Tag: Down payment

Why You Can’t Get a Louisville Kentucky FHA, VA, KHC, USDA, Rural Housing and Fannie Mae Home Loan


Why You Can’t Get a Home Loan.

Why You Can’t Get a Louisville Kentucky FHA, VA, KHC, USDA, Rural Housing and Fannie Mae Home Loan

Credit

This is probably the most common hurdle. Lenders will have a qualifying credit score depending on the loan type, your background and other details. That baseline also applies to anyone else on the mortgage. So you might have an 800 credit score, but if your spouse is lagging at a 530, you’re going to struggle to obtain financing.

Even if you’re going it alone, lenders in community property states may still factor in your spouse’s credit. The average credit score for conventional purchase loans was 762 in September, according to mortgage software firm Ellie Mae. For FHA loans it was 701. Military borrowers interested in using their VA loan benefits will generally need at least a 620 score.

Debt-to-Income Ratio

Conventional and FHA lenders look at two different debt-to-income (DTI) ratios. The first, or front end, ratio compares your monthly income to your housing costs. The second, or back end, ratio considers the percentage of your income that goes toward major revolving debts like the mortgage payment, credit card bills, student loans and others.

Conventional lenders are generally looking for a 28 percent DTI ratio on the front end and 36 percent on the back end. For FHA loans, it’s more like 31/43. The VA program only uses the back-end ratio and wants to see 41 percent or less.

Your DTI ratio may not be an immediate application killer. Lenders calculate it based in part on your estimated monthly mortgage payment. It might break your heart, but you can always run the numbers with a lower loan amount to try and get that ratio into qualifying range.

Cash on Hand

Down payment requirements are here to stay (unless you qualify for a VA- or USDA-backed mortgage). Conventional lenders typically require at least a 5 percent downpayment, while the minimum on FHA loans is 3.5 percent. In addition, you’ll likely need to put down earnest money, which is basically a good-faith deposit with a seller, and be able to cover an appraisal, a home inspection and possibly other up-front costs.

Assets have become increasingly important in this tighter lending environment.

[Related Article: CFPB Could Pass New Mortgage Rules Soon]

Employment

Lenders want to see stable, reliable income and employment that’s likely to continue. The gold standard is generally two years, but that can vary depending on the lender, the loan type and the borrower’s circumstances.

For example, service members who separate from the military and take civilian jobs may not have to wait two years depending on how the new employment relates to their skillset, education and previous work serving our country.

What’s especially problematic is self-employment. There are a lot of unknowns for lenders here, and they’re almost always going to require at least two years of tax returns. Same goes for seasonal workers and those who work on commission.

Bankruptcy or Foreclosure

Foreclosure starts hit a 71-month low in November, according to RealtyTrac, but they’ve impacted hundreds of thousands of homeowners since 2008. More than 1.2 million people filed for bankruptcy protection in federal court in FY2012.

Each presents short- to medium-term obstacles to obtaining home loans. The waiting periods vary by event and by loan type. Bankruptcy means waiting anywhere from two to four years in many cases. The wait after a foreclosure can range from two to seven years.

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

 

Down-payment Assistance Programs Louisville and Kentucky


Down-payment Assistance Programs Louisville and Kentucky.

Can You Afford to Buy a House?


Can You Afford to Buy a House?.

Be sure to factor in all the costs

By Michelle Dawson | Realtor.com

Although the thought of paying a mortgage is more enticing than paying rent, it’s important to understand all the costs involved in buying and owning a home as you determine whether you can afford to join the ranks of homeowners.

