Tag: Closing costs

Overview of the Kentucky VA Home Loan Program


English: Equal Housing Lender emblem

Overview of the Kentucky VA Home Loan Program

Topics on This Page:

Who’s Eligible Size of the Loan Steps in the Process
How It Works Your Costs Useful Links
What It Can Do for You Basic Requirements

 Who’s Eligible

  • Veterans
  • Active duty personnel
  • Certain reservists and National Guard members
  • Surviving spouses of persons who die on active duty or die as a result of service-connected disabilities
  • Certain spouses of active duty personnel who are (a) missing in action, (b) captured in line of duty by a hostile force, or (c) forcibly detained by a foreign government or power

More on Eligibility

How It Works

You get your loan from a private lender, and  VA “stands behind” the loan with that lender. If something goes wrong and you can’t make the payments anymore, the lending institution can come to us to cover any losses they might incur. The VA loan guaranty is this “insurance” that we provide the lender.

Most loans are handled entirely by lenders. VA rarely gets involved in the loan approval process.

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What It Can Do for You

Here are some advantages of the Kentucky VA program:

  • You can buy a home without a down payment – as long as the sales price doesn’t exceed the appraised value. (Of course, you have to qualify in terms of income and credit.)
  • You won’t need to buy private mortgage insurance.
  • VA rules limit the amount you can be charged for closing costs.
  • Closing costs may be paid by the seller. (You should keep this in mind when negotiating the sales price.)
  • The lender can’t charge you a penalty fee if you pay the loan off early.
  • VA may be able to provide you some assistance if you run into difficulty making payments.

You should also know that

  • You don’t have to be a first-time homebuyer.
  • You can reuse the benefit.
  • VA-backed loans are assumable, as long as the person assuming the loan qualifies.

Size of the Loan

VA doesn’t specify a maximum loan amount. But the law does set limits on the amount of liability we can assume. This usually affects the amount of money an institution will lend you.

The lender may be able to increase the size of the loan if you can make a down payment.

Information on Loan Limits

When the lending institution is deciding how big a loan you can afford, it uses either of two methods:

  • One Method is the “residual income calculation.” The lender adds up your routine housing expenses, taxes, and additional debt payments such as your car and credit cards. He or she subtracts this total from your income. Then the lender decides whether you’ll have enough money left over for everyday living.
  • The second method is the debt-to-income ratio. Under VA’s rules, this is the ratio of your total debt (both housing and other debt) to your income. For more information on how lenders use these tools to complete a Loan Analysis, visit the VA Lender’s Handbook, Chapter 4, Topic 9.

This is just a thumbnail sketch. A VA-approved lender is the best resource to see how large a loan you qualify for. In making a decision, the lender must look at income (amount and stability), credit, and “compensating factors.” Lenders may use certain automated systems to help with their decisions.

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Your Costs

The VA Funding Fee. Although we don’t require private mortgage insurance we do charge a funding fee. (This can be folded into the loan.) If you receive service-connected disability payments each month, you’re exempt from the fee. For more information on the VA Funding Fee and who is exempt, visit theLender’s Handbook, Chapter 8, Topic 8.

Information on Funding Fees

Other Costs of the Loan. Other costs will be involved. Of course, the lender charges interest. And some other fees and charges have to be paid at closing. Here are some general rules:

  • The lender, not VA, sets the interest rate, the “discount points,” and closing costs. These rates may vary from lender to lender.
  • The seller can pay for some closing costs. (Under our rules a seller’s “concessions” can’t exceed 4% of the loan. But only some types of costs fall under this 4% rule. Examples are: payment of pre-paid closing costs, VA funding fee, payoff of credit balances or judgments for the veteran, and funds for temporary “buydowns.” Payment of discount points is not subject to the 4% limit.)
  • You’re not allowed to pay for the termite report, unless the loan is a refinance. That fee is usually paid by the seller.

Basic Requirements

  • You must live in the home as your primary residence.
  • You must qualify in terms of income and credit. You could be turned down if you’ve had problems with credit or your income is not considered stable.

Steps in the Process of Getting a VA Home Loan

Getting a VA-backed loan – or any home loan – takes some time. The process has a few steps. Click on the link for more information:

Steps in Getting a VA Home Loan

If you have any questions during the process that the lender can’t answer to your satisfaction, please contact VA at your regional loan center.

