2018 Kentucky First Time Home Buyer Loan Programs


via 2018 Kentucky First Time Home Buyer Loan Programs

 

Getting a mortgage for a home can seem like a complicated and mysterious process. Just like any good investment, you should never buy anything that you don’t understand.  Knowing how the mortgage lending system works will relieve much of the stress and anxiety associated with making what is most likely the largest purchase of your entire life. This article will help you understand…

What You Need To Know About A Mortgage… BEFORE You Get One!!!

Qualifying for a Mortgage

Home LoansMortgage companies are in business to make money by lending money that is secured by an asset large enough to sell and recover their capital if the borrower is no longer able or willing to pay the payments. They are not in the business of owning property and would rather not have to foreclose on a loan, repossess the property and sell it to recapture their capital. This does happen but it is not their primary business. They would rather have their borrowers make their payments so that they could collect the interest and move on down the road. To increase their odds of that happening, mortgage companies look at several areas of your financial history to determine if you will meet their standards. This is called Qualifying for a Mortgage.

What the mortgage company finds when they look at these areas will help determine the type of mortgage that is available to you and the interest rate you will pay on the money that you borrow.

The areas that they are interested in looking at are:

Job History

Lenders want to know if you have been in your current job and/or profession for at least two years. They also want to know if you are retired or self-employed.

Income

TaxesMortgage lenders want to know how much your monthly income is before taxes are taken out (Gross Monthly Income). Typically you will be asked to provide check stubs for the last 30 days and Federal Tax Returns or W-2’s for the last two years to prove your income.

If you are self-employed and it is difficult for you to prove your gross income to the lender you may be able to get a “stated income” loan. If that is the route that you take, your income must be “reasonable” for your profession. Since stated income loans are riskier for the lender you will generally have a higher interest rate.

Credit History

Mortgage lenders really like it if you have a history of paying your bills on time. This is reflected in your credit report and FICO score. If you have “bad credit”, you are NOT automatically disqualified from getting a mortgage. Lower credit scores will increase the interest rate that you will be required to pay and sometimes that increase will be quite significant.

Debt Load

You can have an awesome job with an income to make Bill Gates jealous and a great credit score but if you have already acquired too much long term debt you may not qualify for the loan you want.

assetsAssets

Mortgage lenders will want to check your bank accounts to make sure that you have the cash necessary to pay the down payment and closing costs and that you have “reserves” available to make the loan payment. Often, the lender will require 3-6 months reserves. (Reserves can be in a 401K or other retirement account that you can pull the money out of)

Requested Loan Amount

The loan you are requesting will need to be proportional to your ability to make the payments. Be reasonable with your house buying expectations – don’t expect to buy a lot more house than you can afford. The recent housing bust defined the term “house poor” and got a lot of people into financial trouble. Again, mortgage lenders would much rather you make your monthly house payments because everyone loses if they have to foreclose.

Determining YOUR Mortgage Interest Rate

The market place determines the range of interest rates available for any mortgage and the lending rates change daily. The specific interest rate you will pay is based on how well qualified you are and the type of loan you want.

Interest rates are typically based on the answers to these questions:

How Good Is Your Credit Score? 

FICO ScoreThe most widely used score is the FICO score, the credit score created by Fair Isaac Corporation. Lenders use the FICO Score to help them make billions of credit decisions every day. Fair Isaac calculates the FICO Score based solely on information in consumer credit reports maintained by the credit reporting agencies.

FICO credit scores range from 300 to 850. That FICO Score is calculated by a mathematical equation that evaluates many types of information from your credit report, at that agency. By comparing this information to the patterns in hundreds of thousands of past credit reports, the FICO Score estimates your level of future credit risk.

With the top end of the credit score being 850, anything above about 720 is considered excellent. Some local lenders set 740 as the benchmark for their preferred interest rates. Having a lower credit score DOES NOT mean you will not get a loan. You may qualify BUT your interest rate will be higher than someone with better credit.

How Big Is Your Down-Payment?

down-paymentThe Down-Payment is the amount of your own money you are going to put into buying the property. The more money you put into the property on the front end, the lower the risk of you not paying the payments. The amount of your down payment also directly affects the amount of your loan (purchase price – down payment = loan amount). This is called the Loan to Value Ratio (LTV).

The LTV is the percentage of the value of the house that the mortgage will cover (loan amount / purchase price x 100). For example, the property you are interested in buying is selling for $100,000. You have $20,000 for the down-payment and want a mortgage for the other $80,000. The LTV for this mortgage is 80%.

Similar to the LTV is the Combined Loan to Value Ratio (CLTV). The CLTV is used when 2 loans are used to finance the home purchase. You may see or hear terms like “80-20” or “80-15-5”. This refers to the 1st lien percentage (80), the 2nd lien percentage (20 or 15) and the down payment percentage (5).

How Much Debt Do You Currently Have?

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

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

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

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

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

 Example:  of a 28/36 qualifying ratio:

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

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

Example: of a 29/41 qualifying ratio:

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

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

These are just general guidelines and everyone’s personal finances are unique. To get the real answer about how well you qualify and to determine how large a mortgage a local lender will offer contact one of our preferred lenders and visit with a loan officer.

