we have seen there is really quite phenomenal. Every day we get bid lists. The fascinating thing is that on these bid lists, frequently the same credit will appear more than once.

Here’s one from yesterday. We bid on this particular issue – this happens to be Citizens Insurance, which is a creature of the state of Florida. It was set up to take care of hurricane insurance, and it’s backed by premium taxes, and if they have a big hurricane and the fund becomes inadequate, they raise the premium taxes. There’s nothing wrong with the credit. So we bid on three different Citizens securities that day. We got one bid at an 11.33% interest rate. One that we didn’t buy went for 9.87%, and one went for 6.0%. It’s the same bond, the same time, the same dealer. And a big issue. This is not some little anomaly, as they like to say in academic circles every time they find something that disagrees with their theory.

So wild things happen in the markets. And the markets have not gotten more rational over the years. They’ve become more followed. But when people panic, when fear takes over, or when greed takes over, people react just as irrationally as they have in the past.

Do you think the U.S. financial markets are losing their competitive edge? And what’s the right balance between confidence-inspiring standards and …

… between regulation and the Wild West? Well, I don’t think we’re losing our edge. I mean, there are costs to Sarbanes-Oxley, some of which are wasted. But they’re not huge relative to the $20 trillion in total market value. I think we’ve got fabulous capital markets in this country, and they get screwed up often enough to make them even more fabulous. I mean, you don’t want a capital market that functions perfectly if you’re in my business. People continue to do foolish things no matter what the regulation is, and they always will. There are significant limits to what regulation can accomplish. As a dramatic illustration, take two of the biggest accounting disasters in the past ten years: Freddie Mac and Fannie Mae. We’re talking billions and billions of dollars of misstatements at both places.

Now, these are two incredibly important institutions. I mean, they accounted for over 40% of the mortgage flow a few years back. Right now I think they’re up to 70%. They’re quasi-governmental in nature. So the government set up an organization called OFHEO. I’m not sure what all the letters stand for. [Note to Warren: They stand for Office of Federal Housing Enterprise Oversight.] But if you go to OFHEO’s website, you’ll find that its purpose was to just watch over these two companies. OFHEO had 200 employees. Their job was simply to look at two companies and say, “Are these guys behaving like they’re supposed to?” And of course what happened were two of the greatest accounting misstatements in history while these 200 people had their jobs. It’s incredible. I mean, two for two!

It’s very, very, very hard to regulate people. If I were appointed a new regulator – if you gave me 100 of the smartest people you can imagine to work for me, and every day I got the positions from the biggest institutions, all their derivative positions, all their stock positions and currency positions, I wouldn’t be able to tell you how they were doing. It’s very, very hard to regulate when you get into very complex instruments where you’ve got hundreds of counterparties. The counterparty behavior and risk was a big part of why the Treasury and the Fed felt that they had to move in over a weekend at Bear Stearns. And I think they were right to do it, incidentally. Nobody knew what would be unleashed when you had thousands of counterparties with, I read someplace, contracts with a $14 trillion notional value. Those people would have tried to unwind all those contracts if there had been a bankruptcy. What that would have done to the markets, what that would have done to other counterparties in turn – it gets very, very complicated. So regulating is an important part of the system. The efficacy of it is really tough.

At Piccolo Pete’s, where he has dined with everyone from Microsoft’s Bill Gates to the New York Yankees’ Alex Rodriguez, Buffett sat at a table with 12 Whartonites and bantered over many topics.

How do you feel about the election?

Way before they both filed, I told Hillary that I would support her if she ran, and I told Barack I would support him if he ran. So I am now a political bigamist. But I feel either would be great. And actually, I feel that if a Republican wins, John McCain would be the one I would prefer. I think we’ve got three unusually good candidates this time.

They’re all moderate in their approach.

Well, the one we don’t know for sure about is Barack. On the other hand, he has the chance to be the most transformational too.

I know you had a paper route. Was that your first job?

Well, I worked for my grandfather, which was really tough, in the [family] grocery store. But if you gave me the choice of being CEO of General Electric or IBM or General Motors, you name it, or delivering papers, I would deliver papers. I would. I enjoyed doing that. I can think about what I want to think. I don’t have to do anything I don’t want to do. It might be wonderful to be head of GE, and Jeff Immelt is a friend of mine. And he’s a great guy. But think of all the things he has to do whether he wants to do them or not.

How do you get your ideas?

I just read. I read all day. I mean, we put $500 million in PetroChina. All I did was read the annual report. [Editor’s note: Berkshire purchased the shares five years ago and sold them in 2007 for $4 billion.]

What advice would you give to someone who is not a professional investor? Where should they put their money?

Well, if they’re not going to be an active investor – and very few should try to do that – then they should just stay with index funds. Any low-cost index fund. And they should buy it over time. They’re not going to be able to pick the right price and the right time. What they want to do is avoid the wrong price and wrong stock. You just make sure you own a piece of American business, and you don’t buy all at one time.

When Buffett said he was ready to pose for photographs, all 150 students stampeded out of the room within seconds and formed a massive line. For the next half hour, each one took his or her turn with Buffett, often in hammy poses (wrestling for his wallet was a favorite). Then, as he started to leave, a 77-year-old’s version of A Hard Day’s Night ensued, with a pack of 30 students trailing him to his gold Cadillac. Once free, he drove this Fortune writer back to his office and continued fielding questions.

