Monday, June 8, 2009

Guess What? You’re Bumped!

By Kristin Abouelata, Home Loan Specialist


Sometimes loans don’t close when they are supposed to close. What exactly can cause your loan closing to be delayed? In today’s environment, a refinance can get moved with the blink of an eye. You’ve been bumped! But a purchase, too?

You’ve called the movers, you’re all packed, and it’s the eleventh hour before closing. Your phone rings and it’s your lender with bad news. Your loan’s not going to close tomorrow. Everything’s ready, the utilities are being turned off tomorrow, and the movers are showing up! Why is this happening?

There are so many moving pieces to a puzzle of a loan closing. Everything has to be coordinated to make it go smoothly. For instance, get the requested documents to your lender as soon as possible. If you dilly dally, you may run into problems. You see, your lender has a whole pipeline of loans, as do all the other mortgage lenders that work for that particular company. All of these loans have to be reviewed by an underwriter. So, basically, your loan has to take a number. And if you’re not prompt, your loan may go to the back of a very long line. Most people want their loans to close at the end of the month, so you can imagine the huge glut and back up that occurs. Thus, be prompt and responsive to your lender’s requests to allow everyone time to do their job.

Also, don’t quit your job and expect to close because your approval depends on you receiving proven income. On the day of closing, a lender is going to make a call to ensure you’re still employed. Funny, but your ability to repay the loan is important when someone’s fronting you thousands of dollars. No job, no moola.

If you’re a seller, be sure you’re ready for that final walk through. If the buyers are expecting you to leave the bathroom mirrors and the curtains, then don’t pack them up. The house should be broom clean (unless otherwise noted in the contract) and there shouldn’t be any new damage or sudden repairs needed that previously didn’t exist.

Weird things can happen, too. I know of a loan that was delayed in closing because two days prior to the deadline the title company found out that the builder/seller had filed bankruptcy. It seems that he was not in a position to sell the home anymore, and he failed to tell anyone (however, the new owner who got the property in bankruptcy was happy to sell, but closing was delayed). Another odd tale was that of the seller who failed to disclose he had a $49,000 tax lien outstanding on a property. He didn’t feel it necessary to mention this situation to anyone. It was pretty much a deal killer, as you can imagine.

Another thing that can cause a hiccup is failure to alert anyone that that one of the parties (buyers or sellers) will be out of town for a closing. These situations aren’t insurmountable, but they require careful planning and coordination. Sometimes, the contract changes and the lender isn’t notified until after the loan is fully underwritten. Contract changes usually require a loan to be shot back through underwriting. Remember, you get in the back of the line.

With today’s refinance boom, the majority of lenders can’t give their customers a firm closing date when scheduling their refinance closing. Purchases will typically take precedence in this environment. That means although your refinance is waiting line patiently, it can get bumped. Like an oversold flight at the airport. You just have to be patient and get re-routed. Within reason of course. Just don’t lose sight of the end goal!

The moral of the story is to listen to your lender and keep an open line of dialogue going. Keep the him/her aware of changing situations. Email is great tool for use in accomplishing this purpose. It takes only a minute or two and can save everyone lots of heartache in the long run.

Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.

Saturday, February 21, 2009

It’s A-OK with 203(K)!

With foreclosures on the market, many times a borrower might want to purchase a property that needs a little fixing up, but the sellers (a/k/a the Bank), won’t make any concessions towards repairs. Or a person may want to make upgrades on their current home. A FHA 203(K) rehab loan may be the answer to your dilemma!

Unfortunately, there are a bunch of foreclosed properties lurking about. The good news is that these same properties often are great deals for the right individuals. But when dealing with a foreclosure, typically, the seller won’t make any repairs to the property. You see, the seller, usually a bank or a secondary lender, has already lost money on the property. So, these entities are very unwilling (or in some cases, completely unwilling) to put a new roof on the home or make sure the heat and air unit is working. And that poses a problem.

It’s because when you get the fantastic 30 year fixed mortgage at the unbelievable low interest rates you hear about these days, the property has to be inhabitable. Certain things are a must. Health and safety concerns (banisters, working toilets and running water) are just non-negotiable. And the truth of the matter is that many foreclosed properties, while still fantastic deals, aren’t exactly up to snuff in terms of “ready for the moving van.” When one isn’t able to make a mortgage payment, one doesn’t necessarily maintain the property in top condition, which is the case many times with foreclosures. A lender requires you to be able to live in that residence you’re buying. Otherwise, you may decide it’s not worth it and walk away from your debt obligation.

So what are your options? Well, you can get a bank loan. But, the bank’s guidelines are mostly short term. So it’s not a long term solution. You can also perhaps get a 30 year fixed conventional loan, depending on the condition of the property. However, you can be limited by many factors. Especially if your credit score is below a 680, a conventional loan might not be very affordable.

