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.

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

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.

Home Loans: Should Tom, Dick and Harry Pull Your Credit?

There’s much confusion these days about how often or when you should allow your credit to be pulled. Here’s a little background info on when it’s ok to say yes….

The fact of the matter is that today when you are investigating home financing, the big question on everyone’s lips is, “What’s your credit score?” Many people are clueless as to what their credit score is. Pricing and product availability are hugely driven by credit scores in the mortgage industry. The difference between a 620 credit score and a 720 score means a world of difference to your wallet. However, when it comes to lending money for a home loan, there is a point when a lender must make a credit inquiry.

What is a credit inquiry? It’s when a lender or another entity you are asking to extend you credit requests a tri-merge credit reporting agency to assess and report your credit scores. At the back of the report, there is a list of what organizations you have given permission (or not) to pull your credit recently. And, too many credit inquiries can affect your credit score negatively. However, not all inquiries will do so, just ones that are a result of you applying for new credit. For example, if you apply for a mortgage, car loan or credit card, these are the types of inquiries, when you agree to them, which can affect your FICO credit score. The term FICO stands for Fair Isaac & Co. Credit, the entity that developed this scoring method for determining if you’ll actually repay your debt. However, some inquiries don’t affect your FICO credit score, like a future employer doing a background check on your credit.

So, if you want to apply for a mortgage, and compare different lenders, are you asking for trouble by allowing every Tom, Dick and Harry to pull your credit (or Tammy, Diane and Helen for that matter)? Well, yes and no. It depends. The scoring engine will typically ignore all mortgage or auto inquiries made in the 30 days prior to your most recent scoring. So, you need to make a decision within 30 days if you plan to do major rate shopping. And if the scoring engine finds mortgage or auto inquiries older than 30 days, it groups those inquiries into a typical shopping period as well. So, yes you can shop, just do so wisely.

I advise you to let one lender pull your credit; they can tell you what your score is, and then you can inform other lenders what your score is for the purpose of comparing loans. You can also ask what your debt to income ratio is. With that information, a lender should be able to give you a Good Faith Estimate and Truth in Lending that’s pretty spot on. If they say they can’t do so without pulling a credit report, then move on. A lender should be able to give you an estimate if you know the answers to the right questions. And since it’s an estimate, if you give the wrong information, be aware that all bets are off. As long as you are aware that what you are quoted is based on the information you’ve given(as yet unverified), the lender should be able to give you information that allows you to choose them from other considerations. When you’ve made the final choice, the lender will then have to pull your credit to move forward if they have not done so already.

So, be a smart shopper. But don’t be careless with your information. It could hurt you if you don’t share it wisely.

Saturday, May 3, 2008

Decisions, Decisions….

Which Mortgage Is Right for You?

There are thousands of mortgage products available to consumers. When you’re in the market for a home loan, how do you decide what’s best for your needs?

So, you need a mortgage. Maybe you’re buying a home, maybe you’re refinancing an existing home. When you go on the internet and do a search for “mortgages”, you can get confused pretty quick. Interest rates start popping up, you can become inundated with strange terminology that’s Greek as far as you’re concerned, and you discover a plethora of lenders ready to close your loan tomorrow. How do you know what loan type best suits your needs?

The most common loan type you may have heard of is a conventional loan. Conventional loans adhere to underwriting guidelines set forth by Freddie Mac and Fannie Mae. Each agency’s guidelines are similar with a few exceptions, and are designed to allow for the pooling of large amounts of loans with similar characteristics for sale on the secondary market. Typically, a conventional loan for a primary home requires a minimum 5% down payment, good credit, job stability and an average debt to income ratio. The average loan limit is $417,000 for our area. If you are coming up with at least 20% of purchase price to put down at closing, most likely, a lender will recommend you consider conventional financing. The interest rate and cost to do the loan will vary depending on loan size, credit score and loan to value. But it’s always a safe place to start. As well, conventional financing will apply to second homes and investment properties. You can get a little bit more creative and look at adjustable rate conventional financing or interest only conventional financing if there is a market condition (fixed rates are high) or a personal motivation (interest only for better cash flow) to consider. A good mortgage lender can talk to you about your goals and analyze other options for you to compare and decide.

If you are buying a primary home, you may want to consider other loan programs. In particular, the FHA loan (it stands for Federal Housing Administration) is very popular these days. FHA requires a minimum 3% cash investment on the part of the buyer, but will finance up to 97.75% of the purchase price (the buyer would have to pay the additional .75% in closing costs). FHA is a great product for people with more challenging credit scores and less cash to invest in the property. It also allows for down payment assistance to cover the 3% minimum investment, and the seller can pay up to 6% in closing costs. You can also use this product to refinance your home up to 95% LTV, and it can be rate term or cash out. You don’t have to be a first time home buyer to qualify, either. The loan limit is capped, and is lower than conventional limits. So you should check with your lender to see if it’s an option for you.

If you’re a qualifying veteran or the spouse of a deceased qualifying veteran, you’ll want to look into a VA loan. It allows for 100% financing and no monthly mortgage insurance. It also will let the seller pay up to 4% of closing costs. And if you want to refinance your property, its cap is 90% LTV. There’s no income limit and the loan amount limits are very generous – in line with or above conventional financing.

Rural Development (RD) loans are another good bet, but your property has to be in a “defined” area as allowed by RD. It is not necessary to be a to first time homeowner, but you must be purchasing your primary residence with this program. There is an income limitation as it is designed for low to moderate income families. As well, there is guarantee fee that applies which can be rolled into the loan amount if the appraisal of the property warrants it. But this program does allow 100% financing and no monthly mortgage insurance. So, if your property and your pay stub are within the guidelines, and you have little or no down payment, it may be an excellent resource for you.

Finally, any of the above mentioned loans can be financed through the Tennessee Housing Development Agency (THDA). To qualify for a THDA loan, you must meet both the income eligibility requirements and the county acquisition limit set forth. So you could get a THDA conventional loan, but you couldn’t get a $417,000 home with it. What’s most attractive about THDA is its very competitive rate on a 30 year fixed loan at or below the normal conventional market rate. THDA has grant programs available to its borrowers to assist with down payments if necessary. There are some guidelines that THDA is more stringent on, but usually they don’t pose a problem for a borrower who is considering this product.

So, when you call your mortgage lender, you can now at least have some idea of what type of loan you are interested in hearing more about. And trust me, your lender will probably be able to give you further customized choices once you decide which loan will best suit your needs.

Friday, May 2, 2008

Free Money! - Save $200.00 on your Home Loan

Click the title to apply online.
If you or someone you know is looking for a home loan or to refinance - give me a call and save $200.00 on closing costs.