Thursday, July 31, 2008

VA Loans – BTW Oak Ridge will be host to the 2nd Annual East Tennessee Business Conference for Veterans

August 5th, Oak Ridge will be host to the 2nd Annual East Tennessee Business Conference for Veterans. The purpose of the conference is to increase business opportunities for disabled veterans and veteran owned small businesses. It also seems like a good time to remind veterans of homeownership opportunities available to them…..

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.

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NaVOBA is the Voice of the Veteran Business Movement

2nd annual east tennessee veterans' business conference
The Y-12 National Security Complex and The University of Tennessee Center for Industrial Services Procurement Technical Assistance Center (UT CIS-PTAC) join with a host of East Tennessee agencies for the second annual East Tennessee Veterans Business Conference. The theme of this conference is Increasing Opportunities for Veteran-Owned Businesses.š
[Website Here]

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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, July 30, 2008

FHA Mortgages: What Is a Flip and How Can it Affect you?




You may have heard the term “flipping” lately, especially as investors find good buys in the real estate market. What exactly is flipping, is it a bad thing and how might it touch you?


Flipping is a word that can cause many a lender anxiety. Not the traditional flip that you see in gymnastics or diving. But flipping as it pertains to the real estate and lending community. The flipping I’m talking about means buying a home for a bargain and then re-selling it quickly for profit. Sometimes huge upgrades are made to the property, sometimes not so much. But anytime someone is in the market to make money turning houses, opportunity for fraud can arise. That’s why lenders are particular and have so many rules attached to flipped homes.

Not too many years back, certain markets became inundated with fraud flipping schemes. Realtors, lenders and appraisers in these situations were all in cahoots with one another. As the saying goes, one bad apple can spoil the whole bunch. It was a very terrible thing, and the regulations we have today are reflective from that lesson learned. In particular, FHA has established strict guidelines to follow to alleviate flipping fraud on its homes that it insures.

FHA released a 90 day flipping waiver policy in reaction to the current market and buying climate. Basically, it outlines the following: FHA requires that: a) only owners of record may sell properties that will be financed using FHA-insured mortgages; b) any resale of a property may not occur 90 or fewer days from the last sale to be eligible for FHA financing; and c) that for re-sales that occur between 91 and 180 days where the new sales price exceeds the previous sales price by 100 percent or more, FHA will require additional documentation validating the property’s value. FHA also has flexibility to examine and require additional evidence of appraised value when properties are re-sold within 12 months.How can this policy affect you? If you are selling or buying a home that is a flip and you want FHA financing available, don’t even think about executing a contract until the 91st day. Your appraiser will note that it hasn’t been 90 days since the last sale, and immediately your FHA underwriter will read it and, in turn, reject the loan. And if on the 91st day since settlement you are buying a home that was in deplorable condition and has been fixed up nicely, you might need to get a second independent appraisal to support the value. Even if it is really apparent that it’s not the same house it was 3 months ago.

Certain properties are exempt from the rule. For instance, if HUD has foreclosed on the property, it’s not going to make itself wait 90 days to sell its own real estate. That would be kind of silly. Also, if one can show the seller inherited the property, it should be ok. And properties acquired by employers or relocation companies are kosher, too. There are a few other exemptions sprinkled about, but these are the most common ones encountered.


Basically, if you’re in the home for an FHA mortgage, just keep your ears and eyes open. Knowing your limitations upfront can make you a better negotiator and save you headaches.

Friday, July 25, 2008

Mortgage Lending: What's Your Point?


Buying a home is a confusing process, and one of the most confusing prospects is settling on an interest rate. Even when you decide what type of loan you want, you find you still have options as to what rate to lock. Some of these options stem from whether or not you buy down the rate by paying a point. A point is a fee that equals 1% of the loan amount. For instance, if you are buying a $100,000 home, and your note amount is $97,000 (because you're putting $3000 down), a point would cost you $970.

You can see the points you are being charged on line and 802 of your Good Faith Estimate, and later, on the same line on your HUD-1. This line item reflects fees known as "discount points", but they truly aren't interchangeable with origination fees (line 801) even if they sometimes serve the same purpose. If you choose to pay a discount point, you should expect a lower rate than if you didn't. So, if you're quoted a rate of 6% 0 + 1, you are paying 1 discount point. If the quote is 6% 1+0, you're paying an origination fee. And 6% 0+0? You're paying no fees in either form.