Here is a KEY point to remember…

FICO KEYYour credit score is THE most vital piece of information

when qualifying for a loan.

I am a Dave Ramsey fan and I believe in paying cash but even Dave concedes when it comes to buying a house. In Financial Peace Dave calls the FICO score an “I love debt score” and brags about not having one. He even tells a story about trying to rent an apartment and he couldn’t because he doesn’t have a FICO score. He then says, “I can’t rent an apartment because I don’t have a FICO score… I could write a check and buy the whole complex but I can’t rent an apartment because I don’t have a credit score!” Which is a great story for someone that CAN write a check and buy the whole complex… The rest of us need to maintain a really good credit score.

If you’re ready to buy a new home

and want to shop around for the best deal on a mortgage…

Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won’t affect your score while you’re rate shopping. In addition, the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

What Type of Loan Are You Looking For?

40 year fixed, 30 year fixed, 20 year fixed, 15 year fixed, 10 Year Fixed, Adjustable Rate, etc. All of these loan types have different interest rate ranges.

Locking Your Interest Rate

Once you have completed a loan application, determined what type of loan you want and qualified for that loan you can “lock” the interest rate for that loan. Locking the Interest Rate means, for the period of the “lock” you are guaranteed that interest rate. Lock periods are typically 15, 30 or 60 days, although you may be able to get an extended lock period.

Rate LockOnce you lock your interest rate:

If you do not close on the loan before the lock period expires, you will NOT have a guaranteed interest rate anymore. And, the longer the lock period, the higher the rate will be. For example, a 15 day lock may be at 5.125%, a 30 day lock at 5.25%, and a 60 day lock at 5.375%. So, before locking your loan, be sure you are not locking for too long a time or for too short a time.

Interest rates fluctuate daily and may go up or down. By locking your rate, you are betting that rates will go up in the future.

 What does “Buying Down” the Interest Rate Mean?

You can reduce the interest rate on your mortgage by paying “points” at closing. A point is 1% of the value of the loan, so a point on a $200,000 loan is $2,000. If you “buy down” you loan to a lower interest rate you will have lower monthly payments and pay less interest over the life of the loan. However, “buying down” you loan to a lower interest rate means more money out of your pocket on the front end when you close the loan. You should do the math and weigh each side of the equation before making a decision about buying down the interest rate or not.

What Are The Closing Costs and Fees?

Closing CostsThere are four types of closing costs and fees…

Those charged by the mortgage company and/or mortgage broker, those charged by 3rd party vendors, those charged by the Title Company, Escrow Company or Escrow Attorney and Pre-Paid Charges.

Lender Fees

These can include loan origination fees and Broker fees which are usually a percentage of the loan amount; administrative fees and application fees, processing fees and underwriting fees. These last fees usually run from $100 to $500, and ALL of them are negotiable.

3rd Party Vendor charges

These are charges collected by the lender and paid to outside companies that provide a service. These are not usually negotiable and can include appraisal charges, flood certification fees, courier charges, document prep fees, mortgage lender attorney fees, etc.

Title Company charges

These are the fees charged by the Title Company, Escrow Company or Escrow Attorney. They are usually set by the state and are not negotiable. These charges include title insurance, attorney fees, state/county/city registration fees, etc.

Pre-Paid Charges

If the lender will be establishing an escrow account to pay taxes and insurance, the buyer will pre-pay taxes and insurance to establish an escrow account and will pre-pay the interest on the loan until the end of the month in which the loan closes.

 Does The Closing Date Really Matter?

The day you choose to close determines the amount of pre-paid interest you will have to pay. Closing at the end of the month means that you will pay less pre-paid interest. For example, if you close on October 1st you will pay 31 days of pre-paid interest. If you close on October 31st you will pay 1 day of pre-paid interest.

When Is My First Payment Due?

It doesn’t matter what day of the month you close on, you will not have your first loan payment due until a month has passed. So, if you close in October, your first payment is due in December – you get November for free!

What Is PMI?

pmi-basics1Private Mortgage Insurance (PMI) is required on all loans that have a LTV greater than 80%. PMI is an insurance premium that you pay every month as part of your monthly payment. However, PMI is not intended to protect you. PMI is insurance coverage that protects the mortgage lender against default on the loan. If you stop making your payments, the mortgage lender is paid a percentage of the loan amount (usually 25% to 35%) by the insurance company.

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Customer Testimonials

We just moved here the first of January in 2017 from Ohio to the Louisville, KY area and we found Joel’s website online. He was quick to respond to us and got back the same day on our loan approval. He was very knowledgeable about the local market and kept us up-to date throughout the loan process and was a pleasure to meet at closing. Would recommend his services.

Angela Forsythe

“We were searching online for mortgage companies in Louisville, Ky locally to deal with and found Joel’s website, and it was a godsend. He was great to work with, and delivered on everything he said he would do. I ended up referring my co-worker at UPS, and she was very pleased with his service and rates too. Would definitely vouch for him.” September 2016

Monica Leinhardt

“We contacted Joel back in July 2011 to refinance our Mortgage and he was great to work with. We contacted several lenders locally and online, and most where taking almost 60 days to close a refinance, Joel got it done in 23 days start to finish,I would definetly recommmend him. He got us 3.75% with just $900 in closing costs on our FHA Streamline loan.

