Get Yourself Pre-approved for a Mortgage in Kentucky


via How to Buy a Home in Kentucky

Get Yourself Pre-approved for a Mortgage in Kentucky

Which home loan is used to buy a home in Kentucky

Buying a home can be a nerve-wracking experience, especially if it’s your first time. It may feel even more so if you’re still saddled with student loan debts.

Does your income-driven repayment plan has Do you have Federal student loans in it? Do you know how your lender will handle your debt to income ratio?

These are just some of the factors that you need to put into consideration when planning to buy a house. It might just be not that easy since you also have to factor in your student loan debts.

To make the process less intimidating for you, here are the things you need to do.

Pay Attention to Your Credit Score

FICO credit scores are among one of the most commonly used scoring systems by lenders and creditors whose range plays in between 350 to 800. A consumer with a credit score below 620 is considered to have poor credit, while those with credit scores of 750 or higher is considered to have excellent credit.

Now, if you want to qualify for a home improvement financing or a mortgage and nail a low mortgage rate, make sure your credit score is in good shape. Whenever you apply for a mortgage, every credit bureau gathers information about your credit history and calculate your credit score that lenders will use to gauge your risk factor.

If you find an error or any inconsistencies in your credit report, report it immediately to the credit bureau and have it fixed.

Your DTI (debt-to-income ratio) is one of the major factors that lenders consider when you apply for a mortgage loan. It’s the ratio of the total amount of your recurring debt every month with your monthly gross income.

To calculate your DTI, add up all of your recurring monthly debt such as student loan payments, minimum credit card payments, or car loan payments, then divide it by your pre-tax (the amount you earn before taxes and other withholdings) income every month.

Since your debt-to-income contains two main components: debt and income, the efficient way to reduce it is to:

earn more income

repay existing debt do both

How does your debt to income ratio play into a Kentucky Mortgage Loan Approval for FHA, VA, USDA and Fannie Mae Mortgage Loans

Pay Attention to Your Payments

Case in point: Lenders will approve the application of those who are financially responsible.

Know it that your payment history takes up one of the biggest portions of your credit score. Thus, to make sure that you pay on time, set up an autopay system for all your accounts so that funds are automatically debited every month.

Moreover, your FICO is being weighed heavily by current payments, which means your future will matter more than your past. Make sure also to do the following:

Pay off the balance if you have a delinquent payment.

Do not skip payments.

Pay on time.

Get Yourself Pre-approved for a Mortgage

 

The common cycle for home buyers is to look for a property, then get a mortgage. You have to switch it.

It’s better if you get yourself pre-approved with a lender, so you will know how much you can afford for a home. To get pre-approved, lenders will look at your income, credit profile, employment, assets, to name a few.

 

 

Besides your credit score and DTI, your lenders also assess your credit card utilization score, or your credit card expenses as a percentage of your credit limit every month. The ideal credit utilization must be 30% or less. Even better, keep it less than 10% if possible.

For instance, if you have a $20,000 credit card limit and spent $6,000, your credit utilization is equivalent to 30%.

If you want to regulate your credit card utilization better, here are the things you can do:

Talk with your lender about increasing your credit limit. It may require a hard credit pull so better consult your lender first.

Pay off your balance at least twice a month to lessen your credit utilization.

To track credit utilization, set up alerts for automatic balance.

 

Credit Score Requirements for a Conventional loan, USDA Loan, FHA Loan, VA loan in Kentucky

Even if you have outstanding student loan debts, you can still seek for different down payment assistance. You can start with the following:

 

FHA, VA , USDA AND CONVENTIONAL MORTGAGE LOANS IN KENTUCKY

USDA loans. These loans have zero-down mortgages for suburban and rural homeowners.

FHA loans. Acquire federal loan through the Federal Housing Authority.

VA loans. You can avail these loans if you’ve served in the military service.

There are local, state, and federal assistance programs as well that you can resort to.

If paying off your credit card balance is impossible before getting a mortgage, you can consolidate your credit card debt into one personal loan for a lower interest rate.