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Useful Links:

  • Ginnie Mae (The Government National Mortgage Association) – This site will give you information on the process and calculators
  • HUD (The Department of Housing and Urban Developement) – Contains information on shopping for a home, closing costs and terminology
  • MBA (Mortgage Bankers Association of America) – Will give you information on the purchase process, calculators and real estate terms.
  • Freddie Mac (Federal Home Loan Mortgage Corp.) – Site will give you information about the purchase process.
  • FNMA (Fannie Mae) – Contains information on the purchase process.

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.

     

Kentucky Homepath Financing 2012 Fannie Mae Properties in Kentucky


HomePath Financing for Kentucky Homebuyers 2012

HomePath Mortgage loans have the following characteristics: HomePath Renovation loans have the following characteristics:
HomePath Mortgage allows a borrower to purchase a Fannie Mae-owned property with a low down payment, flexible mortgage terms, no lender-requested appraisal and no mortgage insurance. Expanded seller contributions to closing costs are allowed.

Benefits to You, the Borrower

  • Low down payment and flexible mortgage terms (fixed–rate, adjustable rate, or interest–only).
  • Down payment (at least 3 percent) can be funded by the borrower’s own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer.
  • No lender-requested appraisal.
  • No mortgage insurance; ask your lender for cost details on loans without mortgage insurance.
  • Expanded seller contributions for closing costs allowed.
  • Available for primary residences, second homes and investment properties.
  • Many condo project requirements are waived; ask your lender for details.
  • For more information, contact a HomePath Mortgage lender or click here for the Home Buyers Guide.
HomePath Renovation Mortgage allows a borrower to purchase a property that requires light to moderate renovation. The one loan amount includes both the funds for the purchase and renovation – up to 35% of the as completed value, no more than $35,000.

Benefits to You, the Borrower

  • Low down payment and flexible mortgage terms (fixed- rate or adjustable-rate).
  • Down payment (at least 3 percent) can be funded by the borrower’s own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer.
  • Renovation amount based on appraisal “as completed” value.
  • No mortgage insurance; ask your lender for cost details on loans without mortgage insurance.
  • Expanded seller contributions for closing costs allowed.
  • Available for primary residences, second homes, and investment properties.
  • Many condo project requirements are waived; ask your lender for details.
  • For more information about the renovation process, contact a HomePath Renovation Mortgage lender.
Note: Potential buyers should always use the lender and financing product that best meets the needs of the buyer and property, and should always consider requesting a home inspection of the property. *Ask your lender for cost details for loans with no mortgage insurance.

4 Things Needed to Get Approved for a Mortgage Loan In Kentucky


I wish it were that easy.  There are 4 basic things that a borrower needs to show a lender in order to get approved for a mortgage in Kentucky.  Each category has so many what ifs and sub plots that each box can read as it’s own novel.  In other words, each category has so many variables that can affect what it takes to get approved, but without further adieu here are the four categories in no particular order as each without any of these items, you’re pretty much dead in the water:

Income

You need income.  You need to be able to afford the home.  Without it, forget it!  But what is acceptable income?  Basically, it all depends on the type of loan that a borrower applies for.  Jumbo, V.A., USDA, FHA, Conventional, Super Jumbo?  Let’s just say that there are two ratios:
  1. First Ratio – The first ratio, top ratio or housing ratio.  Basically that means out of all the gross monthly income you make, that no more that X percent of it can go to your housing payment.  The housing payment consists of Principle, Interest, Taxes and Insurance.  Whether you escrow or not every one of these items are factored into your ratio.  There are a lot of exceptions to how high you can go, but let’s just say that if your ratio is 33% or less, generally, across the board, you’re safe.
  2. Second Ratio– The second ratio, bottom ratio or debt ratio includes the housing payment, but also adds all of the monthly debts that the borrower has.  So, it includes housing payment as well as every other debt that a borrower may have.  This would include, Auto loans, credit cards, student loans, personal loans, child support, alimony….basically any consistent outgoing debt that you’re paying on.  Again, if you’re paying less than 43% of your gross monthly income to all of the debts, plus your proposed housing payment, then……generally, you’re safe.  You can go a lot higher in this area, but there are a lot of caveats when increasing your back ratio.
What qualifies as income?  Basically, it’s income that has at least a proven, two year history of being received and pretty high assurances that the income is likely to continue for at least three years.  What’s not acceptable??????  Cash income, short term income and income that’s not likely to continue.

Assets

For the most part this is fairly simple.  Do you have enough assets to put the money forth to qualify for the downpayment that the particular program asks for.  USDA says that there can be no money down.  FHA, for now, has a 3.5% downpayment.  Some loans require 20% down.  These assets need to be validated through bank accounts and sometimes gifts.  Can you borrower the down payment?  Sometimes.  Generally if you’re borrowing a secured loan against a secured asset you can use that.  But rarely can cash be used as an asset.  TALK TO YOUR LOAN OFFICER FIRST when discussing what’s acceptable?