Kayle Griffin

“Joel is one of the best Mortgage Brokers I have ever worked with in my sixteen years in the real estate and mortgage business.” May 25, 2010

Tim Beck

“Joel has always worked very hard to keep his word and to work out seasonable solutions to difficult problems. He is truly an expert in FHA and other type loans.”

September 1, 2010 Nancy Nalley
“I have worked with Joel since 1998. He is a great loan professional.” I refer most of my Louisville, Kentucky area home buyers to him and he always take special care of them.

August 23, 2012 Jon ClarK

“Joel Lobb is a real professional in the lending industry, with many years of experience, he is the one to go to for any mortgage lending needs.” August 22, 2011

RICHARD VOLZ , Residential Sales , Remax Foursquare Realty
“When looking to purchase our new home in 2006, I had the pleasure of meeting Joel Lobb. Not only was he personable and easy to reach, he was extremely knowledgeable in his field and made sure to find us the best rate and a top notch mortgage company. We were able to complete the process in less than 3 weeks with his expertise. I find Joel to have the utmost high integrity and I recommend him to anyone who say’s they are need of mortgage assistance. He is also fantastic and keeping everyone up to date on the latest in the housing industry through his twitter posts. He provided great results for our family and we still communicate to this day!”

August 21, 2010
Stacie Drake

 

“We first use Joel on our new home purchase in 2007 in St Matthews, Kentucky area and he was great to work with. We have since refinanced our home with him in 2010 when rates got really low and he has always delivered on what he says. I could not imagine using anyone else.”

Melody Glasscock March 2014

 
Absolutely Amazing!! I emailed Joel after I had just got a denial from a bank and just thought i would try to get some advice on what my next steps would be to get a house. I honestly didn’t expect to even get a reply because my credit is not great. That was about a week and a half ago. I just signed a contract on a house last night. ONLY because of Joel Lobb. He even worked with us throughout the weekend, which shocked me. Best decision I have ever made. THANK YOU SO MUCH FOR WORKING WITH US THROUGHOUT THE ENTIRE PROCESS.
Cee Bellisle August 2017

Contacted him about buying a home and he was great to work with. I was moving to Louisville Ky to take a new job and he walked me through the entire process. He explained to me all the different options for FHA, VA, USDA mortgage loans and credit score requirements versus Fannie Mae. Since I was a first time home buyer I needed alot of help and guidance. I would definitely recommend him. Fast to respond and available to answer questions that I or my realtor had after hours.

 

Anderson Johnson April 2018

 

 

We moved from Michigan to Northern Kentucky area and we were really impressed. We got a USDA loan no money down and closed in less than 3.5 weeks. We shopped around online with other lenders but Joel was always first to respond and his rates were just a little better than other lenders. He kept us informed through the process along with our realtor and there was absolutely no surprises like we heard from other co-workers and friends that they experienced in their loan process. We have already referred another co-worker to Joel . He’s AWESOME!

Patty Kingston June 2018

 

Debt-to-Income Ratio for Kentucky Mortgage Loans:


 

 

Debt-to-Income Ratio for Kentucky Mortgage Loans Debt-to-Income Ratio: What It Is and Why You Should Care for A Kentucky Mortgage Loan  Debt-to-Income Ratio: What It Is and Why You Should Care for…

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

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 Mortgage Underwriting Guidelines


Louisville Mortgage Underwriting Guidelines

Understanding Louisville Mortgage mortgage underwriting guidelines will help you understand your loan options when purchasing or refinacing a home. Now that you have found your dream house, you are going to need to apply for a Louisville Mortgage mortgage loan. Your realtor will either recommend a banking institution or you may already have one in mind. You will be dealing with a loan officer who will be compiling all the data on you to see if you qualify for a loan to pay for this house. All lending institutions have different Underwriting Guildelines set in place when reviewing a borrower’s financial history to determine the likelihood of receiving on-time payments. The primary items reviewed are:

Income

Income is one of the most important variables a lender will examine because it is used to repay the loan. Income is reviewed for the type of work, length of employment, educational training required, and opportunity for advancement. An underwriter will look at the source of income and the likelihood of its continuance to arrive at a gross monthly figure.

Salary and Hourly Wages – Calculated on a gross monthly basis, prior to income tax deductions.

Part-time and Second Job Income – Not usually considered unless it is in place for 12 to 24 straight months. Lenders view part-time income as a strong compensating factor.

Commission, Bonus and Overtime Income – Can only be used if received for two previous years. Further, an employer must verify that it is likely to continue. A 24-month average figure is used.

Retirement and Social Security Income – Must continue for at least three years into the future to be considered. If it is tax free, it can be grossed up to an equivalent gross monthly figure. Multiply the net amount by 1.20%.

Alimony and Child Support Income – Must be received for the 12 previous months and continue for the next 36 months. Lenders will require a divorce decree and a court printout to verify on-time payments.