That’s where the FHA 203(K) loan comes into play if you’re buying a primary residence. Because it’s an FHA loan, you have a low down payment and premium pricing available with only a 620 credit score. So, that in itself is special about this product. Typically, FHA’s standards regarding the condition of the property are pretty sound and unwaivering. Did I mention you have to be able to actually live in the home and have running water and a working roof when you close? Well, FHA is particularly particular on these matters. They want their customers in a safe, affordable home. That’s the focus of their business. As well, you are limited by the FHA guidelines as far as loan size goes.

So, what’s so special about a 203(K) loan? It allows the buyer to make some of those very necessary repairs or very wanted upgrades by financing them into the loan amount, and into only one loan. And I mentioned this earlier, but the 203(K) loan will work on a refinance, too. Maybe you want to bust out that wall and create a bigger closet. Whatever the need, it may be a solution.

The program allows you to finance up to $35,000 in improvements to the property. The value of the appraisal is based upon the “as completed” condition of the property once the upgrades or repairs are made. The repairs have to be completed by licensed contractor - you can’t do the work yourself.

Thus, if you need a little work done, the 203(K) loan may just prove to be a top notch solution.

Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at http://www.kristinmortgage.com/ Home Loans Plain Talk.

Fannie, Freddie and Ginnie…Explained

Did you ever wonder who these “people” were that had so much to say about the state of our economy? Well, Fannie, Freddie and Ginnie aren’t people, they are institutions. They are the shortened names for Fannie Mae (FNMA-Federal National Mortgage Association), Freddie Mac (FHLMC -Federal Home Loan Mortgage Corporation) and Ginnie Mae (GNMA-Government National Mortgage Association). They are the big three, and they buy the majority of mortgages for all homes across the nation.

The names Freddie and Fannie are all over the place lately. It’s quite common to hear these names on the nightly news on a regular basis. Or you see them online on your favorite news website. Ginnie Mae, not as much. So what exactly are these entities? And what do they have to do with mortgage lending?

These days, you can talk to practically any mortgage lender, they verify your life history and you find yourself owning a home. But you rarely make your mortgage payment to that original lender after an interim period. That’s because lenders make most of their money by selling your loan and it’s servicing.. And more often than not, whatever company you make your payment to doesn’t own your loan. It is the “servicer” of that loan. It is called your servicer because it is simply servicing your loan for the institution that actually owns it.

What happens is your loan gets sold to another company that sells it to one of the big three, or sometimes the company you got your loan from originally sells it directly to one of the big three. Freddie, Fannie and Ginnie buy “pools” of loans. Loans quickly become “pooled” into groups of loans of similar size, interest rate and type. The servicer gets a monthly fee from the institution for servicing your loan and processing your payments. This fee is small (about 3/8 of a percent), but if your pool gets big enough, it can create a tidy sum of income when sold to Fannie, Freddie or Ginnie. There are companies that service billions of dollars of loans. You might have heard lately in the news that some of these servicing portfolios didn’t perform. That’s created a little bit of a headache lately in the mortgage world.

The entire system of mortgages (originators, brokers, banks) is designed to create these pools because so much income can be generated from servicing. When enough loans are made to create a pool, the company sells the loans to Freddie, Fannie or Ginnie, generating more income. This action in turn allows the company to make more loans, and so on and so forth. The whole process begins again.

Freddie, Fannie and Ginnie set underwriting guidelines for lenders to follow that will allow for lower risk loans. The foreclosures of late have caused these guidelines to become less lenient, and in general, more documentation is required to close a loan. The loans in the pools serviced have been reviewed to make sure they are compliant with the guidelines set forth.

So, now you know who Freddie, Fannie and Ginnie are. And now you know why the government cares so much that these three stay healthy.

Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at http://www.kristinmortgage.com/ Home Loans Plain Talk.

Surprise, Surprise…Your Closing Date Is Moved, Again!

Sometimes loans don’t close when they are supposed to close. During this recent refinance boom, it’s not uncommon for a lender to be unable to give you a firm closing date. What exactly can cause your loan closing to be delayed?

It seems like the whole world is refinancing their mortgages right now. Well, not the whole world. I imagine other countries aren’t experiencing the same low rate phenomenon that we are right now. However, I can assure you the mortgage industry here at home is experiencing record numbers in volume due to the current market. It’s a great opportunity for a lot of people to save big bucks, and for long term. However, since everyone and their cousin is trying to refinance right now, it’s creating some logistical difficulties.

Think about it. It’s not just the lenders who are overwhelmed with business right now. So are all the vendors they do business with to get the loan closed. That means appraisals are taking longer to get done, and title companies are scrambling to coordinate title searches and loan closings. Even more obscure vendors, like credit reporting agencies, are behind. Say you want to update a customer’s credit report to remove some erroneous information. Guess what? It’s taking longer than ever to get it done.

Because of this huge glut, lock periods for loan rates are typically longer than usual. A lock period is the timeframe in which you must close your loan to secure that fabulous interest rate that got you to commit in the first place. Lenders are having to set realistic expectations for their customers. How can you possibly close a loan in five days if you don’t have the appraisal back? You see, some things are out of your lender’s control. Realtors are very aware of the limitations that lenders are facing these days. They are ensuring that they too set realistic deadlines when negotiating purchase contracts for buyers.

