Saturday, December 20, 2008

Killer Interest Rates

I have locked in some amazing loans / interest rates this week. The saving to people has been huge. You should definitely take the time to look at your home mortgage and find out if you can save some money.

Let My Experience Work For You!

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

Friday, December 19, 2008

I am Blushing

As I’m sure our in-house real estate agent will agree, the housing market isn’t what it used to be. Times are tough and stress levels are running higher than normal.

But for some crazy reason that didn’t stop my wife and I from jumping right in, looking for the perfect house to suit our first-time-buyer needs. Being the home buying newbies we were, we turned to Suzy Trotta, shooting hundreds of questions her way in hopes of finding some answers. Not only did Suzy have the answers, she helped us find the house we’d been dreaming of. Only one problem: we needed a mortgage.

My wife and I are frugal and detail oriented, two traits I’m sure every lender has experience with. Suzy pointed us to Kristin Abouelata at Mortgage Investors Group (MIG) for help.

[More at Knoxify]

Let My Experience Work For You!

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

Wednesday, December 17, 2008

Fed cuts target for key rate to record low

Fed cuts target for key interest rate to record low, pledges to use all available tools.

WASHINGTON (AP) -- The Federal Reserve has cut its target for a key interest rate to the lowest level on record and pledged to use "all available tools" to combat a severe financial crisis and prolonged recession.

The central bank on Tuesday said it had reduced the federal funds rate, the interest that banks charge each other, to a range of zero to 0.25 percent. That is down from the 1 percent target rate in effect since the last meeting in October. Many analysts had expected the Fed to make a smaller cut to 0.5 percent.


If you would like to evaluate if refinancing is right for you:

Let My Experience Work For You!

Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at or call direct: (865) 567-0113

Toll Free: 1-800-489-8910.

For more information visit her website at Home Loans Plain Talk.

Sunday, December 14, 2008

Mortgage Fraud: Why It Affects Everyone

Mortgage fraud is a very serious problem. It’s a an even bigger problem with the current state of our economy. It affects even the innocent bystander.

The FBI somewhat recently released a report entitled, “2007 Mortgage Fraud Report,” which stated that mortgage fraud was up 176%. That’s a pretty big number. In fact, the report also reported that the FBI had instigated 1200 cases in which an individual “intentionally misrepresented information a lender used to fund a mortgage in the past year.” That’s very serious business. Just think - if it investigated 1200 cases, how many went undetected? The report further says that the number of mortgage fraud “Suspicious Activity Reports,” catapulted to a 31% increase in 2007. And according to the Mortgage Asset Research Institute, mortgage fraud increased nearly 50% in the second quarter of 2008 compared to last year. It’s scary.

Without a doubt, the subprime loans (that basically no longer exist in the old form) contributed to the increase in fraud. It was just too tempting for desperate or greedy people to lie about one’s income or forge a few docs to get into that home. Most of these individuals truly intended to pay back the loan. Life happened, and they figured out they couldn’t, and it was too late. You see, there are two types of fraud. There is fraud for home purchase and fraud for profit. Fraud for home purchase is usually an individual just wanting to get into a home they think they can afford, however, the lender wouldn’t agree with them if all the cards were on the table. And greedy lenders contribute to this mindset by turning a blind eye to information they probably should question. Fraud for profit is more complicated. It involves sometimes groups of individuals falsifying documents to obtain property and resell and drain the property, extracting all equity and saddling the lender with a mess. Fraud for profit sometimes includes appraisers, realtors and lenders.

Currently, there are three very popular mortgage schemes out there. The first one is the “buy and bail.” Lenders are particularly wary of this one. In this scenario, a homeowner applies for a cheaper mortgage than what they currently are financing. They then present a falsified rental agreement and fake renter for the property they currently can’t afford. They close on the new loan, then they default on the old mortgage. The borrower now has an new affordable mortgage, and the lender is stuck with a foreclosure on the old property.

The second type of fraud is the liar loan. Using technology, borrowers produce fake pay stubs, tax returns or income statements. Even the most careful and seasoned originators or underwriters can’t tell the difference.

And finally, there is the reverse appraisal mortgage fraud. In this scenario, lower than normal property valuations convince a bank that the property is worse less than what it is. The appraisal convinces the bank to do a short sale and settle for less than the mortgage owed.

So, how can fraud affect you? When properties sell at inflated prices and they’re in your neighborhood, your taxes increase unjustly. If they sell at deflated prices, than that effects your property’s value. Also, the properties in these schemes usually deteriorate quickly as no one is really maintaining them. Then, if you’re a neighbor, your property value decreases because you live near an unsightly house. And let’s not forget what the mortgage mess is doing to our current economy. I think we all feel that pain.

So, be on watch. This is serious business. And check your credit to make sure you’re not an identity theft victim. People with good credit scores are a big target for mortgage identity theft. You see, if you’re trying to scam a lender, it’s preferable to “be” Joe Smith with a 740 credit score than the deadbeat crook that you really are. Or worse yet, these thieves drain the real Joe Smith’s home equity line of credit by maximizing and withdrawing the limit. Yikes. Keep up your vigilance,and we lenders will do our part on our end. It takes a village.

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

Monday, December 1, 2008

Getting a Mortgage? On What Term?

When exploring your options regarding a mortgage, people often overlook the most basic consideration. How long do you want to make payments?

Many people automatically obtain mortgage financing that amortizes over thirty years. Amortize, according to Wikipedia, “is the process of decreasing, or accounting for, an amount over a period of time. The word comes from Middle English amortisen to kill.” Basically, applying it to a mortgage, it means the terms for killing off that huge debt to which you just obligated yourself. That’s a nice thought – killing your mortgage, right? Now, consider the basic question - how long are you going to be hacking away at this debt?

Typically, as aforementioned, the most common loan term is for 30 years. But also quite common is the 15 year mortgage. What’s the most obvious difference? In basic terms, it’s the payment itself. The loan that amortizes over 15 years costs you approximately 20% to 25% more out of pocket per month. That difference oftentimes is where the buck stops. It’s a matter of affordability.

However, if the numbers work for you, a 15 year mortgage has its added attractions. In a nutshell, you pay less interest over the period of the loan, so it’s less out of pocket at the end of the day (or mortgage, in this case). Over fifteen years, this time reduction can result in considerable savings.

There’s another solution to this dilemma. However, it requires personal discipline. You can obtain a 30 year mortgage, figure out what extra principal payments to make each month, and pay it off in 15 years. This situation works for a lot of people. For instance, if your monthly income is inconsistent, it’s a great plan. Say you consistently make $60,000 annually, but you get the majority of your income only two times a year. Obtaining a fifteen year loan, although affordable on paper for you, doesn’t pan out realistically. Yet, if you’re disciplined, you can plop down a big principal payment when the money is flowing those couple of times a year. That way, you’re not backed into a corner to always have to cough up the higher payment. This scenario works for some people quite well.

There are other loan terms besides 15 or 30 year mortgages. There are 10, 20 and 40 year mortgages, too. However, they are not as common. The reason they aren’t is because of the very fact that they are uncommon. You see, the secondary market wants to sell loans into pools of other loans similar in interest rate, type and amortization. Since there aren’t a lot of these “diffent’ type amortizing loans, the appetite to buy them isn’t as evident. And if no one is hungry for the item on the menu, you either don’t carry a lot of it, or you price it a bit higher for the rare, discriminating palate.

But again, you can always choose a 30 year mortgage, and pay it off on a shorter schedule to suit your own personal needs. What you choose to do need only make sense to you. You may qualify for a 15 year loan, but only be comfortable with a 30 year loan. Only you can say. However, if it is easily affordable, then the chance to build your equity more quickly may be a deciding factor.

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

What’s the Low Down on Loan to Value?

When buying a home, most people only concern themselves with the interest rate and the type of loan they are getting. However, the loan to value may be another aspect to take into consideration.

It’s not very often that a borrower takes into heavy consideration what his loan to value is when shopping for a loan. In fact, if the subject is brought up by the customer, it’s mostly in relation to avoiding paying monthly mortgage insurance. But sometimes, a loan to value can affect even more aspects of your loan – like pricing and approval!

