If the market is a bit slow and individuals are motivated to move on for whatever reason, a short sale might seem enticing. But be careful before making a decision for a short sale…there are repercussions.
I have a client who for private reasons wants out of her home. And she would like to be rid of it quickly. She is a very studious client, and a natural whiz on the internet. So, in her search for an answer to her dilemma, she happened upon the term “short sale”. She thought it sounded like a pretty good deal. You see, a short sale is when you sell your house for less than it’s worth, negotiating with the lender to absorb the loss. So she emailed me and asked my thoughts on the matter.
What the website failed to mention was that the short sale option is usually only a good move when used as a last resort to avoid a foreclosure. The lender who holds the note negotiates for a smaller loss than is anticipated through the loss that would result in the event of a foreclosure. And when it’s all said and done, it doesn’t necessarily settle the remaining balance or loss.
Typically, if you need to negotiate a short sale, you would do so through a lender’s loss mitigation department. Historically, lenders wouldn’t even consider short sales unless the loan was in trouble in the first place – meaning payments had been behind or missed.
However, due to the large amount of foreclosures experienced as of late, lenders are a bit more willing to address short sale requests. Short sales are great for both parties when everyone is aware of the repercussions. However, my client was not. I also had another client who was transferred out of state with his job. He was very motivated to rid himself of his home in Alabama. He was told by his realtor and the lender that his short sale would not show up on his credit report as a foreclosure. So, he thought he had a good deal going. What he didn’t know was that the short sale would show up as “a deed in lieu of foreclosure” on his credit report. And it hurt his credit score. But how it really hurt him was that it affected what type of financing was available to him when he relocated here recently with his family. Although conventional financing would have been the best scenario for him, he ended up having to obtain an FHA loan. This is because FHA will allow a borrower to purchase a new home until 3 years have passed from the date of the short sale. Conventional financing requires 2-4 plus years to have gone by. And there has to be very specific documentation to allow for the 2 year mark. He was adamant that he did not have a foreclosure. And he’s right - he didn’t. But when I explained to him that his lender suffered a loss and someone has to take the fall for it, it dawned on him that perhaps he wasn’t as well informed as to how the short sale might affect him in the future. And, as you can imagine, he as very upset with the situation.
So, typically a short sale is a good option only for a distressed seller. Not just a frustrated seller. If you’re struggling with making payments, perhaps are behind, and are stuck with a house for sale where there are fifteen more just like it for sale in your area, you might consider this option. However, consider all the repercussions before selling yourself short.
Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.
Sunday, February 15, 2009
Monday, February 9, 2009
FYI on DTI
Have you heard the acronym “DTI” and wondered what it was or what the letters stood for? You see, your DTI is a major factor to consider when searching for that dream house…
In the lending world, DTI stands for debt to income ratio. One’s DTI always has been a very important factor when a lender makes a credit decision. However, recently, it’s becoming increasingly part of the loan decision swing vote. Nowadays, the acceptable DTI for different loan types seems to be lowering or holding steady. And the wiggle room for exceptions is getting smaller and smaller. No big surprise here, right?
How do you figure out what your DTI is? Easy enough. You tally all your monthly payments (just those that show up or will soon show up on a credit report). You don’t include incidentals such as your utility bill or your cable bill -at least for qualifying purposes. However, don’t forget your total budget when personally considering what type of house you can afford. Use your head. Anyway, back to calculating DTI. So, total up your monthly obligatory payments, including your new house payment, then divide the sum by your gross monthly income. That percentage is your DTI. For instance, say I make $3000 a month as a salaried employee. I have a $285 a month car payment and a $48 per month credit card payment. I want to buy a house where my total monthly payment will be $800. My DTI is the sum of all these monthly payments ($1133) divided by my income ($3000). Thus, my proposed DTI is 38%.
