When considering a mortgage, oftentimes a borrower is perplexed by the question of whether to pay a “point” for a certain interest rate offered by their lender. What exactly are points and when should you pay them?
Buying a home is a confusing process, and one of the most confusing prospects is settling on an interest rate. Even when you decide what type of loan you want, you find you still have options as to what rate to lock. Some of these options stem from whether or not you buy down the rate by paying a point. A point is a fee that equals 1% of the loan amount. For instance, if you are buying a $100,000 home, and your note amount is $97,000 (because you’re putting $3000 down), a point would cost you $970.
You can see the points you are being charged on line and 802 of your Good Faith Estimate, and later, on the same line on your HUD-1. This line item reflects fees known as “discount points”, but they truly aren’t interchangeable with origination fees (line 801) even if they sometimes serve the same purpose. If you choose to pay a discount point, you should expect a lower rate than if you didn’t. So, if you’re quoted a rate of 6% 0 + 1, you are paying 1 discount point. If the quote is 6% 1+0, you’re paying an origination fee. And 6% 0+0? You’re paying no fees in either form.
What’s the difference between an origination fee and a discount point? Well a few things. Technically, an origination fee is what you pay the lender or the organization that takes the initial application and processes the loan. A discount point is specifically paid to the lender to buy down or permanently lower the interest rate, and it’s usually a percentage of the loan amount. You can also pay additional points to buy down your rate, not just a flat 1%. You can pay a .5% or 2%. It just has to make good economical sense for you. And it shouldn’t be robbing you blind.
From a tax standpoint, there isn’t much difference. An origination fee is generally tax deductible as long as it’s charged in the form of a “point” or percentage of the loan amount. However, you may ask your lender to charge you a discount point versus an origination fee to keep things neat and simple. Sometimes mortgage lenders charge you an origination fee when technically they should be charging you a discount point. But they’re collecting all the fees anyway and happen to be giving you a lower rate. It really matters most if you are working with a mortgage broker. Mortgage brokers can’t be paid discount points, only origination fees or broker fees. They can collect discount points to lower your rate, but the discount point has to be paid to the mortgage lender with whom they’re doing business. And, this information should be disclosed properly on your Good Faith Estimate
A typical trade off is that a 1% discount point equals about .25% reduction in interest rate. You should be able to easily decipher whether or not it’s worth it to buy your rate down. How long do you plan to be in the home? If not that long, then maybe you should think about a 0+0 quote. If it’s your forever home, then dipping into your wallet and footing higher closing costs might be worth it in the long run.
However, if you look at your Good Faith Estimate and it seems you’re paying too much in origination fees and/or discount points, then you probably are. Say something to your lender. And if he doesn’t budge, you may want to look elsewhere. Go with your gut instinct or call another reputable lender and get a second opinion.
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Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.
Friday, June 27, 2008
Sunday, June 22, 2008
Call the Movers! You’re Closing Date is Extended!
Sometimes loans don’t close when they are supposed to close. It’s usually not your lender’s fault. What exactly can cause your loan closing to be delayed?
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. Whatch you talking about, Willis? 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 most usually require a loan to be shot back through underwriting. Remember, you get in the back of the line.
Another minor hitch that frequently occurs involves self employed borrowers. The lender takes a loan application over the phone and writes down the borrower’s income. When tax returns are collected, the lender comes to find out that what their borrowers earn isn’t exactly what they claim with Uncle Sam. A lender will almost always use the income you report to the government, not what shows on your bank statements. All of a sudden, the borrower is no longer income qualified to close the loan. Time to scramble.
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.
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. Whatch you talking about, Willis? 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 most usually require a loan to be shot back through underwriting. Remember, you get in the back of the line.
Another minor hitch that frequently occurs involves self employed borrowers. The lender takes a loan application over the phone and writes down the borrower’s income. When tax returns are collected, the lender comes to find out that what their borrowers earn isn’t exactly what they claim with Uncle Sam. A lender will almost always use the income you report to the government, not what shows on your bank statements. All of a sudden, the borrower is no longer income qualified to close the loan. Time to scramble.
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.
Monday, June 2, 2008
Mortgage Charges: What MERS and a Microwave Have in Common
I’ve talked about all the different charges you see on your Good Faith Estimate. Where does all this money go, and what’s it for? In particular, what on earth is MERS?