What is loan to value? Well, it’s exactly what it says. The loan amount compared to the value of the home you are buying or refinancing. For example, if you are buying a $100,000 home, and your loan amount is only $50,000, your loan to value or “LTV” is 50%. It’s also very common to refinance a home to obtain a lower LTV and drop mortgage insurance that was before required.

Different types of loans have different minimum requirements for LTV’s. With primary residence purchases, for instance, an FHA loan can have as high as a 97.75% LTV (soon to change to 96.5% in 2009). A conventional loan can have as high as a 97% LTV (but more common is 95% LTV). VA and Rural Housing loans can have 100% LTV’s. People who have cash to put down on the property they are buying and financing with a conventional loan oftentimes try to amass 20% of the purchase price in order to avoid mortgage insurance. Mortgage insurance is required when your LTV for a primary residence is above 80% and is issued by independent mortgage insuring companies like Genworth Financial or PMI. Fannie and Freddie, the big purchasers of conventional loans, will require one of these or other approved companies issue mortgage insurance unless the loan has an 80% LTV. And if you’re refinancing the home you live in? The whole grid of acceptable LTV’s changes for the most part, with a few exceptions. And furthermore, if you’re talking about investment properties, it’s another can of worms.

But when else does LTV mean something? Consider when a loan specialist prices your loan. Oftentimes there are pricing differentials based upon the loan to value. For instance, if you carry mortgage insurance and your LTV is 85.01% or higher, you might actually get a better interest rate than if you had an 85% LTV (but don’t get too excited because your monthly mortgage insurance will be higher). Or if your LTV is 60% or lower, you might also get a better interest rate. If you are close to tipping the scales on one of these ratios, it may be to your benefit to ask your loan specialist how close you are to a pricing break one way or another. You’d be surprised to find out it might change your mind as to how much money you decide to put down on your loan.

And guess what else? A low loan to value may be the difference between loan approval and loan denial. Why is that? Because if you are investing enough of your own money into the equity of a property, chances are you won’t default on the loan. And if you do, it’s probably a last recourse. Not to mention, the lender who holds the note won’t lose money because there is enough equity in the property to cover foreclosure costs, re-sale costs and any value loss from an upside down market. The lender is covered. So, the lender will consider the loan less risky and a higher debt to income ratio is tolerated when reviewed with a high credit score.

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

Sunday, November 30, 2008

What Is Right of Rescission, and When Should You Use It?

Did you know you can sometimes change your mind on a real estate transaction even if the note and deed of trust have been signed? It’s called your Right of Rescission, and it exists to give you time to consider your actions.

I had a gentleman call me today that had begun a transaction with another lender, and was getting cold feet. He said he had heard he could rescind or back of the transaction, but couldn’t find anyone who knew what he was talking about. Hmmm. That’s not a great thing to hear.

The Truth In Lending Act affords this “out clause” known as a Right of Rescission (ROR) to borrowers, giving them the right to cancel their loan within three business days of signing the final closing docs and allowing them to a full refund of any monies paid at that closing.

It turns out my guy was confused. He had only signed initial disclosure documents (that’s a whole other article), and had locked his loan. He could walk away from the deal. But as it turns out, this lender had extracted a $500 commitment fee which he probably wouldn’t see again. Note to self, avoid commitment fees.

However, if he had gotten as far as closing, he could have changed his mind. This fact is because his transaction would have met the guidelines for allowing for the rescission of the real estate transaction. He was refinancing the loan on his primary residence. If it was his beach house, then no, that wouldn’t work. It has to be the house you live in. It doesn’t matter what type of house it is, but where you call home. It doesn’t matter if he was refinancing to pull out a little cash to pay off bills or simply lowering his interest rate. He would have had a cooling off period (three business days mentioned above) before the funds to complete the transaction actually disbursed. For instance, if he signed on Monday, he would have Tuesday, Wednesday, midnight of Thursday to say, “HOLD UP!” Business days include Saturdays, but not Sundays or legal public holidays. Thanksgiving counts, but not the Friday afterward.

You can’t rescind every time you are refinancing your primary residence. For instance, if you are refinancing to pay off a construction loan because you just finished building your house, that wouldn’t count. If a state agency is your creditor, there is no ROR.

How do you go about exercising this right? Well, typically, your title company and lender give you very clear guidelines in writing telling you what you should do. During the rescission period, nothing really happens on your loan. If you want out, you have to send the request in writing to the lender, or else the title agency sometimes accepts it in on their behalf. But make sure you keep a paper trail and can show it was sent before midnight of the third day. A phone call or a visit to the lender isn’t legally sound, although most lenders wouldn’t hold you to the transaction if you called them; they’d just get you the paperwork to do it correctly.

Don’t misunderstand me. I’m not advocating people go hog wild and start exercising ROR for the fun of it. It’s very serious decision. A lot of people and companies worked hard to get you to the point of closing. It’s not a frivolous matter. And it happens extremely rarely because most folks are honest and do their jobs right. However, if you feel you were mislead in anyway, now you know you’re not backed into a corner. You have time to right any wrongs, reconsider or simply walk away.

Cash Crunch? Maybe It’s Time to Cash Out?

It’s that time of year when people start scrambling for cash or assess their financial standings. Thinking about pulling equity out of your property? Know what your options are before making a move…

It’s probably safe to say that today’s current economic situation is not ideal for the majority of Americans. As rates continue to creep down, many people start to consider refinancing. And if you’re going to refinance, it’s always a good time to discuss cashing out some equity in the property.

Why is it a good topic for discussion? For one, if you are refinancing on the secondary market, you’re going to pay closing costs. It’s best to consider all options before you leap. Not that cashing out equity necessarily makes sense for you. If you just want to take the kids to Disney or throw a silver wedding anniversary party for your parents, you might take a second to think of a better way to finance these items. Do you really want to pay for them over the next 30 years? However, if you’re paying a mound of money in credit card debt and your existing interest rate is way higher than current market rate, than it’s something to consider. Or maybe it’s time to send a kid off to college.

A cash out refinance works this way. Say you bought your house three years ago, financed $100,000 of the $125,000 purchase price at a rate of 7%. In the meantime your house is worth $150,000 now, and you have amassed some icky credit card debt. You’d like to pull out $10,000 in equity from the house to pay off the credit card, and the current rate available to you is 5.75%. This scenario would make sense to consider a cash out.

The down side to a cash out refinance is that, as mentioned before, you have to pay closing costs. You do usually pay a lower rate in title insurance by commanding a re-issue rate. And this charge can be a big ticket item, but other than that the other costs are pretty much standard as they would be for a purchase. The money you would need to set up escrow probably will come back to you from your old escrow account when your old mortgage is paid off. So, that’s more palatable.

Also, keep in mind that if you pull too much equity out of your house, you might have to face monthly mortgage insurance. Right now, the minimum loan to value for a cash out on aprimary residence on a Conventional loan is 85%. For FHA, it’s 95%. But you can expect that to change soon. The reason for the changes? Many people in a tight financial bind sucked the equity out of their homes, then defaulted on the mortgages. As you can imagine, this move hasn’t helped our economy much. Not much at all. So, lenders have safeguards now and higher loan to values, to prohibit this from happening as often.

Make sure you really consider all options when refinancing. Don’t fall into a trap of cashing out for a quick return with a long term pay back. Make sure cashing out has a real purpose and benefit for doing so. Your mortgage lender should be able to crunch the numbers and present your options. Take your time and don’t move too, quickly. But if it makes sense, then lock that low rate!

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

Tuesday, November 11, 2008

VA Loans – Thank You for Your Service

The VA home loan guaranty program allows lenders to offer long term affordable housing with zero to low down payments for veterans. It’s one of the benefits you receive as an acknowledgement of gratitude for your service……..

In 1930, Congress and the President established the “GI Bill” which allowed the Veteran Administration (VA) to coordinate benefits for its service people. One of these programs, known as the Home Loan Guaranty Program, was created to help returning veterans and their families assimilate back into civilian life after sacrificing so much personally for their country.