Across the board, 38% is a decent DTI. But what constitutes an iffy DTI? It depends on your loan type. Historically, if you got an approval in an automatic underwriting system (AUS), it was rare that your loan wouldn’t get an official blessing from the actual underwriter when reviewed. Rare, but not unheard of. Nowadays, these underwriting denials based upon DTI are becoming less rare. Especially for conventional financing when less than a 20% down payment is involved. This change is because there is mortgage insurance involved when less than 20% is put down on the property. You see, the automatic underwriting approval engine that was created using guidelines from Fannie and Freddie doesn’t necessarily protect the mortgage insurance (MI) companies who are underwriting these loans. And these MI companies have their own set of risk guidelines that apply to these loan scenarios. Thus, currently, a conservative DTI for a conventional loan is 45%. Just a few weeks ago, you have a 48% or 50% DTI and not fret a bit about loan approval as long as you got an AUS approval. Not so much today. Currently, you can exceed this DTI guideline only if you have a spanking credit score and some reserves to show for yourself. Again, this applies to loans that require monthly mortgage insurance. However, in general, for conventional financing, a DTI of 45% is a good rule of thumb.
The other loan types are even more conservative. For FHA financing, expect to command a 43% DTI, and for VA and Rural Housing try for 41%. However, FHA and VA are more flexible if you get an AUS approval at a higher DTI with few or little reserves. A good credit score never hurts in these instances. Rural Housing will consider crossing its DTI threshold with excellent compensating factors (i.e. high credit score) and other help such as evidence that the new housing payment isn’t completely out of whack with what the borrower is currently spending on housing. They call it payment shock.
So, if you’re browsing through real estate magazines and dreaming of a new home, use these guidelines to narrow your focus. Or better yet, get pre-qualified with a lender so you know how big you can dream!
Let My Experience Work For You!
Find out if refinancing is right for you with today's low rates.
Call Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.
In the lending world, DTI stands for debt to income ratio. One’s DTI always has been a very important factor when a lender makes a credit decision. However, recently, it’s becoming increasingly part of the loan decision swing vote. Nowadays, the acceptable DTI for different loan types seems to be lowering or holding steady. And the wiggle room for exceptions is getting smaller and smaller. No big surprise here, right?
How do you figure out what your DTI is? Easy enough. You tally all your monthly payments (just those that show up or will soon show up on a credit report). You don’t include incidentals such as your utility bill or your cable bill -at least for qualifying purposes. However, don’t forget your total budget when personally considering what type of house you can afford. Use your head. Anyway, back to calculating DTI. So, total up your monthly obligatory payments, including your new house payment, then divide the sum by your gross monthly income. That percentage is your DTI. For instance, say I make $3000 a month as a salaried employee. I have a $285 a month car payment and a $48 per month credit card payment. I want to buy a house where my total monthly payment will be $800. My DTI is the sum of all these monthly payments ($1133) divided by my income ($3000). Thus, my proposed DTI is 38%.
Across the board, 38% is a decent DTI. But what constitutes an iffy DTI? It depends on your loan type. Historically, if you got an approval in an automatic underwriting system (AUS), it was rare that your loan wouldn’t get an official blessing from the actual underwriter when reviewed. Rare, but not unheard of. Nowadays, these underwriting denials based upon DTI are becoming less rare. Especially for conventional financing when less than a 20% down payment is involved. This change is because there is mortgage insurance involved when less than 20% is put down on the property. You see, the automatic underwriting approval engine that was created using guidelines from Fannie and Freddie doesn’t necessarily protect the mortgage insurance (MI) companies who are underwriting these loans. And these MI companies have their own set of risk guidelines that apply to these loan scenarios. Thus, currently, a conservative DTI for a conventional loan is 45%. Just a few weeks ago, you have a 48% or 50% DTI and not fret a bit about loan approval as long as you got an AUS approval. Not so much today. Currently, you can exceed this DTI guideline only if you have a spanking credit score and some reserves to show for yourself. Again, this applies to loans that require monthly mortgage insurance. However, in general, for conventional financing, a DTI of 45% is a good rule of thumb.