As you’re sitting across from your mortgage lender who is going over, line by line, the charges and fees associated with your loan, he/she mentions MERS. It’s only costing you $4.95, so you don’t pay particular attention to it. I mean after all, $4.95 is nothing compared to the state tax stamp fee or other line items you see. But, aren’t you curious as to exactly what MERS is? At face value it sounds like something you should get an inoculation to avoid. But in actuality, it’s a little system that has revolutionized the mortgage industry.
MERS is kind of like a microwave. You never knew how much you depended upon it until you consider taking it away. Seriously. Our microwave was broken for a short period of time, and I couldn’t believe how much we used it or how much it simplified our lives. Half the food I cooked became a real trial to prepare the old fashioned way. Not to mention heating up leftovers. Ironically, it’s a very similar situation for the mortgage industry if they had to do away with MERS all of a sudden. It would be perplexing, annoying and time consuming.
MERS stands for Mortgage Electronic Registration System. If you visit the MERS website (http://www.mersinc.org/), you can read their overview: “MERS was created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper. Our mission is to register every mortgage loan in the United States on the MERS (registered trademark) System.” Nice. Everyone likes paperless systems these days.
In the old days, if you sold a loan on the secondary market, you had to assign the mortgage to the new buyer. You created a paper assignment and recorded it at the courthouse. If there was an error on the assignment, you had to correct it (have it initialed by the appropriate parties) and re-record it. Then you sent this original recorded document to the new buyer for them to keep. If they in turn sold the loan, they had to prepare another assignment, record it and forward it, along with the first recorded assignment, onto the new buyer. And so on and so forth. Lots of paper being printed, recorded, regenerated and reconstituted. MERS came up with a fabulous system to eliminate this nightmare. Now, when you sign a mortgage, MERS assigns a unique identifying number to that mortgage. The lender, upon closing, registers the loan with MERS to show it exists. Then, any transfers can be done electronically. The mortgage servicing and mortgagees can also be tracked electronically, which allows for title searches to be streamlined. It’s a beautiful thing. This system has saved a lot of time and energy for the industry.
However, if you were to tell a mortgage operations person that MERS was going away, and they were going back to paper assignments, it wouldn’t go over well. They would probably be at a total loss. Sort of like tossing someone a bag of popcorn and telling them to cook it without a microwave.
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.
MERS is kind of like a microwave. You never knew how much you depended upon it until you consider taking it away. Seriously. Our microwave was broken for a short period of time, and I couldn’t believe how much we used it or how much it simplified our lives. Half the food I cooked became a real trial to prepare the old fashioned way. Not to mention heating up leftovers. Ironically, it’s a very similar situation for the mortgage industry if they had to do away with MERS all of a sudden. It would be perplexing, annoying and time consuming.
MERS stands for Mortgage Electronic Registration System. If you visit the MERS website (http://www.mersinc.org/), you can read their overview: “MERS was created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper. Our mission is to register every mortgage loan in the United States on the MERS (registered trademark) System.” Nice. Everyone likes paperless systems these days.
In the old days, if you sold a loan on the secondary market, you had to assign the mortgage to the new buyer. You created a paper assignment and recorded it at the courthouse. If there was an error on the assignment, you had to correct it (have it initialed by the appropriate parties) and re-record it. Then you sent this original recorded document to the new buyer for them to keep. If they in turn sold the loan, they had to prepare another assignment, record it and forward it, along with the first recorded assignment, onto the new buyer. And so on and so forth. Lots of paper being printed, recorded, regenerated and reconstituted. MERS came up with a fabulous system to eliminate this nightmare. Now, when you sign a mortgage, MERS assigns a unique identifying number to that mortgage. The lender, upon closing, registers the loan with MERS to show it exists. Then, any transfers can be done electronically. The mortgage servicing and mortgagees can also be tracked electronically, which allows for title searches to be streamlined. It’s a beautiful thing. This system has saved a lot of time and energy for the industry.
However, if you were to tell a mortgage operations person that MERS was going away, and they were going back to paper assignments, it wouldn’t go over well. They would probably be at a total loss. Sort of like tossing someone a bag of popcorn and telling them to cook it without a microwave.
Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at http://www.kristinmortgage.com/ Home Loans Plain Talk.
Monday, May 26, 2008
Happy Memorial Day! VA Loans - Thank You for Your Service
The VA home loan guaranty program allows lenders to offer long term affordable housing with zero to low down payments for veterans. It's one of the benefits you receive as an acknowledgment of gratitude for your service...
In 1930, Congress and the President established the "GI Bill" which allowed the Veteran Administration (VA) to coordinate benefits for its service people. One of these programs, known as the Home Loan Guaranty Program, was created to help returning veterans and their families assimilate back into civilian life after sacrificing so much personally for their country.
