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 kristin.abouelata@migonline.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, 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 kristin.abouelata@migonline.com or call direct: (865) 567-0113Toll Free: 1-800-489-8910.For more information visit her website at www.kristinmortgage.com 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.



[ENTIRE ARTICLE HERE]



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 kristin.abouelata@migonline.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.

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 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.

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 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.

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 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.