The other loan types are even more conservative. For FHA financing, expect to command a 43% DTI, and for VA and Rural Housing try for 41%. However, FHA and VA are more flexible if you get an AUS approval at a higher DTI with few or little reserves. A good credit score never hurts in these instances. Rural Housing will consider crossing its DTI threshold with excellent compensating factors (i.e. high credit score) and other help such as evidence that the new housing payment isn’t completely out of whack with what the borrower is currently spending on housing. They call it payment shock.
So, if you’re browsing through real estate magazines and dreaming of a new home, use these guidelines to narrow your focus. Or better yet, get pre-qualified with a lender so you know how big you can dream!
Let My Experience Work For You!
Find out if refinancing is right for you with today's low rates.
Call Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.
Friday, February 6, 2009
2008 MBA Awards
2008 Knoxville Mortgage Bankers Association awards banquent was held last night February 5, 2009.
I am very pleased to report I recieved a Bronze Production Award!
Thank you to all my wonderful clients.
Let Mortgage Specialist Kristin Abouelata's Experience Work For You!
Want to refinance online? [CLICK HERE]
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or
call direct: (865) 567-0113
Toll Free: 1-800-489-8910
For more information visit her website at http://www.kristinmortgage.com/ Home Loans Plain Talk.
For more information visit her website at http://www.kristinmortgage.com/ Home Loans Plain Talk.
Tuesday, February 3, 2009
Flory of Knox News reports, "Mortgage industry doing fine; refinancing up 400%-500% at one local firm"
By Josh Flory (Contact)Tuesday, February 3, 2009
As problems go, this is a good one for the mortgage industry.
While home sales sputtered last year in the midst of a national recession, the federal government’s aggressive moves to prop up the economy spurred a year-end boom in mortgage refinancing that has carried over into 2009, and left some firms scrambling to keep up with demand.
While home sales sputtered last year in the midst of a national recession, the federal government’s aggressive moves to prop up the economy spurred a year-end boom in mortgage refinancing that has carried over into 2009, and left some firms scrambling to keep up with demand.
Chuck Tonkin, co-president of the Knoxville-based Mortgage Investors Group, estimated that refinancing volume at his firm is up 400 to 500 percent this month compared to January 2008, and he’s expecting a bigger number in February.
Tonkin said that at his company, “many, many people are working until 10 every night just to keep it going,” adding that the blistering pace is probably happening at other firms as well.
Let Mortgage Specialist Kristin Abouelata's Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910.
For more information visit her website at http://www.kristinmortgage.com/ Home Loans Plain Talk.
Monday, February 2, 2009
Just How Hard Is It to Get a Loan These Days?
By Kristin Abouelata, Home Loan Specialist
Every where you turn you read or see some bit of information about tightening guidelines for mortgage lenders? It makes you wonder if you would qualify for a loan today that you easily qualified for two years ago. Hmmm, would you?
I see or hear it everywhere. On the television news, in the paper. People at parties ask me about it. Clients discuss it. Everyone is curious to know just how difficult it is to get a loan these days. I guess I would answer that by asking just what type of loan are you considering? From what I understand through the media, if you need a car loan, yes- it’s more difficult. And I really have no idea if it is exceptionally more difficult to obtain car financing. I’d be curious to hear from a car financing loan officer on that matter. But a home loan? It just depends.
You see, here’s the thing. Most lenders in our area never did the really, funky loans that have caused this mortgage crisis and only a small slice of the market was committed to subprime loans. Yes, we did stated income. But that was only because Joe Borrower had been on the job forever and had an 8 bazillion credit score. And he was buying a house he intended to call home. You see, the automated underwriting engines assign risk factors to certain aspects of the loan. These risks are based on statistics and mathematical data regarding loan performance. Stuff way over most of our heads. But you see if everyone’s cards were on the table, these old estimates of risk worked for the most part.
But they didn’t work when people lied about the intended use of the property or about how much income they made. Or they didn’t work if they had an unscrupulous lender who assisted them in committing fraud, oftentimes unwittingly. You see, if you didn’t plan to live in the property, you would have had to put more money down and proven your income or your assets. Mathematically, the statistics showed that if you could not substantiate or meet these requirements, you were at risk for default. Oops, false data equals bad results. And ta-da, mass foreclosures.