Taking a personal loan can help you save big on you on interest expenses over the repayment term, which usually lasts for three up to7 years, depending on the lender. It can also enhance your credit score since it’s an installment loan with a fixed repayment term.

On the flip side, credit cards have no fixed repayment terms because they are revolving loans. When such is the case, you can minimize your credit utilization and diversify your debt types whenever you trade your credit card debt for a personal loan.
Takeaway

Buying a home while grappling with student loan debts can be taxing. Your likelihood to get a mortgage for a property will depend on your loans. It can result in disappointment if your loans are in bad shape.

 

The lenders I currently deal with have the following fico cutoffs for credit scores:
As you can see, different government-backed loan programs have different minimum score requirements with most lenders for a FHA, VA, or Fannie Mae loan, and 620  is required for the no down payment programs offered by USDA and KHC in Kentucky for First Time Home Buyers wanting to go no money down.

history of mortgage rates in United States

Joel Lobb
Senior  Loan Officer
(NMLS#57916)
 Company ID #1364 | MB73346

 

 

text or call my phone: (502) 905-3708
email me at kentuckyloan@gmail.com

 

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). USDA Mortgage loans only offered in Kentucky.

All loans and lines are subject to credit approval, verification, and collateral evaluation

 

“Grossing-Up” Non-Taxable Income for a Kentucky Mortgage Loan Approval


Image result for "Grossing-Up" Non-Taxable Income

“Grossing-Up” Non-Taxable Income

Did you know that you can gross up non-taxable income?

You may gross up non-taxable income for income qualifying purposes. The non-taxable income source being “grossed-up” must be documented.

Non-taxable income refers to types of income not subject to federal taxes, which includes, but is not limited to:

  • some portion of Social Security Income;
  • some federal government employee Retirement Income;
  • Railroad Retirement benefits;
  • some state government Retirement Income;
  • certain types of disability and Public Assistance payments;
  • Child Support;
  • military allowances; and
  • other income that is documented as being exempt from federal income taxes.

The percentage to be grossed-up varies by agency:

  • FHA the greater of 15% or the appropriate tax rate for the income amount
  • USDA 25%
  • VA 25%
  • Freddie Mac  25% or the amount of the current federal and state income tax withholdings tables
  • Fannie Mae 25% or the amount of the current federal and state income tax withholdings tables
  • Jumbo – 25% (see guidelines for specific restrictions)

 

mortgage qualification

 

Now let’s talk about what it takes to qualify for a mortgage.

First off, you’ll need an adequate credit score, along with sufficient income to make the proposed mortgage payment each month.

[What credit score do I need to get a mortgage?]

Generally speaking, a credit score below 620 is considered subprime in the mortgage world and will make qualifying for a mortgage that much more difficult. But it’s still possible depending on lender and loan type.

If you’ve got previous foreclosures on your credit report, things will get even more problematic and you may not even be eligible for a certain period of time.

But if your credit score is above 740 and you’ve got some decent credit history to back it up, you should have access to the lowest mortgage rates and a wide array of loan options.

Credit scores in between should still work, though there might be pricing hits associated, which all else being equal, may bump up your interest rate.

Tip: Lenders want to see a minimum of 3 active credit tradelines with two-year history on each to assess your creditworthiness.

As far as job history goes, it’s important to show the mortgage underwriter you’ve had (and still have!) a steady job, typically for two years or longer.

This essentially proves that you will continue to receive regular income to make those costly mortgage payments each month for the next 30 years.

If you just graduated and have held a job for a mere two months, don’t expect to qualify for a mortgage unless your new position directly correlates with what you studied in school.

For example, if you went to medical school, and now have a job as a doctor, this might be sufficient to qualify for a mortgage.

But if you were an art history student who has been working as a flight attendant for two months, mortgage lenders probably won’t feel comfortable lending to you just yet. Make sense?

When seeking out your mortgage, you’ll also need to consider the mortgage down payment requirements, which vary depending on the type of loan you’re after.