Potential buyers sometimes forget to factor in the down payment, homeowners insurance and the possibility of depreciation, as well as the costs associated with closing the transaction, moving, purchasing major appliances, and home, landscape and pool maintenance, not to mention furnishings and design accessories once you move in.
The days of calling up the landlord to fix your problems come to an abrupt halt when you’re a homeowner. You’ll be responsible for everything from malfunctioning appliances to leaky faucets to broken heating and air conditioning units and everything in between. And if you buy an older home, you’ll probably eventually encounter costly repairs, such as replacing the roof or windows.
To determine whether you can afford to buy a home, you should do the following:
1. Determine the property value of homes that interest you. The property value (what the home is worth) is determined by comparing the prices of homes recently sold of similar size in the same neighborhood. Your real estate agent will be able to provide this information to you.
2. Review different mortgage loan types and compare their required down payment amounts to the money you have available. Down payments, based on a percentage of the value of the property and determined by the type of mortgage you select, typically range from three to 20 percent of the property value. Don’t forget to factor in private mortgage insurance, a policy that allows mortgage lenders to recover part of their financial losses if a borrower fails to full re-pay a loan. Mortgage insurance makes it possible to buy a home with as little as 3 percent down. Usually, the lower the down payment, the higher the PMI, which typically will cost somewhere between $40 and $125 a month.
3. Get an estimate of your closing costs, including points (the dollar amount paid to a lender for obtaining a lower interest rate on a loan—one point is one percent of the loan amount), taxes, recording, inspections, prepaid loan interest, title insurance (a policy that insures a home buyer against errors in the title search; cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller) and financing costs from your mortgage lender or a real estate professional. These will generally add up to between 2 and 7 percent of the property value. You’ll receive an estimate of these costs from your lender after you apply for a mortgage.
4. Add the down payment requirements and the closing costs together to determine the amount of money you’ll need right off the bat. But you’re not done yet.
5. Think about the actual move. Will you hire a moving company or rent a truck? Either way will cost you. The more stuff you have, the more it will cost.
6. Property taxes. Many lenders will require an impound account in which monthly payments for property tax (and often insurance) are paid together with the monthly mortgage payment. You can figure your average annual tax rate will be about 1.5 percent of the purchase price of your home.
7. Next, budget for maintenance and repairs. HouseMaster, a home inspection company with 300 franchises nationwide, said that based on a study that evaluated 2,000 inspection reports, the typical costs of major repairs are:
  • Roofing: $1,500 to $5,000
  • Electrical systems: $20 to $1,500
  • Plumbing systems: $300 to $5,000
  • Central cooling: $800 to $2,500
  • Central heating: $1,500 to $3,000
  • Insulation: $800 to $1,500
  • Structural systems: $3,000 to $1,500
  • Water seepage: $600 to $5,000
Once you crunch the numbers and find you come up a bit short, investigate ways to reduce or creatively fund your down payment—it can come from a variety of sources. Check with your realtor or lender to find out what’s available.
You’ll also need to factor in the cost of homeowners insurance. In addition to the type of construction, age of the home, your credit history and past insurance history, new issues like litigating costly toxic mold cases are raising homeowners insurance rates.
In fact, the National Association of Insurance Commissioners reports that homeowners will spent an average of $822 on homeowners insurance in 2007, the last year data was available.
In your final analysis of whether you can afford to buy a home, you’ll want to weigh the costs with the financial benefits—a consistent mortgage payment (unlike rent, which can increase), the tax benefits (you can deduct, in most cases, mortgage interest, closing costs, and property taxes), and the all-important appreciation factor—the rate of increase in a home’s value.
And of course, you’ll want to weigh perhaps the biggest benefit of all—having a place to call your own.

2013 First Time Home Buyer Mortgage Loans in Louisville Kentucky


To get a First time home buyer loan in Louisville Kentucky in 2013, you will need to look at these following three first time home buyer loans program in Louisville.

Louisville Ky First Time Home Buyer Loan

1. Louisville KY FHA Loan Program-This program allows for 3.5% down payment and low 30  30 year fixed rate loans currently. The minimum credit score for a Louisville KY FHA loan with us is 640. You have three scores, and we take the middle credit score.

The down payment can be saved or gifted from a family member, or borrowed from a 401k loan . The 3.5% down payment cannot be borrowed from a lending instiution or off a credit card.

The current debt to income ratios for a Louisville KY FHA loan is 31% and 43%. This means  that your current house payment, with taxes and insurance included, cannot be more than 31% of your gross monthly income. The 43% means the new house payment and total debts on credit report along with child support or 401k loans.

For example if you made 4k gross a month, the maximum house payment would be $1240 piti, and the maximum total bills outstanding each month, including new house payment would be $1720.00

There are some compensating factors that will allow for a higher house payment if you have  good credit scores (740 score or higher) and a large down payment. (more than the minimum 3.5% down payment)

If you have had a bankruptcy or foreclosure in the past, you will have to need be out of the  bankruptcy for at least 2 years with good reestablished credit and a foreclosure must be 3 years from the when the masters commissioners deed was filed at courthouse.

2. Fannie Mae Loan Program -This requires 5% down, and it must be from your own saved funds, no gifted funds from family members. The 30 year fixed rate is a little higher than the FHA loan, but the mortgage insurance is much cheaper. If you have a credit score of 740 or higher, and can put down the 5%, this is better program for you due to lower monthly payments and less upfront and monthly mortgage insurance.

Most lenders will want a 680 credit score, with less than 20% down, and the seasoning for foreclosures and bankruptcies are much tougher than the FHA loan program.

Fannie Mae will require 5 years or more on a foreclosure, and 4 years on a bankruptcy.