Who qualifies for VA loans? If you served in the military, naval or air service and are active duty or released from duty for reasons other than a dishonorable discharge, you may qualify. You had to serve for 90 days active duty or 181 days consecutively in peacetime. If you served less than the minimum requirement because of discharge or service connected disability, you may also qualify. In addition, if you are the surviving un-remarried wife or husband of an eligible service member who died for his/her country, you may too be eligible. This program was designed to reward you and your loved ones for your service.

“The VA program, in general, is an exceptional program. Many veterans don’t know it can even benefit them if he/she is overseas. We’ve been helping active duty service people by putting their families in homes, and giving them peace of mind that their loved ones and their immediate needs are being taken care of while they’re away”, reflects Jamie Utton, Director of Product Development at Mortgage Investors Group.

These loans are available only for a primary home you intend to occupy. You can’t go and buy a beach house for weekend use with it. However, you can also use your eligibility to refinance your primary residence and pay off debt (except for Texans, for some reason, they don’t allow it in that state). Or, if you had a VA loan prior, and the interest rates have dropped dramatically, you can do a “streamline” refinance – no worries about paying for a new appraisal or the hassle of verifying your income. You’re all set to go.

So what makes the VA loan stand out above other types of financing? It allows for 100% financing for loans up to $417,000 with no reserves (checking and savings money to burn) required. The loan amounts allowed go up to $1.5 million, but you’d have to put some type of down payment into the transaction if you want to borrow that much money, plus show you have enough money to pay your mortgage for two months sitting in the bank if you need it. And if you’re buying a home, the program allows for the seller to pay up to 4% of the closing costs, based upon the purchase price. Basically, you can get into a home for very little or no money at a more than affordable market rate.

And the best part? No extra money is added to your payment for mortgage insurance if you put a less than 20% down payment on the home. That’s a pretty unique feature that makes this loan more affordable than others. Most of the time, the veteran will be required to pay a VA Funding Fee, but it is financed into the loan amount. So, the funding fee is not an out of pocket expense for closing. A veteran can be exempt from paying the funding fee for different reasons, including service connected disability, or if he/she is a surviving spouse of a veteran who died in service or from a service related disability. And regarding credit scores, the VA loan program has more flexibility than some other programs offer.

If you think you may qualify for this loan, let me first of all say, “Thank you.” I really appreciate the sacrifices you’ve made for this country. And if you’re looking to purchase or refinance your home, call a lender today who specializes in VA loans, and take advantage of this great benefit.


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

Sunday, November 9, 2008

Hey, THDA! “Great Save!”

THDA has a new product that could be an answer for homeowners facing an adjusable rate mortgage they soon can’t afford...

Effective October 1, 2008, THDA announced a new product to further help the beleaguered homeowner found facing an adjustment on a rate for a mortgage that they’ll no longer be able to afford. It’s called the “Great Save” program, and it is an excellent choice for the right, qualifiying individual.

Basically, THDA will allow a qualifying person to refinance his/her adjustable rate mortgage (ARM) at the current interest rate that is offered for THDA’s Great Rate program. For instance, as I write this blurb, the rate is 5.8%. Typically, the Great Rate is below current market rate. So, this program can “save” you in more ways than one.

This program isn’t for every average Joe who has an ARM loan with an adjustment looming. There must be a financial hardship established by showing one of the following criteria is met at the time of “application for” and “closing of” the Great Save loan. For one, if the payment to income ratio based on the current payment for the qualified adjustable rate mortgage loan or the anticipated adjusted payment will be greater than 31%, this would count as an established financial hardship. Or, the payment to income ratio based on the lifetime capped interest rate (fully indexed) of the qualified arm loan will be greater than 35%. Also, if the lifetime capped interest rate for the qualified ARM loan exceeds the Great Save interest rate offered by THDA by more than 2%, then the criteria is met. As well, if the original ARM loan includes a prepayment penalty of $1000 or greater, you’ve met a criteria. And finally, the last is if there is an involuntary reduction of household income of at least 5% monthly or increased expenditures due to death, permanent disability, serious illness or injury of the borrower or co borrower since the origination of the original loan.

Did you get all that?

All the other THDA restrictions apply, such as income and appraised value limitations. After all, THDA services the low to moderate income borrower. Plus, if you have access to assets (without penalty) that comprise 10% or more of the ARM’s balance, you won’t qualify -for obvious reasons. And you can’t use this program to refinance your beach house. Once again, for obvious reasons.

For this program, you will have to have obtained your ARM loan between 12/31/01 and 01/01/08. So, if you weren’t paying attention to all the news stories and got an ARM loan in March of this year, THDA can’t help you. But, I can’t think of many people who did that. However, I’m sure there are some out there who did.

To receive this help, THDA is going to ask you to attend a homebuyer education course called “Keeping the American Dream.” Its emphasis is on financial management, and it’s taught through a certified THDA trainer. You have to attend this seminar/class before you close on your loan.

Thus, if you have a conventional, VA or FHA adjustable rate mortgage that you soon will not be able to afford, contact a local THDA lender. It just might be the greatest save you’ve made since you were the goalie on your high school soccer team!

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

Friday, October 31, 2008

Don’t Like Your Credit Score? Get a New One –Quick!

People don’t make it a habit to check their credit scores as often as they should. That’s why sometimes when they apply for a mortgage, they find a few surprises. Sometimes this issue can be remedied quickly.

One of the worst surprises a customer can have is discovering they have a credit score lower than what they thought it should be. It’s funny (not the lower credit score part). People who know they have excellent credit, have always paid their bills on time, etc, sometimes get really nervous when their credit is pulled. That’s because of what they’ve heard has happened to other people- the horror stories of discovering erroneous credit information on reports resulting in a dramatically lower score. Or worse yet, identity theft. When one is sitting across the desk from someone who is getting ready to pull credit, a common reaction is anxiety and fear. Even the most logical people can succumb to these misgivings.

Credit repositories’ information is only as reliable as the information supplied to them by creditors. This part of the equation is subject to human error. People make mistakes - all the time. Also, people drop the ball, get fired or promoted, and loose ends never get taken care of. These life happenings can result in errors on your credit report that can cost you money. Sometimes it’s considerable.

But there is an answer to this dilemma. Most lenders these days have the ability to rescore your credit profile if there are errors on it. Or maybe you have the cash to payoff some old, lingering black mark. A lender can revise a credit score in this case as well. They should be able to do it quickly. There typically is a fee associated with this service, but at times it’s definitely worth it.

Typically it takes 30-60 days for credit updates to hit the credit bureaus via the traditional methods. It could take longer, or never happen if the person in charge of submitting the information drops the ball. In fact, this recently happened to a client of mine. But it has a happy ending.

My client had an excellent credit profile. He was very attention detail oriented, earned an excellent income, and had saved quite a bit of money for a down payment. When he applied for a loan, his credit score was not reflective of his actions. He only had a 679. Still a good score, but his credit score should have been really much higher. When we looked over his history, it appeared that a medical debt had been erroneously accredited to him. He had talked directly with the company, and they were to have taken the actions to address it. But, somewhere along the way, someone got distracted. Instead, this debt ended up with a collection agency. And my customer wasn’t aware. Ouch.

Why wasn’t he aware? Well, it wasn’t a huge debt, and I don’t know how long it had been in transfer limbo between one company and another. And at some point he had addressed it and believed it to be taken care of properly. But it hadn’t. Now it was costing him in interest rate. He was obtaining conventional financing which is credit score driven.

The good news is I was able to do a rapid re-score for him. In three days, his credit score jumped to a 762 credit score. And his interest rate dropped from 6% to 5.5%. Big difference, especially over 30 year’s time.

There’s some scary statistic out there on the internet that says 25% of credit reports have serious errors on them that could result in credit approval denial. I’m not sure it’s that high, at least based on personal experience. But I can tell you, people see errors all the time. They usually can be corrected pretty easily. So, I guess it’s safe to say you should check your credit from a free source at least once a year to review it. Better safe than sorry.

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

Saturday, October 25, 2008

Mortgage Loan Approval: Are you on pins and needles wondering if you might qualify for a loan?

Get Your Answer Automatically. In today’s market, your answer is often times automatic.