While there are still some zero down mortgages around, namely VA loans and USDA loans, it certainly helps to set aside some assets so you’ve got something to put into your home purchase.

Obviously, the amount of money needed will also vary based on the purchase price of the home. If you want a more expensive house, expect to put more down in order to qualify.

If we’re talking about a mortgage refinance, you’ll need a certain amount of home equity to qualify for the mortgage, as determined by loan-to-value ratio constraints.

Use Common Sense and Think Like the Mortgage Lender

  • Would you approve YOU for a mortgage?
  • If not, address those red flags immediately
  • Don’t guess, run the actual numbers with a professional
  • And ask plenty of questions if you’re unsure about anything early on

When it comes down it, it’s all pretty much common sense. Do you think you can/should qualify for a mortgage?

Do you have a track record of making on-time payments, carrying large amounts of debt and paying it down, holding a job, and saving money?

Are you ready to make a big commitment? If you were the bank, would you lend you a mortgage…hmm.

 

I would guess that most prospective homeowners could assess the situation beforehand and determine if they should be granted a mortgage.

But without running the numbers, you won’t know for certain. So be sure to do plenty of calculations and speak with a loan officer or two to see where you stand.

They’ll be able to get you a quick answer so no one’s time is wasted.

What You Need to Qualify for a Mortgage

Here’s a general list of what you need to qualify for a mortgage. Keep in mind that qualification requirements vary greatly by lender and loan type.

In some cases, you won’t need all of these things, but it should certainly make life easier to satisfy everything on this list.

  • Credit History – minimum of 3 active trade lines with 2-year history on each (credit score minimums vary)
  • Job History – at least 2 years on same job or in same line of work (recent graduates with new jobs in certain fields like doctors and lawyers may be exempt)
  • Income – verifiable income (tax returns, pay stubs) for the past two years that satisfies debt-to-income ratio limits
  • Assets – enough to cover down payment, closing costs, and at least two months of mortgage payments (known as reserves)
  • Rental History – proof of clean rental history for the past two years is also important to show the lender you have a propensity to pay on time each month (those currently living with their parents may be excluded from this rule).

If you can’t satisfy these basic requirements, you may want to keep renting, saving, and working on your credit until you can.

Or consider adding a co-signer who is better qualified to apply for a mortgage.

Either way, don’t be discouraged. There are lots of home loan programs and creative options out there to suit all different needs. As noted, one lender may say no while another says YES.

 

Joel Lobb


Mortgage Loan Officer

Individual NMLS ID #57916

Text/call:      502-905-3708

 

 

What does debt to income ratio mean for a Mortgage Loan Approval in Kentucky?

Debt ratios and mortgage guidelines for approval in Kentukcy?


via What does debt to income ratio mean for a Mortgage Loan Approval in Kentucky?

 

How does your debt to income ratio play into a Kentucky Mortgage Loan Approval for FHA, VA, USDA and Fannie Mae Mortgage Loans

When it comes to getting approved for a Kentucky Mortgage loan, lenders will look at your current gross monthly income versus your current debts to qualify up to your maximum spending limits for a mortgage loan. Also called your dti or debt to income ratios.

There are two ratios they use: Front end ratio and back-end ratio

The first ratio is measured using your new house payment, taking into account your principal and interest payment, property taxes and home insurance premiums along with the mortgage insurance. That ratio typically needs to be less than 1/3 of your gross monthly income to fit most KY mortgage programs for FHA, VA, USDA and Fannie Mae guidelines.

I have attached below a picture with  a general overview of qualifying ratios for a Kentucky Mortgage loan approval when it comes to income vs debts or debt to income ratios.

Debt-to-Income Ratio Guide for Kentucky FHA, VA, USDA and KHC Loans: 

Acceptable Ratios
Housing Debt to Income
Conventional 28% 41-50%
FHA 29% 41-56.5%
VA
USDA/RHS
KHC 
29%
29%
40%
41-65%
41-45%
50%
Higher ratios may be accepted with compensating factors: low loan value, large cash reserves after closing, high credit scores, etc,

So for example, let’s say you make $3000 gross a month, then your max house payment on the new loan would equal about $1000 for your new house payment.

