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*
Advertisements

Louisville Kentucky VA Refinancing IRRL – Frequently Asked Questions


Image

Back to FAQ’s home

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.

Kentucky VA Loan Refinance and Purchase Guidelines


 

How do I refinance using my Kentucky VA Home Loan?

You can use your Kentucky VA home loan benefit to refinance your existing VA home loan to a lower

interest rate, with little or no out-of-pocket cost. This is called an Interest Rate Reduction

Refinancing Loan (IRRRL), also known as a “rapid refinance” or a “streamline refinance.”

Generally, no appraisal, credit information, or underwriting is required for this refinancing

option, although some lenders may require an appraisal and credit report. The fees and

charges associated with the refinancing loan may be incorporated into the new VA loan.

Remember: The interest rate on the new loan must be lower than the rate on the old loan

(unless you refinance an adjustable-rate mortgage to a fixed-rate mortgage).

To receive an IRRRL, work with your lender to process your application. It’s generally a good

idea to compare several lenders’ rates first, as there may be large differences in the terms

they offer. Also, some lenders may contact you suggesting that they are the only lenders

with the authority to make IRRRLs, but according to VA, any lender can

make you an IRRRL.

An IRRRL can be done only if you have already used

your eligibility for a KentuckyVA loan on the property you intend to

refinance. If you have your Certificate of Eligibility, take it

to the lender to show your prior use of the entitlement.

The occupancy requirement for an IRRRL is different from that for

other VA loans. When you originally got your Kentucky  VA loan, you certified

that you occupied or intended to occupy the home. For an IRRRL, you

need only certify that you previously occupied it.

The loan may not exceed the sum of the outstanding balance on the existing VA loan,

plus allowable fees and closing costs, including the funding fee.

What’s the Cash-out Refinance Option?

The Veterans’ Benefits Improvement Act of 2008 allows you to free up cash with a cash-out

refinance, a VA home loan refinance program in which you can cash-out on the equity you

have built up in your home. As an example, if you still owe $70,000 on your original loan, you

can refinance for a $90,000 loan, which gives you a cash-out of $20,000.

An appraisal is required and you must qualify for the loan. If you are refinancing for the first

time, VA charges a 2.15% funding fee for this program (2.15% of the total loan) which can be

rolled into the loan amount. If you refinance more than once, the funding fee is 3.3%.

There is no minimum amount of time that you must own your home, yet your home must have

sufficient equity to qualify for KEntuckyVA refinancing. Existing loans can be refinanced whether they

are in a current or delinquent status, but refinancing loans are subject to the same income

and credit requirements as regular home loans. As long as you have title to the property

you can refinance an assumed loan. Check with your lender as there are some additional

regulations concerning assumed loans.

Conventional to VA Refinance

If you do not have a KentuckyVA home loan but are eligible for one, you can refinance a subprime or

conventional mortgage for up to 100 percent of the value of the property. Usually you will be

charged a funding fee of around 2-3 percent (depending on the lender you choose) if you are

using your VA loan guarantee for the first time. Benefits to this type of refinancing are that

your new interest rate may be lower and you will have no monthly mortgage insurance or outof-

pocket closing costs.

Can I reuse my Kentucky VA Home Loan benefit?

The Kentucky VA  home loan benefit can be reused if you have paid off your priorKentucky VA loan and sold the

property. In addition you may, on a one-time-only basis, be able to reuse or restore your

benefit eligibility if your prior VA loan has been paid in full and you still own the property.

In either case, to restore your eligibility, you must send a completed VA Form 26-1880 to your

VA Eligibility Center. (See VA Loan Documents Checklist Above.)

To prevent delays in processing, you should also include evidence that the prior loan has

been paid in full and, if applicable, the property disposed of. This evidence can be presented

in the form of a paid-in-full statement from the former lender, or a copy of the HUD-1

settlement statement completed in connection with a sale of the property or refinance of the

prior loan.

Depending on the circumstances, if you have already used a portion of your VA-guaranteed

amount (up to $89,912), and the used portion cannot be restored, any remaining portion of

your VA guarantee is available for use on another loan. You will have to ask your lender if your

remaining VA-guaranteed portion will be enough, or if you will need to make a down payment

to qualify for the loan. If you have a question about your specific case, contact VA.

 

 

 

What are the advantages of a Kentucky VA Home Loan?

The following is a quick list of reasons why a Kentucky VA loan may be your best option:

No down payment required

VA funding fee may be financed in the loan

VA Loans do not require perfect credit – there is no credit score cut-off

VA funding fees may be waived for veterans with VA rated service-connected

disabilities and surviving spouses of veterans with service-connected disabilities

 

Closing costs may be shared between the buyer and lender

Flexible mortgage types – fixed, hybrid and traditional ARMs

No mortgage insurance premiums – this is huge in today’s housing market

VA guarantied mortgages are assumable

No pre-payment penalties

Homes are inspected and appraised by VA prior to approval and/or during

construction

 

VA can offer assistance to veteran borrowers in default due to temporary financial

difficulty

 

Refinance and Interest Rate Reduction loans are available

All in all, the pros far outweigh the cons. And, considering there are very few “no-down

 

payment” mortgage options around that offer lower associated fees, using your VA home

 

loan benefit seems like a no-brainer – as long as the red tape doesn’t scare you.

     

Refinance your Kentucky Mortgage Loan


If you are a homeowner who was lucky enough to buy when Kentucky mortgage rates were low, you may have no interest in refinancing your present loan. Perhaps you bought your home when rates were higher. Or perhaps you have an adjustable rate loan and would like to obtain different terms.

