Monday, June 8, 2009

Guess What? You’re Bumped!

By Kristin Abouelata, Home Loan Specialist


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

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

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

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

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

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

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

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

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

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

Saturday, February 21, 2009

It’s A-OK with 203(K)!

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

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

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

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

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

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

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

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

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

Fannie, Freddie and Ginnie…Explained

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Wednesday, February 18, 2009

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

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

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

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

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

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


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

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

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

Here's how I rank the resources used:

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

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


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

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

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

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

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

I found Patrick's blog [HERE]

Monday, February 16, 2009

Suzy Trotta Blogs on the "New Homebuyer Tax Credit"

New $8,000 Homebuyer Tax Credit

February 15, 2009

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

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

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

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

Sunday, February 15, 2009

Don’t Sell Yourself Short

If the market is a bit slow and individuals are motivated to move on for whatever reason, a short sale might seem enticing. But be careful before making a decision for a short sale…there are repercussions.

I have a client who for private reasons wants out of her home. And she would like to be rid of it quickly. She is a very studious client, and a natural whiz on the internet. So, in her search for an answer to her dilemma, she happened upon the term “short sale”. She thought it sounded like a pretty good deal. You see, a short sale is when you sell your house for less than it’s worth, negotiating with the lender to absorb the loss. So she emailed me and asked my thoughts on the matter.

What the website failed to mention was that the short sale option is usually only a good move when used as a last resort to avoid a foreclosure. The lender who holds the note negotiates for a smaller loss than is anticipated through the loss that would result in the event of a foreclosure. And when it’s all said and done, it doesn’t necessarily settle the remaining balance or loss.

Typically, if you need to negotiate a short sale, you would do so through a lender’s loss mitigation department. Historically, lenders wouldn’t even consider short sales unless the loan was in trouble in the first place – meaning payments had been behind or missed.

However, due to the large amount of foreclosures experienced as of late, lenders are a bit more willing to address short sale requests. Short sales are great for both parties when everyone is aware of the repercussions. However, my client was not. I also had another client who was transferred out of state with his job. He was very motivated to rid himself of his home in Alabama. He was told by his realtor and the lender that his short sale would not show up on his credit report as a foreclosure. So, he thought he had a good deal going. What he didn’t know was that the short sale would show up as “a deed in lieu of foreclosure” on his credit report. And it hurt his credit score. But how it really hurt him was that it affected what type of financing was available to him when he relocated here recently with his family. Although conventional financing would have been the best scenario for him, he ended up having to obtain an FHA loan. This is because FHA will allow a borrower to purchase a new home until 3 years have passed from the date of the short sale. Conventional financing requires 2-4 plus years to have gone by. And there has to be very specific documentation to allow for the 2 year mark. He was adamant that he did not have a foreclosure. And he’s right - he didn’t. But when I explained to him that his lender suffered a loss and someone has to take the fall for it, it dawned on him that perhaps he wasn’t as well informed as to how the short sale might affect him in the future. And, as you can imagine, he as very upset with the situation.

So, typically a short sale is a good option only for a distressed seller. Not just a frustrated seller. If you’re struggling with making payments, perhaps are behind, and are stuck with a house for sale where there are fifteen more just like it for sale in your area, you might consider this option. However, consider all the repercussions before selling yourself short.

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.

Monday, February 9, 2009

FYI on DTI

Have you heard the acronym “DTI” and wondered what it was or what the letters stood for? You see, your DTI is a major factor to consider when searching for that dream house…

In the lending world, DTI stands for debt to income ratio. One’s DTI always has been a very important factor when a lender makes a credit decision. However, recently, it’s becoming increasingly part of the loan decision swing vote. Nowadays, the acceptable DTI for different loan types seems to be lowering or holding steady. And the wiggle room for exceptions is getting smaller and smaller. No big surprise here, right?

How do you figure out what your DTI is? Easy enough. You tally all your monthly payments (just those that show up or will soon show up on a credit report). You don’t include incidentals such as your utility bill or your cable bill -at least for qualifying purposes. However, don’t forget your total budget when personally considering what type of house you can afford. Use your head. Anyway, back to calculating DTI. So, total up your monthly obligatory payments, including your new house payment, then divide the sum by your gross monthly income. That percentage is your DTI. For instance, say I make $3000 a month as a salaried employee. I have a $285 a month car payment and a $48 per month credit card payment. I want to buy a house where my total monthly payment will be $800. My DTI is the sum of all these monthly payments ($1133) divided by my income ($3000). Thus, my proposed DTI is 38%.

