I believe in transparency. When you apply online, we will pull your credit from all three agencies and give you a free copy. You don’t even have to ask for it. It will be in your inbox for your review at the same time we get it for review. It’s part of the Approved Buyer’s Cert (ABC) process. I will give you an underwritten mortgage approval. Better than a pre-approval based on assumptions, it’s an actual mortgage approval. Know what you are approved to purchase even before you find the home of your dreams. Simple and straightforward.
I know it can be intimidating getting approved to buy a home, so rest assured I will try and make it as easy as possible for you and I will be glad to answer any of your questions about the home buying process.
Below are some items (in red) that we will review for your mortgage loan pre-approval letter to purchase a home along with some different loan programs to consider:
What kind of credit score do I need?
Most lenders want a 620 credit score nowadays, however, there are some lenders now doing FHA and VA loans down to a 580 score with no bankruptcies and no foreclosures in the last 2 years. You have three fico scores from experian, equifax and transunion credit reporting agencies and the lenders will throw out the high and low score and take the middle score of the borrower(s). For example if you have a 598, 625, 604 on each of the main three reporting agencies, then your qualifying fico score would be 604.
How much down do I need for a down payment?
If you don’t have access to a down payment or would like to keep your money in savings, there are still housing programs that exist for Kentucky home buyers whereas you can purchase a home with no down payment. You will need a 620 to 640 middle credit score to purchase a home using the USDA or KHC loan programs for their no down payment credit requirements.
The first no money-down home loan program called, KHC, currently offers $6000 in down payment assistance (DAP) along with a 30 year fixed rate loan of 5.00%. The maximum income limits are $117,000 for a household with a max loan of $282,000. This loan program sponsored by Kentucky Housing Corp. or (KHC) requires a 620 minimum credit score and can be done anywhere in Kentucky.
The second no money down home loan option is the USDA program for properties located outside urban areas of Kentucky areas where you can secure a no money down loan at a current low fixed rate of 4.25% on 30 years. The max household income limits usually are between $80k to $103k for most rural area counties depending on household family size. A 640 middle credit score is needed for loan approval on this program. If you are looking in the area that is in an USDA eligible area, then this program should be available to you. I just need the address to determine if it’s an eligible USDA area.
Alternatively, If you have access to a down payment (3.5 % or more of the sales price) , we can always look at doing a FHA loan and go down to a 580 credit score. There are no income limits oror geographical restrictions on a FHA loan. If your credit scores are higher, say 680 or above, we can look at doing a conventional loan with Fannie Mae and possibly get you better terms on your payments when it comes to mortgage insurance and interest rates.
Lastly, There are some programs offered to home buyers here locally that if they have a credit score higher than 660, you can do a no money down home loan with no mortgage insurance. This Is good for buyers they have no money to put down, but not have to go with a FHA loan and pay mortgage insurance for life of loan.
If your credit scores are a little low now, we can look at doing some improvement to your scores through the rapid-rescoring program we offer free of charge as I described above. It seems like you have a handle on this with your student loan error, so it may be best to let you work on this.
Keep in mind mortgage rates are currently in an trending-up pattern, kinda like gas prices they change everyday, so I would go ahead and starting getting these things together below so we can lock in your rate and secure a low 30 year fixed rate.
How much income do I need to qualify for a mortgage loan?
The maximum house payment is usually limited to 1/3 of your gross monthly income. For example, if you make $30,000 a year or $2,500 gross a month, then x that by 31%, and this would equal about a $824 maximum house payment you would qualify for. Again this is just the max, you don’t have to go that high on your ratios. Once I verify your income.
On a house payment, there is more than just the principal and interest payment that is included. You also have to pay property taxes, home insurance, and mortgage insurance that is all included in the house payment..We can go over this on your loan pre-approval.
In order to get you pre-approved for your max loan amount, I will need the following items from you. This is a free process and I will give you a copy of your credit report for free!
Mortgage Pre-Approval Checklist Below
1. Last 30 days worth of pay stubs
2. Last 2 years W-2′s
3. Last 2 years tax returns
4. Last two months bank statements for all accounts including 401 k or retirement account if you have one
Once I get the information above, I can usually get you pre-approved in one day, and get your loan closed in 30-45 days after you get an accepted offer on a home.
Your first house payment usually starts 30-60 days after you close.
Your loan pre-approval is usually good for 60 days.
I don’t need originals, copies are fine. You can fax or email me the above documents, or meet me face-to-face if you wish to make copies and go over your options.
Let me know your questions.
Thanks and look forward to helping you!
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364