But around here, most folks did traditional conventional loans for primary residences or obtained FHA mortgages where you had to prove all that stuff anyway. These loans performed well, and continue to do so. And these people still can get loans easily. Not much has changed for them, except if they are getting a conventional loan, they have to bring in a few more pieces of paper to show their income that they didn’t before. And the lender is typically going to collect some type of down payment from you, even it’s marginal or from a grant.
What has changed, credit wise, is if you are an individual who is buying rental property. You have to put more money down, have higher credit, and can only own so many and still qualify. People who scooped up homes, expecting to turn them quickly but couldn’t, are part of the problem we all now face. People who had very little invested into the property when they purchased it. People who could walk away easily when they realized they had no renters and couldn’t sell the home anymore because the house prices dropped. People who didn’t have to prove their income to obtain the loan. Or they agreed to a extremely low interest adjustable rate mortgage where they never thought they would see the adjustment happen. Lots of people in Nevada, California and Florida where individuals invested heavily in the mortgage industry for profit – not necessarily for homeownership and the American Dream.
So, yes, it’s much more difficult for this latter group of individuals to secure financing on the secondary market. But for your typical hardworking family, there are loans out there for you. If you earn good income, have a sensible budget and work history, you should be ok. Some guidelines have tightened up, but these shrinking nets being cast make good sense. However, considering what a beating our pocketbooks have taken lately, good sense is a good thing. But don’t be afraid that you won’t qualify. If you do what your mama and daddy raised you to do, chances are you will.
Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.
Every where you turn you read or see some bit of information about tightening guidelines for mortgage lenders? It makes you wonder if you would qualify for a loan today that you easily qualified for two years ago. Hmmm, would you?
I see or hear it everywhere. On the television news, in the paper. People at parties ask me about it. Clients discuss it. Everyone is curious to know just how difficult it is to get a loan these days. I guess I would answer that by asking just what type of loan are you considering? From what I understand through the media, if you need a car loan, yes- it’s more difficult. And I really have no idea if it is exceptionally more difficult to obtain car financing. I’d be curious to hear from a car financing loan officer on that matter. But a home loan? It just depends.
You see, here’s the thing. Most lenders in our area never did the really, funky loans that have caused this mortgage crisis and only a small slice of the market was committed to subprime loans. Yes, we did stated income. But that was only because Joe Borrower had been on the job forever and had an 8 bazillion credit score. And he was buying a house he intended to call home. You see, the automated underwriting engines assign risk factors to certain aspects of the loan. These risks are based on statistics and mathematical data regarding loan performance. Stuff way over most of our heads. But you see if everyone’s cards were on the table, these old estimates of risk worked for the most part.
But they didn’t work when people lied about the intended use of the property or about how much income they made. Or they didn’t work if they had an unscrupulous lender who assisted them in committing fraud, oftentimes unwittingly. You see, if you didn’t plan to live in the property, you would have had to put more money down and proven your income or your assets. Mathematically, the statistics showed that if you could not substantiate or meet these requirements, you were at risk for default. Oops, false data equals bad results. And ta-da, mass foreclosures.
But around here, most folks did traditional conventional loans for primary residences or obtained FHA mortgages where you had to prove all that stuff anyway. These loans performed well, and continue to do so. And these people still can get loans easily. Not much has changed for them, except if they are getting a conventional loan, they have to bring in a few more pieces of paper to show their income that they didn’t before. And the lender is typically going to collect some type of down payment from you, even it’s marginal or from a grant.
What has changed, credit wise, is if you are an individual who is buying rental property. You have to put more money down, have higher credit, and can only own so many and still qualify. People who scooped up homes, expecting to turn them quickly but couldn’t, are part of the problem we all now face. People who had very little invested into the property when they purchased it. People who could walk away easily when they realized they had no renters and couldn’t sell the home anymore because the house prices dropped. People who didn’t have to prove their income to obtain the loan. Or they agreed to a extremely low interest adjustable rate mortgage where they never thought they would see the adjustment happen. Lots of people in Nevada, California and Florida where individuals invested heavily in the mortgage industry for profit – not necessarily for homeownership and the American Dream.