Who qualifies for VA loans? If you served in the military, naval or air service and are active duty or released from duty for reasons other than a dishonorable discharge, you may qualify. You had to serve for 90 days active duty or 181 days consecutively in peacetime. If you served less than the minimum requirement because of discharge or service connected disability, you may also qualify. In addition, if you are the surviving un-remarried wife or husband of an eligible service member who died for his/her country, you may too be eligible. This program was designed to reward you and your loved ones for your service.
"The VA program, in general, is an exceptional program. Many veterans don't know it can even benefit them if he/she is overseas. We've been helping active duty service people by putting their families in homes, and giving them peace of mind that their loved ones and their immediate needs are being taken care of while they're away", reflects Jamie Utton, Director of Product Development at Mortgage Investors Group.
These loans are available only for a primary home you intend to occupy. You can't go and buy a beach house for weekend use with it. However, you can also use your eligibility to refinance your primary residence and pay off debt (except for Texans, for some reason, they don't allow it in that state). Or, if you had a VA loan prior, and the interest rates have dropped dramatically, you can do a "streamline" refinance - no worries about paying for a new appraisal or the hassle of verifying your income. You're all set to go.
So what makes the VA loan stand out above other types of financing? It allows for 100% financing for loans up to $417,000 with no reserves (checking and savings money to burn) required. The loan amounts allowed go up to $1.5 million, but you'd have to put some type of down payment into the transaction if you want to borrow that much money, plus show you have enough money to pay your mortgage for two months sitting in the bank if you need it. And if you're buying a home, the program allows for the seller to pay up to 4% of the closing costs, based upon the purchase price. Basically, you can get into a home for very little or no money at a more than affordable market rate.
And the best part? No extra money is added to your payment for mortgage insurance if you put a less than 20% down payment on the home. That's a pretty unique feature that makes this loan more affordable than others. Most of the time, the veteran will be required to pay a VA Funding Fee, but it is financed into the loan amount. So, the funding fee is not an out of pocket expense for closing. A veteran can be exempt from paying the funding fee for different reasons, including service connected disability, or if he/she is a surviving spouse of a veteran who died in service or from a service related disability. And regarding credit scores, the VA loan program has more flexibility than some other programs offer.
If you think you may qualify for this loan, let me first of all say, "Thank you." I really appreciate the sacrifices you've made for this country. And if you're looking to purchase or refinance your home, call a lender today who specializes in VA loans, and take advantage of this great benefit.
In 1930, Congress and the President established the "GI Bill" which allowed the Veteran Administration (VA) to coordinate benefits for its service people. One of these programs, known as the Home Loan Guaranty Program, was created to help returning veterans and their families assimilate back into civilian life after sacrificing so much personally for their country.
Who qualifies for VA loans? If you served in the military, naval or air service and are active duty or released from duty for reasons other than a dishonorable discharge, you may qualify. You had to serve for 90 days active duty or 181 days consecutively in peacetime. If you served less than the minimum requirement because of discharge or service connected disability, you may also qualify. In addition, if you are the surviving un-remarried wife or husband of an eligible service member who died for his/her country, you may too be eligible. This program was designed to reward you and your loved ones for your service.
"The VA program, in general, is an exceptional program. Many veterans don't know it can even benefit them if he/she is overseas. We've been helping active duty service people by putting their families in homes, and giving them peace of mind that their loved ones and their immediate needs are being taken care of while they're away", reflects Jamie Utton, Director of Product Development at Mortgage Investors Group.
These loans are available only for a primary home you intend to occupy. You can't go and buy a beach house for weekend use with it. However, you can also use your eligibility to refinance your primary residence and pay off debt (except for Texans, for some reason, they don't allow it in that state). Or, if you had a VA loan prior, and the interest rates have dropped dramatically, you can do a "streamline" refinance - no worries about paying for a new appraisal or the hassle of verifying your income. You're all set to go.
So what makes the VA loan stand out above other types of financing? It allows for 100% financing for loans up to $417,000 with no reserves (checking and savings money to burn) required. The loan amounts allowed go up to $1.5 million, but you'd have to put some type of down payment into the transaction if you want to borrow that much money, plus show you have enough money to pay your mortgage for two months sitting in the bank if you need it. And if you're buying a home, the program allows for the seller to pay up to 4% of the closing costs, based upon the purchase price. Basically, you can get into a home for very little or no money at a more than affordable market rate.