Automated underwriting (AU) systems are used to determine most mortgage lending decisions. AU systems have been around since the 1970s for different institutions such as auto dealers and credit card companies. The first AU system for mortgage banking was introduced by Freddie Mac in 1995. It was designed along the same credit tenements that manual traditional underwriting focused upon – credit, capacity (to repay) and collateral.

Today, whether you are Freddie Mac, a big bank, a mortgage lender or a mortgage insurer, all the major players use some type of AU system to mitigate risk and to evaluate the credit worthiness of applicants. These systems have different names like Zippy, Desktop Underwriter, Assetwise and Clout (all registered trademark names), to list a few. They basically are the same systems, but are “tweaked” to each investor’s guidelines. They are also branded by each investor with its own name (that’s where the funny names come in). What does that mean? Well, Fannie Mae may buy a loan over $1M, but perhaps a particular investor doesn’t want to buy loans over $1M. Thus, the investor would “tweak” their system to deny loans larger than that loan amount. So if you are a lender, and have a$1.2M loan, then you would have to find a different investor who would buy that loan or sell it directly to Fannie Mae. The end goal is to put all the loans into pools or buckets in order to package securities. Some lenders can bulk enough loans to sell directly to Fannie, Ginnie or Freddie, and some just sell to an investor who sells to the big guys.

How does an AU system work? When you speak with a lender, they listen and help you determine what financing options best suit your needs. The lender collects your relevant information by asking you the questions from a loan application. Basically, a lender inputs the loan application information with regard to where the applicant lives, how much money they make, what other properties they may own, what reserves they have, as well as some government mandated questions. The lender pulls a tri-merged credit report (credit from three reporting agencies), and combines all the information, in addition to loan specifics, together in the system. Then, the lender pushes a button and waits for an answer. The system analyzes the data input as well as mortgage loan data, such as loan to value ratios, property type and debt ratios. And, ta-da! You have pre-qualified for a loan. That’s why you can get a quick answer these days. Of course, more often than not, it’s never quite that simple. There are perfect applicants out there who have worked at the same job and lived in the same place for the last 20 years, who have $100K in the bank. But more often than not, an applicant’s situation has its own special nuances.

Which brings me to my next point. AU systems don’t remove the need for a real underwriter in the mortgage approval process. A real, live underwriter reviews all documentation and data to ensure its accuracy. And a good loan office will anticipate what the underwriter will require. Let’s face it, if I were personally lending someone $200,000, I wouldn’t want to leave that decision completely up to a computer. Would you?

It’s safe to say that AU systems have made the lending process more concise, efficient and effective. But regardless, underwriting approval these days is never cut and dried!

Let My Experience Work For You!

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

Wednesday, October 22, 2008

Mortgage Lending and Identity Theft: What You Should Know

When you apply for a mortgage these days, lending institutions gather enough information on you to form an independent DNA sample (not really, but you get the picture). What steps should these organizations take to protect you from identity theft?

If you’ve ever applied for a mortgage, particularly since credit guidelines have tightened in the past few months, you know that the amount of information you must divulge to your lender could sink you financially if it were to get into the wrong hands. That’s really kind of scary when you ponder it a bit. I mean, after all, they have your social security number, your birth date, your bank account numbers, and a hair sample (just kidding on the last one). But, really. How do you know that you’re protected?

The Gramm-Leach-Bliley (GLB) Act requires companies defined under the law as “financial institutions” to ensure confidentiality and security of your personal information. Which includes mortgage lenders. In addition as part of this act, the Federal Trade Commission (FTC) issued the Safeguards Rule, which mandates measures to keep customer information safe.

So, if you apply for a mortgage and you’re concerned, your lender should be able to provide you with a written security plan that describes their program to protect you. The plan’s appropriateness should vary in relation to the company’s size and complexity, and the nature and scope of its activities. You wouldn’t expect a company with 20 employees to have the same guidelines as a company with 2000 employees. But there will be some similarities.

The written plan should outline that all staff be trained and informed of the policies. That’s important. How good is a plan if no one knows how to implement it? Typically, a lender should have several methods to detect identity theft apart from suspicious documentation or squirrelly applicants. Most use third party sources to verify a customer’s identity beyond driver’s license or government issued identification. These are background search programs with weird names like Lexis Nexus and Interthinx. And they work.

The company’s policy should require employees to change their various passwords regularly and have good security systems in place to prevent “hackers” from accessing your information. We hear time and time again the horror stories of hackers and their nasty activities. Furthermore, the company should shred documents and lock away files at night. Who wants their W-2 showing up in a company’s dumpster? Who wants the nosy cleaning crew thumbing through their file? Not me. Not anyone.

Furthermore, the staff needs to be educated as to how to detect fraudulent documentation or suspicious activity. And they need to understand they shouldn’t discuss your information with any other employees that don’t need access to your file, nor should they discuss your profile with the spousal unit at home. It’s kind of like being a doctor. They can’t discuss patient’s medical records. A lender can’t discuss your financial records.

And what happens if a lender suspects a borrower has been the victim of, or even creepier, is committing identity theft? The lender should have clear guidelines as to how the individual discovering the discrepancy should handle the “red flag.” After all, when the red flag arises, how does the lender know if she’s talking to a victim or a perpetrator at the time of discovery? So, it has to be handled correctly. And the lender’s employees need to have a clear understanding as to exactly how to handle these situations.

So, when you apply for a loan, find out upfront if you’re being protected properly. You’ve got enough to contend with these days when obtaining a mortgage. You deserve a lender who complies with these regulations and acts. We all deserve this protection.

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

Tuesday, October 14, 2008

Subject: letter of appreciation

Dear Kristin,

I just wanted to say thank you for all of your help with refinancing my home.
In today’s market it is not the easiest thing to do but you made it seem effortless.
I know you worked very hard for my family by getting us the best rates possible
and I wanted you to know how much we appreciated your dedication.
I will be sure to refer you without hesitation to anyone I meet that needs
help with their mortgage. And of course you will be the first person I call
when my children are ready for their first home.

Sincerely Jim Johnson
Jim Johnson

Monday, October 13, 2008

Eeny, Meeny, Miny, Moe? Which Lender Do You Choose?

You’re ready to buy a house, and you’ve spoken with 3 different lenders. All of their offers seem comparable. How do you choose just one?

Ok, so you don’t have a particular relationship with any one lender, and you need to get a home loan. Being the prudent shopper that you are, you’ve called around to various lenders, and you’ve obtained 3 very competitive good faith estimates. In fact, these estimates are so competitive, you wonder if the three lenders are in cahoots with each other. (Trust me, they’re not). So, how do you decide?

First, you should consider the reputations of the companies involved. You can check out the company/lender online. How long have they been in business? In today’s volatile market, you want to make sure that whom ever you are obtaining your loan through is in business on the day of closing. When times are tough, mortgage shops have been known to close their doors overnight. Don’t laugh, it happens. Even a good lender may close its door if it is relatively new or poorly managed. Look at the sub prime market. When the bottom fell out of it last year, lenders disappeared right before our very eyes. Ok, I’m exaggerating a bit, but many consumers found themselves shopping for new mortgage at the last minute. And those that were unable to produce one probably lost a bit of cash, not to mention experienced a lot of turmoil and stress. After all, many plans are made by many different people when a home changes hands. Movers are booked, rent is cancelled, new school enrollment is arranged. It can become a logistical nightmare if a closing date is moved.

Secondly, one lender may be able to offer you something another cannot. I’m not talking about anything directly related to the lender’s fees or charges. But some lenders offer discounts or services from other vendors. It can be anything from a coupon for a free appraisal to a gift certificate to Home Depot. Ask your lender if there are any other benefits or advantages to using them. You never know.

A third thing to consider is service. Has one lender been more responsive than the others? Do you get the feeling that one will get the job done over another? A person can have a completely different experience with the exact same loan from one lender to a next. Why is this possible? Because once your loan is out of your lenders hands, it flows through different departments. Many, many people will work on your loan before it is all over. It takes a village to close a loan (not really, but it was fun to say). Seriously, though. A good support staff is what keeps a loan officer on top of the pack. So, take into account a lender’s reputation. A good one is earned for good reason.