The debt to income ratios are a little tougher too, with them being at 35% and 45% respectively.

3. Louisvile Kentucky VA Loan Program -This requires no down payment, but you must be a qualified veteran or active duty military to participate in the program. The current minimum credit score is 620, with no bankruptcies or foreclosures in the last 2 years.

The maximum debt to income ratio is usually set at 41%, but can go higher with compensating factors, such as over 740 credit score, large down payment, or high residual income. The residual income is set by each region, and you can clink the link below for more info about this .http://kentuckyvaloan.com

 502 905 3708
kentuckyloan@gmail.com
NMLS #57916
Jo

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.

Louisville Ky First Time Home Buyer


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Louisville Ky First Time Home Buyer Loan

Many home loan programs have been specifically created for first time home buyers. These loans feature low down paymentsand approval guidelines that make it easier to qualify. Some of the more popular first time homebuyer programs are listed below. .

Louisville KY First Time Buyers Loans

What is a First Time Buyer Loan?

Kentucky FHA and VA Loans for First Time Buyers

Who is Eligible for a Kentucky First Time Buyer Loan?

Louisville Ky Community Home Buyer Programs

What is Escrow?

Mortgage Credit Certificates from KHC

What is a First Time Buyer Loan?

Many people dream of owning a home but the home loan process can be confusing for many first time home buyers. Mortgage lenders offer first time buyers with many home loan options and assist the buyer in finding the best home loan for them. First time home buyer programs can offer lower interest rates, low down payments, or reduced taxes.

FHA and VA Loans for First Time Buyers Apply Online

First time homebuyers often experience the most difficulty amounting a significant down payment and everyone should have the opportunity to buy a home. For this reason the Federal government has developed two loan programs to assist homebuyers that have a little or no down payment. These programs are called the Kentucky Federal Housing Administration (FHA) and the Kentucky Veteran’s Administration (VA). These programs are not solely intended for first time home buyers; your home loan advisor will be able to determine if you qualify and if so which program is acceptable for your needs. Kentucky FHA and VA loans can be especially advantageous when combined with a HFA or MCC first time homebuyer program.

AWho is Eligible for a First Time Buyer Loan?
Kentucky First time home buyer programs are designed to help borrowers who may not have enough money to pay the full cost of the down payment or the closing costs on a mortgage. These programs make obtaining a mortgage more cost effective. There are even programs specifically for residents of each state. First time home buyer programs are available to those who have not owned a home for the past three years.

Community Home Buyer Programs
Kentucky  Community homebuyer programs reduce the down payment the borrower must pay to 3%, which must be the borrower’s own funds. The closing costs can be gift funds, a grant, or seller assistance up to 3% of sale price. This type of home loan requires the home buyer to take a class on home ownership in their state. Upon completion of the class, the homebuyer will receive a certificate that reduces the cash requirement and expands the qualification ratios. Community homebuyer programs have been making it possible for many people to have the opportunity to buy a home.

What is Escrow?

Escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of an event. In simpler terms, escrow is where the transaction changes hands and prevents the seller from not receiving the money from the sale and prevents the buyer from not receiving the home that was purchased. Escrow is important to both buyers and sellers during the mortgage process.

Mortgage Credit Certificates
A Mortgage Credit Certificate or MCC from KHC -Kentucky Housing Corp is a certificate awarded by your local government agency authorizing the home loan borrower to take certain federal income tax credits. The credits awarded help to free up funds and make the monthly home loan payments more affordable for the homeowner. First time home buyers are typically the candidates eligible for an MCC but in special cases that you may discuss with your home loan advisor this requirement may be waived. Income and purchase price requirements also vary state to state and should be covered in conversations with your home loan representative.

Louisville Ky First Time Buyers Program
First time buyer programs in Louisville can make securing a Louisville home loan easier and more affordable. Contact us at 502-905-3708 for your Louisville Ky  mortgage to begin your first time buyer loan.

Interest Rates

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KHC Mortgage Interest Rates as of 11/09/2011, 10:00 a.m. ET

Rates subject to change without notice.

Secondary Market Interest Rates

Loan Type

Rate without DAP*

Rate with DAP

FHA only

3.875%

4.250%

RHS only

3.875%

4.250%

VA only

3.875%

4.250%

* DAP – Down Payment Assistance Program, including Regular DAP and HOME DAP

 

MRB Interest Rates

  • NEW – EFFECTIVE WITH RESERVATIONS BEGINNING ON 11/7/2011
  • For all approved KHC lenders
  • 60-day reservation for new and existing properties

640+ Credit Score Mortgage Revenue Bond (MRB) Interest Rates

  • KHC-funded down payment assistance may be utilized with these rates

Loan Type

Rate without DAP

Rate with DAP

*Government Rates only

4.250%

4.375%

* Government includes FHA, RHS, and VA.