How does the current turmoil stack up against past crises?

Well, that’s hard to say. Every one has so many variables in it. But there’s no question that this time there’s extreme leveraging and in some cases the extreme prices of residential housing or buyouts. You’ve got $20 trillion of residential real estate and you’ve got $11 trillion of mortgages, and a lot of that does not have a problem, but a lot of it does. In 2006 you had $330 billion of cash taken out in mortgage refinancings in the United States. That’s a hell of a lot – I mean, we talk about having $150 billion of stimulus now, but that was $330 billion of stimulus. And that’s just from prime mortgages. That’s not from subprime mortgages. So leveraging up was one hell of a stimulus for the economy.

If that was one hell of a stimulus, do you think the $150 billion government stimulus plan will make an impact?

Well, it’s $150 billion more than we’d have otherwise. But it’s not like we haven’t had stimulus. And then the simultaneous, more or less, LBO boom, which was called private equity this time. The abuses keep coming back – and the terms got terrible and all that. You’ve got a banking system that’s hung up with lots of that. You’ve got a mortgage industry that’s deleveraging, and it’s going to be painful.

The scenario you’re describing suggests we’re a long way from turning a corner.

I think so. I mean, it seems everybody says it’ll be short and shallow, but it looks like it’s just the opposite. You know, deleveraging by its nature takes a lot of time, a lot of pain. And the consequences kind of roll through in different ways. Now, I don’t invest a dime based on macro forecasts, so I don’t think people should sell stocks because of that. I also don’t think they should buy stocks because of that.

Your OFHEO example implies you’re not too optimistic about regulation.

Finance has gotten so complex, with so much interdependency. I argued with Alan Greenspan some about this at [Washington Post chairman] Don Graham’s dinner. He would say that you’ve spread risk throughout the world by all these instruments, and now you didn’t have it all concentrated in your banks. But what you’ve done is you’ve interconnected the solvency of institutions to a degree that probably nobody anticipated. And it’s very hard to evaluate. If Bear Stearns had not had a derivatives book, my guess is the Fed wouldn’t have had to do what it did.

Do you find it striking that banks keep looking into their investments and not knowing what they have?

I read a few prospectuses for residential-mortgage-backed securities – mortgages, thousands of mortgages backing them, and then those all tranched into maybe 30 slices. You create a CDO by taking one of the lower tranches of that one and 50 others like it. Now if you’re going to understand that CDO, you’ve got 50-times-300 pages to read, it’s 15,000. If you take one of the lower tranches of the CDO and take 50 of those and create a CDO squared, you’re now up to 750,000 pages to read to understand one security. I mean, it can’t be done. When you start buying tranches of other instruments, nobody knows what the hell they’re doing. It’s ridiculous. And of course, you took a lower tranche of a mortgage-backed security and did 100 of those and thought you were diversifying risk. Hell, they’re all subject to the same thing. I mean, it may be a little different whether they’re in California or Nebraska, but the idea that this is uncorrelated risk and therefore you can take the CDO and call the top 50% of it super-senior – it isn’t super-senior or anything. It’s a bunch of juniors all put together. And the juniors all correlate.

If big financial institutions don’t seem to know what’s in their portfolios, how will investors ever know when it’s safe?

They can’t, they can’t. They’ve got to, in effect, try to read the DNA of the people running the companies. But I say that in any large financial organization, the CEO has to be the chief risk officer. I’m the chief risk officer at Berkshire. I think I know my limits in terms of how much I can sort of process. And the worst thing you can have is models and spreadsheets. I mean, at Salomon, they had all these models, and you know, they fell apart.

What should we say to investors now?

The answer is you don’t want investors to think that what they read today is important in terms of their investment strategy. Their investment strategy should factor in that (a) if you knew what was going to happen in the economy, you still wouldn’t necessarily know what was going to happen in the stock market. And (b) they can’t pick stocks that are better than average. Stocks are a good thing to own over time. There’s only two things you can do wrong: You can buy the wrong ones, and you can buy or sell them at the wrong time. And the truth is you never need to sell them, basically. But they could buy a cross section of American industry, and if a cross section of American industry doesn’t work, certainly trying to pick the little beauties here and there isn’t going to work either. Then they just have to worry about getting greedy. You know, I always say you should get greedy when others are fearful and fearful when others are greedy. But that’s too much to expect. Of course, you shouldn’t get greedy when others get greedy and fearful when others get fearful. At a minimum, try to stay away from that.

By your rule, now seems like a good time to be greedy. People are pretty fearful.

You’re right. They are going in that direction. That’s why stocks are cheaper. Stocks are a better buy today than they were a year ago. Or three years ago.

But you’re still bullish about the U.S. for the long term?

 The American economy is going to do fine. But it won’t do fine every year and every week and every month. I mean, if you don’t believe that, forget about buying stocks anyway. But it stands to reason. I mean, we get more productive every year, you know. It’s a positive-sum game, long term. And the only way an investor can get killed is by high fees or by trying to outsmart the market.

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