And finally, is there a lender you just click with over the rest? Sometimes, it’s a question of personality fit. I’ve heard from countless customers that this aspect is what tipped the scales for them. And it makes sense, when you think about it. After all, if you’re making the biggest purchase of your existence, you really want to work with a person with whom you feel comfortable. Trust me, even seasoned homeowners have questions and misgivings. Thus, the answer of whom you choose may just come down to who you like.

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

Wednesday, October 8, 2008

Mortgage Lending: It’s a History Lesson

When applying for a loan, a mortgage lender cares more about your past than your future. And sometimes, a lender cares more about your past than the present……

When a mortgage underwriter reviews customers’ credit profiles and income histories, what’s happened in the past two years holds a lot of weight as to what their future will be. And what the future may hold for them doesn’t always count for much at all. At least when assessing risk in mortgage lending.

If your future is difficult to substantiate, your past history is what a mortgage underwriter considers. That’s why it can be difficult these days for newly self-employed people to obtain loans. If you start a new business, you have no track record. Couple this fact with the other odds reflecting it’s highly likely you’ll lose money your first year in business, and you can see why you have to be out of the gate two years before you’re not considered a risk anymore.

The history theory is also a hard lesson for people who earn tips as a large part of their income to learn A lender will ask these individuals what Uncle Sam has on record for their earnings for the last two years. There’s no way to soundly document what they’ve earned year to date, except for base pay and their two year history. So, if they’re making a ton of more money in their third year of business, typically a lender can’t substantiate the marked difference in income. The same can be said for people who are self employed and have multiple business expense and depreciation deductions. Lenders count the bottom line when the dust settles. And again, a lender can’t look at year to date earnings to offset what’s on historical record. Year to date earnings might strengthen your profile, but basically, it is what it is.

Of course, your credit score is a reflection of your past. It’s a great indicator of what your future will be. I guess that’s pretty self explanatory when you think in terms of lending. Statistics prove that this number pretty much tells a lender how likely it is you’ll pay on time in the future. It’s a good crystal ball, in general. So if you have an iffy credit score, you need to work to improve it, and reapply for a mortgage in the future.

Sometimes a lender can look to the future, and it’s to your advantage. For instance, if you have a debt, like a car payment, that will be completely satisfied in 10 months or less, it won’t count against you when calculating your monthly debt. The same can be said for child support or alimony that’s about to expire (or at least the legal obligation is about to expire). Likewise, certain payments sometimes won’t count if they’re deferred for a couple of years, like student loans. In addition, generally, a person can just have started a salary job and provide a pay stub after loan closing. However, some programs may be more stringent than others where these areas are concerned.

You see, a lender is going to always count what can be verified, not what the future will hold – no matter how rosy it appears. And most programs these days would require that an applicant be prepared to verify the information, even if the underwriter doesn’t ask for it. So, be informed when you consider buying a house. Your credit history can mean the difference between an A+ and a C- in your interest rate secured and ability to obtain a loan.

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

Tuesday, September 9, 2008

KNS Reports: Bailout expected to help, not heal, economy

Bailout expected to help, not heal, economy
By JEANNINE AVERSA and TOM RAUMAssociated PressTuesday, September 9, 2008

WASHINGTON - If the government bailout of Fannie Mae and Freddie Mac is a salve to help heal what's ailing the U.S. economy, it's likely to be a slow-acting medicine that may not stop the infection before it gets worse.

Analysts predict the vicious cycle where housing, credit and financial problems force Americans to hunker down further - hobbling the economy and in turn aggravating those very troubles - won't be easily broken.

"The negative psychology has become embedded and will take time to unwind," said Brian Bethune, economist at Global Insight. "It is not instant coffee."

Many are expecting the government's action will have faster relief when it comes to mortgage rates, however. The national average interest rate for a 30-year fixed rate mortgage dropped 0.3 percentage point to 6.04 on Monday, according to financial publisher HSH Associates.
And the nation's banks saw another immediate benefit -stock prices spiked. Financial stocks overall rallied Monday as the government vowed to invest up to $200 billion in Fannie Mae and Freddie Mac to help stabilize the ongoing credit crisis and the resulting problems in the housing market.

The plan could help banks feel more open to write new mortgages and to refinance existing mortgages at lower rates.


Monday, September 8, 2008

Everything works out in the end

Everything works out in the end. If it is not worked out then it is not the end yet.

Saturday, September 6, 2008

She's so skirt

From Skirt Magazine!
(Click here for the Skirt Site)

Kristin Abouelata - Ray of SunshineBy day, you can find Kristin and her dog, Bear, at Mortgage Investors. By daydream, she’s in Paris or fulfilling her secret desire as a novelist. There’s a little of Hollywood in her blood as well being her daughters are named after Sophia (Loren) and Natalie (Wood) and Kristin’s “sunny-side up” disposition frequently garners Mary Poppins comparisons.

My Rules:
1. Be bitter or better. I have a choice when disappointment sets in, and if I choose to be bitter, my girlfriends can talk about me.

2. Embrace change. As long as death and dismemberment aren’t involved, you have to roll the dice and take a leap. Otherwise, you wake up one day and realize you’re miserable.

3. Don’t burn any bridges.

4. Say you’re sorry like you mean it. It takes years of practice to do it right, but when you finally get it down, you realize a simple act can save you and others a lot of heartache.

5. A good haircut and color are worth the money! Why buy expensive things you only wear once a month when, after all, you wear your hair every day.

Home Loans – Fast, Easy and Competitive
Kristin Abouelata
Mortgage Investors Group/Loan Officer
8320 E. Walker Springs Ln #200
Knoxville, TN 37923
(865) 567-0113 cell
(865) 691-8910 office

Friday, September 5, 2008

Question: "flips"

I have a question on flips, I purchased a new condo at a bank auction last week where the developer lost several new construction homes. I would like to flip it ASAP and list it for 28,000.00 below current appraisal and 23,000.00 below tax appraisal. The home inspection report came back good with just a couple of minor fixes. I'm sure the rule still applies here but I still have to ask your opinion. Also would a FHA loan be the quickest route to a faster sale? I know there are different rules and different time frames for different lenders.

For FHA, the contract has to be dated on the 91st day after you, the seller, purchased it. If the sales price is much higher than purchase price, two appraisals may be required.

Conventional has no limitations as to when it can be sold. However, the UW will want to review the title prior to approval to make sure it is clear.

Hope this helps!


Monday, September 1, 2008

First Time Homebuyer? Give Me a Break!

The Housing Assistance Tax Act, which is a section of the recently passed Housing and Economic Recovery Act, provides some incentives to put the residential housing market back on it’s feet. Are you in a position to take advantage of them?

If you are (or will be) a first time homebuyer purchasing a home between April 9, 2008 and June 30, 2009, you may be eligible to receive a tax credit. Good news, right? This tax credit is kind of like a fifteen year, zero interest loan. Not a bad deal, huh?

The tax credit you can claim is equal to the lesser of $7,500 or 10% of the price of the home. So if you buy a $65,000 home, you can claim $6500. But, if you buy a $85,000 home, you can only claim $7,500. The main catch is you have to pay the credit back to Uncle Sam over the next 15 years. However, it’s interest free. You start doing so the second tax year following your home purchase, so you have a little breather before you start. If you sell your home before you’ve settled your debt, you have to pay it back upon sale. But you won’t owe the full amount of the outstanding credit due if your gain from the sale of your house is less than what you owe.

You have to qualify for the benefit, naturally. And the amount for which you can qualify varies. You have to be a first time homebuyer, as mentioned above (and that includes your spouse if you’re both on the loan) who has had no ownership interest in a principal residence for the past three years (date of your home purchase). You see, in the mortgage world, if you haven’t had a mortgage within this time frame, the fact that you owned and sold a home five years ago doesn’t count. Mortgage Lenders and underwriters want more recent history.

The tax break will not apply to you if you obtained a THDA (Tennessee Housing Development Agency) loan because the thought process is you’re already ahead from receiving benefit of use of proceeds from a tax-exempt revenue bond. In other words, the government’s already given you a deal. No double dipping allowed. You also can’t be a non-resident alien, and you have to keep your home for at least a year to claim this particular tax benefit. So, if you’re transferred and have to sell your home in six months, you’re out of luck.