Notes Receivable, Interest, Dividend and Trust Income – Proof of receiving funds for 12 previous months is required. Documentation showing income due for 3 more years is also necessary.Rental Income – Cannot come from a Primary Residence roommate. The only acceptable source is from an investment property. A lender will use 75% of the monthly rent and subtract ownership expenses. The Schedule E of a tax return is used to verify the figures. If a home rented recently, a copy of a current month-to-month lease is acceptable.

Automobile Allowance and Expense Account Reimbursements – Verified with 2 years tax returns and reduced by actual expenses listed on the income tax return Schedule C.

Education Expense Reimbursements – Not considered income. Only viewed as slight compensating factor.

Self Employment Income – Lenders are very careful in reviewing self-employed borrowers. Two years minimum ownership is necessary because two years is considered a representative sample. Lenders use a 2-year average monthly income figure from the Adjusted Gross Income on the tax returns. A lender may also add back additional income for depreciation and one-time capital expenses. Self-employed borrowers often have difficulty qualifying for a mortgage due to large expense write offs. A good solution to this challenge used to be the No Income Verification Loan, but there are very few of these available any more given the tightened lending standards in the current economy. NIV loan programs can be studied in the Mortgage Program section of the library.

Debt

An applicant’s liabilities are reviewed for cash flow. Lenders need to make sure there is enough income for the proposed mortgage payment, after other revolving and installment debts are paid.

  • All loans, leases, and credit cards are factored into the debt calculation. Utilities, insurance, food, clothing, schooling, etc. are not.
  • If a loan has less than 10 months remaining, a lender will usually disregard it.
  • The minimum monthly payment listed on a credit card bill is the figure used, not the payment made.
  • An applicant who co-borrowed for a friend or relative is accountable for the payment. If the applicant can show 12 months of on-time cancelled checks from the co-borrowee, the debt will not count.
  • Loans can be paid off to qualify for a mortgage, but credit cards sometimes cannot (varies by lender). The reasoning is that if the credit card is paid off, the credit line still exists and the borrower can run up debt after the loan is closed.
  • A borrower with fewer liabilities is thought to demonstrate superior cash management skills.

Credit History

Most lenders require a residential merged credit report (RMCR) from the 3 main credit bureaus: Trans Union, Equifax, and Experian. They will order one report which is a blending of all three credit bureaus and is easier to read than the individual reports. This “blended” credit report also searches public records for liens, judgments, bankruptcies and foreclosures. See our credit report index.

Credit report in hand, an underwriter studies the applicant’s credit to determine the likelihood of receiving an on-time mortgage payment. Many studies have shown that past performance is a reflection of future expectations. Hence, most lenders now use a national credit scoring system, typically the FICO score, to evaluate credit risk. If you’re worried about credit scoring see our articles on it.

The mortgage lending process, once very forgiving, has tightened lending standards considerably. A person with excellent credit, good stability, and sufficient documentable income to make the payments comfortably will usually qualify for an “A” paper loan. “A Paper”, or conforming loans, make up the majority of loans in the U.S. and are loans that must conform to the guidelines set by Fannie Mae or Freddie Mac in order to be saleable by the lender. Such loans must meet established and strict requirements regarding maximum loan amount, downpayment amount, borrower income and credit requirements and suitable properties. Loans that do not meet the credit and/or income requirements of conforming “A-paper” loans are known as non-conforming loans and are often referred to as “B”, “C” and “D” paper loans depending on the borrower’s credit history and financial capacity.

Here are some rules of thumb most lenders follow:

  • 12 plus months positive credit will usually equal an A paperloan program, depending on the overall credit. FHA loans usually follow this guideline more often than conventional loans.
  • Unpaidcollections, judgments and charge offs must be paid prior to closing an A paper loan. The only exception is if the debt was due to the death of a primary wage earner, or the bill was a medical expense.
  • If a borrower has negotiated an acceptable payment plan, and has made on time payments for 6 to 12 months, a lender may not require a debt to be paid off prior to closing.
  • Credit items usually are reported for 7 years. Bankruptcies expire after 10 years.
  • Foreclosure – 5 years from the completion date. From the fifth to seventh year following the foreclosure completion date, the purchase of a principal residence is permitted with a minimum 10% down and 680 FICO score. The purchase of a second or investment property is not permitted for 7 years. Limited cash out refinances are permitted for all occupancy types.
  • Pre-foreclosure (Short Sale) – 2 years from the completion date (no exceptions or extenuating circumstances).
  • Deed-in-Lieu of Foreclosure – 4 year period from the date the deed-in-lieu is executed. From the fifth to the seventh year following the execution date the borrower may purchase a property secured by a principal residence, second home or investment property with the greater of 10 percent minimum down payment or the minimum down payment required for the transaction. Limited cash out and cash out refinance transactions secured by a principal residence, second home or investment property are permitted pursuant to the eligibility requirements in effect at that time.
  • Chapter 7 Bankruptcy – A borrower is eligible for an A paper loan program 4 years after discharge or dismissal, provided they have reestablished credit and have maintained perfect credit after the bankruptcy.
  • Chapter 13 Bankruptcy – 2 years from the discharge date or 4 years from the dismissal date.
  • Multiple Bankruptcies– 5 years from the most recent dismissal or discharge date for borrowers with more than one filing in the past 7 years.
  • The good credit of a co-borrowerdoes not offset the bad credit of a borrower.
  • Credit scores usually range from 400 to 800. Changes to lending standards are occurring on a daily basis as a result of tightening lending standards, and can vary from lender-to-lender– so this information should be considered simply a guideline. For conforming loans, most lenders will lend down to a FICO of 620, with additional rate hits for the lower-end credit scores and loan-to-values. When you are borrowing more than 80%, they typically will not lend if you have a FICO below 680. The FHA/VA program just changed their minimum required FICO to 620, unless you are qualifying a borrower with non-traditional credit. The few non-conforming loan programs that are still available typically require 30% down payment with a minimum FICO of 700 for self-employed and 650 for W-2 employees, and the loan-to-value will change with the loan amount.
  • A credit score below 600 may require an Alternative Credit mortgage program.
  • Misinformation on a credit report can be repaired! For more information see our credit repairsection.
  • The FTC states, “Credit repair companies take your money and vanish.” Anything a credit repair company does for a fee, a consumer can do for free. Be wary of these guys!
  • If a borrower falls behind on a payment, the creditor should be contacted as quickly as possible. Most creditors will work with a borrower who makes an initial good faith effort to communicate with them.

