Louisville Kentucky Jumbo Mortgage Loans


Qualifying for a Jumbo Mortgage in the Post Boom Era

Qualifying for a Jumbo Mortgage in the Post Boom EraYour Jumbo Mortgage Solution

Louisville Kentucky Jumbo Mortgage Loans

Louisville KY Jumbo loans are any loans over $417,000. With jumbo loans you typically have to put down 20% or more. Jumbo loan option include 30 and 15 year fixed or 3, 5, 7 year ARMS. Jumbo loans start over $417,000, but can go up to the multi-million dollar range. As the loan amount goes up, the percentage you have to put down goes up.
These loans often require the borrower to have high credit scores and plenty of reserves. The borrower also has to be willing to help us document their income. The stated income options of yesterday are long gone. If you are a business owner, you will now have to provide tax returns to prove income.
Typically Jumbo loans have higher rates than conforming loans under $417,000. This is because jumbo loans carry a lot more risk to lenders. Jumbo loans are associated with luxury homes which can take longer to sell and can be prone to large valuation shifts. Jumbo loans and higher-end homes have come under more scrutiny with the lower market values and the associated difficulties with appraising luxury homes. In the current mortgage environment fewer lenders are offering jumbo loans and super jumbo loans.
So, if you are in the market for a jumbo loan, here are the new rules:
• A down payment, or, if refinancing, equity, of (usually):
• At least 20% down for jumbos up to $1 million
• At least 30% down up to $2 million
• More for loans over $2 million
• An excellent credit score (at least 720 but could be more as some banks report that their average jumbo customer has a credit score in the 760s)
• Income documentation and verification. Borrowers are now required to provide financial records verifying that they earn what they say they earn (some borrowers have been asked to provide two years of their income history).
• Expect to obtain an adjustable-rate loan; fixed-rate jumbos are relatively rare.
• DTI (Debt-to-Income) of less than 38 percent. That means a borrower’s monthly mortgage payment must be less than 38 percent of their income before taxes. The ability to afford to make monthly payments is critical in the jumbo loan market.
Be prepared to shop around. Depending on what part of the country you are in, lenders can have different jumbo loan lending guidelines. Guidelines may also vary depending on the type of dwelling (condo vs. house), whether it is a primary home or investment property (some lenders will only approve jumbo loans for primary residences; others will grant jumbo loans for vacation homes or investment properties).
Jumbo loans are not commodities. Today, most jumbo loans come from the big banks that are keeping loans on their books instead of selling them. Falling property values are still a concern, but with jumbo loans requiring a lower loan-to-value ratio, even if housing prices dropped sharply, the risk to the bank is low.
Since interest rates on deposits are currently low, the bank makes money by charging higher interest rates on mortgages than they pay on their customers’ deposits, thereby profiting on jumbo mortgages, even when the mortgage is offered at a low rate. However, keep in mind that rates paid on deposits will someday rise again. Banks are promoting jumbo ARMs whose rates will rise when rates paid on deposits go up. The most popular jumbos are 5/1 ARMs, which have an introductory rate that lasts five years; then adjust annually thereafter.
Income requirements are high
Lenders of jumbo mortgages take a risk. If a jumbo mortgage loan defaults, it can be hard to sell the property quickly for a good price. Luxury properties are generally more subject to the vagaries of the marketplace than are ordinary properties. Therefore, borrowers taking a jumbo mortgage must prove their financial responsibility and reliability
Having a high income demonstrates an ability to support mortgage payments. In order to qualify for a jumbo mortgage, you will have to have a low debt-to-income ratio that allows you comfortably to pay the principal, interest, taxes and insurance each month. As a rule, your monthly mortgage payment on a jumbo loan should not exceed 38 percent of your pre-tax income.
Be prepared to present proof of your income. Jumbo borrowers typically have to fully document two years of income history. Show your shining credit score  A good credit score is essential to qualify for a jumbo mortgage. Required scores vary according to lender, but expect to need a score of at least 720. Be aware that lenders will look at credit reports from all three major credit bureaus, so any history of missed payments is sure to impact.  Down payment requirements are demanding  Again, due to the risk the lender takes, down payment requirements for jumbo loans are strict. It is rare to find a lender who will accept less than 20 percent of the home cost as a down payment. Many lenders expect at least 30 percent, especially for very expensive properties.
Not all properties qualify  Although each lender is different, many will not offer jumbo loans on vacation homes and investment properties. Refinancing a jumbo loan can be problematic in a weak economy. If house prices fall, borrowers of jumbo loans might suddenly find that they do not have 20 percent equity in their homes. Thus, they do not qualify to refinance.
Joel Lobb (NMLS#57916)Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.comKey Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*

Louisville Kentucky VA Refinancing IRRL – Frequently Asked Questions


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Louisville Kentucky VA Refinancing

 

 

Do you have an existing Louisville Kentucky VA Home Loan or conventional loan that you are interested in refinancing? While interest rates are still low, there are many advantages to refinancing now in order to get a lower interest rate, take cash out of the equity in your home, consolidate credit, or make home improvements. If you are interested in refinancing with a Kentucky VA Loan, the VA has programs that can assist you. Below are some questions other people have asked about the Louisville Kentucky VA Refinancing programs. Follow the headers to find information about Louisville Kentucky VA Refinancing. If you cannot find an answer here, a VA Loan Specialist can be contacted online or by phone to answer all your refinancing questions.