Your current rent payment, utility bills, car insurance, cell phone bills, don’t go into account when figuring your max ratios.

The second ratio, called the backend-ratio measures your new house payment, plus your current monthly debts listed on the credit report.  Most Kentucky Mortgage programs will want to cap this at 45% to 50%, with some going a little higher with compensating factors.

For example, let’s say you make $3000 gross a month, and your new house payment is $1000, taking you up to your max limits on the front end ratio of 1/3.  and let’s say you have a $300 car payment, $100 in credit card payments and $150 student loan payment.

What is your maximum qualifying house payment with a back-end ratio of 50% with the current debts above? Let’s look at the math: Take $3,000 x 50% =$1,500 — this is going to be your max limits on the backend ratio with new house payment and current debt load. So let’s see what this amounts to:

($1500-$300-$100-$150=$950)

So if we take the $1500 minus your current monthly bills on the credit report, this is going to equal a max house payment of $950. As you can see, even though the front end ratio allows for $1000 max house payment, the back-end ratio is going to be $950, so you would go with the lowest of the two.

If you pay or receive child support  or child support this can be added or deducted to affect your max qualifying ratios for a mortgage loan, along with 401k loans.

As stated above, car insurance, cell phone bills, current rent payments, utility bills, insurance, does not come into play when qualifying for a max mortgage loan approval.

Curios about how much you would qualify for a mortgage loan in Kentucky?

Call, text or email me your questions and I would be glad to help you.

 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

http://www.nmlsconsumeraccess.org/
If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/

— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

Kentucky VA Loans for Kentucky First-Time Home Buyers


via Kentucky VA Loans for Kentucky First-Time Home Buyers

Kentucky FHA Loans Compared to Kentucky Conventional Loans


via Kentucky FHA Loans Compared to Kentucky Conventional Loans

 

Kentucky FHA Loans Compared to Kentucky Conventional Loans

 

When it comes to financing a home a buyer is faced with the decision of what type of loan they want. The two most common choices are FHA or Conventional. Both have their advantages and disadvantages. Follow the chart below to see which one is a fit for you!

For more information on homes available for FHA or Conventional

Which Loan is better for you?

Kentucky FHA Loans are good for borrowers who have the following:

• Credit scores less than 680.
• Less than 5% down payment and no reserves to use.
• Borrowers with past foreclosures between 3 and 7 years old.
• Borrowers with past short sales between 2 and 4 years old.
• Borrowers who need a gift for the down payment and/or closing costs, prepaid taxes and
insurance.
The FHA Mortgage Insurance premium is a premium that exists for the FHA Loan that is
paid up front and monthly by the homebuyer. This premium protects the lender should the
buyer default. They vary per state and per type of loan Kentucky home buyers qualify for. In Kentucky, upfront mortgage insurance premiums are 1.75%.
Below are the rates per type of loan:
• 15-Year Fixed with down payment more than 10%: .45%
• 15-Year Fixed with down payment less than 10%: .70%
• 30-Year Fixed with down payment more than 5%: .80%
• 30-Year Fixed with down payment less than 5%: .85%

Kentucky Conventional loans are usually reserved for the following:

• Credit scores greater than 680
• Greater than or equal to  5% down payment with reserves
• Borrowers with past foreclosures over 7 years old.
• Borrowers with past short sales between 5-7 years old.
• Borrowers who have a lot of money saved up and want to get rid of mortgage insurance within the first 5 years give or take. 20% equity position is needed for no mi

The biggest difference between conventional loans and FHA loans comes down to the mortgage insurance.  Mortgage insurance is more expensive for FHA loans, but the trade off is a lower fixed rate than conventional loans.