Credit

Whewwwwwwwwwwwwwwwwwwwwwwwwwwww.  This can be the bane to every borrower, every loan officer and every lender……and yes, to every realtor.  How many times has a borrower said my credit’s good, only to find out that it’s not nearly as good as a borrower thinks or nearly as good as the borrower needs.  Big stuff for sure.  620 is the bottom score (again with few exceptions) that lenders will permit.  Below a 620, then you’re in a world of hurt.  Even at 620, people consider you a higher risk that other folks and are going to penalize you or your borrower with a more expensive loan.  700 is when you really start to get in the “as a lender we love you” credit score.  720 is even better.  Watch your credit!!!!!  Check out my post:

Appraisal

In many ways this is the easiest box.  Why?????  Generally, there’s nothing you can do to affect this.  Bottom line here is…..”is the value of the house at least the value of what you’re paying for it?”  If not, then not good things start to happen.  Generally you’ll find less issues with values on purchase transactions, because, in theory, the realtor has done an accurate job of valuing the house prior to taking the listing.  The big issue comes in refinancing.  In purchase transactions, the value is determined as the

Lower of the value or the contract price!!!

That means that if you buy a $1,000,000 home for $100,000, the value is established at $100,000.  Conversely, if you buy a $200,000 home and the value comes in at $180,000 during the appraisal, then the value is established at $180,000.  Big issues….Talk to your loan officer.
For each one of these boxes, there are over 1,000 things that can effect if a borrower has reached the threshold to complete that box.  Soooooooooooo…..talk to a great loan officer.  There are so many loan officers that don’t know what they’re doing.  But, conversely, there’s a lot of great ones as well.  Your loan is so important!  Get a great lender so that you know, for sure, that the loan you want, can be closed on!
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

Credit Scores for Kentucky VA, FHA, USDA , Fannie Mae Home Loans


502 905 3708 or kentuckyloan@gmail.com

Credit Scores for Kentucky VA, FHA, USDA , Fannie Mae Home Loans

The first step to interpreting a score is to identify the source of the credit score and its use. There are numerous scores based on various scoring models sold to lenders and other users. The most common was created by Fair Isaac Co. and is called the FICO score. FICO produces scoring models that are most commonly used, and which are installed at and distributed by the three largest national credit repositories in the U.S (TransUnion, Equifax and Experian) and the two national credit repositories in Canada (TransUnion Canada and Equifax Canada). FICO controls the vast majority of the credit score market in the United States and Canada although there are several other competing players that collectively share a very small percentage of the market.

In the United States, FICO risk scores range from 300-850, with 723 being the median FICO score of Americans in 2010. The performance definition of the FICO risk score (its stated design objective) is to predict the likelihood that a consumer will go 90 days past due or worse in the subsequent 24 months after the score has been calculated. The higher the consumer’s score, the less likely he or she will go 90 days past due in the subsequent 24 months after the score has been calculated. Because different lending uses (mortgage, automobile, credit card) have different parameters, FICO algorithms are adjusted according to the predictability of that use. For this reason, a person might have a higher credit score for a revolving credit card debt when compared to a mortgage credit score taken at the same point in time.

The interpretation of a credit score will vary by lender, industry, and the economy as a whole. While 620 has historically been a divider between “prime” and “subprime”, all considerations about score revolve around the strength of the economy in general and investors’ appetites for risk in providing the funding for borrowers in particular when the score is evaluated. In 2010, the Federal Housing Administration (FHA) tightened its guidelines regarding credit scores to a small degree, but lenders who have to service and sell the securities packaged for sale into the secondary market largely raised their minimum score to 640 in the absence of strong compensating factors in the borrower’s loan profile. In another housing example, Fannie Mae and Freddie Mac began charging extra for loans over 75% of the value that have scores below 740. Furthermore, private mortgage insurance companies will not even provide mortgage insurance for borrowers with scores below 660. Therefore, “prime” is a product of the lender’s appetite for the risk profile of the borrower at the time that the borrower is asking for the loan.

Kentucky Mortgage Credit Scores Are Vital to Your Financial Health

CAll 502 905 3708 or email us at kentuckyloan@gmail.com for your free Kentucky Mortgage Application and Credit Report

A credit score is a number that helps lenders and others predict how likely you are to make your credit payments on time. Each score is based on the information then in your credit report.

Why Do Your Scores Matter?