Across the board, 38% is a decent DTI. But what constitutes an iffy DTI? It depends on your loan type. Historically, if you got an approval in an automatic underwriting system (AUS), it was rare that your loan wouldn’t get an official blessing from the actual underwriter when reviewed. Rare, but not unheard of. Nowadays, these underwriting denials based upon DTI are becoming less rare. Especially for conventional financing when less than a 20% down payment is involved. This change is because there is mortgage insurance involved when less than 20% is put down on the property. You see, the automatic underwriting approval engine that was created using guidelines from Fannie and Freddie doesn’t necessarily protect the mortgage insurance (MI) companies who are underwriting these loans. And these MI companies have their own set of risk guidelines that apply to these loan scenarios. Thus, currently, a conservative DTI for a conventional loan is 45%. Just a few weeks ago, you have a 48% or 50% DTI and not fret a bit about loan approval as long as you got an AUS approval. Not so much today. Currently, you can exceed this DTI guideline only if you have a spanking credit score and some reserves to show for yourself. Again, this applies to loans that require monthly mortgage insurance. However, in general, for conventional financing, a DTI of 45% is a good rule of thumb.

The other loan types are even more conservative. For FHA financing, expect to command a 43% DTI, and for VA and Rural Housing try for 41%. However, FHA and VA are more flexible if you get an AUS approval at a higher DTI with few or little reserves. A good credit score never hurts in these instances. Rural Housing will consider crossing its DTI threshold with excellent compensating factors (i.e. high credit score) and other help such as evidence that the new housing payment isn’t completely out of whack with what the borrower is currently spending on housing. They call it payment shock.

So, if you’re browsing through real estate magazines and dreaming of a new home, use these guidelines to narrow your focus. Or better yet, get pre-qualified with a lender so you know how big you can dream!


Let My Experience Work For You!

Find out if refinancing is right for you with today's low rates.
Call 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.

Friday, February 6, 2009

2008 MBA Awards


2008 Knoxville Mortgage Bankers Association awards banquent was held last night February 5, 2009.


I am very pleased to report I recieved a Bronze Production Award!


Thank you to all my wonderful clients.


Let Mortgage Specialist Kristin Abouelata's Experience Work For You!

Want to refinance online? [CLICK HERE]

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, February 3, 2009

Flory of Knox News reports, "Mortgage industry doing fine; refinancing up 400%-500% at one local firm"

By Josh Flory (Contact)
Tuesday, February 3, 2009
As problems go, this is a good one for the mortgage industry.
While home sales sputtered last year in the midst of a national recession, the federal government’s aggressive moves to prop up the economy spurred a year-end boom in mortgage refinancing that has carried over into 2009, and left some firms scrambling to keep up with demand.

Chuck Tonkin, co-president of the Knoxville-based Mortgage Investors Group, estimated that refinancing volume at his firm is up 400 to 500 percent this month compared to January 2008, and he’s expecting a bigger number in February.

Tonkin said that at his company, “many, many people are working until 10 every night just to keep it going,” adding that the blistering pace is probably happening at other firms as well.


Let Mortgage Specialist Kristin Abouelata's 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, February 2, 2009

Just How Hard Is It to Get a Loan These Days?

By Kristin Abouelata, Home Loan Specialist

Every where you turn you read or see some bit of information about tightening guidelines for mortgage lenders? It makes you wonder if you would qualify for a loan today that you easily qualified for two years ago. Hmmm, would you?

I see or hear it everywhere. On the television news, in the paper. People at parties ask me about it. Clients discuss it. Everyone is curious to know just how difficult it is to get a loan these days. I guess I would answer that by asking just what type of loan are you considering? From what I understand through the media, if you need a car loan, yes- it’s more difficult. And I really have no idea if it is exceptionally more difficult to obtain car financing. I’d be curious to hear from a car financing loan officer on that matter. But a home loan? It just depends.

You see, here’s the thing. Most lenders in our area never did the really, funky loans that have caused this mortgage crisis and only a small slice of the market was committed to subprime loans. Yes, we did stated income. But that was only because Joe Borrower had been on the job forever and had an 8 bazillion credit score. And he was buying a house he intended to call home. You see, the automated underwriting engines assign risk factors to certain aspects of the loan. These risks are based on statistics and mathematical data regarding loan performance. Stuff way over most of our heads. But you see if everyone’s cards were on the table, these old estimates of risk worked for the most part.

