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 http://www.rurdev.usda.gov/, 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?

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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.

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

Hi

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
Bonnie
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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!
Kristin

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,
etc.

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

Betty

------------
------------

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
default).

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!
-Kristin

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)

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!



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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.

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.

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)

Nothing to do with Home loans - Pig Tricks Video

Pig Tricks!

Best Deal Knoxville - HOMES - Beta Site

Abacus Creative Management, LLC (ACM) is currently testing a new website concept www.bestdealknoxville.com/

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!

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 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.

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 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.

Article Source: http://EzineArticles.com/?expert=Kristin_Abouelata
http://EzineArticles.com/?How-Does-a-Fed-Cut-Affect-Home-Mortgage-Rates?&id=940500

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 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.

Article Source: http://EzineArticles.com/?expert=Kristin_Abouelata
http://EzineArticles.com/?Seller-Paid-Closing-Costs---Knowledge-is-Power&id=1348975

HGTV Ideas Ad

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

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 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.

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