Credit scores affect whether you can get credit and what you pay for credit cards, auto loans, mortgages and other kinds of credit. For most kinds of credit scores, higher scores mean you are more likely to be approved and pay a lower interest rate on new credit.

Want to rent an apartment? Without good scores, your apartment application may be turned down by the landlord. Your scores also may determine how big a deposit you will have to pay for telephone, electricity or natural gas service.

Lenders look at your scores all the time. They look at your scores when deciding, for example, whether to change your interest rate or credit limit on a credit card, or whether to send you an offer through the mail. Having good credit scores makes your financial dealings a lot easier and can save you money in lower interest rates. That’s why they are a vital part of your financial health.

Consider a couple who is looking to buy their first house.
Let’s say they want a thirty-year mortgage loan and their FICO credit scores are 720. They could qualify for a mortgage with a low 5.5 percent interest rate*. But if their scores are 580, they probably would pay 8.5 percent* or more — that’s at least 3 full percentage points more in interest. On a $100,000 mortgage loan, that 3 point difference will cost them $2,400 dollars a year, adding up to $72,000 dollars more over the loan’s 30-year lifetime. Your credit scores do matter.*Interest rates are subject to change. These rates were offered by lenders in 2005.

What is a Good Score?

When lenders talk about “your score,” they usually mean the FICO® score developed by Fair Isaac Corporation. It is today’s most commonly used scoring system. FICO scores range from 300-850, and most people score in the 600s and 700s (higher FICO scores are better). Lenders buy your FICO score from three national credit reporting agencies (also called credit bureaus): Equifax, Experian and TransUnion.

In the eyes of most lenders, FICO credit scores above 700 are very good and a sign of good financial health. FICO scores below 600 indicate high risk to lenders and could lead lenders to charge you much higher rates or turn down your credit application.

Not Just One Score

There are many types of credit scores. They are developed by independent companies, credit reporting agencies, and even some lenders. As a rule, the higher the score, the better.

  • Each credit reporting agency calculates your score and each score may be different because the credit history each agency has about you may be different. Lenders may make a credit card or auto loan decision based on a single agency’s score, although others such as mortgage lenders often will look at all three scores.
  • Your credit score changes when your information changes at that credit reporting agency. This is good news! It means you can improve a poor score over time by improving how you handle credit.
  • Many insurance companies use something similar when setting your insurance rates, called a “credit-based insurance score.” You may be able to improve your insurance score by improving how you handle credit, which in turn may lower your premium payments on auto or homeowners insurance.
  • Some credit scores offered to consumers are just estimates and are different from the credit risk scores lenders actually use, although they may appear similar. Consumer reporting agencies and other companies sometimes use an estimated score to illustrate a consumer’s general level of credit risk. How might you tell whether a score is estimated? Ask the company if the score is used by most lenders. If it isn’t, it is likely to be an estimated score.

Five Parts to Your FICO Credit Scores

As a rule, credit scores analyze the credit-related information on your credit report. How they do this varies. Since FICO scores are frequently used, here is how these scores assess what is on your credit report.

1. Your payment history – about 35% of a FICO score
Have you paid your credit accounts on time? Late payments, bankruptcies, and other negative items can hurt your credit score. But a solid record of on-time payments helps your score.
2. How much you owe – about 30% of a FICO score
FICO scores look at the amounts you owe on all your accounts, the number of accounts with balances, and how much of your available credit you are using. The more you owe compared to your credit limit, the lower your score will be.
3. Length of your credit history – about 15% of a FICO score
A longer credit history will increase your score. However, you can get a high score with a short credit history if the rest of your credit report shows responsible credit management.
4. New credit – about 10% of a FICO score
If you have recently applied for or opened new credit accounts, your credit score will weigh this fact against the rest of your credit history. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur. If you need a loan, do your rate shopping within a focused period of time, such as 30 days, to avoid lowering your FICO score.
5. Other factors – about 10% of a FICO score
Several minor factors also can influence your score. For example, having a mix of credit types on your credit report – credit cards, installment loans such as a mortgage or auto loan, and personal lines of credit – is normal for people with longer credit histories and can add slightly to their scores.
What’s NOT In Your Scores
By law, credit scores may not consider your race, color, religion, national origin, sex and marital status, and whether you receive public assistance or exercise any consumer right under the federal Equal Credit Opportunity Act or the Fair Credit Reporting Act.

Learn Your Scores Soon

It’s now easy to get your credit scores to check your financial health. Different sources provide credit scores to consumers via the Internet, telephone or U.S. Mail. For most scores, you will need to pay a small amount. You also will be asked to prove your identity to make sure your financial information isn’t given to the wrong person.