But they didn’t work when people lied about the intended use of the property or about how much income they made. Or they didn’t work if they had an unscrupulous lender who assisted them in committing fraud, oftentimes unwittingly. You see, if you didn’t plan to live in the property, you would have had to put more money down and proven your income or your assets. Mathematically, the statistics showed that if you could not substantiate or meet these requirements, you were at risk for default. Oops, false data equals bad results. And ta-da, mass foreclosures.

But around here, most folks did traditional conventional loans for primary residences or obtained FHA mortgages where you had to prove all that stuff anyway. These loans performed well, and continue to do so. And these people still can get loans easily. Not much has changed for them, except if they are getting a conventional loan, they have to bring in a few more pieces of paper to show their income that they didn’t before. And the lender is typically going to collect some type of down payment from you, even it’s marginal or from a grant.

What has changed, credit wise, is if you are an individual who is buying rental property. You have to put more money down, have higher credit, and can only own so many and still qualify. People who scooped up homes, expecting to turn them quickly but couldn’t, are part of the problem we all now face. People who had very little invested into the property when they purchased it. People who could walk away easily when they realized they had no renters and couldn’t sell the home anymore because the house prices dropped. People who didn’t have to prove their income to obtain the loan. Or they agreed to a extremely low interest adjustable rate mortgage where they never thought they would see the adjustment happen. Lots of people in Nevada, California and Florida where individuals invested heavily in the mortgage industry for profit – not necessarily for homeownership and the American Dream.

So, yes, it’s much more difficult for this latter group of individuals to secure financing on the secondary market. But for your typical hardworking family, there are loans out there for you. If you earn good income, have a sensible budget and work history, you should be ok. Some guidelines have tightened up, but these shrinking nets being cast make good sense. However, considering what a beating our pocketbooks have taken lately, good sense is a good thing. But don’t be afraid that you won’t qualify. If you do what your mama and daddy raised you to do, chances are you will.

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.

Tax Time! First Time Homebuyers Can Take Credit!

The Housing Assistance Tax Act, which is a section of the Housing and Economic Recovery Act, provides some incentives allowing qualified first time homebuyers a tax credit that puts money in their pocket. Do you qualify?

If you were (are or will be) a first time homebuyer who bought/buys a home between April 9, 2008 and June 30, 2009, you may be eligible to receive a tax credit. This tax credit is basically a fifteen year loan that you payback without interest. This incentive can benefit many people, and is a great way to finance some home improvements.

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.

You can’t use the tax break if you obtained a THDA (Tennessee Housing Development Agency) loan because the thought process is you already benefited from proceeds from a tax-exempt revenue bond. 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 after you closed on it, you’re out of luck.

The amount you earn to qualify has a cap for income. 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.

The tax credit you can claim is equal to the lesser of $7,500 or 10% of the price of the home. Thus, if you buy a $65,000 home, you can claim $6500. But, if you buy an $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 the pay back the second tax year following your home purchase. If you sell your home before you’ve settled your debt, you have to pay it back sooner. 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.

So is this deal a good one for you? How could you take advantage of it? Well, again, view it as an interest free loan. You can upgrade appliances in your kitchen, finish out a basement or do some landscaping for this type of money. 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 take lightly as filing your taxes is serious business. And if you do qualify and it makes sense for you, spend your money wisely! Increase the value of your home with this interest free loan. Now that’s easy money.

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.


Tax Credit, Housing Assistance Tax Act, THDA, IRS, Home Loan Plain Talk, Mortgage Specialist, Kristin Abouelata

Tuesday, January 13, 2009

It’s Baaaaack! 100% Financing

With the mortgage meltdown onset, the only 100% financing options available for borrowers became limited. However, there’s a new game in town that might make sense for you…..

100% financing was a very popular option in the lending world via FHA approved grants, however, it became a memory not too long ago. Programs like AmeriDream and Nehemiah enabled a borrower to obtain their FHA minimum down payment through a seller as a financed gift. After much haranguing back and forth between pro and con parties, FHA retired the grant program. The only 100% financing options that remained were Veteran Administration loans (VA) and Rural Housing loans (RECD).