There is an income cap that must be met for qualifiers. If you’re single, the benefits available start to dwindle if you earn more than $75,000 per year, or $150,000 for joint filers. It’s unavailable completely if you earn $95,000 individually or $170,000 jointly.

So is this deal a good one for you? How could you take advantage of it? Well, again, look at it as an interest free loan. You can put some nice appliances in a kitchen, finish out a basement or do some landscaping for this type of money. So, it can work to your advantage. But make sure you qualify before attempting to take this credit. It’s not the type of thing you want to make a mistake about because filing your taxes is serious business. And if you do qualify and it makes sense for you, spend your money wisely. The ultimate goal is to get this economy moving, so if enough people can take advantage of it, it just may work. It’s worth a try, right?

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

Interest Rates: One Man’s Gain Is Another’s Loss

How can two borrowers can buy the same house, and get completely different interest rates? There are multiple considerations to take into account when a lender is pricing an interest rate for a customer……

In the old days, you used to be able to call a lender, give them a note amount and term, and get a quote. Lickety split. Not a lot of questions. Just “boom”, there’s your answer. It certainly made interest rate comparison much easier. But in today’s mortgage lending world, it’s just not that easy.

In fact, say you’ve got two customers buying identical homes in a development. Each customer can be quoted completely different interest rates for different reasons. Even if they have the same credit score. That’s because you’re granted different discounts or assessed with different cost additions for various aspects of your lending profile.

For instance, one guy may be getting a conventional loan, and the other an FHA (Federal Housing Administration) loan. With FHA and a credit score of 620, there are no discounts or additions for credit score that a lender will add to the total price. But, dip below a 620 and there will be quite a pricing differential. With a conventional loan, you’ll get discounts the higher your credit score. Thus, a 620 credit score in the conventional realm does not have as much interest rate muscle as a 720. And there are different cost hits in between for every 19 point differential. Plus, if you have less than a 620, you probably won’t get conventional approval. A typical lender nowadays has to be really good at reading a chart to quote a loan in the conventional world.
Another big factor is loan size. Again, you’ll probably pick up a discount if you’ve got a healthy sized loan. However, if you’re financing a smaller amount, it may cost you a bit. Thank goodness for excellent first time homebuyer programs that let qualified borrowers avoid some of these pricing hits.

Another big difference in interest rates available is the buyer’s intention for the property. If it’s a primary residence or a second home, one gets a better rate than if it’s an investment property. From an underwriting perspective, a borrower is less likely to quit paying a mortgage for a property that is intended for personal use. Statistics have proven this aspect of lending to be quite true. Of course, if it is an investment property, the borrower is going to have to come up with a heck of a lot more money out of pocket anyway. If it’s a manufactured home, you have to reconsider loan programs again. Some programs aren’t available for manufactured homes, and especially if it is a manufactured home that is an investment property. You’ll have to find a lender that specializes in this type of loan.

As touched on before, the type of loan matters, too. Conventional rates are different than FHA rates, which are different than VA rates, which are different than Rural Housing rates. Even for the same house. And again, as mentioned before, throw THDA or another first time housing program into the equation, and you start all over again. Of course, you can’t get a VA loan if you’re not a veteran or the spouse of one buying a loan. And you can’t get a rural housing loan if you’re in the wrong zip code and make too much money. So, at times, your choices are limited for you.

Even if you get the same interest rate, it doesn’t necessarily mean your payment will be the same. If your loan requires mortgage insurance, your monthly premium could differ because of your credit profile.

I guess the best advice is to be patient when considering loan programs and payments. Make sure you explore all your options. And don’t worry about the guy sitting next you. Just keep your eyes open and work with a lender that’s trustworthy.

Let My Experience Work For You!

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

Saturday, August 30, 2008

Cool Country: Rural Housing Loans

The USDA offers a fantastic program that allows for 100% financing. What’s the catch? Your house you want to buy has to be in the right part of the county…

Remember that old Donnie and Marie Osmond song, “I Was Country, When Country Wasn’t Cool”? I know, I’m dating and embarrassing myself all in one fell swoop. I loved their variety show when I was a kid. Weird as it may seem, that song comes to mind when I think of Rural Housing loans. The United States Department of Agriculture (USDA) offers a home loan guaranty program in Tennessee that is truly affordable and beneficial for moderate to low income families/borrowers. The only catch is you have to be on the right part of the map. Rural areas only, please. But you’d be surprised as to what constitutes “rural”. Did you think Powell was rural?

I think this program is often overlooked because lenders forget that some properties qualify for it. And it’s super easy to figure out. If you go to, you can click on a link that allows you to determine if a specific property address is eligible. Lately, I’ve been happy to discover this program is available for more of my customers than I would have initially guessed.

Why are Rural Housing loans so cool? First and foremost, they allow for 100% financing. Yep, the elusive 100% financing still exists (at least in some counties). Another very attractive feature is the program allows you to finance Rural Housing’s 2% guarantee fee (required) into the loan amount as well. So if you buy a $100K home, you can borrow $102K. And perhaps the most exciting feature? You have no monthly mortgage insurance with this product. That’s right, no monthly mortgage insurance. Now you see what makes this product so affordable.

Of course, you have to be able to qualify. You obviously can’t be making a ton of money and qualify for this type loan. It varies from county to county, but for example, in Knoxville, a 2 person family can’t earn more than $56,600 a year. You have to have been on the job or have recently produced a professional/educational degree or certification during the past two years. And it goes without saying these days, you need a clean credit history. You can’t buy a McMansion or anything. Your loan size is limited by what you can afford. As a general rule of thumb don’t expect to go over $150K.

The seller can pay all of your closing costs or you can get a gift from a family member to pay your closing costs. You can’t buy an investment property-you need to plan to live in the house. And although it’s a terrific product for first time homebuyers, you don’t have to be one to qualify. However, if you are a first time homebuyer, chances are you can fund this loan through Tennessee Housing Development Agency (THDA). That’s a double whammy. You see, THDA offers a fabulous interest rate for first time homebuyers.

So dust off your blue jeans and drive around the county roads with your realtor. You may just find your dream home nestled down at the end of a country lane. Now, wouldn’t that be cool?


Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at or call direct: (865) 567-0113 Toll Free: 1-800-489-8910.

For more information visit her website at Home Loans Plain Talk.

Thursday, August 28, 2008

Mortgage Question: Can we be sure we will be approved?


I have a questions, we ( hubby and I) due to past problems and the very large rent we pay, have low scores. We want to purchase a home and get out of the rental deal (2700 per month). We have been gifted a good down payment of 20-25 percent. Can we be sure we will be approved?? I dont want to put money down to find out we cannot get a commitment.

Also, what are the most important items to pay off, old charge off? what would the cut of time be for those?

Thank You


Hi, Bonnie. How low are your credit scores? You can go FHA with a minimum of 560 credit scores. Old charge offs should be paid, however, if it is up to the UW's discretion. Medical debts are forgiven.

You could become pre-qualified with a manual underwrite. This means you would provide evidence of three non-traditional trade lines that you have paid on time for the last twelve months. For instance, KUB, Comcast, Verizon...anything that doesn't typically show up on a credit report. You have to provide a 12 months statement from the creditor or actual cancelled checks. Cancelled rent checks or auto insurance payments are other examples of non-traditional lines of credit.

Good luck!

Mortgage Question: Changing Escrow

I have a question or two for you. I have my house note through ------.

I would like to find out if I can stop paying into my escrow account and
take on the financial responsibilities of paying my insurance, taxes,

Is this possible and can I do it without having to refinance?



Hi, Betty. This situation is totally up to your servicer (------, I am
assuming still accepts payments?). If taxes, in particular, go unpaid,
the tax lien would be paid prior to the mortgage lien (in the event of

Normally on the secondary market, there is a .25 charge in price to
waive escrow. Your servicer may choose to charge you a fee for allowing
you to pay your own escrow. I would assume much would depend on your
mortgage history and perhaps, credit score.

In the past, I know that servicers have been amenable to dropping escrow
servicing. However, in today's climate, it just depends on the grantor.
So, give them a call!