Here are recommended places you can get your scores:

Source Cost Description Score range
ANNUAL CREDIT REPORT SERVICE
Congress recently established this outlet to make it easier for consumers to get their credit reports and credit scores from the three national credit reporting agencies.Web:www.annualcreditreport.com
Phone: 1 877 322 8228
U.S. Mail:
Annual Credit Report Request Service
P. O. Box 105281
Atlanta, GA 30348-5281
The price for credit scores is being determined by the Federal Trade Commission Credit Reports and Scoring.One free credit report per year from each credit reporting agency. Each credit reporting agency offers a different type of credit score to consumers. FICO score via:
Equifax 300-850
Experian score 330-830
TransUnion score 150-934
MYFICO.COM
The consumer Internet site of Fair Isaac Corporationwhich developed the FICO score.Web: www.myfico.com
$14.95 for one FICO score and credit report. $44.85 for all three FICO scores and credit reports from the three credit reporting agencies (2005 pricing). This score is most often used by lenders. It lets you see how prospective lenders would evaluate your credit history. FICO score from Equifax, Experian and/or Trans Union 300-850
INDIVIDUAL CREDIT REPORTING AGENCIES:Equifax
Web: www.equifax.com
Phone:1 800 685 1111Experian
Web: www.experian.com
Phone:1 866 200 6020TransUnion
Web: www.transunion.com
Phone: 1 800-888-4213
Prices for credit scores with credit reports vary from $14.95 to $34.95 (2005 pricing). Each credit reporting agency offers a different type of credit score to consumers. FICO score via:
Equifax 300-850
Experian score 330-830
TransUnion score 150-934
MORTGAGE LENDERS Credit Score is free when applying for mortgage or home equity loan. This score will likely be the actual score used to evaluate your application. Ask your lender to be sure. FICO score from Equifax, Experian or Trans Union 300-850

Want Examples?

Meet Vera, A Single Mother

Behavior of action Change in score Vera’s current FICO score
March 2004
Vera and husband Dave have been married for 10 years. They have one daughter April, age 4. Financially they are making payments on time for two car loans, one mortgage and four credit cards which have low balances. But sadly, their marriage has deteriorated and they agree to divorce. In the settlement Vera retains custody of April. Dave takes one of the cars and responsibility for its loan. He also takes two of their four credit cards, and agrees to pay 50 percent of the monthly mortgage payments.
780
May
Dave struggles financially following the divorce and runs up his two credit cards to nearly their limit. Vera doesn’t realize her name is still on the card accounts Dave is using.
-80 700
July
Dave continues to struggle and misses payments on both cards. Both cards still are nearly maxed out.
-100 600
August
Vera gets a call from her bank about the missed payments. Once she understands what has happened, she contacts Dave and asks him to roll over the balances on both cards to a new card that he opens in his name only, which he does. Paying off the two accounts improves her score.
+80 680
February 2005
Vera continues to manage her money carefully, paying her bills on time and keeping her two card balances low. Meanwhile the two missed payments get older on her credit file and have less impact to her score. Dave lands a better job and makes his part of the mortgage payments on time.
+40 720
March
Vera’s car breaks down. Since she relies on it to get to work and to take April to preschool, she has no choice but to have it repaired. To pay the garage she maxes out one of her credit cards.
-80 640
April
Since Vera needs a reliable car, she asks her bank about auto loan rates. They tell her that her credit score is too low to qualify her for their best rate. Since money is tight, she waits to buy a car.
640
July
Vera has steadily paid down her high credit card balance and monitored her score. When her score has improved, Vera applies and is approved for an excellent rate on an auto loan. She buys a used car and feels good about how she has managed her credit.
+40 680

Now Meet Don and Doris

Behavior of action Change in score Don and Doris’s current FICO score
March 2004
Don and Doris are married and in their 50s. They have twin sons who graduated from college a year ago, have good jobs and live in different states. Don and Doris have been managing their money carefully for 30 years. They are making payments on a mortgage, three credit cards with large balances, and a $50,000 bank loan that paid for their sons’ college. Now that their sons are on their own financially, Don and Doris focus on paying down their credit card balances by making larger monthly payments and using their cards sparingly.
690
March 2005
After a year of steady payments, their credit card balances are significantly lower. They continue to manage their credit well and haven’t opened any new accounts.
+50 740
June
The couple decides to go on an extended vacation, taking leaves of absence from the jobs to so they can tour the U.S. in a motor home. They buy their motor home with help from a new bank loan at a favorable rate, thanks to their good credit scores. But opening the new loan lowers their scores a bit. Since their plans will keep them on the road for three months, they put one of their sons in charge of paying their monthly bills.
-20 720
September
They have a wonderful vacation. When they return, they find they had neglected to tell their son about the bank loan. He didn’t open the invoices they received from the bank thinking they were monthly account statements. Now their bank loan payment is 60 days late.
-75 645
October
Doris calls the bank, explains the mix-up and sends in the overdue payments immediately. A couple of weeks later their bank conveys their new account information to the credit reporting agencies, where it is available to influence their credit scores.
+20 665
April 2006
After six more months of on-time payments, their credit scores have steadily improved. Although the late payment will remain on their credit reports for seven years, it will impact their scores less as time passes. Don and Doris are on track once again to regain their good FICO credit scores in the 700s.
+30 695
* Don and Doris have separate FICO score, but in this example, they would rise and fall together.