What's the difference between an origination fee and a discount point? Well a few things. Technically, an origination fee is what you pay the lender or the organization that takes the initial application and processes the loan. A discount point is specifically paid to the lender to buy down or permanently lower the interest rate, and it's usually a percentage of the loan amount. You can also pay additional points to buy down your rate, not just a flat 1%. You can pay a .5% or 2%. It just has to make good economical sense for you. And it shouldn't be robbing you blind.
From a tax standpoint, there isn't much difference. An origination fee is generally tax deductible as long as it's charged in the form of a "point" or percentage of the loan amount. However, you may ask your lender to charge you a discount point versus an origination fee to keep things neat and simple. Sometimes mortgage lenders charge you an origination fee when technically they should be charging you a discount point. But they're collecting all the fees anyway and happen to be giving you a lower rate. It really matters most if you are working with a mortgage broker. Mortgage brokers can't be paid discount points, only origination fees or broker fees. They can collect discount points to lower your rate, but the discount point has to be paid to the mortgage lender with whom they're doing business. And, this information should be disclosed properly on your Good Faith Estimate

A typical trade off is that a 1% discount point equals about .25% reduction in interest rate. You should be able to easily decipher whether or not it's worth it to buy your rate down. How long do you plan to be in the home? If not that long, then maybe you should think about a 0+0 quote. If it's your forever home, then dipping into your wallet and footing higher closing costs might be worth it in the long run.

However, if you look at your Good Faith Estimate and it seems you're paying too much in origination fees and/or discount points, then you probably are. Say something to your lender. And if he doesn't budge, you may want to look elsewhere. Go with your gut instinct or call another reputable lender and get a second opinion.

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.

Tuesday, July 22, 2008

Testimony - My customers are extremely important to me, and I am here to prove it

“Kristin was able to provide the dedication and information that I needed to purchase my first home. Without her wealth of knowledge and experience I would have never been able to get away from the money pit that calls it self “rent!” Thanks Kristin!”

~Travis G. / University of Tennessee


Your home is your most important investment. For many people, it’s the largest debt that you’ll ever personally incur. And, your home is where you will raise your family and create your own secure haven. These are two compelling reasons why you should take the greatest of care and consideration when choosing a mortgage specialist. I will take all the time and energy necessary to ensure you have the best options before you when making the important decisions that affect your largest and most important investment. Let my experience and years in the industry work for you. My customers are extremely important to me, and I am here to prove it.” - Kristin Abouelata Mortgage Specialist

Need Cash for a Home Closing? Consider a Gift


Coming up with a down payment or money for closing costs for a home loan can be a challenge these days. What extra money you were setting aside may all of sudden be going toward your gas tank or your grocery bill. To obtain your dream of homeownership, it may be time to accept that gift from Mom and Dad………

I saw a cartoon the other day that was pretty funny, but also pretty sad when you think about it. It showed a couple sitting across from a mortgage lender, and the caption read, “We’re here to apply for a tank of gas.” With increases in prices for just about everything, it gets more and more difficult to stash away a nest egg for a down payment. And pretty much every loan requires some part of down payment, even if you get a 100% financing loan. After all, you still are generally going to be required to put down some earnest money on your contract and in most cases, pay for an appraisal up front. You may have been trying to save it up on your own, but it may be time to accept some help from your family.

Most loan programs, be it Conventional, FHA, VA or Rural Housing, require the borrower to pay for something. In particular, FHA and Conventional home purchases want a minimum of 3% to come out of the borrower’s pocket. If you are doing a Conventional loan, you still can’t receive a gift for your 3% down payment, but you can use a gift to help with closing costs. However, FHA will allow your source of down payment to be a gift. So, if you find yourself a bit short on cash, you may need to ask someone to gift you the down payment or closing costs (or if your really lucky, and it’s allowed – both!).

All lenders are particular about just who can give you a gift for your down payment or closing costs. Pretty much across the board, the gift must be from a blood relative. You may have to prove that the gifter is a relative thru birth certificates, christening records, etc. Strange but true. Conventional loans will also allow an employer to give you a gift. But in any case, the most important factor is that whoever is giving the gift does not expect to be paid back. A certification to that effect will be required to be signed by the donor. Otherwise, it’s really a loan, now isn’t it? And as a responsible lender, we’re going to include that payment in your debt to income ratio, and we’ll probably want a bunch of documentation to prove the terms, etc. So, make sure it truly is a gift.

