Tag: welcome home grant kentucky $5000

Kentucky Homebuyers Down Payment Grants for 2019


PRMI_Dreammakerdec 16Kentucky First Time Home Buyer Loans for 2019$6000 Kentucky housing grant for 2019 first time home buyersa8a1e-unnamed2B2528152529via Kentucky Homebuyers Down Payment Grants for 2019

Here are action steps you can take right now to buy a home in Kentucky in 2019

1. Focus on your credit score

FICO credit scores are among the most frequently used credit scores, and range from 350-800 (the higher, the better). A consumer with a credit score of 750 or higher is considered to have excellent credit, while a consumer with a credit score below 620 is considered to have poor credit.

To qualify for a mortgage and get a low mortgage rate, your credit score matters.

Each credit bureau collects information on your credit history and develops a credit score that lenders use to assess your riskiness as a borrower. If you find an error, you should report it to the credit bureau immediately so that it can be corrected.

2. Manage your debt-to-income ratio

Many lenders evaluate your debt-to-income ratio when making credit decisions, which could impact the interest rate you receive.

A debt-to-income ratio is your monthly debt payments as a percentage of your monthly income. Lenders focus on this ratio to determine whether you have enough excess cash to cover your living expenses plus your debt obligations.

Since a debt-to-income ratio has two components (debt and income), the best way to lower your debt-to-income ratio is to:

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.

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 45% 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.

3. Keep credit utilization low on your credit cards

Lenders also evaluate your credit card utilization, or your monthly credit card spending as a percentage of your credit limit.

Ideally, your credit utilization should be less than 30%. If you can keep it less than 10%, even better.

For example, if you have a $10,000 credit limit on your credit card and spent $3,000 this month, your credit utilization is 30%.

Here are some ways to manage your credit card utilization:

  • set up automatic balance alerts to monitor credit utilization
  • ask your lender to raise your credit limit (this may involve a hard credit pull so check with your lender first)
  • pay off your balance multiple times a month to reduce your credit utilization

4 . Look for down payment assistance in Kentucky

There are various types of down payment assistance, even if you have student loans.

Here are a few:

  • FHA loans – federal loan through the Federal Housing Authority
  • USDA loans – zero down mortgages for rural and suburban homeowners
  • VA loans – if military service
  • Kentucky Housing Down Payment Assistance of $6000

There are federal, state and local assistance programs as well so be on the look out.

If you want a personalized answer for your unique situation call, text, or email me or visit my website below:

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

American Mortgage Solutions, Inc.
10602 Timberwood Circle 
Louisville, KY 40223
Company NMLS ID #1364

Text/call: 502-905-3708

email: kentuckyloan@gmail.com

https://kentuckyloan.blogspot.com/

2019 Welcome Home Program for Kentucky Home Buyers.

2019 Welcome Home Program for Kentucky Home Buyers.


via 2019 Welcome Home Program for Kentucky Home Buyers.

 

Welcome Home Funds Kentucky $5000 Grant
What is the Welcome Home Program?
The Welcome Home Program (WHP) offers grants to fund reasonable down payments and closing costs incurred in conjunction with the acquisition or construction of owner-occupied housing by low- and moderate-income homebuyers. The grants are limited to $5,000 per homebuyer and Members are subject to an aggregate limit of $200,000 per offering. All funds are reserved for specific homebuyers purchasing specific homes and cannot be transferred to other homebuyers or to other homes. Welcome Home funds will be available for reservation on a first-come, first-served basis beginning at 8:00 AM ET on March 1, 2018, and will remain available until all funds have been reserved.
Who Can Use the WHP?
The FHLB has established a set-aside of Affordable Housing Program (AHP) funds to help create homeownership. These funds are available to Members as grants to assist their mortgage loan applicants in the home buying process. This is our most widely used program, ideally suited to the needs of community lenders and their customers. 
What are the Program Requirements?
Below is an abbreviated list of program eligibility requirements:
The total income for all occupants must be at or below 80 percent of the Mortgage Revenue Bond (MRB) limit for the county and state where the property is located. The FHLB has an Income and Affordability Workbook to assist in determining household income eligibility.
Homebuyers must contribute at least $500 of their own funds towards down payment and/or closing costs.
WHP applicants do not have to be first-time homebuyers. However, all first-time homebuyers are required to complete a homeownership counseling program.
WHP grant funds are intended only for homebuyers who qualify for the first mortgage based on their own merit. Co-signors and co-borrowers are not allowed unless they will occupy the home as their primary residence and their incomes are included in determining eligibility.
WHP grant funds may be used in conjunction with other local, state and federal funding sources and with the FHLB Cincinnati’s Community Investment Cash Advance Programs.
The Member who reserves the WHP funds must originate the first loan, but the loan may close in the name of a third party.
The interest rate for the first mortgage may not exceed 7.50 percent.
The interest rate for the second mortgage may not exceed 11.00 percent.
Only second mortgages provided by formal organizations, community development financial institutions, housing finance agencies, non-profit organizations, etc. are acceptable.
All eligible property assisted with WHP funds is subject to a five-year retention mechanism (Retention Agreement), which may require the household to repay all, or a portion, of the subsidy, if the home is sold or refinanced within five years from the closing of the transaction.
How Do I Apply?
Information for Homebuyers
Reserving WHP Funds
Homebuyers must apply with one of our Member institutions. Click here to search our Member Directory.
Members may reserve funds via the Welcome Home Program link through the FHLB’s Members Only portal by submitting an online Reservation Request with supporting documentation. Instructions for accessing Members Only may be found here.
The FHLB will perform a preliminary review of the Reservation Request and the documentation submitted to determine eligibility of the homebuyer, availability of funds in the program, and availability of funds for the Member. If any of the information is incomplete, additional documentation or information may be required. Note: The Reservation Request will be denied upon receipt if a fully executed loan application is not included.
Written notification will be provided to the Member as to the homebuyer’s eligibility. Submission of a Reservation Request does not constitute an approval of funds. Funds are reserved only upon written notification of approval from the FHLB.
Please allow four weeks for the FHLB to review the Reservation Request and supporting documentation.
Disbursing WHP Funds
Welcome Home funds will only be disbursed after closing. The FHLB has some general guidance and specific instructions that Members and Closing Agents should use in closing mortgages using Welcome Home funds. Funds will be disbursed only to the extent they are required to fill the gap for down payment, closing costs, and counseling fees.
Members may submit a Request for Payment of Reserved Funding with supporting documentation via the Welcome Home Program link through the FHLB’s Members Only portal. Submission of a Request for Payment of Reserved Funding is not an approval of funds disbursement. Once the Request for Payment of Reserved Funding has been reviewed and approved, funds will be disbursed to the Member. 
In the event the FHLB determines that funds were used for an ineligible expense, the grant will be reduced by the amount of the ineligible expense unless the household brings adequate funds to the closing to cover the amount of the ineligible expense. Under no circumstances will cash back to the homebuyer be permitted.
Please allow four to six weeks for the FHLB to review the Request for Payment of Reserved Funding and supporting documentation.