What is an IRRRL?

An IRRRL is the VA’s Interest Rate Reduction Refinancing Loan, also known as a VA Streamline Refinance. An IRRRL is a loan that refinances your existing VA Loan into a new VA Loan with a lower interest rate, or from an adjustable rate mortgage (ARM) into a fixed rate mortgage. A Certificate of Eligibility is not required for an IRRRL.

Do I have to be eligible for a lower interest rate in order to qualify for a VA IRRRL?

Not necessarily. In order to qualify for an IRRRL, the VA requires you to obtain a lower interest rate if you are going from a one fixed rate mortgage to another fixed rate mortgage, but if you are going from an adjustable rate mortgage to a fixed rate mortgage, the VA will allow you to refinance to a higher interest rate.

If it is called an Interest Rate Reduction Loan, why does the VA allow me to refinance my ARM to a higher interest rate?

Since you are refinancing your adjustable rate mortgage into a fixed rate mortgage the interest rate may be higher initially, but you will save money over time. With adjustable rate mortgages you may get a lower interest rate than a fixed rate mortgage for the first few years, but after that your interest rates increase and you are paying higher rates than you would with a fixed rate mortgage. This is why the VA allows you to refinance into a higher fixed rate of interest on your mortgage before your adjustable rate on your current mortgage increases.

Can I refinance with the VA if I am already using my Loan Guarantee entitlement with my current mortgage?

Yes. As long as you are refinancing your VA-guaranteed mortgage, then you can use this program to get more favorable loan terms and save money over the long run. If you’re ready to get started with your VA Refinance, contact a VA Refinance Specialist now.

What out-of-pocket expenses will I have when refinancing?

None. The VA allows you to finance all closing costs associated with refinancing into your new mortgage. Your lender may have some fees, but you will need to consult them to find out what they expect you to pay up front, if anything.

Do I have to use my current lender to refinance?

No. If you want a new lender, you can choose from any mortgage lender on the VA-approved lender’s list. Make sure that you shop around for your refinancing loan. By going to several lenders, you will get more offers and you can choose the best loan terms for you and your family. Be careful of lenders that try to deceive you into thinking they are the only lender that can finance a VA IRRRL. The VA has a long list of approved lenders, and you should shop around.

Do I have to go through the credit check and appraisal process again when refinancing?

The VA does not require another credit check and appraisal because it has already approved you for the loan guarantee in the first place. However, lenders usually do require a credit check and appraisal when refinancing because they need to make sure you are still credit worthy and the property still has a higher market value than their maximum loan amount. For more information about this, check out VA Appraisal, Qualification and Approval FAQ’s.

Do I have to get another Certificate of Eligibility?

No. You have already been approved by the VA for your home loan guarantee, and refinancing does not require a Certificate of Eligibility.

Keys with a VA Loan

What fees does the VA charge for an IRRRL?

The VA only requires a 1.5% funding fee of the value of your new loan. There are no other fees involved with the VA. If a lender tries to tell you that the VA charges extra fees you should contact the VA to see if something has recently changed and, if not, you should find a new, ethically responsible lender.

Does the VA have any requirements for me to get an IRRRL?

The VA has the following eligibility requirements for an IRRRL:

  • You must be refinancing an existing VA Loan into a new VA Loan in order to use this program.
  • You need to certify that you have been occupying the property. For your original loan you had to sign an agreement stating you would be the primary occupant of the home, and now you will have to sign an additional agreement saying that you have been the primary occupant.
  • You cannot take more out on your new loan than what you currently owe. The loan can be more only as a result of fees and closing costs being financed into the mortgage.

Can I include the cost of home improvements in my IRRRL?

You are allowed to include up to $6,000 in your refinancing loan for the purpose of energy efficient home improvements. Any other home improvements are not eligible.

Can I take cash out of an IRRRL?

No. An IRRRL from the VA is only for the purposes of obtaining a better interest rate on your mortgage loan in order to save you money over time.

What is a VA Cash Out Refinancing Loan?

This is the type of refinancing loan the VA offers for those Veterans who want to take cash out of the equity in their homes. You must be refinancing an existing VA Loan in order to use the VA Cash Out Refinancing Program.

What can I use the cash I take out of my home for?

Anything you want. Make sure you consult your lender to see if they have any restrictions on what you can use the money for.

Can I consolidate debt with a Cash Out Refinance Loan?

Yes. As a matter of fact, many lenders prefer that you do consolidate all of your debt into your new loan because it makes you less of a credit risk for them.

How much cash can I take out of my home equity?

Your home’s value is on a Certificate of Reasonable Value, and you are allowed to take up to 90% of this amount. On top of this you are also allowed to finance the VA funding fee and include up to $6,000 for energy efficient home improvements.

I am delinquent on my current mortgage. Can I still get a VA Cash Out Refinance Loan?

This depends on your lender. The VA allows it, and many lenders will also allow you to refinance as long as you are financially able to make the new payments. If you are a delinquent on your current mortgage because of excess debt, the lender will probably require you to consolidate that debt into your new mortgage loan in order to lower you interest rates on your unsecured debt and give you a more affordable monthly payment.

How much does the VA guarantee my loan for with a VA Cash Out Refinance?

The highest amount the VA will guarantee a Cash Out Refinance mortgage for is $36,000.

Still have questions?

More information on refinancing options is available through the Department of Veterans Affairs or by contacting your VA Regional Loan Service Center.