As of the date I’m writing this article, FHA will allow for down payment assistance programs, such as Nehemiah or Ameridream. Lenders view these products as “gifts” in a sense. They are basically seller concessions funneled through the down payment assistance channels. However, by the time this article is published, they may be null and void. It’s currently being reviewed and could go away. Or it may still be there, but just know it’s under review.

Lenders are very particular about how the gift funds reach the closing table. If you deposit the gift before closing, you have to show it coming out of the donor’s account and depositing into your account. It’s a lot of paper to collect. The easiest method is for Grandpa or your Great Aunt to just send a cashier’s check payable to you and your title company to the closing table. Smoother, quicker, simpler.

Gifts are a wonderful thing, and a gift of a down payment is a useful gift. After all, I think it’s safe to say that homeownership is one gift that keeps on giving, wouldn’t you?

Pay into the Kitty: How Does Escrow Work?

When you finance your home, it’s very typical to see money set aside into an escrow account. What purpose does an escrow account serve, and do you have to have one?

When I explain escrow or prepaid items to my customers, I always liken it as to setting up a kitty. You know, like in poker. A place where your money sits until it’s decided where it should be paid. And if you’ve ever played poker, you keep adding to the kitty, till it gets passed out; then another kitty is created, and so on and so forth, until someone is broke or mad. Escrow for a mortgage is a very similar situation except hopefully we avoid the mad or broke part (particularly the broke part – that kind of talk makes a lender nervous).

What exactly is escrow? It’s part of your monthly payment that’s held by your mortgage servicer in an account (also known as “impounds” or “reserves”) so that your mortgage servicer can pay your homeowner’s insurance, taxes and, if applicable, mortgage insurance and flood insurance when the time is due. Some mortgage products or lenders require escrow. Sometimes, it’s not required or even allowed. It just depends on what type of loan you are getting.

Typically on a purchase, a lender will collect a 1-2 months portion of whatever your annual premium is for your homeowner’s insurance and put it into escrow. For instance, if your homeowner’s premium is $1000, the lender will ask for $200 in reserves. In addition, the lender will also collect the full $1000 premium to pay for your homeowner’s insurance until the next payment is due, a year from now. For taxes, lenders typically collect 4-5 months of reserves. One reason you always have more taxes collected then homeowner’s insurance is because all city and county entities usually want the tax bill paid in advance from when it is due. For instance, if taxes for 2008 are due in October, where do you get the money for November and December if you don’t collect it at closing? Further, if you had closed your loan in August, and the first payment isn’t due until October, you already had missed out on collecting escrow for 2 months if the borrower doesn’t make his payment until the last minute. You need that kitty to pay everyone when the time is due.

The other portion of escrow that is collected is per diem interest. This escrow portion collected is why most folks try to close on or about the last day of the month. The lender usually requires the borrower to pay the interest that accrues from the date of settlement to the first monthly payment. So, if you close July 28th, your lender will collect three days of “per diem” interest from July 29th to July 31st. Interest is collected in arrears, so your payment that is due September 1st will include the interest for the month of August.

The big thing to know about the prepaid section of a Good Faith Estimate is that you shouldn’t focus too much on this section when comparing lender’s costs. Whatever the lender reflects needs to be collected for escrow may vary a bit from lender to lender, but when you show up at the closing table, it just is what it is. The lender can’t control what the taxes are on the property, when the closing will be or how much you negotiate for homeowner’s insurance. Also, many times you can waive escrow, paying taxes and insurance out of your own pocket when the time is due. This luxury usually costs you a bit more out of your wallet. Think about where a lender would stand if you didn’t pay your tax bill or your mortgage. The tax man gets his money first. No big surprise, there, huh?


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.

Seller Paid Closing Costs: Knowledge Is Power



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 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.

Friday, July 4, 2008

Happy 4th of July! 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.

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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.


VA Loans, Veteran Administration, GI Bill, home loan financing, credit reports, Home Loan Plain Talk, Mortgage Specialist, Kristin Abouelata, Mortgage Investors Group

Tuesday, July 1, 2008

WBIR: ASK THE MORTGAGE SPECIALIST: Expensive homes going unsold?




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.



For your home lending needs contact:

Kristin Abouelata

8320 E. Walker Springs Ln #200
Knoxville, TN 37923
(865) 691-8910 office
1-800-489-8910
(865) 567-0113 cell (preferred)
Email: Kristin Abouelata Mortgage Specialist
www.kristinmortgage.com