Category: Foreclosure

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

 

Getting a Mortgage loan in Kentucky again after A Chapter 7 or Chapter 13 Bankruptcy.


via SURRENDERING YOUR HOME IN BANKRUPTCY

Getting a Mortgage Again in Kentucky after a Bankruptcy. Guidelines for FHA, VA, USDA AND CONVENTIONAL LOAN PROGRAMS.

 

mortgage after bk 1

 

 

Chapter 7 Kentucky Bankruptcy Mortgage Questions

How long do I have to wait to get a mortgage after my Chapter 7 Bankruptcy?

While different programs have different waiting periods, we offers some mortgage options as soon as 2 years after a Chapter 7 Bankruptcy for some Portfolio loans and 2 years from discharge for some government loan programs like FHA, VA, and USDA.

What type of loans are available for a Kentucky mortgage after Chapter 7 Bankruptcy?

We offer a wide variety of loan programs specifically tailored to Chapter 7 Bankruptcy borrowers in all kinds of financial situations: conventional loans, Kentucky VA home loansFHA loansUSDA loans, ! While you may not qualify immediately for all the programs we offer, we will present the best available options, with the best terms, and lowest possible bottom line to you. We customize your options based on your personal goals.

 


Chapter 13 Bankruptcy Kentucky Mortgage Questions

 

How long after bankruptcy can I get a Kentucky mortgage as one year into their plan.

What types of Kentucky mortgages are available for clients with a Chapter 13 Bankruptcy?

As a Kentucky Mortgage Broker we offer programs  after bankruptcy, we offer a wide variety of mortgages for Kentucky borrowers in all kinds of financial situations. We proudly offer Conventional mortgagesVA home loansFHA loansUSDA loans,

What is your waiting period for an Kentucky FHA Loan after bankruptcy?

We are able to secure our Kentucky clients with a FHA loan or USDA loan 12 months after being in the plan for 1 year with a perfect pay history from Chapter 13 Bankruptcy.

How long does it take to refinance after Chapter 13 Bankruptcy discharge?

Mortgages after Chapter 13 Bankruptcy can take as little as 30 days to as long as 3 months. We pride ourselves on great communication and efficient service. The most common issues that slow the process down deal with credit, title, property condition and how quickly we receive requested documentation from you. We love to help our customers clear up these issues and put them on a brighter path.

How long does it take to purchase after Chapter 13 Bankruptcy discharge?

Mortgages after Chapter 13 Bankruptcy can take as little as 25 days to as long as 2 months. We pride ourselves on great communication and efficient service. The most common issues that slow the process down are credit problems, problems with the property itself, and how quickly we receive requested documentation from you. We love to help our customers clear up these issues and put them more soundly on a brighter path.

Can I purchase a home if I am still in my Chapter 13 Bankruptcy?

Yes, you can! Purchasing a home during a Chapter 13 Bankruptcy Plan does have extra steps involved though. Your trustee must approve your purchase and you must make all of your first year’s payments on time into your plan before purchasing a home. There are other challenges of obtaining a mortgage during a Chapter 13 Bankruptcy, but we are skilled at presenting a clear plan for success.

Can I refinance my mortgage with Peoples Bank if I am still in my Chapter 13 Bankruptcy?

Yes, you can! Refinancing a home during Chapter 13 Bankruptcy does have extra steps involved though. Your trustee must approve your refinance and you must make your first year’s payments into your plan before refinancing your home. Many borrowers find that waiting until after the 3rd year of on time payments is best for refinances. Some borrowers have also tapped into the equity in their home getting a cash-out refinance to pay off their Chapter 13 Bankruptcy Plan early. We have experienced great success securing trustees’ approval, especially when the refinancing option saves our borrowers a considerable amount of money.

How long does it take to get a mortgage if I am still in my Chapter 13 Bankruptcy Payment Plan?

Can I get a cash-out with my refinance after my Chapter 13 Bankruptcy?

Many clients choose to obtain a cash-out refinance after their Chapter 13 Bankruptcy. Often our clients have not been able to tap into equity in their home during bankruptcy to make home improvements or consolidate high interest rate debts. Our mortgage programs have different limits set on the amount you can take out relative to the value of your home. Don’t hesitate to call to discuss your options.