Savings

Lenders evaluate savings for three reasons.

  1. The more money a borrower has after closing, the greater the probability of on-time payments.
  2. Most loan programs require a minimum borrower contribution.
  3. Lenders want to know that people have invested their own into the house, making it less likely that they will walk away from their life’s savings. They analyze savings documents to insure the applicant did not borrow the funds or receive a gift.

Lenders look at the following types of accounts and assets for down payment funds:

Checking and Savings – 90 days seasoning in a bank account is required for these funds.Gifts and Grants – After a borrower’s minimum contribution, a gifts or grant is permitted.

Sale of Assets – Personal property can be sold for the required contribution. The property should be appraised and a bill of sale is required. Also, a copy of the received check and a deposit slip are needed.

Secured Loans – A loan secured by property is also an acceptable source of closing funds.

IRA, 401K, Keogh & SEP – Any amount that can be accessed is an acceptable source of funds.

Sweat Equity and Cash On Hand – Generally not acceptable. FHA programsallow it in special circumstances.

Sale Of Previous Home – Must close prior to new home for the funds to be used. A lender will ask for a listing contract, sales contract, or HUD 1 closing statement.

Debt vs Income Ratio

The percentage of one’s debt to income is one of the most important factors when underwriting a loan. Lenders have determined that a house payment should not exceed approximately 30% of Gross Monthly Income. Gross Monthly Income is income before taxes are taken out. Furthermore, a house payment plus minimum monthly revolving and installment debt should be less than 40% of Gross Monthly Income (this figure varies from 35%-41% contingent on the source of financing).

Example

An applicant has $4,500 gross monthly income. The maximum mortgage payment is:

$4500 X .30 = $1350

Their total debts come to:

$500 Car
$20 Visa
$30 Sears
$75 Master Card
—————-
$625 per month.

Remember, their total debts (mortgage plus other debts) must be less than or equal to 40% of their gross monthly income.

$2,800 X .40 = $1800

$1800 is the maximum debt the borrower can have, debts and mortgage payments combined. Can the borrower keep all their debts and have the maximum mortgage payment allowed? NO!

In this case, the borrower, since they have high debts, must adjust the maximum mortgage payment downward, because:

$625 debts
$1350 mortgage
————–
$1975 – which is more than the $1800 (40% of gross debt) we calculated above.

The maximum mortgage payment is therefore:

$1800 – $625 (monthly debt) = $1175.

Apply today -It’s free and takes only 10 minutes.

Kentucky USDA Mortgage Loans | Rural Housing Ky Loans


Kentucky USDA Mortgage Loans | Rural Housing Ky Loans

Kentucky Mortgage USDA Loan Requirements

What are the Kentucky USDA Mortgage Loan Requirements?
To decide if you qualify for an USDA Mortgage Loan, we will look at:

  • Your income and your monthly expenses. Standard debt-to-income ratios are 29/41 for USDA Loans. These ratios may be exceeded with compensation factors.
  • Your credit history (this is important, but USDA’s credit standards are flexible). A FICO score of 620 or above is required for all loans
  • Your overall pattern rather than to individual problems you may have had.

To be eligible for an Kentucky USDA Mortgage, your monthly housing costs (mortgage principal and interest, property taxes and insurance) must meet a specified percentage of your gross monthly income (29% ratio). Your credit background will be fairly considered. At least a 620 FICO credit score is required to obtain an USDA approval through Lending. You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). These percentages may be exceeded with compensating factors. Applicants for loans may have an income of up to 115% of the median income for the area. Maximum USDA Loan income limits for your area can be found at below Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance.

