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 or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at 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 or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at 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 or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at 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 or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at Home Loans Plain Talk.

Monday, February 9, 2009


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 or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at 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 or

call direct: (865) 567-0113

Toll Free: 1-800-489-8910
For more information visit her website at 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 or call direct: (865) 567-0113 Toll Free: 1-800-489-8910.

For more information visit her website at 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 or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at 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 or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at Home Loans Plain Talk.

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