Helpful Tips

1. When you get your credit scores, make sure you also learn the highest and lowest scores possible, as well as the most important factors that influenced your scores. These factors can give you an idea of how you can improve your scores.
2. Getting your own credit scores or credit reports won’t affect your scores, as long as you order them from one of the sources we list here.
3. Review your credit reports for accuracy. Mistakes and omissions on your credit reports probably will affect your credit scores. If you spot an error, contact the credit reporting agency and the creditor whose information is wrong.
4. If you have questions or problems with your credit scores, contact the company that provided them to you.

Boosting Your Scores

Your credit scores change when new information is reported by your creditors. So your scores will improve over time when you manage your credit responsibly.

Here are some general ways to improve your credit scores:

  • Pay your bills on time.Delinquent payments and collections can really hurt your score.
  • Keep balances low on credit cards.High debt levels can hurt your score.
  • Pay off debt rather than moving it between credit cards.The most effective way to improve your score in this area is to pay down your revolving credit.
  • Apply for and open new credit accounts only when you need them.
  • Check your credit report regularly for accuracyand contact the creditor and credit reporting agency to correct any errors.
  • If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your score.
Improving your credit scores can help you:
  • Lower your interest rates
  • Speed up credit approvals
  • Reduce deposits required by utilities
  • Get approved for apartments
  • Get better credit card, auto loan and mortgage offers

Consumer Federation of America logo     Fair Isaac Corporation logo

This publication has been prepared by Consumer Federation of America and FICO, and was reviewed by the Federal Citizen Information Center. These materials may be reproduced for educational purposes only.

Website Fine Print

The content provided on this website is presented or compiled by Joel Lobb and is provided for informational purposes only. It does not necessarily represent the views or opinions of Key Financial Mortgage .Neither Joel Lobb nor Key Financial Mortgage assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information disclosed, or represents that its use would not infringe privately owned rights.

The mortgage or financial services or strategies mentioned in this website may not be not suitable for you.

Key Financial Mortgage is an Equal Opportunity Lender. All rights Reserved.

Joel Lobb is a Licensed Mortgage Originator: NMLS #57916. Key Financial Mortgage NMLS # 1800 is a licensed Mortgage Broker Company in the State of Kentucky

Legal Disclaimer

*

This web site is not the FHA, VA, USDA, HUD or any other government organization responsible for managing, insuring, regulating or issuing residential mortgage loans.

**Download Fair Housing Booklet – CLICK HERE

All approvals and rates are not guaranteed, and are only issued based on standard mortgage qualifying guidelines.

 

How do you calculate income for self-employed borrowers Kentucky Mortgage?


How do you calculate income for self-employed borrowers?.

 

Under normal Fannie Mae underwriting standards, a borrower is considered self-employed if he or she owns more than 25% of a business from which income is derived. Any lower percentage ownership and a borrower can simply be considered employed by the firm (Yes, this is a help for co-owners of a small business – if you own less than 25% you don’t even have to read this article).

How do you calculate income for self-employed borrowers Kentucky Mortgage?
Self-employed borrowers who want to go the full documentation route must be able to provide the following:

1) two years of business tax returns; 2) two years of personal tax returns; 3) a letter from a CPA confirming two years of self-employment; and 4) a year to date profit and loss statement. If there are any problems with this information, then additional documentation will be required, such as letters from accountants, business bank statements or other financial records.

Underwriters average the net income to the business owner over the past two years to obtain an estimate of total income.If a business owner suffered a difficult year in 2011, but in all years before and after income was significantly higher, then the averaging method of analyzing income would unfairly deny the borrower a standard loan.

2011 Welcome Home Program


Welcome Home Program-2011-Clink on Image for info

 

2011 Welcome Home Program

        

2011 Welcome Home Program

Frequently Asked Questions

Q. How are funds reserved?

A.