On Conventional loans there is no upfront mortgage insurance like FHA, and if you have a high credit score you can possibly get a lower monthly mi premium as compared to FHA where everybody gets the same mortgage insurance premium not matter your credit score or down payment.

Lastly, FHA Mortgage insurance is for life of loan, whereas Conventional mortgage insurance or pmi it’s called, is discontinued once you reach the 80% threshold equity position of your home loan.

Again, I would not get too caught in FHA having mortgage insurance for life of loan, because most loans are only kept open a minimum of 5-7 years so a lot of times it may make sense to go with the lower rate and pay the mortgage insurance with FHA because most people don’t hold their mortgage for 30 years.

 

You can call or text me with your questions and we can compare the differences based on your credit score, down payment and income.

 

FHA vs conventional loans comparison chart

Equal Housing Lender.  NMLS#:57916 http://www.nmlsconsumeraccess.org/Rates, terms, and program information are subject to change without notice. Subject to certain approvals, terms and conditions. This is not a commitment to lend.

Not part of any government lending agency and only lending in the State of Kentucky.

Looking at FHA loans vs Conventional loans can arm you with a lot of valuable information as these are the 2 most popular mortgage loan products today. Before getting to the content let’s look at some abbreviations that will need to be defined.

 

  • PMI stands for Private Mortgage Insurance
  • MIP stands for Mortgage Insurance Premium
  • Credit Scores are a numerical measure of your credit worthiness, the maximum score is 850
  • Debt-to-Income Ratio measures your monthly income versus your monthly obligations. A good rule of thumb is to try to be below 45%

 

FHA Loans vs Conventional Loans

 

fha loans vs conventional loans

 

Conventional Mortgage Benefits

 

  • Minimum Down Payment is 5%
  • Maximum loan amount is $424,100
  • 20% down payment preferred to avoid PMI
  • No upfront PMI
  • 3% Down Payment Conventional Loan Option is available
  • Mortgage Insurance is cheaper on a Conventional Loan at .51%
  • PMI expires once principal balance is less than 78%
  • Houses do not have to be owner-occupied (so they can be used at rentals)
  • Can purchase any condominium and townhome (no FHA regulations)

 

Conventional Mortgage Disadvantages

 

  • Significant upfront investment (20% down preferred)
  • Credit score of 620 required
  • No Down Payment Assistance
  • Down Payment must be at least 5% unless you qualify for a 3% conventional mortgage
  • Harder to Qualify for a Conventional Mortgage
  • No government inspection so the home can be in any quality
  • Only a portion of a down payment can be a gift
  • Interest rates are higher than FHA loans

 

Most of the disadvantages of conventional mortgages stem around qualifications and resources needed upfront. If a borrower has significant resources most of these disadvantages are of little consequence.

 

Conventional loan rates today

 

FHA Loan Advantages

 

The major advantage to going with an FHA loan is that there are much more lax credit standards you have to meet to obtain financing. Usually, FHA mortgages require a lower down payment, can work with lower credit scores, less elapsed time is needed if you have some credit problems (charge-offs, foreclosures) and you can use a non-occupant co-borrower or co-signer (who is a relative) to help you qualify for the loan. That way you can use blended ratios. Blended ratios are debt-to-income ratios that equally blend or combine the primary borrower’s income and the non-occupant co-borrower’s income and monthly payments to help get approval for the loan. Except for HomeReady (formerly Fannie Mae HomePath) mortgages, conventional loans do not allow you to use a non-occupant co-borrower.

 

  • Government-backed program. Ideal for first-time home buyers
  • Easier to obtain, lower credit scores needed and lower minimum down payment
  • Down Payment minimum is 3.5%
  • All of down payment can be a gift
  • Down Payment Assistance Available (in some circumstances)
  • No reserves required
  • Minimum credit score is 580 (for 3.5% down payment)
  • Home has to meet a minimum condition to be approved for FHA so there are less potential upfront repairs needed
  • Lower interest rates than conventional mortgages

 

 

FHA Loan Disadvantages

 