While both the aforementioned 100% financing programs are fantastic, they are limited in their scope. To qualify for a VA loan, you have to be a veteran (surprise, surprise, right?). And the RECD loan, limited by income and loan size, also has to be in a designated rural area (funny how the names of these programs give it away, huh?). So the average Joe city dweller, who never served in the arm forces, was out of luck.

Well, I’ve got good news. There is now a new 100% program, and it isn’t limited to veterans or geographic region. It is, however, targeted to low to moderate income earning families. That means the household income can’t exceed $54,800. In addition, the Freddie/Fannie acquisition cost limitations apply for your area (that is your loan limit). You have to have a good debt to income ratio (simply speaking, total up your monthly required payments that appear on your credit and divide it by your monthly gross income) of no more than 41%, but you can wiggle a little higher. And you need a credit score of at least 680. If you meet these criteria, you may want to explore it further.

How it works is the lender allows you to get a first loan at 95-92% loan to value (LTV, loan amount divided by appraised value), and then the lender allows you to close on a second loan for the remainder of the total sales price, which is anywhere from 5-8%. Which you choose is simply what works best for your loan scenario. The second loan is amortized over 20 years. In addition, the seller can pay up to 3% of your closing costs. This means a borrower can get into the home with little or no money down. Mortgage insurance and escrow for taxes and insurance are included in your monthly payment, but the mortgage insurance is issued at a reduced rate. And the other good news? You don’t have to be a first time homebuyer to qualify for this loan type. But if you are, you’ll be required to take a first time homebuyer class. So before you know it, badda bing, badda boom, you can begin the process of buying a home.

And guess what? There’s never been a better time to buy a home. Sales prices are fantastic and rates are fabulous. So, if you’ve been sitting on the fence, it may be time to hop off and take action. Call a lender and get pre-qualified. Homeownership is the American Dream, and here’s the opportunity to grab it!

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.

Refinancing Client Testimony

Kristin goes above and beyond to get her customer’s the best rates and terms – and the best service. She makes the whole process understandable and painless. And as a plus, she is enjoyable to work with. I would give her an unqualified recommendation to handle your mortgage needs!

Katie Colocotronis

Save money - Remortgage TODAY!

Ok, so if you’ve had your head in the sand lately, I’m here to tell you rates are low.

I mean shockingly low rates. I’ve been working around the clock (not literally, but it feels like it) to accommodate folks and get them moving on a home loan refinance. Or the second home. And even a few rental properties. Don’t drag your feet.

If your rate is above 5.5%, you should be calling your lender and exploring your options. It may not make sense for you, but it will for the vast majority of homeowners. Don’t wait too long. You never know how long an opportunity like this one will last.

If you not have a lender, Let My Experience Work For You!

If you want to take advantage of these historically low rates to purchase or refinance please call me at (865) 567-0113.

Monday, January 12, 2009

Really - you could save a bunch of money

Ok, so if you’ve had your head in the sand lately, I’m here to tell you rates are low.

I mean shockingly low rates. I’ve been working around the clock (not literally, but it feels like it) to accommodate folks and get them moving on a home loan refinance. Or the second home. And even a few rental properties. Don’t drag your feet.

If your rate is above 5.5%, you should be calling your lender and exploring your options. It may not make sense for you, but it will for the vast majority of homeowners. Don’t wait too long. You never know how long an opportunity like this one will last.

If you not have a lender, Let My Experience Work For You!

If you want to take advantage of these historically low rates to purchase or refinance please call me at (865) 567-0113.

Saturday, January 10, 2009

Take advantage of these historically low rates to purchase or refinance

If you are remotely considering re-financing please give me a call at (865) 567-0113. I have been in this business over 16 years and have never seen the rates consistently this low. My clients have saved THOUSANDS OF DOLLARS in interest.

Let My Experience Work For You!

If you want to take advantage of these historically low rates to purchase or refinance please call me at (865) 567-0113.

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 my website at http://www.kristinmortgage.com/ Home Loans Plain Talk.

Kristin Abouelata

Wednesday, January 7, 2009

Locking in Your Interest Rate and other tales of Las Vegas

“Should I lock my loan? Are the rates going up? Are the rates going down? What’s the market supposed to do in the next week?” These are questions that every experienced loan officer has been asked by his or her customers on various occasions. I’ll tell you one thing, if I had a hard and fast answer to any of these questions, I would be reading a book on my own private yacht in the Mediterranean Sea. And my butler would be asking me what I wanted for lunch.