Good luck!

Wednesday, August 27, 2008

This is why I love my job!

After having to lease a house for the last year, my husband and I were really excited this year to be purchasing a new home. However after reading all the gloom and doom regarding the mortgage industry and the stricter lending requirements, we quickly grew worried. Like most people, we had some challenges over the years. While he had been homeowners before, we felt this time we would be more challenging. Mortgage Investors Group had handled our loans in the past, so we turned to them again.

This was our first time working with Kristin Abouleta, however during our first meeting, I knew we were in good hands. Kristin took the time to explain all of our options, she made sure we understood upfront what we should expect, and most importantly she delivered on everything she said. Kristin and her team kept our minds at ease through constant communication. At the end of the process, our loan closed on time with the rates and term we expected, without any hidden surprises.

We walked into this process thinking it was going to be a huge headache, thankfully Kristin and the MIG team alleviated the pain and made home buying enjoyable for us. I would definitely encourage anyone (in any situation) looking to refinance or purchase a new home to contact Kristin. MIG continues to be best in class in my book!

-Marcee & Chris Townsend (Happy Home Owners)

Saturday, August 23, 2008

Want to Make Your Landlord Rich? Renew Your Lease!

When you make your payment to your landlord every month like the dutiful renter you are, you are placing cash in his pocket. Maybe it’s time to consider keeping some of that money for your self…..

No doubt about it. Renting definitely serves a need and a purpose. It also is typically hassle-free. There’s very little maintenance. If something goes wrong, you call someone, and they fix it. But is it always necessary or the smart choice?

Think about it. Every month when you write that check out to Joe Landlord, you are paying your landlord’s mortgage for him (or at least some portion of it). And, in the meantime, you are building equity for him in the property he owns. That’s really quite nice of you. Very thoughtful indeed. So, if he decides to sell that property in the future, do you think he will write you a thank you note for all the money you’ve made for him? That might happen when pigs fly.

Say you pay $1000 a month for rent. Most landlords cover their mortgage when they set the rent payment. Typically, but not always. So if you stay in this place for two years, you will end up making $24,000 worth of mortgage payments for your landlord. That’s mighty nice of you. Now, in turn, think of the property’s appreciation that will occur simultaneously. For instance, when you first started renting the house, it was worth $100,000. Now, two years later, it’s worth $124,000. Since you’ve been so considerate to make his mortgage, oops, I mean your rent payment on time, your landlord is smiling. He’s just accumulated $24,000 in equity. And it’s all thanks to you!

Hmm, that gives you pause for a moment, doesn’t it?

I’m not trying to make you feel bad. Like I said before, renting definitely serves a need and a purpose. Some people can’t qualify for a mortgage. Perhaps they are self employed, and need to build up some type of income history of earnings to get a home. Or maybe their job is transient or unstable, and they don’t want to have to deal with selling a home in a few months. There are many instances when renting makes sense.

However, if you are just being complacent or nervous, then you might reconsider renting. Yes, I said nervous. You see, fear keeps many people from homeownership. The paperwork and numbers can be daunting, even to a person who is buying their fifth house. And if you are a first time homebuyer considering a thirty year debt, it can be overwhelming and cause great anxiety.

But I’ll let you in on a little secret. Homeownership is easily attainable. You just have to set a little cash aside and pay your bills on time. That’s it. No great mystery. And here’s another little tidbit. It’s a buyer’s market right now. That means there are deals to be found and lots of inventory available.

So if you’re a renter, consider paying yourself instead of a landlord. Contact a trusted mortgage lender. There are tons of options that can be explored if you just know where to look. Let your mortgage lender help you figure out how long it will be before you can move out!


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

Wednesday, August 20, 2008

Best Deal Knoxville - HOMES - Beta Site

If you are shopping for a home be sure to take a look at he new website:

Best Deal Knoxville - Homes

REALTORS Submit their best deal they have in inventory. The submissions are compared and only one home is selected to be featured as the "Best Deal Knoxville" - home

I have a promotional coupon under the resource section.

Monday, August 18, 2008

Commentary: Want to make Your landlord rich? Renew your lease!

By Kristin Abouelata, WBIR Home Loan Specialist

No doubt about it. Renting definitely serves a need and a purpose. It also is typically hassle-free. There's very little maintenance. If something goes wrong, you call someone, and they fix it. But is it always necessary or the smart choice?

(read the article here)

Wednesday, August 13, 2008

Best Deal Knoxville - HOMES - Beta Site

Abacus Creative Management, LLC (ACM) is currently testing a new website concept

The idea is very simple: every week ACM is going to feature ONE HOME that they believe to be the absolute best buy in the Knoxville area.

ACM is asking realtors to submit the best deal they have in their inventory. If you submit a property for consideration, you will be placed on the realtor submission page FREE OF CHARGE. To keep the integrity of the website, there will be NO CHARGE for the submission, and NO CHARGE if your property is the weekly feature.

As a realtor, your best buy is the free one; submit now and get a listing for ZERO COST.

There can only be one best deal!

Monday, August 11, 2008

Home Loans: Two Incomes Cut from the Same Cloth

Determining income is tricky when it comes to underwriting a home loan. Sometimes, it turns out you can make too much money. It just depends who’s looking at it.

Did you ever think you could make too much money? Or what if you potentially could make too much money? Now that sounds just plain old silly, doesn’t it? But believe it or not, different entities view your income in different ways. And depending on the situation, you might make too much moola.

Typically, an underwriter is going to be fair yet conservative when determining your income. If you make overtime and you want to count it, you’re going to have to show that you’ve received it for a decent amount of time and that it will continue. If you’ve only been on your job for a few months, you’re not going to be able to use anything but base income to qualify. Even if you’re in the same line of work. Even if it’s typical for the position and and you have a letter from your employer stating overtime will be available to you for the ten years. To an underwriter, in most cases, it’s all conjecture and forecasting. Not the kind of stuff you want to base lending $100,000 dollars against. The underwriter is going to stick with base salary. This rule of thumb applies to conventional, VA and FHA loans. There’s a little variance between agency guidelines, but not a ton.

Consider alimony. Maybe the court says you should get $300 a month, but your ex only pays you sporadically. You’re probably not going to be able to count it. It’s not fair that you can’t, but don’t bet on it. Most of the time you have to show where you have received the income for at least 3 months and more typically 6 months consecutively before you use that extra boost to your bottom line. You also have to show it’s going to continue for at least three years

Now here’s the funny part. If you are applying for a loan that has an income guideline or limitation, all bets are off. Some lenders will count potential income that you could start collecting. Others will average recent overtime into their equation. Typically, these type of loans go through two sets of underwriters (sometimes three!). The first underwriter will verify that the loan conforms to agency guidelines (Fannie, Freddie and Ginnie). When run through this gamut, you will see more traditionally conservative income guidelines applied. But say the lender is selling the loan to THDA (Tennessee Housing Development Agency). This agency has very strictly monitored income guidelines you must meet in order to qualify for the program. This entity will ensure you don’t make too much money as a first time homebuyer because its program is strictly for low to moderate income individuals or families. All of a sudden, your income looks different.

Here is an example of a loan I had recently. This loan was an FHA loan being sold to THDA. The wife on the loan had an ex-husband who should have been paying her court awarded child support in the amount of $320 per month. The ex had only sporadically paid her over the last 6 months, and when he did, it was only half of what he owed her. FHA would not include the income at all, yet THDA counted the full amount.

So which of the above underwriters was correct? Well actually, they both were. It just depends on what your objective is when determining the final figure. And that’s why you can get two incomes cut from the same cloth.

Let My Experience Work For You!

Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at or call direct: (865) 567-0113 Toll Free: 1-800-489-8910.

For more information visit her website at Home Loans Plain Talk.

Saturday, August 9, 2008

How Does a Fed Cut Affect Home Mortgage Rates?

How Does a Fed Cut Affect Home Mortgage Rates?
By Kristin Abouelata

You hear quite a bit lately that "the Fed is cutting the interest rate." Maybe you've been considering a refinance, and you're waiting to move forward till the Fed takes action again. But be smart about waiting and watching. A Fed cut doesn't directly affect long term rates (for instance a 30 year fixed mortgage), but it does impact long term mortgage rates. The problem is the impact might not have the result you've been waiting for.