  • FHA loans require the owners to live in the home
  • Mortgage Insurance Premium required if borrowers put down less than 10%
  • Private Mortgage Insurance monthly cost is higher for FHA loans
  • Government Licensed Inspector required to inspect home before sale can be approved
  • FHA maximum loan limit is $271,050
  • Condominiums require FHA approval
  • FHA Loans take longer to process because of government requirements and all mandated repairs have to be completed before sales can be finalized

 

Most of these disadvantages involve extra requirements or limits added to the process of the house (see Pros and Cons of FHA Loans). Some of these might not be disadvantages depending on one’s personal situation, but they are extra steps to note. Since FHA mortgages are a government program, more care and consideration goes into the process, which may be better in some situations.

 

FHA loan rates today

 

Compare and Contrast FHA loans vs Conventional loans

 

There are four important numbers in deciding which loan you will go with: credit scores, down payment amount, debt-to-income, and mortgage insurance percentage rate. Conventional mortgages and FHA home loans have different limits and rates which are important to examine. They also have important differences which affect the availability of properties, the condition of the properties one wishes to buy and how your down payment can be paid. So comparing FHA loans vs Conventional loans can sometimes be a tricky endeavor.

 

Down Payment Requirements

 

  • Conventional Mortgages require between 5 and 20% upfront
    • In certain circumstances, down payments can be as low as 3% (Conventional 97 loan program)
  • FHA Mortgages have 2 possibilities
    • If Credit Score is 500-579 then 10% down payment is required (not all lenders will even go down this low)
    • If Credit Score is 580+ then 3.5% down payment is required

 

 

Debt-to-Income Ratio

 

  • Conventional Mortgages’ maximum debt-to-income ratio is 43% (hard cap)
  • FHA Mortgages’ maximum debt-to-income ratio is 45%
    • Soft cap as in certain circumstances this can be adjusted up to 50%

 

Mortgage Insurance Premium Rates

 

  • Conventional Mortgages PMI rate is .51% PMI
  • FHA Mortgages
    • If Down Payment is 10% or more the percentage is .80% MIP
    • If Down Payment is less than 10% the rate is .85% MIP.

 

Credit Score Minimum Requirement

 

  • Conventional Mortgage minimum credit score
    • Most lenders will require between 620 and 640
    • Some lenders it will be as high as 700
  • FHA Mortgage minimum credit score
    • Credit Score is a minimum of 500 if putting 10% down
    • Credit Score is a minimum of 580 if not

 

 

These four numbers are important to know and will affect one’s decision to pursue a particular type of home loan. Knowing your combination of numbers as you are looking to buy a house will help buyers find the best loans for their particular situation.

 

Other Comparisons

 

  • All sellers will take conventional mortgages and some sellers will not take FHA Loans
    • People looking for short-sells won’t take FHA because FHA has a longer closing process.
    • If sellers know there are FHA repairs that are needed in order to sell their house, they will not always accept FHA financing.

 

Thus, if one is wanting a low-risk transaction then the FHA home loan route is a better option to pursue, even though it limits your options for homes that you might wish to buy. If one is looking to fix-up a house and raise its equity quickly then a conventional loan is going to be more beneficial because there are no requirements as to the condition of the house and it’s occupied status.

 

Down Payment Gifting

 

  • Making the Down Payments (Assistance and Gifts)
    • Conventional mortgages have no assistance but can be partially fulfilled with a gift
    • FHA Mortgages have loans and assistance programs available and the whole down payment can be fulfilled with a gift

 

In this article, we have given you the basic parameters of FHA loans vs Conventional loans. The conventional loans are for people who have a better financial track record and can handle a larger upfront cost. Because of PMI, conventional loans are cheaper in the long run if you can put enough of a down payment to get rid of PMI. However, there are no down payment assistance programs to help you reach that goal. FHA loans are for people who are looking to build their investment and in some cases may not have a great financial track record. FHA loans have lower down payment requirements and many grants/forgivable loans to help people wanting to buy a first house in which to live for at least a few years. It is important to assess your situation and decide which mortgage is going to work better for your circumstances.