So, yes, it’s much more difficult for this latter group of individuals to secure financing on the secondary market. But for your typical hardworking family, there are loans out there for you. If you earn good income, have a sensible budget and work history, you should be ok. Some guidelines have tightened up, but these shrinking nets being cast make good sense. However, considering what a beating our pocketbooks have taken lately, good sense is a good thing. But don’t be afraid that you won’t qualify. If you do what your mama and daddy raised you to do, chances are you will.
Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.
Tax Time! First Time Homebuyers Can Take Credit!
The Housing Assistance Tax Act, which is a section of the Housing and Economic Recovery Act, provides some incentives allowing qualified first time homebuyers a tax credit that puts money in their pocket. Do you qualify?
If you were (are or will be) a first time homebuyer who bought/buys a home between April 9, 2008 and June 30, 2009, you may be eligible to receive a tax credit. This tax credit is basically a fifteen year loan that you payback without interest. This incentive can benefit many people, and is a great way to finance some home improvements.
You have to qualify for the benefit, naturally. And the amount for which you can qualify varies. You have to be a first time homebuyer, as mentioned above (and that includes your spouse if you’re both on the loan) who has had no ownership interest in a principal residence for the past three years (date of your home purchase). You see, in the mortgage world, if you haven’t had a mortgage within this time frame, the fact that you owned and sold a home five years ago doesn’t count.
You can’t use the tax break if you obtained a THDA (Tennessee Housing Development Agency) loan because the thought process is you already benefited from proceeds from a tax-exempt revenue bond. No double dipping allowed. You also can’t be a non-resident alien, and you have to keep your home for at least a year to claim this particular tax benefit. So, if you’re transferred and have to sell your home in six months after you closed on it, you’re out of luck.
The amount you earn to qualify has a cap for income. If you’re single, the benefits available start to dwindle if you earn more than $75,000 per year, or $150,000 for joint filers. It’s unavailable completely if you earn $95,000 individually or $170,000 jointly.
The tax credit you can claim is equal to the lesser of $7,500 or 10% of the price of the home. Thus, if you buy a $65,000 home, you can claim $6500. But, if you buy an $85,000 home, you can only claim $7,500. The main catch is you have to pay the credit back to Uncle Sam over the next 15 years. However, it’s interest free. You start the pay back the second tax year following your home purchase. If you sell your home before you’ve settled your debt, you have to pay it back sooner. But you won’t owe the full amount of the outstanding credit due if your gain from the sale of your house is less than what you owe.
So is this deal a good one for you? How could you take advantage of it? Well, again, view it as an interest free loan. You can upgrade appliances in your kitchen, finish out a basement or do some landscaping for this type of money. It can work to your advantage. But make sure you qualify before attempting to take this credit. It’s not the type of thing you want to take lightly as filing your taxes is serious business. And if you do qualify and it makes sense for you, spend your money wisely! Increase the value of your home with this interest free loan. Now that’s easy money.
Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.
Tax Credit, Housing Assistance Tax Act, THDA, IRS, Home Loan Plain Talk, Mortgage Specialist, Kristin Abouelata
If you were (are or will be) a first time homebuyer who bought/buys a home between April 9, 2008 and June 30, 2009, you may be eligible to receive a tax credit. This tax credit is basically a fifteen year loan that you payback without interest. This incentive can benefit many people, and is a great way to finance some home improvements.
You have to qualify for the benefit, naturally. And the amount for which you can qualify varies. You have to be a first time homebuyer, as mentioned above (and that includes your spouse if you’re both on the loan) who has had no ownership interest in a principal residence for the past three years (date of your home purchase). You see, in the mortgage world, if you haven’t had a mortgage within this time frame, the fact that you owned and sold a home five years ago doesn’t count.
You can’t use the tax break if you obtained a THDA (Tennessee Housing Development Agency) loan because the thought process is you already benefited from proceeds from a tax-exempt revenue bond. No double dipping allowed. You also can’t be a non-resident alien, and you have to keep your home for at least a year to claim this particular tax benefit. So, if you’re transferred and have to sell your home in six months after you closed on it, you’re out of luck.