Can I get an USDA Mortgage Loan after bankruptcy?
Criteria for USDA loan approvals state that if you have been discharged from a Chapter 7 bankruptcy for three years or more, you are eligible to apply for an USDA mortgage. If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are also eligible to make an Kentuck USDA Loan application

What are the USDA Down Payment Requirements? 
USDA Mortgages have no down payment requirement. Other loan programs don’t allow this.

What types of property are eligible?
While USDA Mortgage Guidelines do require that the property be Owner Occupied (OO), they do allow you to purchase condos, planned unit developments, manufactured homes, and single family residences.

What is the maximum amount that I can borrow?
The maximum amount for an Kentucky USDA Mortgage Loans are determined by:

Maximum loan amount: The is no set maximum loan amount allowed for an USDA Mortgage. Instead, your debt-to-income ratios will dictate how much home your can afford (29/41 ratios). Additionally, your total household monthly income must be within USDA allowed maximum income limits for your area. Maximum USDA Loan income limits for your area can be found at here.

Maximum financing: The maximum USDA Mortgage amount will be 100% of the appraised value of the home.

What kinds of loans does USDA offer?

Fixed rate loans – All Rural Housing and USDA loans are fixed-rate mortgages. In a fixed rate mortgage, your interest rate stays the same during the whole loan period, normally 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your monthly payment will be, and you can plan for it.

What is Considered a Rural Area by the USDA?
Rural areas include open country and places with population of 10,000 or less and—under certain conditions—towns and cities. There is an automated rural area eligibility calculator at:http://eligibility.sc.egov.usda.gov.

Kentucky USDA Loans

What are USDA Home Loans?
USDA stands for United States Department of Agriculture. A USDA Mortgage provides a low-cost insured home mortgage loan that suits a variety of options. A USDA mortgage is likely the best home loan option if you want to purchase a home with no down payment. If you’re unsure about your credit rating, or have concerns about a down payment when you’re doing a home loan comparison,

What Types of Loans does USDA offer in Kentucky?
Currently, there are two kinds of USDA Homeo Loans available in Kentucky for single family households:

. USDA Guaranteed Rural Housing Loans
USDA Guaranteed Kentucky USDA Mortgage are the most common type of USDA loanin Kentucky and allow for higher income limits and 100% financing for home purchases. USDA Guaranteed Loan applicants may have an income of up to 115% of the median household income for the area. Area income limits for this program can be viewed here. All USDA Guaranteed Loans carry 30 year terms and are set at a fixed rate.

. USDA Direct Rural Housing Loans
USDA Direct Housing Loans are less common than USDA Guaranteed Loans and are only available for low and very low income households to obtain homeownership, as defined by the USDA. Very low income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. Click here to see area income limits for this program.

What factors determine if I am eligible for a USDA Loan in Kentucky?
To be eligible for A USDA Kentucky USDA Mortgage Loans | Rural Housing Ky Loans in Kentucky, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income (29% ratio). Your credit background will be fairly considered. A 620 FICO credit score is required to obtain a USDA Kentucky USDA Mortgage Loans | Rural Housing Ky Loans approval . You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). These ratios can be exceeded somewhat with compensating factors. Applicants for loans may have an income of up to 115% of the median income for the area. Maximum USDA Guaranteed Loan income limits for your area can be found at here. Maximum USDA Direct Loan income limits for your area can be found at here. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance.

What is the maximum amount that I can borrow?
The maximum amount for an USDA home loan is determined by:

Maximum Loan Amount: The is no set maximum loan amount allowed for USDA Kentucky USDA Mortgage Loans | Rural Housing Ky Loans. Instead, your debt-to-income ratios will dictate how much home your can afford (29/41 ratios). Additionally, your total household monthly income must be within USDA allowed maximum income limits for your area. Maximum USDA Guaranteed Loan income limits for your area can be found at here.

Maximum financing: The maximum USDA Kentucky USDA Mortgageamount is 102% of the appraised value of the home (100% plus the 2% USDA Kentucky USDA Mortgage RD Loan guarantee fee).

How much money will I need for the down payment and closing costs?
USDA Kentucky USDA Mortgage Loans require no down payment and they allow for the closing costs to be included in the loan amount (appraisal permitting).

What property types are allowed for USDA Rural Loan Mortgages?
While USDA mortgage guidelines do require that the property be Owner Occupied (OO), they do allow you to purchase condos, planned unit developments, manufactured homes, and single family residences.
Additional offers from other lenders.