 

Conclusion

 

Both mortgages have a lot of benefits and drawbacks because they are designed for people with different needs. This article has hopefully helped you to get a basic understanding of the different terms and conditions of different mortgage packages when looking at FHA loans vs Conventional loans. Home buying can be an emotional roller coaster and the knowledge in this article will help you navigate the various emotional struggles of home buying.

 

 

 

 

 

louisville-kentucky-fha-mortgage-loan-guide-1-638

 

Debt-to-Income Ratio for Kentucky Mortgage Loans:


via Debt-to-Income Ratio for Kentucky Mortgage Loans:

 

How Much Debt Do You Currently Have?

It only makes sense that the more debt you have the riskier the loan is for the lender. There is a finite amount of income in all of our households and it all gets allocated every month. Lenders use a “debt-to-income” ratio to determine how qualified you are for the loan based on how much debt you already have.

debt_to_income_ratioYour Debt to Income Ratio (DTI) is the percentage of your incomethat you owe in debt on a monthly basis. For example, if you make $5,000 per month, and have debt payments (car loans, credit cards, student loans, etc.) of $2,000, your DTI ratio is 40%. The higher this ratio is, the less likely you will be to qualify for a low interest rate.

Conventional loans typically have a qualifying ratio of 28/36. FHA loans will sometimes allow for a higher debt load of 29/41 qualifying ratio.

The first number in a qualifying ratio is the maximum percentage of your gross monthly income that can be applied to your mortgage. That includes the loan principal and interestprivate mortgage insuranceproperty taxeshomeowners insurance, and homeowner’s association dues.

The second number is the maximum percentage of your gross monthly income that can be applied to housing expenses and recurring debt. Recurring debt includes monthly payments for carsboatsmotorcycleschild support payments and monthly credit card payments.

 Example:  of a 28/36 qualifying ratio:

Gross monthly income of $5,000 x .28 = $1400 can be applied to housing.

Gross monthly income of $5,000 x .36 = $1,800 can be applied to recurring debt plus housing expenses

Example: of a 29/41 qualifying ratio:

Gross monthly income of $5,000 x .29 = $1,450 can be applied to housing.

Gross monthly income of $5,000 x .41 = $2,050 can be applied to recurring debt plus housing expenses

 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

http://www.nmlsconsumeraccess.org/
If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.
Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/
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Compensating factors may affect the loan decision for a Kentucky VA Mortgage Denial.


via Compensating factors may affect the loan decision for a Kentucky VA Mortgage Denial.

Compensating Factors to over turn a Kentucky VA Loan Mortgage Denial

Compensating factors may affect the loan decision for a Kentucky VA Mortgage.  These factors are especially important when reviewing loans which are marginal with respect to residual income or debt-to-income ratio.  They cannot be used to compensate for unsatisfactory credit.
Valid compensating factors to over turn a Kentucky VA Mortgage loandenial should represent unusual strengths rather than mere satisfaction of basic program requirements.  For example, the fact that an applicant has sufficient assets for closing purposes, or meets the residual income guideline, is not a compensating factor.
Valid compensating factors should logically be able to compensate (to some extent) for the identified weakness in the loan.  For example, significant liquid assets may compensate for a residual income shortfall whereas long-term employment would not.

Compensating factors include, but are not limited to the following:

 

·   excellent credit history,

·   conservative use of consumer credit,

·   minimal consumer debt,

·   long-term employment,

·   significant liquid assets,

·   sizable downpayment,

·   the existence of equity in refinancing loans,

·   little or no increase in shelter expense,

·   military benefits,

·   satisfactory homeownership experience,

·   high residual income,

·   low debt-to-income ratio,

·   tax credits for child care, and

·   tax benefits of home ownership.

If you looking to get approved for a Kentucky VA Mortgage, give us a call today. We can go down to 640 credit scores for VA loans in Kentucky, and the maximum debt to income ratio on some cases can go as high as 50% with the above compensating factors.