2016 Kentucky mortgage waiting period for foreclosures and short sales for specific situations
Kentucky Conventional Loans
Foreclosures: 7 years from the foreclosure completion date (some applicants may qualify for a conventional loan only 3 years after with extenuating conditions including wage earner death, illness or job loss)
Short Sale/Deed in Lieu-Short Sale:
7 year with less than 10% down of primary residence
4 years with 10% down on the purchase of a primary residence
4 years with 20% down on the purchase of a primary, secondary or investment property purchase
2 years with extenuating circumstances, only with 20% down
Kentucky FHA Loans
Foreclosures: 3 years from the foreclosure completion date and transferred back to the lender to the credit report date
Short Sale: 3 years from the title transfer date
Kentucky VA Loans
Foreclosure: 2 years from foreclosure completion date and date transferred back to the lender
Short Sale: 2 years from previous sale closed date and new owner transfer date
Kentucky USDA Loans
** If the mortgage debt that was foreclosed, was included in a Bankruptcy – then the KY USDA Home Loan waiting periods after foreclosure “waiting period” of 3 years, starts from the date of the discharge of the Bankruptcy. Because it can take 6 months or more for Banks to process the Foreclosure, and transfer title, this is a tremendous plus.
: 3 years from foreclosure completion date or sheriff sale of home
Credit scores range from 300 to 850. A good score is 670 and higher. A bad score is anything below 600. More than one-third of your score is based on payment history. Another third is how much you currently owe. Length of credit history makes up 15 percent. New credit makes up another 10 percent.
When it comes to mortgages and credit scores, there are two really important questions to ask:
–What credit score do I need to qualify for a mortgage?
–What credit score do I need to get the lowest interest rate on a mortgage?
These different but related questions are important if you are looking to buy a home. And the second question is particularly important. With a high FICO score, you can literally save tens of thousands of dollars in interest over the life of a home loan. So let’s take a look at both questions. And if you don’t know you score, be sure to get you free credit score.
What credit score do you need to qualify for a mortgage?
The first thing to keep in mind is that qualifying for a mortgage involves a lot more than just a credit score. While your FICO score is a very important ingredient, it is just one factor. Lenders also look at your income and level of debt, among other things.
As a rule of thumb, however, a credit score below 620 will make buying a home very difficult. A FICO score below 620 is considered sub-prime. In the past there were mortgage companies that specialized in sub-prime mortgages. Because of the challenges in the credit market over the last year or so, however, sub-prime loans have become difficult if not impossible to obtain.
A FICO score between 620 and 650 is considered fair to good credit. But keep in mind, this range of credit scores does not guarantee you will qualify for a mortgage, and if you do qualify, it won’t get you the lowest interest rate possible. Still, to buy a home aim for a score of at least 620, recognizing that other factors weigh in the decision and that some banks may require a higher score.
What credit score do you need to get a low rate mortgage?
It use to be that a score of about 720 would yield the lowest mortgage rates available. Today, the best rates kick in with a FICO score of 760. And interest rates go up significantly as your credit score drops. To give you an idea, the following table shows current rates by credit score and calculates a monthly principal and interest payment based on a $300,000 loan:
Eligibility Requirements for a Kentucky FHA Loan after September 15, 2015
When applying for eligibility for A Kentucky FHA Loans, There are some factors taken into account:
Credit score 620 and above with the mortgage investors we work with, even though FHA will insured lower credit scores, most mortgage lenders will create overlays
No bankruptcies (Chapter 7) in last 2 years with clean credit afterwards and 3 years after a foreclosure or short sale
3.5% Down payment. Can be gifted or money saved-up or money taken out of 401k or retirement account. No cash gifts or unsourced deposits are allowed for down payment on a FHA loan.
Debt to income ratios can be up to 55% on an Approved Eligible Files but restricted on manual underwrites to 31% and 43% respectively.
Overtime or bonus income needs to show a 2 year history for it be eligible for income qualifying on a FHA loan. FHA underwriters typically will take a 2 year average.
FHA appraisals with the new changes now call for the FHA appraiser to check and review the home more thoroughly, hence the typical costs of a FHA appraisal has gone from $325 to $425 due to more legwork involved on a FHA appraisal.