Here’s the deal on locking in your loan. Typically a standard lock is for 30 days. This time frame gives all parties involved in the transaction adequate time to complete their responsibility in the loan process. If you are closing within 30 days, you should probably go ahead and lock your rate, provided you are comfortable with the terms quoted to you. What if the rate goes down .125%? I counter and ask what if the rate goes up .125%? Are you willing to risk it?

If you are happy with your payment, then I advise you to lock in the rate. Your mortgage lender will give you a picture of the general trend of interest rates, or you can research it for yourself. Find the loan payment amount you are aiming for and focus on this issue to lock your loan. I’ve seen it happen plenty of times: everyone speculates the rates are going down, but the next day you see a .25% increase. Of course the converse does happen at times, but I haven’t seen it happen as much!

I’ve had customers who have checked with me every day to see where the rates are and I’ve never seen this vigilance result in a significant rate improvement. Not to say it can’t happen, I’m just relaying the odds from personal experience that it won’t. But, if this course is what my customer is most happy taking, I’m just as happy to update them daily till they feel comfortable locking. But keep in mind it’s a gamble. If it was easy, there would be a lot of folks on the beach with their butlers. It is very difficult to predict short term movements in the market. Try it for a few days just for fun, and you’ll see what I mean.

When a loan is locked, your mortgage company has made a commitment to provide a product at that note rate to its secondary market source. If the rates go down, you still are expected to close at your locked rate. If the rates go up, you still expect to close at your locked rate. A lock represents a commitment from the customer and the lender. So, find your comfort zone and lock your rate. Spend your time worrying about what you’re going to do with all the money you saved on your refinance or how you are possibly going to get boxes packed in time to move in two weeks!

Let My Experience Work For You!
If you want to take advantage of these historically low rates to purchase or refinance please call me at (865) 567-0113.


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.

LEGISLATIVE ALERT-FIX HOUSING FIRST

Support Your Fellow Builders by Contacting Congress on Wednesday, January 7!
Call the NAHB Legislative Hotline at 1-866-924-NAHB (6242) or visitwww.capitolconnect.com/builderlink
CALL TO ACTION
On Wednesday, January 7, builders from across the country will converge on Capitol Hill to meet with key members of the House and Senate to discuss the Fix Housing First Proposal and push for its inclusion in the economic stimulus bill being crafted by Congress and the incoming Obama Administration.
In order to make sure their message is heard loud and clear, we need to add the full weight of the association to this advocacy effort. Please join your fellow builders on Wednesday, January 7, by calling 1-866-924-NAHB (6242) and telling your senators and member of Congress:
1. The national economy is in a deep recession and urgent action must be taken to shore up the economy.
2. Only by stimulating the demand for housing can the national economy be saved.
3. Perfecting the homebuyer tax credit created by Congress last summer and creating a short-term mortgage rate subsidy are proven housing demand incentives.
4. These solutions must be included in the economic stimulus package being considered by Congress.
You may also send a letter to Congress with the Fix Housing First message by visiting www.capitolconnect.com/builderlink. For instructions, click here.

BACKGROUND INFORMATION
The Problem: Falling home values are at the core of the current economic crisis
The impact on the national economy of home building, and housing in general, in good times and bad, should not be underestimated. The historic increase in foreclosures, tightened mortgage qualifying criteria, and general declining economic conditions have significantly cut demand for housing. Housing wealth is the primary source of savings for most households and a key driver of consumer spending.
As housing has slowed, so has the national economy. In recent quarters, the decline in home building activity has subtracted a percentage point or more from annualized GDP growth. These facts suggest that the recovery from the current economic crisis must begin in the housing sector. Without addressing the crisis in home prices and residential construction, no recovery effort will be successful. The key to this effort is stimulating housing demand.

The Solution: Targeted incentives to encourage Americans to buy homes again.

In 2008, Congress adopted a measure providing first-time home buyers with a tax credit of up to $7,500. While well-intentioned, the legislation failed to stimulate or stabilize the housing market. This can be attributed to three main factors: the tax credit was really a loan that had to be recaptured; it was only available to first-time home buyers; and $7,500 was not enough to entice people to buy. The nation's current financial crisis has outpaced the ability of the homebuyer credit, as currently structured, to turn the housing market around.