As a mortgage lender after bankruptcy, does Peoples Bank offer any options if I own my home outright?

We  have options to obtain a mortgage if you own your home outright. Although the wording is unusual, these mortgages are treated like a cash-out refinance. Cash-out options are best after the 3rd year of your Chapter 13 Bankruptcy Plan or as soon as one day after discharge.

Are there loan programs that do not require a large down payment if I had a Chapter 13 Bankruptcy?

we offer low down-payment mortgages after bankruptcy. FHA loans after bankruptcy have low down-payment options and both VA loan programs and USDA loan programs have zero down-payment options after bankruptcy. Your Mortgage Consultant will go over these options with you and determine if you qualify for one of the programs. They will present the very best options for which you qualify.

What credit score is required to obtain a mortgage after bankruptcy?

We have options for mortgages after bankruptcy with credit scores of 560 and up. .

 

Kentucky USDA Rural Single Family Foreclosed Homes For Sale as of 04/09/2017


Source: Kentucky USDA Rural Single Family Foreclosed Homes For Sale as of 04/09/2017

8 New Fannie Mae Homes in Kentucky


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HomePath

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$77,900Just Listed

250 Commerce St
Hardin, KY 42048

4 Beds |2 Baths | 2210 sq. ft.

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$37,500Back on Market

1618 Parkside Dr
Bowling Green, KY 42101

2 Beds |2 Baths | 1147 sq. ft.

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$119,000Active

120 Ridgemont Rd
Paducah, KY 42003

3 Beds |3 Baths | 2429 sq. ft.

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1004 Alexander Loop
Mayfield, KY 42066

3 Beds |2 Baths | 1914 sq. ft.

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912 Cuba School Rd
Mayfield, KY 42066

3 Beds |2 Baths | 1284 sq. ft.

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2725 Grand Ave
Louisville, KY 40211

3 Beds |1 Baths | 1199 sq. ft.

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3432 Peleske Dr
Louisville, KY 40216

3 Beds |1 Baths | 1511 sq. ft.

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10520 Pinoak View Dr
Louisville, KY 40299

3 Beds |2 Baths | 1402 sq. ft.

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Kentucky First Time Home Buyer Mortgage Loans: Four things to know about…:

 

2016 Kentucky Home Buyers Mortgage Guide After Foreclosures and Short Sales For FHA, VA, Fannie Mae, USDA, RHS


2016 Kentucky  mortgage waiting period for foreclosures and short sales for specific situations

Homebuyers are Ready to Buy After Foreclosures and Short Sales

Kentucky Conventional Loans

  • Foreclosures: 7 years from the foreclosure completion date (some applicants may qualify for a conventional loan only 3 years after with extenuating conditions including wage earner death, illness or job loss)
  • Short Sale/Deed in Lieu-Short Sale:
    • 7 year with less than 10% down of primary residence
    • 4 years with 10% down on the purchase of a primary residence
    • 4 years with 20% down on the purchase of a primary, secondary or investment property purchase
    • 2 years with extenuating circumstances, only with 20% down

Kentucky FHA Loans

  • Foreclosures: 3 years from the foreclosure completion date and transferred back to the lender to the credit report date
  • Short Sale: 3 years from the title transfer date

 

Kentucky VA Loans

  • Foreclosure: 2 years from foreclosure completion date and date transferred back to the lender
  • Short Sale: 2 years from previous sale closed date and new owner transfer date

 

Kentucky USDA Loans

** If the mortgage debt that was foreclosed, was included in a Bankruptcy – then the KY USDA Home Loan waiting periods after foreclosure “waiting period” of 3 years, starts from the date of the discharge of the Bankruptcy.  Because it can take 6 months or more for Banks to process the Foreclosure, and transfer title, this is a tremendous plus.

 

:    3 years from foreclosure completion date or sheriff sale of home

:    3 years from short-sale closing date

 

Homebuyers are Ready to Buy After Foreclosures and Short Sales

Obtaining new financing after a Short Sale or Foreclosure for a Kentucky USDA, FHA, VA, and Fannie Mae Loan


Obtaining new financing after a Short Sale or Foreclosure for a Kentucky USDA, FHA, VA, and Fannie Mae Loan.