The amount you earn to qualify has a cap for income. If you’re single, the benefits available start to dwindle if you earn more than $75,000 per year, or $150,000 for joint filers. It’s unavailable completely if you earn $95,000 individually or $170,000 jointly.
The tax credit you can claim is equal to the lesser of $7,500 or 10% of the price of the home. Thus, if you buy a $65,000 home, you can claim $6500. But, if you buy an $85,000 home, you can only claim $7,500. The main catch is you have to pay the credit back to Uncle Sam over the next 15 years. However, it’s interest free. You start the pay back the second tax year following your home purchase. If you sell your home before you’ve settled your debt, you have to pay it back sooner. But you won’t owe the full amount of the outstanding credit due if your gain from the sale of your house is less than what you owe.
So is this deal a good one for you? How could you take advantage of it? Well, again, view it as an interest free loan. You can upgrade appliances in your kitchen, finish out a basement or do some landscaping for this type of money. It can work to your advantage. But make sure you qualify before attempting to take this credit. It’s not the type of thing you want to take lightly as filing your taxes is serious business. And if you do qualify and it makes sense for you, spend your money wisely! Increase the value of your home with this interest free loan. Now that’s easy money.
Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.
Tax Credit, Housing Assistance Tax Act, THDA, IRS, Home Loan Plain Talk, Mortgage Specialist, Kristin Abouelata
Tuesday, January 13, 2009
It’s Baaaaack! 100% Financing
With the mortgage meltdown onset, the only 100% financing options available for borrowers became limited. However, there’s a new game in town that might make sense for you…..
100% financing was a very popular option in the lending world via FHA approved grants, however, it became a memory not too long ago. Programs like AmeriDream and Nehemiah enabled a borrower to obtain their FHA minimum down payment through a seller as a financed gift. After much haranguing back and forth between pro and con parties, FHA retired the grant program. The only 100% financing options that remained were Veteran Administration loans (VA) and Rural Housing loans (RECD).
While both the aforementioned 100% financing programs are fantastic, they are limited in their scope. To qualify for a VA loan, you have to be a veteran (surprise, surprise, right?). And the RECD loan, limited by income and loan size, also has to be in a designated rural area (funny how the names of these programs give it away, huh?). So the average Joe city dweller, who never served in the arm forces, was out of luck.
Well, I’ve got good news. There is now a new 100% program, and it isn’t limited to veterans or geographic region. It is, however, targeted to low to moderate income earning families. That means the household income can’t exceed $54,800. In addition, the Freddie/Fannie acquisition cost limitations apply for your area (that is your loan limit). You have to have a good debt to income ratio (simply speaking, total up your monthly required payments that appear on your credit and divide it by your monthly gross income) of no more than 41%, but you can wiggle a little higher. And you need a credit score of at least 680. If you meet these criteria, you may want to explore it further.
How it works is the lender allows you to get a first loan at 95-92% loan to value (LTV, loan amount divided by appraised value), and then the lender allows you to close on a second loan for the remainder of the total sales price, which is anywhere from 5-8%. Which you choose is simply what works best for your loan scenario. The second loan is amortized over 20 years. In addition, the seller can pay up to 3% of your closing costs. This means a borrower can get into the home with little or no money down. Mortgage insurance and escrow for taxes and insurance are included in your monthly payment, but the mortgage insurance is issued at a reduced rate. And the other good news? You don’t have to be a first time homebuyer to qualify for this loan type. But if you are, you’ll be required to take a first time homebuyer class. So before you know it, badda bing, badda boom, you can begin the process of buying a home.
And guess what? There’s never been a better time to buy a home. Sales prices are fantastic and rates are fabulous. So, if you’ve been sitting on the fence, it may be time to hop off and take action. Call a lender and get pre-qualified. Homeownership is the American Dream, and here’s the opportunity to grab it!
Let My Experience Work For You!
Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910. For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.
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.
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