NAHB proposes to build upon the foundation of the homebuyer tax credit by perfecting its structure and scope. First, eliminate the repayment requirement. Second, make the credit larger by increasing the credit amount on a sliding scale between $10,000 and $22,000. Third, make the credit available to all homebuyers. Finally, in its new form the eligibility period for the credit should be extended to December 31, 2009.

In addition to an enhanced homebuyer credit, NAHB is advocating for a short-term mortgage subsidy for purchases made in 2009. The Treasury Department is reportedly considering a program to provide 4.5 percent, below-market rate mortgages. While this program is a welcome first-step, the depth of the recession demands a more aggressive response. Specifically, NAHB proposes a federally-subsidized, 30-year fixed rate 2.99 percent mortgage for homes purchased before June 30, 2009, and a 3.99 percent mortgage rate for homes purchased before December 31, 2009. The rate subsidy would only apply to principal residences. This dual strategy of a homebuyer tax credit and a mortgage subsidy was used successfully during the 1970's housing crisis, which was fed by excess inventory and falling home prices.

Questions? Comments?

Please provide feedback to builderlink@nahb.com
Thank you for your help!

Saturday, January 3, 2009

Cash out –Go Green Power!

Effective in 2009, the government is giving residential homeowners certain tax incentives to go green. And even without a tax incentive, it sometimes just makes sense. With rates so low, it may be the perfect time reason to consider cashing out and greening up…

In the past few months, energy consumption has crossed a lot of minds. It seems to be a topic of conversation among many groups of people, not just the ones you figure are conversing about it. I’m talking about people who recycled before we had curbside service, hauling their smelly milk cartons and bottles to the local recycling center. Dedicated and environmentally conscience. Now, it seems to be the talk of the town, even among those people who think a triangle with a “1” inside of it is an answer that floats up from the bottom of the Magic Eight Ball.

One major source of energy consumption for all individuals is our homes. There are minor and major upgrades that one can do (many sometimes needed), that pay back in the long run. And sometimes in the short run. But one doesn’t always have cash on hand to make it happen.

Thus, with rates at a historic low, it’s a perfect time to consider these upgrades. First and foremost, consider it as taking equity out of your property to add equity to your property. There are many items which removing equity from your home to finance is considered imprudent. Increased home upgrades for energy efficiency is not one of them. A trip to Jamaica is.

For instance, one very inexpensive, but “big bang” for your buck upgrade is installing a radiant barrier. Radiant barriers are most effective on homes that are inadequately or poorly insulated. If your attic space is 1000 square feet, the upgrade would cost approximately $1250, fully installed. But it could save you up to 30% of your expense required to cool your home. In addition, it also positively affects your heating expenses, but not as dramatically. So, it really wouldn’t take you long to recoup your investment.

And that old refrigerator in the garage? Do you know how much energy that out dated appliance costs you monthly to cool your soft drinks and beer? You’re better off buying a super cheap, energy star rated new one.

As a personal example, I went out and bought a front loading washer and dryer, kicking our old set to curb. The old set was 15 years old and finally biting the dust. My friends now tease me because I am such a fan of the new appliances. I should be on a commercial for them. Our energy bill went down dramatically and my slave time in the laundry room decreased dramatically, too. Do you know how many towels and blue jeans you can stuff into those things?

On another note, Uncle Sam will reward you if you’re making solar upgrades to your home in 2009. Solar energy (replaces electric) installations get a 30% tax break (with no cap), and solar thermal installations get a30% tax deduction (but have a $2000 cap). Solar energy is the new patriotic incentive. TVA (Tennessee Valley Authority) offers additional incentives. Read about the Generation Power Program at http://www.tva.gov/power/ .

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.

FHA 2009: More Money Out of Pocket

Buying a house in 2009 and thinking about an FHA loan? Be aware your out of pocket investment is going up…

We sure have seen a bunch of changes in the mortgage industry this year. FHA has had a few noted ones, such as raising the loan limit. However, new changes will be in effect beginning in January 2009. And for this area, most important is that more money is required from the borrower.