And the best part? No extra money is added to your payment for mortgage insurance if you put a less than 20% down payment on the home. That's a pretty unique feature that makes this loan more affordable than others. Most of the time, the veteran will be required to pay a VA Funding Fee, but it is financed into the loan amount. So, the funding fee is not an out of pocket expense for closing. A veteran can be exempt from paying the funding fee for different reasons, including service connected disability, or if he/she is a surviving spouse of a veteran who died in service or from a service related disability. And regarding credit scores, the VA loan program has more flexibility than some other programs offer.
If you think you may qualify for this loan, let me first of all say, "Thank you." I really appreciate the sacrifices you've made for this country. And if you're looking to purchase or refinance your home, call a lender today who specializes in VA loans, and take advantage of this great benefit.
Mortgage Lending: No Title Insurance? No Moola…
Just what exactly is title insurance? It’s on your list of mortgage charges, but why do you really have to have it?
So, you’re sitting across from your mortgage lender going over all the charges for your mortgage. It seems like there are countless charges for this (document preparation) and that (MERS assignment fee - what the heck is MERS again?). But, none of these little charges are that big. But, whoa, wait a minute! What’s that on line 1108? Title insurance? Do you really need it since you’re putting 20% down on the property? Is that a double charge for the insurance you’re getting in case your house burns down? What exactly does it do for you?
Truth be told, title insurance as required by the lender doesn’t do a whole lot for you as a borrower. But it does a heck of a lot for the lender. Title insurance protects from loss against problems arising from problems with the title. If you are being lent money to buy or refinance your home, your lender is going to require it. Before you came along and put down a contract on the house you want to buy, there have possibly been numerous people who owned the house or at least the property it sits upon. The house may have changed hands countless times. And if the parties conducting the transaction before yours made a boo-boo, it could mean the world to you and your wallet. Which in turn, could pose a huge risk for your lender.
What kind of errors could be made? Well, say someone forged a document. It happens more than you think. Maybe Aunt Sue really never intended to sell that house when she was in a coma. Or what about tax liens against the property? If they were undiscovered at the time of a previous transfer, someone somewhere is owed some money. Title insurance will protect the lender for unforeseen claims against title up to the amount of the mortgage. It’s obligatory that you buy it if that lender is giving you money. You will be required to pay a single up front premium that will protect the lender for the life of the loan.
So you can see, a lender’s mortgage insurance policy does very little to protect a buyer. However, buyers can purchase their own title policy insurance to cover their legal fees and needs if a problem with title insurance occurs. It’s usually offered at a discounted rate to them at closing, allowing them to “piggyback” off of the lender’s policy. At a closing I attended the other day, the closing agent told of an undiscovered $10,000 lien that surfaced after a loan closing. It seems that the sellers had a pool built. Unfortunately, they failed to pay the pool builder. So the builder filed a lien against the old homeowners. These homeowners went to sell the home to the new buyers, a title search was done, and there were no issues. But, after closing, the pool builder figured out he had filed his lien in the wrong county. Oops. So he promptly re-filed it correctly. And lo and behold, suddenly there was a doozy of a lien existing against this property. The seller was long gone. Thankfully, the title insurance paid the lien so the lender was happy. And the buyers just had happened to purchase title insurance as well –so, they were happy because the whole fiasco cost them nada. In fact, it might have been the wisest $150 they ever spent. End of story.
#
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.
So, you’re sitting across from your mortgage lender going over all the charges for your mortgage. It seems like there are countless charges for this (document preparation) and that (MERS assignment fee - what the heck is MERS again?). But, none of these little charges are that big. But, whoa, wait a minute! What’s that on line 1108? Title insurance? Do you really need it since you’re putting 20% down on the property? Is that a double charge for the insurance you’re getting in case your house burns down? What exactly does it do for you?
Truth be told, title insurance as required by the lender doesn’t do a whole lot for you as a borrower. But it does a heck of a lot for the lender. Title insurance protects from loss against problems arising from problems with the title. If you are being lent money to buy or refinance your home, your lender is going to require it. Before you came along and put down a contract on the house you want to buy, there have possibly been numerous people who owned the house or at least the property it sits upon. The house may have changed hands countless times. And if the parties conducting the transaction before yours made a boo-boo, it could mean the world to you and your wallet. Which in turn, could pose a huge risk for your lender.
What kind of errors could be made? Well, say someone forged a document. It happens more than you think. Maybe Aunt Sue really never intended to sell that house when she was in a coma. Or what about tax liens against the property? If they were undiscovered at the time of a previous transfer, someone somewhere is owed some money. Title insurance will protect the lender for unforeseen claims against title up to the amount of the mortgage. It’s obligatory that you buy it if that lender is giving you money. You will be required to pay a single up front premium that will protect the lender for the life of the loan.