Who is the Fed? Well, it's really the Federal Reserve. And when the Fed cuts rates, it usually cuts the Fed Funds Rate, which is the rate banks lend each other money. However, when the Fed lowers the Fed Funds Rate, Prime Rate, the rate banks give their best customers, usually drops as well. Ok, that's great. But what does that really mean to the average person on the street? It means that anything that has an interest rate tied to Prime is directly affected by the Feds' rate cut. Typically, these are short term loans. For instance: a credit card or a Home Equity Line of Credit (HELOC). In general, these rates decline when the Fed lowers rates. On the flip side, a Fed rate cut means your savings will perhaps not yield as much interest and your CD (certificate of deposit) won't be at such a great rate. So, it's not all good.

Why aren't mortgages directly affected? Because mortgage rates are typically longer term rates and are influenced by buyers and sellers in the bond market. Daily movements in the bond market cause mortgage rates to change. That's why you might get a quote from a loan officer on Tuesday, and on Wednesday, your quoted interest rate has increased .125%. The Fed lowers rates to help stimulate the economy. Ultimately a healthy economy is good for the real estate market. Jesse Lehn, Senior Vice President for Mortgage Investors Group, believes, "...a liquid real estate market is beneficial for the mortgage market and that keeps rates competitive." So, when the Fed lowers rates, indirectly it can help mortgage rates, but there is no direct correlation.

Another misconception is that mortgage rate changes occur in direct relation to when a Fed rate cut happens. In actuality, most mortgage rate changes, positive or negative, occur regardless of whether the Fed is actually meeting. That's because the mortgage market anticipates what the Fed is going to do.

A good loan officer should have their finger on the pulse of the market, but again it's a gamble. Remember to have a target interest rate in mind if you want to lock a loan but are watching the market. Trying to lock an interest rate on the day the mortgage rates have reached their lowest point in a year is like trying to get a royal flush in poker. It happens, but it's not a realistic goal. It just means you were lucky. Just stick to your home financing goals and consider the big picture, and you'll be fine.

Let My Experience Work For You!

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

Article Source:

Friday, August 8, 2008

Seller Paid Closing Costs - Knowledge is Power

Seller Paid Closing Costs - Knowledge is Power
By Kristin Abouelata

If you haven't negotiated a bunch of home contracts, you may not be aware that you can ask the seller to pay a portion of your closing costs. Just how does that work?

When you're considering making an offer on a home, there are other ways to get a good deal other than just snagging the lowest price you can imagine. Most loan programs allow the seller to concede money toward the buyer's closing costs that would normally walk away with the seller in his pocket. Oftentimes, seller paid closing costs can make a home more affordable for you. You just have to make sure you stay within the allowable guidelines for the mortgage product you need.

You see, a lot depends on what type of loan you are getting. The scenarios I am going to discuss all pertain to if you are buying your primary residence, not an investment or second home. And the reason the amount that a seller can pay on your behalf varies from product to product is because different loan types have different documentation requirements, and therefore, different layering of risks. So, it's important to compare apples to apples. The less money out of your pocket invested into your home presents a higher risk for the lender, regardless of the source of the funds to close.

For instance, I had a loan the other day where the seller had agreed to pay up to 6% of the sales price in closing costs on behalf of the borrower. Totally reasonable since the borrower was getting an FHA loan. Unfortunately, the home wasn't up to FHA standards, and the loan had to switch to Conventional financing. Whoops. Conventional financing only allows for 3% seller concessions if one is putting less than 10% of the sales price down on the property. All of a sudden the negotiated contract wasn't working out to the benefit of the borrower quite as nicely. She actually would be paying more for the property than she need be without the same benefit to her unless she re-negotiated a lower sales price. Why is that? Well, originally the sales price was $100,000. The seller was giving her $6,000 toward closing costs and walking away with $94,000 in his pocket. Now, Conventional underwriting guidelines would only allow him to give the buyer $3,000. So his pockets would be a bit fuller unless the buyer renegotiated.

Different loan programs have different allowable amounts for seller concessions. For instance, VA loans allow the seller to pay 4% of closing costs, and Rural Housing loans have no limit on seller paid closing costs. Conventional loans will allow up to 6% seller paids, but the buyer has to put more than 10% money down on the property. And finally, FHA allows for 6% of sales price paid on behalf of the buyer toward closing costs.

Don't lose sight of the fact that seller paid closing costs usually don't count toward a buyer's minimum out of pocket investment required. For conventional and FHA, you usually have to come up with at least 3% of your own funds regardless of how much the seller is willing to help out. VA loans and Rural Home loans allow for 100% financing in most cases, so you're good to go there. And FHA will allow the seller to participate in a down payment assistance program and contribute toward your 3% investment, but that's a whole other article to write (and who knows if it will still be ok by the time this article makes it to print).

Your best rule of thumb is to work with a lender and realtor who know what they are doing. And if you have any doubts, your lender should be able to define your limitations for you pretty quickly. So, arm yourself with knowledge when negotiating your contract. It is always to your advantage to negotiate from a position of strength, and knowledge is power in this case.

Let My Experience Work For You!

Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at or

call direct: (865) 567-0113
Toll Free: 1-800-489-8910.

For more information visit her website at Home Loans Plain Talk.

Article Source:

Wednesday, August 6, 2008

HGTV Ideas Ad

Okay here it is my ad for HGTV Ideas Magazine... any thoughts? Comment away please.

Monday, August 4, 2008

Jumbo Loans and White Elephants: Will the Pace Pick Up?

The rates for jumbo loans (loans above $417,000) have caused somewhat of a glut in the real estate market of higher end homes. What’s caused these rates to stay steadily higher while rates for traditional loan sizes have seen record lows in the past months?

According to Wikipedia, the definition for a white elephant is “a valuable possession which the owner cannot dispose of, but whose cost (particularly of upkeep) exceeds its usefulness.” Hmmm. Sounds like some of the higher priced homes we hear may be sitting on the market a little bit longer than usual. According to the Knoxville Area Association of Realtors (KAAR), the number of homes valued at $500K+ which sold in May 2008 was 34. But there were 205 new listings.

Ok, so I have to give you a little bit of history about the origin of the phrase white elephant. It really has nothing to do with mortgage lending, but it’s a cool information nugget to know. Per Wikipedia (yes, again), in the tales from the Buddhist scriptures, Buddha’s mother dreamt of a white elephant giving her a lotus flower on the eve of Buddha’s birth. Thus, in Southeast Asia, it became a status symbol to own a white elephant (basically a requirement if you were some type of royalty). However, due to being sacred and all, the owner couldn’t have the white elephant actually do any work or labor to offset its keep. Ever wonder how much food an elephant can consume a day? Think of the clean up after it eats! You not only get to feed the beast constantly, but you also have nothing to show for it when you’re done. You get the picture.

So, my analogy of there being a few white elephants in the real estate market right now is due in part to the jumbo rates not being so hot as of late. Loans below $417,000 are sold into mortgage backed securities. But jumbo loans are sold into private backed securities. And unfortunately due to the debacle in the mortgage industry that occurred in markets such as Florida, Nevada and California (where a lot of loan sizes are above $417K), there’s not a great appetite for the jumbo loan. It’s kind of like jumbo loans are liver and spinach on the menu. A few people will buy that stuff, but it’s not as popular as the cheeseburger.

So what to do if you need a jumbo loan? Make sure you work with a lender who knows their stuff and can present you with options. Adjustable rate mortgages (ARM) may suit your needs as long as they are fixed for a decent amount of time and won’t paint you into a corner. An ARM may buy you enough time to refinance at a later date when the market calms down. You might also be able to wrangle a first and a second so the first loan fints under the conforming loan size umbrella and the second part of your financing is at a smaller loan amount with a higher interest rate. Just be smart and make sure your lender is smart. And if you’re selling your home, sit tight. These homes are moving, however it might be at an elephant’s pace. Don’t fret, though. An elephant’s top speed can reach 25 mph.

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