 

object_preapproval

 

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.

 

Louisville Ky FHA Loans


Louisville Ky FHA Loans

The Federal Housing Administration (FHA) is a federal agency within the U.S. Department of Housing and Urban Development (HUD). FHA’s primary objective is to assist in providing housing opportunities for lo to moderate income families. FHA has both single family (1-4 unit homes) and multi-family (5 or more units) mortgage lending programs. The agency does not generally provide funds for the mortgages, but rather insures home mortgage loans made by private industry lenders such as mortgage bankers, savings and loans and banks.


Is there a Loan Limit on Louisville Ky FHA Loans?
FHA Maximum Loan Amounts are set by HUD for every county in the United States. Maximum loan amounts vary from one county to another. It is critical that the borrower’s loan amount, including financed closing costs, not exceed the maximum set by FHA for the county in which the subject property is located. There are no income limits on Louisville Ky FHA Loans  . Check with you Loan Consultant for the maximum Mortgage amount allowed in the county you are considering purchasing a home in.


Is Mortgage Insurance Required On Louisville Ky FHA Loans?
FHA is a government insured program with a unique mortgage insurance program. Although not as expensive monthly, you have an up front MIP fee. FHA requires a mortgage insurance premium on the 203(b) program. An up front premium of  1.0% of the loan amount is paid at closing and can be financed into the mortgage amount. In addition there is a monthly MIP amount included in the PITI of 1.15% . Condos do not require up front MIP, only monthly MIP.


Can I Use Gift Funds for the Down Payment for a Louisville Ky FHA Loans   ?

One of the most popular aspect of FHA financing is the ability to receive your down payment as a gift. It just needs to be from a relative. The down payment can be 100% gift funds. This is one of the key benefits to the Louisville Ky FHA Loans and FHA program. Most conventional mortgages do not allow 100% gift funds. Generally the borrower must have 5% of the funds.

Verification of the source of gift money is not required. However, it is necessary that the gift funds be deposited in the borrower’s bank account, or in an escrow account, prior to underwriting approval. Proof of deposit is required.

Gift donors are restricted primarily to a relative of the borrower. They can also be certain organizations, such as a labor union or charitable organization. Contact your Loan Consultant for complete information.


What are the Rules Regarding Bankruptcy for a Louisville Ky FHA Loans?
FHA may have the most lenient policies towards bankruptcy, but you still must have a valid reason and re-established credit. Generally, a bankruptcy will not necessarily disqualify a potential borrower. Guidelines are as follows:

Chapter 7: Two years must have passed since the bankruptcy was discharged. (Note: Discharge, not Filing Date) The borrower must have re-established good credit without delinquencies for two years (or has chosen not to incur new credit obligations), and has demonstrated an ability to manage financial affairs. If the borrower does not incur new credit, such thing as, Car Insurance, Telephone, Cable, Utilities, Medical Payments, Etc. will be used to demonstrate re-established credit.

Chapter 13: A borrower currently paying off debts through this process may qualify if a minimum of one year of the pay out period had elapsed and payment performance has been satisfactory with no new derogatory credit and the borrower must receive court approval to enter into the mortgage transaction.

Louisville Ky FHA Loans

Call me for your next Louisville Kentucky FHA Loan; I have closed over 300 FHA loans in my career

Current kentucky housing KHC interest rates


Interest Rates

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KHC Mortgage Interest Rates as of 06/20/2011, 9:00 a.m. ET

Rates subject to change without notice.

 

 

700+ Credit Score Mortgage Revenue Bond (MRB) Interest Rates     

 

 

 

 

Loan Type

Regular Rate

Zero-Point Rate

*Government Rates only

4.250%

4.625%

 

640+ Credit Score Mortgage Revenue Bond (MRB) Interest Rates 

  • KHC-funded down payment assistance may be utilized with these rates

 

 

 

Loan Type

Regular Rate

Zero-Point Rate

*Government Rates only

4.500%

4.875%

* Government includes FHA, RHS, and VA.

 

660+ Credit Score Mortgage Revenue Bond (MRB) Conventional Interest Rates     

 

 

Loan Type

Regular Rate

Zero-Point Rate

*Conventional Rates

4.250%

4.625%

  • Maximum LTV 80%**
  • No down payment assistance allowed – must be borrowers’ own funds or gift funds
  • AUS required

**At the present time, KHC is not offering a conventional product at 81% or greater LTV.