So you can see, a lender’s mortgage insurance policy does very little to protect a buyer. However, buyers can purchase their own title policy insurance to cover their legal fees and needs if a problem with title insurance occurs. It’s usually offered at a discounted rate to them at closing, allowing them to “piggyback” off of the lender’s policy. At a closing I attended the other day, the closing agent told of an undiscovered $10,000 lien that surfaced after a loan closing. It seems that the sellers had a pool built. Unfortunately, they failed to pay the pool builder. So the builder filed a lien against the old homeowners. These homeowners went to sell the home to the new buyers, a title search was done, and there were no issues. But, after closing, the pool builder figured out he had filed his lien in the wrong county. Oops. So he promptly re-filed it correctly. And lo and behold, suddenly there was a doozy of a lien existing against this property. The seller was long gone. Thankfully, the title insurance paid the lien so the lender was happy. And the buyers just had happened to purchase title insurance as well –so, they were happy because the whole fiasco cost them nada. In fact, it might have been the wisest $150 they ever spent. End of story.
#
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, May 21, 2008
Knoxville News Sentinel reports on: Residential prices fall
Residential prices fall
The April report from the Knoxville Area Association of Realtors shows the median sale price of a three-bedroom home fell nearly two percent to $149,000 in April. Meanwhile, the median price of a home with four or more bedrooms fell more than 12 percent to $240,000.
Total sales (home and condo) were down 19.2 percent, to 1,144, and the average market time was 100 days.
In another interesting figure, there were 24 home sales worth $500,000 or more in April, but there were a whopping 1,246(!) active listings in that price range.
--------------
Time to buy?
--------------
Give me a call and I can check the rates, work up a good faith whatever you need.
Kristin Abouelata
Loan Officer
8320 E. Walker Springs Ln #200
Knoxville, TN 37923
(865) 567-0113 cell
(865) 691-8910 office
(865) 691-7714 fax
kristin.abouelata@migonline.com
www.kristinmortgage.com
The April report from the Knoxville Area Association of Realtors shows the median sale price of a three-bedroom home fell nearly two percent to $149,000 in April. Meanwhile, the median price of a home with four or more bedrooms fell more than 12 percent to $240,000.
Total sales (home and condo) were down 19.2 percent, to 1,144, and the average market time was 100 days.
In another interesting figure, there were 24 home sales worth $500,000 or more in April, but there were a whopping 1,246(!) active listings in that price range.
--------------
Time to buy?
--------------
Give me a call and I can check the rates, work up a good faith whatever you need.
Kristin Abouelata
Loan Officer
8320 E. Walker Springs Ln #200
Knoxville, TN 37923
(865) 567-0113 cell
(865) 691-8910 office
(865) 691-7714 fax
kristin.abouelata@migonline.com
www.kristinmortgage.com
Tuesday, May 20, 2008
Like an Old Shoe- The FHA Loan is a Good Fit
You hear so much about FHA (Federal Housing Administration) loans lately? Why? Because sometimes an FHA loan is the best fit for your mortgage needs…
FHA (Federal Housing Administration) loans are really a hot product right now. Mortgage companies and brokers are scrambling to become approved FHA lenders left and right. However, FHA loans have been around for a long time, helping a lot of people get into homes. Some people say it’s become the new “sub prime” loan. What that really means is that if you can’t qualify for a conventional loan, FHA’s guidelines are more flexible than some loan products. And because of this point, the FHA loan fits a lot of people’s needs and goals.,
When should you consider an FHA loan? One great fit for an FHA loan is if you are buying a property and are looking to put as little money down on the property as possible. I had one couple that had plenty of money and excellent credit, but the seller of the property they were buying was conceding “nada”, and all the funds for closing were being footed by this couple out of their own check book. They were retired and relocating. Their goal was to spend as little money as possible, but still get into the home they desired. FHA fit their needs perfectly, because they were able to finance 97.75% of the loan amount. Their rate was competitive and their mortgage insurance was reduced. Also, they had plenty of money left over to buy plane tickets to visit the grandkids. Be aware, however, there is a loan limit for the FHA loan, so not all properties will qualify. But the limit is pretty generous.