Any disputes on credit bureau will need to be taken out of dispute status typically for your credit scores to be validated, so please be aware of this.
Rent references are usually not called for unless your file get downgraded to a manual
FHA mortgage insurance the upfront and annual mi monthly fee is for life of loan.
A lender may approve a borrower if: acceptable payment history and no major derogatory credit on revolving accounts in the last 12 months. “Acceptable payment history” means: the borrower made all housing and installment debt payments on time for the previous 12 months, and there are no more than two 30‐day late mortgage or installment payments in the last 24 months. “Major derogatory credit” means: payments made more than 90 days after the due date, or 3 or more payments made more than 60 days after the due date.
Child support income is Allowed If using a voluntary payment agreement, the lender: obtains 12 months canceled checks, deposit slips, or tax returns. For divorce decree, legal separation agreement, or court order if there is evidence of receipt for the most recent 6 months, may use the current payment to calculate income, & if there are not 6 months of consistent payments, may average the income received over the prior 2 years, or less if the income has not been received that long 4000.1 II.A
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.
I specialize in Kentucky FHA, VA, USDA, KHC, Jumbo and Fannie Mae mortgage loans in Ky. I have helped over 589 Kentucky families buy their first home and refinance their current mortgage for a lower rate; For the first time buyer with little money …view more
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.
Do you have clients with no down payment? Do you have clients with some cash but they do not wish to exhaust all of it to buy a home? How many times have you pre-qualified an applicant only to realize that the mortgage insurance or higher interest rates keep them out of the price range needed to accommodate their family? The Rural Development guarantee may be able to help!
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What does it mean to be upside down on my mortgage?The terms “Upside Down”or “Underwater” simply mean that you owe more on your home loan than your property may appraise or sell for.The percentage that you are upside down is factored into what’s called a Loan-to-Value(LTV) ratio. So, if you owe $125,000 on a property that is valued at $100,000, then your LTV would be 125%.With the new updates to the HARP 2.0 program, borrowers with an LTV ratio greater than 125% may now qualify for a new refinance, provided they meet the other criteria.
What changes were made to HARP that may make me eligible now?There were several changes to HARP, but the primary enhancement removed the limit on the amount that homeowners could be underwater (owe more on their mortgage than their home is worth). With that change, many homeowners who were not eligible will now qualify.The amount a borrower owes on a mortgage compared to the appraised value of a property is called Loan-to-Value (LTV).With the release of “HARP 2.0” guidelines, the original 125% LTV Cap was lifted, which will essentially allow borrowers who owe more than 125% on their first mortgage the ability to qualify for a new refinance, provided they meet the other underwriting and program criteria.
Who is Fannie Mae?Fannie Mae is a government-chartered company with a mission to provide a stable source of funding to the U.S. housing and mortgage markets.The company purchases and securitizes mortgage loans to ensure that money is consistently available to financial institutions that lend money to home buyers.
What is the difference between a lender and a servicer?Your mortgage lender is the financial institution that gave you your mortgage loan.Your servicer is the financial institution that you send your monthly payment to. Your servicer is responsible for collecting your payments and crediting your account.You can find your mortgage servicer contact information on your monthly statement or coupon book.
Does Fannie Mae own my first and second mortgage?Fannie Mae generally owns primary (first-lien) mortgages only. A “Match Found” on the Fannie Mae Loan Lookup Tool means that they own the primary mortgage on the address entered in the search field.To find out who owns your second mortgage, refer to your monthly mortgage statement or contact the mortgage servicer to whom you send your monthly payment to.
What if I have an adjustable-rate mortgage (ARM)?HARP allows you to replace your adjustable-rate mortgage and many homeowners opt for a more stable fixed-rate mortgage.Every adjustable-rate mortgage is different, but refinancing may still provide you with a lower monthly payment, and allow you to avoid the sometimes large payment increase that comes once your ARM initial rate ends. The stability of a fixed monthly payment will give you security in knowing what you’ll owe every month.