Buying a home after a short sale, foreclosure, or bankruptcy using a Conventional Fannie Mae Loan


Buying a home after a short sale, foreclosure, or bankruptcy

Conventional Fannie Mae  Agency Guidelines below

Short Sale
Deed-In-Lieu of Foreclosure:

4 years from completion date
If extenuating circumstances exist:
• DU: 2 years from completion date
• LP: 2 years from completion date on owner occupied purchase or non-cash out refi nance only,
max 90% LTV or max LTV per program

Bankruptcy:

Chapter 7 or 11
4 years from discharge or dismissal date.
If extenuating circumstances exist – 2 years from discharge or dismissal date.
Bankruptcy: Chapter 13
4 years from dismissal date (borrower did not complete the Chapter 13 plan) or 2 years from
discharge date.
If extenuating circumstances exist – 2 years from discharge or dismissal date.
Multiple Bankruptcy Filings
within the last 7 years
5 years from the most recent discharge date or dismissal date.
If extenuating circumstances exist – 3 years from discharge or dismissal date.

Foreclosure

7 years from completion date of foreclosure action as reported on the credit report or other
foreclosure documents*
If extenuating circumstances exist: 3 years from the completion date of foreclosure action as
reported on the credit report or other foreclosure documents*
• Purchase-90% or program limit, owner occupied only

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

 phone: (502) 905-3708
 Fax:     (502) 327-9119
 
 Company ID #1364 | MB73346

 CONFIDENTIALITY 

Getting Approved for a Kentucky FHA, VA, USDA, Fannie Mae Loan after a bankruptcy, foreclosure, short-sale,


How long does it take after a Bankruptcy, foreclosure or short-sale to get approved for A Kentucky VA, USDA, Rural Housing, FHA, and Conventional Mortgage loan in 2014?

Getting Approved for a Kentucky FHA, VA, USDA, Fannie Mae Loan after a bankruptcy, foreclosure, short-sale,
Getting Approved for a Kentucky FHA, VA, USDA, Fannie Mae Loan after a bankruptcy, foreclosure, short-sale,

 

 

Kentucky Mortgage Loan Program Chapter 7 Bankruptcy
Conventional
(Determined by date of application)
  • 4 years from date bankruptcy was completed
  • 2 years from date bankruptcy was completed*
KENTUCKY FHA MORTGAGE
(Determined by date of credit approval)
  • 2 years from completion date
  • Less than 2 years, but no less than 12 months the date bankruptcy was completed*
KENTUCKY VA MORTGAGE
(Determined by date of credit approval)
  • 2 years from date bankruptcy was completed
  • Between 12-23 months from the date bankruptcy was completed*
KENTUCKY MORTGAGE FOR USDA
(Determined by date of credit approval)
  • 3 years from date bankruptcy was completed
  • Less than 3 years from date bankruptcy was completed*

 

 

 

 

 

 

 
Joel Lobb
Senior  Loan Officer

(NMLS#57916)
 
American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223
 Fax:     (502) 327-9119
 
 Company ID #1364 | MB73346

 

Conventional Mortgage May Be Cheaper Than FHA


Conventional Mortgage May Be Cheaper Than FHA.

 

A primary reason for the decline is due to the increase in mortgage insurance premiums and a new rule that no longer allows borrowers to opt out of mortgage insurance after establishing a steady record of payments.

Newsday reports that FHA borrowers are charged an annual mortgage insurance premium of up to 1.35% of the borrower’s outstanding balance on their loan, which is added to their monthly payment. Additionally, a fee of 1.75% is charged up front once the borrower closes on the loan.

For example, Newsday demonstrates exactly how the extra fees can add up: A borrower getting a $200,000 loan, after making a 3.5% down payment, pays $225 per month in FHA mortgage insurance, plus an upfront fee of $3,500. Say you keep that mortgage for 10 years before you sell or refinance — that adds up to about $30,000 in mortgage insurance fees.