Should could you refinance your  Kentucky Mortgage Loan? This page will answer some questions that may help you decide. If you do refinance, the process will remind you of what you went through in obtaining the original mortgage. That’s because, in reality, refinancing a mortgage is simply taking out a new mortgage. You will encounter many of the same procedures and the same types of costs the second time around.

Would Refinancing your Kentucky Mortgage loan Be Worth It?

Refinancing can be worth while, but it does not make good financial sense for everyone. A general rule is that refinancing becomes worth your while if the current interest rate on your mortgage is at least two percentage points higher than the prevailing market rate. This figure is generally accepted as the safe margin when balancing the costs of refinancing a mortgage against the savings.

There are other considerations, too. Such as how long you plan to stay in the house. Most sources say it takes at least three years to realize fully the savings from a lower interest rate, given the costs of the refinancing. (Depending on your loan amount and the particular circumstances, however, you might choose to refinance a loan that is only 1.0 percentage points higher then the current rate. You may even find you could recoup the refinancing costs in a shorter time.)

Refinancing can be a good idea for homeowners who:

  • Want to take advantage of lower rates. This is a good idea only if you intend to stay in the house long enough to make the additional fees worthwhile.
  • Have an adjustable rate mortgage (ARM) and want a fixed-rate loan, to have the certainty of knowing exactly what the mortgage payment will be for the life of the loan.
  • Want to convert to an ARM with a lower interest rate or more protective features (such as a better rate and payment caps) than the ARM they currently have.
  • Want to build up equity more quickly by converting to a loan with a shorter term.
  • Want to draw on the equity built up in their house to get cash for a major purchase or for their children’s education.

If you decide that refinancing is not worth the costs, ask your lender whether you may be able to obtain all or some of the new terms you want by agreeing to a modification of your existing loan.

Should You Refinance Your  ARM?

In deciding whether to refinance an ARM you should consider these questions:

  • Is the next interest rate adjustment on your existing loan likely to increase your monthly payments substantially? Will the new interest rate be two or three percentage points higher than the prevailing rates being offered for either fixed-rate loans or other ARMs?
  • If the current mortgage sets a cap on your monthly payments, are those payments large enough to pay off your loan by the end of the original term? Will refinancing a new ARM or a fixed-rate enable you to pay your loan in full by the end of the term?

What Are The Costs of Refinancing?

The fees described below are the charges that you’ll most likely encounter in refinancing.

  • Title Search and Title Insurance
    This charge will cover the cost of examining the public record to confirm ownership of the property. It also covers the cost of a policy, usually issued by a title insurance company, that insures the policy holder in a specific amount for any loss caused by discrepancies in the title to the property. Be sure to ask the company carrying the present policy if it can re-issue your policy at a re-issue rate. You could save up to 70 percent of what it would cost you for a new policy.
  • Lender’s Attorney’s Review Fees
    The lender will usually charge you for fees paid to the lawyer or company that conducts the closing for the lender. Settlements are conducted by lending institutions, title insurance companies, escrow companies, real estate brokers, and attorneys for the buyer and seller. In most situations, the person conducting the settlement is providing a service to the lender. You may want to retain your own attorney to represent you at all stages of the transaction, including settlement.
  • Loan Origination Fees and Discount Points
    The origination fee is charged for the lender’s work in evaluating and preparing your mortgage loan. Discount points are prepaid finance charges imposed by the lender at closing to increase the lender’s yield beyond the stated interest rate on the mortgage note. One point equals one percent of the loan amount. For example, one point on a $100,000 loan would be $1,000. In some cases, the points you pay can be financed by adding them to the loan amount. The total number of points a lender charges will depend on market conditions and the interest rate to be charged.
  • Appraisal Fee
    This fee pays for an appraisal which is a supportable and defensible estimate or opinion of the value of the property.
  • Prepayment Penalty
    A prepayment penalty on your present mortgage could be the greatest determent to refinancing. The practice of charging money for an early pay-off of the existing mortgage loan varies be state, type of lender, and type of loan. Prepayment penalties are forbidden on various loans including loans from federally chartered credit unions, FHA and VA loans, and some other home-purchase loans. The mortgage documents for your existing loan will state if there is a penalty for prepayment. In some loans, you may be charged interest for the full month in which your prepay your loan.
  • Miscellaneous
    Depending on the type of loan you have and other factors, another major expense you might face is the fee for a VA loan guarantee, FHA mortgage insurance, or private mortgage insurance. There are a few other closing costs in addition to these.

In conclusion, a homeowner should plan on paying an average of 3 to 6 percent of the outstanding principal in refinancing costs, plus any prepayment penalties and costs of paying off any second mortgage that may exist. One way of saving on some of these costs is to check first with the lender who holds your current mortgage. The lender may be willing to waive some of them, especially if the work relating to the mortgage closing is still current. This could include the fees for the title search, surveys, inspections, and so on.

The information contained in this page is intended to help you ask the right questions when considering refinancing your loan. It is not a replacement for professional advice. Talk with mortgage lenders, real estate agents, attorneys, and other advisors about lending practices, mortgage instruments, and your own interests before you commit to any specific loan.

Refinancing Savings On A $100,000 Loan
Your Present Mortgage Rate Current Monthly Payment Monthly Payment Monthly Savings Annual Savings
@ 6.0%
@ 6.0%
@ 6.0%
10 $878 $600 $144 $1,728
9.5 $841 $600 $107 $1,284
9 $805 $600 $71 $852
8.5 $769 $600
8 $734 $600
7.5 $700 $600
7 $665 $600
6.5 $632 $600
6 $600 $600

NMLS# 57916

Call today for your Kentucky Mortgage Refinance Mortgage -502-905-3708