There are so many moving pieces to a puzzle of a loan closing. Everything has to be coordinated to make it go smoothly. That means that you as a customer have certain responsibilities and obligations, as well. For instance, get the requested documents to your lender as soon as possible. If you dilly dally, you may run into problems. You see, your lender has a whole pipeline of loans, as do all the other mortgage lenders that work for that particular company. All of these loans have to be reviewed by an underwriter. So, basically, your loan has to take a number. And if you’re not prompt, your loan may go to the back of a very, very, very long line. Most people want their loans to close at the end of the month or in the first few days of the month, so you can imagine the huge glut and back up that occurs. Thus, be prompt and responsive to your lender’s requests to allow everyone time to do their job.

The moral of the story is to listen to your lender and keep an open line of dialogue going. Keep him/her aware of changing situations. Email is great tool for use in accomplishing this purpose. It takes only a minute or two and can save everyone lots of heartache in the long run. And if your loan closing date gets moved, take heart. It will close, eventually.

Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.

Wednesday, February 18, 2009

"How to find a house in Knoxville, TN", by Patrick Beeson

Entry updated Dec. 1, 2008 at 4:13 p.m.

*Note: You can also read this entry on Knoxify.*

UPDATE: My wife and I closed on our house November 24!

Knoxville is an easy enough city in which to live. It's cheap, most folks are nice and life is generally relaxed. But whats it like finding a house in Sunsphere City?

My wife and I, being home-buying n00bs, had the chance to find out with our (fingers-crossed) recent find in Fountain City, just north of downtown Knoxville.


Home-finding resources for Knoxville
I work for Scripps Interactive Group, which means I know more than enough about home listings available though the Web site of the Knoxville News-Sentinel. This online resource culls both multiple listing service (MLS) listings and newspaper classifieds into a site that's easy to use. I especially like the way that you can filter the listing criteria, which also adjusts the map display.
Another resource I used extensively was the Knoxville Area Association of Realtors' (KAAR) Internet Data Exchange Program. This complex name really denotes a basic listing application that pulls from the MLS database, and displays data similar to that of knoxnews' service.
I especially like the KAAR's interactive map, which displays available listings for the area of town you're looking at. Also useful is the ability to save your favorite listings, rate them, and write notes.

Unfortunately, as my wife and I learned the hard way, the available listings are always current. And they don't show whether an offer is pending on the house.
We used KAAR service as a starting point for drive-bys.

Other resources include Realtor Suzy Trotta, Zillow, print classifieds and driving around neighborhoods.

Here's how I rank the resources used:

  • KAAR
  • Realtor
  • Driving around neighborhoods
  • News-Sentinel
  • Zillow
  • Print classifieds
  • How to find a neighborhood

Knoxville's lack of established neighborhoods is probably its greatest flaw. Fortunately, there are a few great ones such as Sequoya Hills, Island Home, North Hills and Fountain City, all of which are located within bike-riding distance to downtown.


West Knoxville is home to mostly mindless subdivisions and new construction with little to no history or character. There are diamonds in the rough, but they're few and far between.

My definition of a great neighborhood means the following:
Sidewalks or streets with little through traffic
Walking distance to local eateries or other businesses
Walking distance to parks
Walking distance to schools
Homes with distinct characteristics (not planned communities)
Connections to other neighborhoods, not just isolated pockets of housing
Historical significance (bonus)

Honestly, this was the hardest part of the home search because there aren't many resources available for researching Knoxville neighborhoods other than talking to long-time residents. Fortunately, our Realtor Suzy Trotta has compiled a number of neighborhood reviews on both her blog All Around K-Town, and the Knoxville-centric group blog Knoxify.
The real estate section of knoxnews also features a number of neighborhood descriptions.

Summary and other tips
If you're looking to find a house in Knoxville, here are the resources I'd recommend:
Realtor: Suzy Trotta
Mortgage lender: Kristin Abouelata
Home inspection: Volunteer Home Inspections
Listing service: KAAR IDX and knoxnews
Neighborhood information: All Around KTown's Neighborhood of the Week and Knoxify Neighborhood Guide

If you want information about my experiences finding a home in Knoxville, or just have a question about any of the resources I mentioned, please post a comment or contact me directly.

I found Patrick's blog [HERE]

Monday, February 16, 2009

Suzy Trotta Blogs on the "New Homebuyer Tax Credit"

New $8,000 Homebuyer Tax Credit

February 15, 2009

Courtesy of the National Association of Realtors - yes, I always knew they were good for something- we finally have the details of the new home buyer tax credit from the recently passed stimulus bill, or the “American Recovery and Reinvestment Act of 2009″ as it is now officially called.

According to the NAR:
The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser’s income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

There is also a PDF file on the site with a table highlighting the differences between the old $7,500 tax credit and the new one.

Check out "Allaround Ktown" by Suzy Trotta [HERE]