A homebuyer applies for a mortgage through one of the Federal Home Loan Bank of

Cincinnati’s (FHLBank) Members. The Member will then submit an online

Welcome Home Reservation Request, loan application, and pertinent income

documentation to the FHLBank. Funds are reserved on a first-come, first-served

basis.

Q. What is the maximum amount of grant funds a homebuyer and Member can

receive?

A.

A homebuyer may receive Welcome Home grant funds up to $5,000 to be used for

down payment and closing costs. A Member may utilize a maximum of $200,000 for

the Welcome Home round.

Q. How long does it take to get an approval for a Reservation Request?

A.

Please allow a minimum of four to six weeks from the time the Reservation Request

was submitted. If it has been more than four weeks and you have not received an

answer, please contact us via email at

welcomehome@fhlbcin.com. Please state the

homebuyer’s full name and the date you sent the request.

Q. If I put my name and contact information on the Reservation Request form, why

are the approval letters not coming to me?

A

. Each Member may only have one contact person. We use the information on the first

Reservation Request received, unless instructed otherwise. If the Member wants a

particular person to be the contact, please let us know via email at

welcomehome@fhlbcin.com

 

.

   

Q. Can Welcome Home funds be used in conjunction with other local, state, and

federal funding sources?

A

. Yes. However, Welcome Home funds may not be used with an existing or future

award through the FHLBank’s competitive Affordable Housing Program (AHP).

Q. Where can I find the Mortgage Revenue Bond limit for my county?

A.

The MRB income limits can be found on our website at http://www.fhlbcin.com or at the

State Housing Finance Agencies. Remember: Welcome Home income limits are

80% of the MRB income limits.

Q. How long do I have to close my loan?

A.

All Welcome Home approvals are valid until December 1, 2011.

Page 2 of 3

Q. What if the property address changes or the grant amount needed changes after

I send in my Reservation Request or after I have received an approval letter?

A

. A Reservation Request and approval are only valid for the property originally

submitted and the grant amount originally submitted. To make any changes, the

Member should withdraw the original Reservation Request and submit a new online

Reservation Request with the updated property address or requested grant amount.

The four to six week review period will begin again upon resubmission.

Q. Are non-occupant co-borrowers or co-signors permitted?

A.

No. Welcome Home funds are intended to only assist homebuyers who qualify for

the first mortgage based on their current household income, not relying on others, and

not relying on any expected but uncertain change in job status or income.

Q. When and how are the grant funds disbursed?

A.

The Welcome Home funds are disbursed to the Member after the loan has closed.

The Member must provide the funds to the borrower at time of closing and then send

an online Funding Request, a copy of the fully executed HUD-1, the final signed

Truth-in-Lending for all repayable mortgages, and a copy of the warranty deed

containing our 2011 retention language to the FHLBank. Please allow four to six

weeks for it to be reviewed and for funds to be disbursed.

Q. What if I do not need the whole amount I was approved for?

A.

If you do not need the entire amount of the approved grant, you may apply the

difference to the first mortgage loan as a principal reduction. Be sure to show it on

the HUD-1. No cash back may be given to the homebuyer and no earnest money may

be returned!

Q. Why wasn’t my disbursement for the full amount I requested?

A.

The HUD-1 may have shown payoff of debt, return of the earnest money deposit, or

cash back at closing. All of these issues will cause the grant disbursement to be

reduced.

Q. Does the applicant have to be a first-time homebuyer?

A

. No. However, at least one-third of Welcome Home funds must be reserved for firsttime

homebuyers.

Q. Will the FHLBank send me confirmation that my fax or email was received?

A.

No. It is the Member’s responsibility to set their fax machine or email to print a

confirmation. Do not call the FHLBank asking if your information was received

unless it has been at least four weeks since you sent it. A status report will be sent to

the Member contact every Friday.

Page 3 of 3

Q. Can the subject property be a manufactured home?

A.

Yes. However, the manufactured home must be built on a permanent chassis,

installed on an FHA Title II permanent foundation system, be a multi-section home at

least 24 feet wide. Additionally, the home and lot must be taxable together as real

property and the home must be built to the Manufactured Home Construction and

Safety Standards (HUD Code). A copy of the appraisal is required at time of funds

reservation.

Q. Are tax returns required to document total household income?

A.

Depends. If income is from employment, we require two consecutive YTD pay stubs

or a completed Verification of Employment. If income is from self-employment, we

require the most recent two years’ signed federal tax returns. More information on

documenting income can be found in our Welcome Home Guide, which is available

on our website at

http://www.fhlbcin.com.

