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.