Effective the first day of the year, any property with a case number for FHA ordered will have the new minimum loan to value requirement of 96.5%. What’s a case number, you may ask? A case number is FHA’s way of identifying a property. When you order an appraisal, you must provide the appraiser with the official assigned case number. The lender obtains this number from FHA’s system. If you’re the borrower, and you switch lenders but still have the contract on the same house, the existing case number and the assignment have to get transferred in FHA’s system.

OK, so back to the cash investment required from a borrower. The old rule was you had to have 3% out of pocket to qualify for an FHA loan. And you could finance up to 97.75% of the loan. You could use the other .75% required left over toward your closing costs. Now, you have to put a down payment equal to 3.5%. To make it a little clearer, if you were buying an home via FHA in 2008 that cost $100,000, you could finance up to $97,750, and only pay $750 in closing costs if the seller were will to pay the rest. Now, you have to put $3500 down for a loan amount of $96,500, and you and the seller have to negotiate the rest of the closing costs. Closing costs now cannot be used to meet the 3.5% requirement.

If you think about it, this change will afford FHA a few things. Number one FHA now has more wiggle room to recoup some loss in the event of foreclosure. More money down means more equity. The other aspect is that a borrower now has to a bit more serious about saving for a home if they need FHA financing.

But what hasn’t changed is that the seller can still contribute 6% of the sales pricing to help out with closing costs. That’s more generous than most lending programs with the exception of a few. And your down payment can still be in the form of a gift from a qualifying donor (blood relative is always a safe bet). Thus, these nuances of the FHA loan that have been so beneficial to many aren’t going away.

The FHA program has always been a strong one because its foundations were based upon common sense lending. Income was always verified, assets were always checked out, and the program is only for primary residences. I think these new changes may make folks have to wait a bit longer before buying a house, but it’s a smart move to keep FHA lending healthy and out of the headlines. We’ve had enough mortgage headaches due to bad decisions by lending institutions and borrowers. These changes make sense, and that’s ok with me.

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.

Haven’t Sold, Wanna Buy? Bridge the Gap


It’s a buyer’s market. Many people are excited by the bargains. But what if you want that new house but haven’t sold the old one? You can bridge the gap and still get that new house…


Wow. There are some really great bargains out there right now. Talk about motivated sellers. The market is prime for good deals - sellers who have been caught in a slow market and need to sell a house. Maybe they’ve been transferred, maybe they’ve inherited a house – whatever the reason, they’re motivated. And if you’ve been toying with the idea of a new house, it’s a great time to act.

Whoa. But wait a minute. The same market that is creating these great deals is causing you a bit of trouble as well. There’s that minor issue - you already have a house, and you need its equity to close on the new one. And yes, your dream house is on the market with a 20% discount below appraised value. What do you do? You can’t expect to sell your house in time to close on the new one, can you? Part of your offer on the new house is a quick closing. If you put a contingency on your offer “upon the sale of your existing home”, you’ll lose this deal. What are you to do?

Well, if you are financially capable, you can “bridge” the gap. In effect, you obtain what lenders refer to as a bridge loan. How do you do that, exactly? Basically, you liquidate the equity in your existing home to finance the new one. And when the old house sells, you pay off the bridge loan with net proceeds. It’s short term and quick.

There are lender’s limitations, naturally, on bridge loans. For one, the numbers have to work, and you have to be able to get approval carrying all the debt. That means the old mortgage, the new mortgage and the bridge loan, plus all your other debt. Depending on the type of financing you’re getting, there can be additional limitations as well. And there are different types of bridge loans. You have to figure out what’s best for you.

For instance, if you are financing your new home with an FHA loan (Federal Housing Administration), the old mortgage can’t be an FHA mortgage. FHA only allows you to have one FHA mortgage for a primary residence at a time. There are exceptions to the rule. For instance, if you’ve transferred to Knoxville, but your old home in Memphis hasn’t sold, you can get FHA financing on your new home. It’s a common sense thing. If your old house is financed with a Conventional loan, you’re fine to proceed with FHA financing. But in either case, be ready to prove that the old house is under contract for sale.

If you’re new financing is Conventional, you have a different set of ropes to jump. Conventional financing requires you to be able to manage all the debt (house 1, house 2, and the bridge loan), AND show six months reserves to make payments on all three. If your old house has 30 percent equity in it after the bridge loan, then you only need two month’s reserves proven. However, the equity must be verified. No one will take your opinion on the home’s value. Imagine that.

So if opportunity knocks, you do have options. You can make it happen. Just build a bridge.


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.