Q. Can the Member close their loan with a repair escrow?

A.

Yes. However, if the repair escrow is greater than $500 and is held from the buyer’s

funds, the Member must obtain pre-approval from the FHLBank. The Member

should send the FHLBank a copy of the appraisal showing all repairs were required

and the estimated amount of the repairs. The FHLBank staff will review the request

and email the Member contact with a response. Note: We expect the Member or

their closing agent to hold the escrowed funds and to disburse them upon presentation

of acceptable receipts and/or invoices. If the repair escrow is held from the seller, no

pre-approval or documentation is required.

Q. What documentation does the FHLBank need to prove the escrowed repairs

have been completed?

A.

The Member must submit an inspection showing all repairs have been made, copies

of invoices and/or receipts showing all parties were paid, and proof no funds were

returned to the homebuyer.

Q. What should I do if the homebuyer did not spend/use all of the escrowed funds?

Can they have cash back?

A.

If all escrowed funds are not used, the balance should be applied to the first mortgage

as a principal reduction. However, if the HUD-1 clearly shows that the homebuyer

used their own funds to set up the repair escrow account, and they did not use all

those funds, they may have their remaining funds back as long as they have the

minimum $500 in the transaction. If the HUD-1 shows the homebuyer only had the

minimum $500 in the transaction, and they did not use all of the escrowed funds, the

balance must be applied to the first mortgage as a principal reduction or the Welcome

Home grant will be reduced.

Q. Where can I find the complete description and requirements for the Welcome

Home Program?

A.

The 2011 Welcome Home Guide is available on our website at http://www.fhlbcin.com

Louisville Ky Mortgage Lender FHA VA KHC Kentucky Mortgage: Louisville FHA and VA Home Loans


Louisville FHA and VA Home Loans


Louisville FHA and Louisville VA home loans. Louisville FHA home loans can help Louisville borrowers obtain a Louisville mortgage more easily. Louisville VA home loans can help Louisville Veterans secure Louisville home loans to purchase their dream home. Contact for help with your Louisville FHA and VA home loans.

1 hour preapproval and 21 day closings– call toay for your free application  an credit report
502-905-3708
Key Financial Mortgage
107 South Hurstbourne Parkway
Louisville Ky 40222

Kentucky Housing Mortgage Rates—Kentucky
Louisville Kentucky Mortgage | August 18, 2010 at 8:05 pm
Interest Rates.
700+ Credit Score Mortgage Revenue Bond (MRB) Interest Rates
• KHC-funded down payment assistance not available with these rates
Loan Type
Regular Rate
*Government Rates only
3.500%
620+ Credit Score Mortgage Revenue Bond (MRB) Interest Rates
• KHC-funded down payment assistance may be utilized with these rates
Loan Type
Regular Rate
*Government Rates only
3.875%
* Government includes FHA, RHS, and VA.

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Joel Lobb
Senior Mortgage Loan Officer

Key Financial Mortgage
107 S. Hurtsbourne Parkway
Louisville Ky 40222

ph# 502-905-3708
fax# 502-895-2266

jlobb@keyfinllc.com

http://kentuckyloan.blogspot.com/
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Louisville, Ky Mortgage Lenders: For a Quick Easy Loan Approval:Have These Items Re…


Louisville, Ky Mortgage Lenders: For a Quick Easy Loan Approval:Have These Items Ready

Employment

____ Name and address of employers for the past two years
____ Copy of pay stubs for the previous 30 days
____ Copy of last two years w-2 forms
        (if commissioned or paid by 1099, copy of last two years complete tax returns)
 

Self-employed

____ Copy of last two years tax returns (personal and corporate);
        year to date P&L and Balance Sheet through the most recent quarter
 

Liabilities

____ Name and account numbers for all revolving and installment accounts
____ Name and account number for all mortgage loans for the previous two years
____ Name and address for landlords for the previous two years
 

Assets

____ Name, address, and account number for all bank accounts
____ Name, address, and account numbers for all brokerage accounts
____ Copies of statements covering last 3 months on asset accounts
____ Copy of most recent statement for 401K, Savings Plan, etc.
 
 

Miscellaneous

____ Copy of driver’s license and social security card
____ Copy of fully executed divorce decree if applicable
____ Copy of signed earnest money contract
____ Copy of lease agreements on rental properties
____ Veterans! Copy of DD 214 and Eligibility Cert. if you have it
____ Check for the cost of your credit report and appraisal

FHA Mortgage Requirements Louisville Kentucky Mortgage First Time Home Buyer


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