Kentucky USDA Loan Adjusted Maximum Income Limits by County\\\\\\\\\

Kentucky USDA Mortgage Loans | Rural Housing Ky Loans
Updated 05/01/2009

County Name
1-4 Person Households
(Guaranteed Loans)
5-8 Person Households
(Guaranteed Loans)
NON-METRO
ADAIR
$73,600
$97,150
NON-METRO
ALLEN
$73,600
$97,150
FRANKFORT, KY (MICRO)
ANDERSON
$73,600
$97,150
PADUCAH, KY-IL (MICRO)
BALLARD
$73,600
$97,150
GLASGOW, KY (MICRO)
BARREN
$73,600
$97,150
MOUNT STERLING, KY (MICRO)
BATH
$73,600
$97,150
MIDDLESBOROUGH, KY (MICRO)
BELL
$73,600
$97,150
CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA)
BOONE
$73,600
$97,150
LEXINGTON-FAYETTE, KY (MSA)
BOURBON
$73,600
$97,150
HUNTINGTON-ASHLAND, WV-KY-OH (MSA)
BOYD
$73,600
$97,150
DANVILLE, KY (MICRO)
BOYLE
$73,600
$97,150
CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA)
BRACKEN
$73,600
$97,150
NON-METRO
BREATHITT
$73,600
$97,150
NON-METRO
BRECKINRIDGE
$73,600
$97,150
LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA)
BULLITT
$73,600
$97,150
NON-METRO
BUTLER
$73,600
$97,150
NON-METRO
CALDWELL
$73,600
$97,150
MURRAY, KY (MICRO)
CALLOWAY
$73,600
$97,150
CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA)
CAMPBELL
$73,600
$97,150
NON-METRO
CARLISLE
$73,600
$97,150
NON-METRO
CARROLL
$73,600
$97,150
NON-METRO
CARTER
$73,600
$97,150
NON-METRO
CASEY
$73,600
$97,150
CLARKSVILLE, TN-KY (MSA)
CHRISTIAN
$73,600
$97,150
LEXINGTON-FAYETTE, KY (MSA)
CLARK
$73,600
$97,150
NON-METRO
CLAY
$73,600
$97,150
NON-METRO
CLINTON
$73,600
$97,150
NON-METRO
CRITTENDEN
$73,600
$97,150
NON-METRO
CUMBERLAND
$73,600
$97,150
OWENSBORO, KY (MSA)
DAVIESS
$73,600
$97,150
BOWLING GREEN, KY (MSA)
EDMONSON
$73,600
$97,150
NON-METRO
ELLIOTT
$73,600
$97,150
NON-METRO
ESTILL
$73,600
$97,150
LEXINGTON-FAYETTE, KY (MSA)
FAYETTE
$73,600
$97,150
NON-METRO
FLEMING
$73,600
$97,150
NON-METRO
FLOYD
$73,600
$97,150
FRANKFORT, KY (MICRO)
FRANKLIN
$73,600
$97,150
UNION CITY, TN-KY (MICRO)
FULTON
$73,600
$97,150
CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA)
GALLATIN
$73,600
$97,150
NON-METRO
GARRARD
$73,600
$97,150
CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA)
GRANT
$73,600
$97,150
MAYFIELD, KY (MICRO)
GRAVES
$73,600
$97,150
NON-METRO
GRAYSON
$73,600
$97,150
NON-METRO
GREEN
$73,600
$97,150
HUNTINGTON-ASHLAND, WV-KY-OH (MSA)
GREENUP
$73,600
$97,150
OWENSBORO, KY (MSA)
HANCOCK
$73,600
$97,150
ELIZABETHTOWN, KY (MSA)
HARDIN
$73,600
$97,150
NON-METRO
HARLAN
$73,600
$97,150
NON-METRO
HARRISON
$73,600
$97,150
NON-METRO
HART
$73,600
$97,150
EVANSVILLE, IN-KY (MSA)
HENDERSON
$73,600
$97,150
LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA)
HENRY
$73,600
$97,150
NON-METRO
HICKMAN
$73,600
$97,150
MADISONVILLE, KY (MICRO)
HOPKINS
$73,600
$97,150
NON-METRO
JACKSON
$73,600
$97,150
LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA)
JEFFERSON
$73,600
$97,150
LEXINGTON-FAYETTE, KY (MSA)
JESSAMINE
$73,600
$97,150
NON-METRO
JOHNSON
$73,600
$97,150
CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA)
KENTON
$73,600
$97,150
NON-METRO
KNOTT
$73,600
$97,150
NON-METRO
KNOX
$73,600
$97,150
ELIZABETHTOWN, KY (MSA)
LARUE
$73,600
$97,150
LONDON, KY (MICRO)
LAUREL
$73,600
$97,150
NON-METRO
LAWRENCE
$73,600
$97,150
NON-METRO
LEE
$73,600
$97,150
NON-METRO
LESLIE
$73,600
$97,150
NON-METRO
LETCHER
$73,600
$97,150
MAYSVILLE, KY (MICRO)
LEWIS
$73,600
$97,150
DANVILLE, KY (MICRO)
LINCOLN
$73,600
$97,150
PADUCAH, KY-IL (MICRO)
LIVINGSTON
$73,600
$97,150
NON-METRO
LOGAN
$73,600
$97,150
NON-METRO
LYON
$73,600
$97,150
RICHMOND-BEREA, KY (MICRO)
MADISON
$73,600
$97,150
NON-METRO
MAGOFFIN
$73,600
$97,150
NON-METRO
MARION
$73,600
$97,150
NON-METRO
MARSHALL
$73,600
$97,150
NON-METRO
MARTIN
$73,600
$97,150
MAYSVILLE, KY (MICRO)
MASON
$73,600
$97,150
PADUCAH, KY-IL (MICRO)
MCCRACKEN
$73,600
$97,150
NON-METRO
MCCREARY
$73,600
$97,150
OWENSBORO, KY (MSA)
MCLEAN
$73,600
$97,150
LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA)
MEADE
$73,600
$97,150
MOUNT STERLING, KY (MICRO)
MENIFEE
$73,600
$97,150
NON-METRO
MERCER
$73,600
$97,150
GLASGOW, KY (MICRO)
METCALFE
$73,600
$97,150
NON-METRO
MONROE
$73,600
$97,150
MOUNT STERLING, KY (MICRO)
MONTGOMERY
$73,600
$97,150
NON-METRO
MORGAN
$73,600
$97,150
CENTRAL CITY, KY (MICRO)
MUHLENBERG
$73,600
$97,150
LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA)
NELSON
$73,600
$97,150
NON-METRO
NICHOLAS
$73,600
$97,150
NON-METRO
OHIO
$73,600
$97,150
LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA)
OLDHAM
$73,600
$97,150
NON-METRO
OWEN
$73,600
$97,150
NON-METRO
OWSLEY
$73,600
$97,150
CINCINNATI-MIDDLETOWN, OH-KY-IN (MSA)
PENDLETON
$73,600
$97,150
NON-METRO
PERRY
$73,600
$97,150
NON-METRO
PIKE
$73,600
$97,150
NON-METRO
POWELL
$73,600
$97,150
SOMERSET, KY (MICRO)
PULASKI
$73,600
$97,150
NON-METRO
ROBERTSON
$73,600
$97,150
RICHMOND-BEREA, KY (MICRO)
ROCKCASTLE
$73,600
$97,150
NON-METRO
ROWAN
$73,600
$97,150
NON-METRO
RUSSELL
$73,600
$97,150
LEXINGTON-FAYETTE, KY (MSA)
SCOTT
$73,600
$97,150
LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA)
SHELBY
$73,600
$97,150
NON-METRO
SIMPSON
$73,600
$97,150
LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA)
SPENCER
$73,600
$97,150
CAMPBELLSVILLE, KY (MICRO)
TAYLOR
$73,600
$97,150
NON-METRO
TODD
$73,600
$97,150
CLARKSVILLE, TN-KY (MSA)
TRIGG
$73,600
$97,150
LOUISVILLE-JEFFERON COUNTY, KY-IN (MSA)
TRIMBLE
$73,600
$97,150
NON-METRO
UNION
$73,600
$97,150
BOWLING GREEN, KY (MSA)
WARREN
$73,600
$97,150
NON-METRO
WASHINGTON
$73,600
$97,150
NON-METRO
WAYNE
$73,600
$97,150
EVANSVILLE, IN-KY (MSA)
WEBSTER
$73,600
$97,150
CORBIN, KY (MICRO)
WHITLEY
$73,600
$97,150
NON-METRO
WOLFE
$73,600
$97,150
LEXINGTON-FAYETTE, KY (MSA)
WOODFORD
$73,600
$97,150