Many times people have very little cash to put down on the property, but they have very nice credit. Again, FHA fits their needs greatly. Since FHA can pretty much offer the lowest cash necessary to close available to many, it’s easier for a buyer to negotiate for the seller to make a concession to lower or even eliminate the buyer’s cash out of pocket. Naturally, the seller has to be ok with what they are netting from the sale of the property. And the lender will make sure the house is worth the contract price. But FHA allows the seller to pay up to 6% of the buyer’s closing costs and on top of that, will let them gift the buyers the minimum required 3% investment through a down payment assistance program. So you see, you can get into a house with little or no money if you qualify for an FHA loan.
Another great thing about FHA? It doesn’t have any major pricing hits for a minimum qualifying credit score of 620. In the conventional loan world, there typically are pricing increases for loans every corresponding 19 point increase in credit score. Most secondary lenders who offer FHA loans will only give you a pricing hit if you dip below a 620 credit score.
And what if you have a credit score below 620? If you don’t get an automatic underwriting approval, you can possibly obtain a manual approval. What’s a manual approval? It’s when a real live human being looks at your file, and considers actors other than your credit score to qualify you. You may have to show you’ve paid other bills that don’t appear on your credit report on time for the past year. These types of bills would perhaps be your cell phone bill, utility bill, rent, or car insurance premium. Couple this evidence with a strong, hard explanation of why your credit score is less than perfect, and you still have a good chance of loan approval. But, be aware that your minimum credit score must typically be a 580 or higher.
Another nice fit for an FHA loan? Manufactured homes. You can still obtain an FHA loan to buy a new or refinance an existing manufactured home. Of course, there are stringent guidelines regarding the property that must be met, but FHA is still in the manufactured home market. In fact, it’s one of the few product types offered on the secondary market that still will endorse a manufactured home loan. The VA will too.
So, if one of the above mentioned situations reflects your scenario, make sure you investigate your options with FHA financing. You won’t be sorry you did. You know what they say? If the shoe fits - wear it.
When should you consider an FHA loan? One great fit for an FHA loan is if you are buying a property and are looking to put as little money down on the property as possible. I had one couple that had plenty of money and excellent credit, but the seller of the property they were buying was conceding “nada”, and all the funds for closing were being footed by this couple out of their own check book. They were retired and relocating. Their goal was to spend as little money as possible, but still get into the home they desired. FHA fit their needs perfectly, because they were able to finance 97.75% of the loan amount. Their rate was competitive and their mortgage insurance was reduced. Also, they had plenty of money left over to buy plane tickets to visit the grandkids. Be aware, however, there is a loan limit for the FHA loan, so not all properties will qualify. But the limit is pretty generous.
Many times people have very little cash to put down on the property, but they have very nice credit. Again, FHA fits their needs greatly. Since FHA can pretty much offer the lowest cash necessary to close available to many, it’s easier for a buyer to negotiate for the seller to make a concession to lower or even eliminate the buyer’s cash out of pocket. Naturally, the seller has to be ok with what they are netting from the sale of the property. And the lender will make sure the house is worth the contract price. But FHA allows the seller to pay up to 6% of the buyer’s closing costs and on top of that, will let them gift the buyers the minimum required 3% investment through a down payment assistance program. So you see, you can get into a house with little or no money if you qualify for an FHA loan.
Another great thing about FHA? It doesn’t have any major pricing hits for a minimum qualifying credit score of 620. In the conventional loan world, there typically are pricing increases for loans every corresponding 19 point increase in credit score. Most secondary lenders who offer FHA loans will only give you a pricing hit if you dip below a 620 credit score.
And what if you have a credit score below 620? If you don’t get an automatic underwriting approval, you can possibly obtain a manual approval. What’s a manual approval? It’s when a real live human being looks at your file, and considers actors other than your credit score to qualify you. You may have to show you’ve paid other bills that don’t appear on your credit report on time for the past year. These types of bills would perhaps be your cell phone bill, utility bill, rent, or car insurance premium. Couple this evidence with a strong, hard explanation of why your credit score is less than perfect, and you still have a good chance of loan approval. But, be aware that your minimum credit score must typically be a 580 or higher.
Another nice fit for an FHA loan? Manufactured homes. You can still obtain an FHA loan to buy a new or refinance an existing manufactured home. Of course, there are stringent guidelines regarding the property that must be met, but FHA is still in the manufactured home market. In fact, it’s one of the few product types offered on the secondary market that still will endorse a manufactured home loan. The VA will too.
So, if one of the above mentioned situations reflects your scenario, make sure you investigate your options with FHA financing. You won’t be sorry you did. You know what they say? If the shoe fits - wear it.
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