Will the lender require an appraisal with a new HARP loan?Maybe – Even though the new updates to this program are intended to give borrowers with a Loan-to-Value (LTV) ratio above 125% the ability to refinance, lenders will still run an online valuation or require a full appraisal.Fannie Mae and Freddie Mac are updating their systems as this program progresses, but a good rule-of-thumb to follow is that loans under 125% LTV will generally not have an appraisal.If the appraisal is not conducted because of what is called PIW (Property Inspection Waiver), there will still be a $75 fees paid to Fannie Mae. Irrespective of what the appraisal value comes out to be, the loan would go through. However, some lenders may still cap the LTV to 150% – 200% or more, mainly depending on how the market reacts to this new program. Basically, expect LTV, Appraisal and Lending Limits to vary between lenders, and the time of the month.
Do I have to refinance through my current lender?No – As of March 19, 2012, Fannie Mae and Freddie Mac have opened this program up to non-servicing mortgage lenders.This is a huge benefit to borrowers in the fact that you have an opportunity to find a bank or mortgage broker who specializes in the new HARP program and can offer competitive rates.
I did not put 20% down when I purchased my property, but I do not have MI?If your current loan at the time of closing was over 80% and you are not paying a monthly Mortgage Insurance, most likely you have a Lender Paid Mortgage Insurance (LPMI).And yes, you would be able to refinance if you have an LPMI. Your lender will simply need to transfer the same coverage level from your current MI company to the new HARP 2.0 Refinance.
Can I Combine My First And Second Mortgage Into The New HARP Refinance?No – HARP does not allow for cash-out refinances or combining a first and second.Your new lender will order a subordination from your current second mortgage holder, which may require a fee.To quote the guidelines: “The refinance will not have a cash-out component, except for closing costs and certain de minimis allowances to cover items such as association fees, property tax bills, insurance costs, and rounding adjustments.
Will the lender need to verify income, assets and employment?Fannie Mae doesn’t expressly ask for Income, Employment or Asset verification for HARP 2.0 Loans. But, Fannie Mae suggests that the lender must obtain a verbal verification of employment (VOE) and verify the borrower’ss source of non-employment income, plus obtain any other income documentation as required by the Underwriting Findings Report.The borrower’s ability to repay the mortgage loan is based primarily on the acceptable payment history of the existing mortgage and the borrower benefit provisions. The acceptable payment history is no late in last 6 months and no more than one 30 days late in 7-12 months.If the borrower’s principal and interest payment is increasing more than 20%, the borrower must be re-qualified for the new loan, including verification of all income sources and amounts, and verification of any assets needed to close.Basically, your new lender will run your application through an online Fannie Mae or Freddie Mac approval engine, which will then provide a list of necessary documentation you need to prepare for loan submission.
Can I qualify for a new loan on an investment property or second home?All occupancy types i.e. Primary Residence, Second Homes and Investment Properties are allowed with HARP, even if the occupancy type has changed since the time of the original loan.Aliquam porttitor metus felis. Curabitur euismod porta justo ut mattis. Mauris condimentum ultrices justo, ac suscipit leo tempor eget
Are All Borrowers on the existing mortgage required to be on the new loan?Borrower(s) may be removed through the new transaction, provided that:a) The lender obtains documented evidence that the remaining borrower has been making payments from his or her own funds for the past 12 months, andb) The borrower(s) being removed is also removed from the deed.If the borrower(s) is being removed due to death, however, evidence that the remaining borrower(s) has been making payments from his or her own funds is not required.
Joel Lobb (NMLS#57916)
HARP REFINANCE QUESTIONS?
HARP 2.0 Refinance Guidelines for Fannie Mae and Freddie Mac Louisville Kentucky Mortgage Loans
You can determine whether your mortgage is owned by either Fannie Mae or Freddie Mac by checking the following Web sites:
Fannie Mae and Freddie Mac have adopted changes to the Home Affordable Refinance Program (HARP) and you may be eligible to take advantage of these changes. If your mortgage is owned or guaranteed by either Fannie Mae or Freddie Mac, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.
We Are Not The Government. All approvals and rates are not guaranteed, and are only issued based on standard HARP or other mortgage qualifying guidelines. Equal Opportunity Lending, Fair Credit, Truth in Lending, and their own local and state RESPA, or otherwise lending laws. Privacy Statement | Equal Housing