Why choose a USDA Mortgage?

  • The loans  require no down payment.
  • There are no prepayment penalties for USDA Kentucky USDA Mortgage Rural Home Loans
  • A USDA Kentucky USDA Mortgage Rural Housing has no monthly mortgage insurance.
  • A USDA Kentucky USDA Mortgage Rural Housing is available all rural areas of the country, provided a market exists for the property and the home meets HUD’s minimum property standards.
  • A USDA Kentucky USDA Mortgage Rural Housing Loan can be used to purchase a new or existing one family home in rural areas.
  • USDA RD LOANS are offered at terms of 30 years with a fixed interest rate.

USDA Loan FAQ’s

Kentucky USDA Mortgage Loans | Rural Housing Ky Loans

What is the Maximum LTV for a USDA Loan?
The maximum USDA rural loan  LTV can be up to 100% LTV plus the Agency guarantee fee.

Can Closing Costs be Financed into the Loan?
Yes, any difference between the contract price and the appraisal value can be used to finance normal closing costs for a Kentucky USDA Mortgage

What is a USDA Loan Guarantee?
USDA Rural Development Single Family Housing Program serves as a safety net for mortgage lenders. The USDA provides the full faith and assurance of the U.S. government that any financial loss resulting from servicing the loan will be reimbursed in full up to an amount not exceeding 90% of the original loan amount. All loss up to an amount not exceeding 35% of the original loan is fully reimbursed. Any loss amount exceeding the 35% is 85% reimbursed. This leaves the lender only 15% exposed on the loss amount above the 35% of original loan. In the majority of cases, the total loss does not exceed 35% of the original loan and the lenders are fully reimbursed. This guarantee provides lenders an expanded level of protection against losses. The quality of this guarantee allows lenders to easily sell the loans on the secondary market.

Kentucky USDA Mortgage Loans | Rural Housing Ky Loans

Louisville Kentucky USDA Loans               Lexington Kentucky USDA Loans               Fayette Kentucky USDA Loans

Owensboro Kentucky USDA Loans           Bowling Green Kentucky USDA Loans     Florence Kentucky USDA Loans

Paducah Kentucky USDA Loans Richmond Kentucky USDA Loans              Elizabethtown Kentucky USDA Loans


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