 

 

kentucky housing corporation welcome home funds$6000 Kentucky housing grant for 2019 first time home buyers

 

What is the Welcome Home Program?

The Welcome Home Program (WHP) offers grants to fund reasonable down payments and closing costs incurred in conjunction with the acquisition or construction of owner-occupied housing by low- and moderate-income homebuyers. The grants are limited to $5,000 per homebuyer and Members are subject to an aggregate limit of $200,000 per offering. All funds are reserved for specific homebuyers purchasing specific homes and cannot be transferred to other homebuyers or to other homes. Welcome Home funds will be available for reservation on a first-come, first-served basis beginning at 8:00 AM ET on March 1, 2018, and will remain available until all funds have been reserved.

 

Who Can Use the WHP?

The FHLB has established a set-aside of Affordable Housing Program (AHP) funds to help create homeownership. These funds are available to Members as grants to assist their mortgage loan applicants in the home buying process. This is our most widely used program, ideally suited to the needs of community lenders and their customers.

 

What are the Program Requirements?

Below is an abbreviated list of program eligibility requirements:

  • The total income for all occupants must be at or below 80 percent of the Mortgage Revenue Bond (MRB) limit for the county and state where the property is located. The FHLB has an Income and Affordability Workbook to assist in determining household income eligibility.
  • Homebuyers must contribute at least $500 of their own funds towards down payment and/or closing costs.
  • WHP applicants do not have to be first-time homebuyers. However, all first-time homebuyers are required to complete a homeownership counseling program.
  • WHP grant funds are intended only for homebuyers who qualify for the first mortgage based on their own merit. Co-signors and co-borrowers are not allowed unless they will occupy the home as their primary residence and their incomes are included in determining eligibility.
  • WHP grant funds may be used in conjunction with other local, state and federal funding sources and with the FHLB Cincinnati’s Community Investment Cash Advance Programs.
  • The Member who reserves the WHP funds must originate the first loan, but the loan may close in the name of a third party.
  • The interest rate for the first mortgage may not exceed 7.50 percent.
  • The interest rate for the second mortgage may not exceed 11.00 percent.
  • Only second mortgages provided by formal organizations, community development financial institutions, housing finance agencies, non-profit organizations, etc. are acceptable.

All eligible property assisted with WHP funds is subject to a five-year retention mechanism (Retention Agreement), which may require the household to repay all, or a portion, of the subsidy, if the home is sold or refinanced within five years from the closing of the transaction.

 

How Do I Apply?

Information for Homebuyers

Reserving WHP Funds

Homebuyers must apply with one of our Member institutions. Click here to search our Member Directory.

Members may reserve funds via the Welcome Home Program link through the FHLB’s Members Only portal by submitting an online Reservation Request with supporting documentation. Instructions for accessing Members Only may be found here.

The FHLB will perform a preliminary review of the Reservation Request and the documentation submitted to determine eligibility of the homebuyer, availability of funds in the program, and availability of funds for the Member. If any of the information is incomplete, additional documentation or information may be required. Note: The Reservation Request will be denied upon receipt if a fully executed loan application is not included.

Written notification will be provided to the Member as to the homebuyer’s eligibility. Submission of a Reservation Request does not constitute an approval of funds. Funds are reserved only upon written notification of approval from the FHLB.

Please allow four weeks for the FHLB to review the Reservation Request and supporting documentation.

Disbursing WHP Funds

Welcome Home funds will only be disbursed after closing. The FHLB has some general guidance and specific instructions that Members and Closing Agents should use in closing mortgages using Welcome Home funds. Funds will be disbursed only to the extent they are required to fill the gap for down payment, closing costs, and counseling fees.

Members may submit a Request for Payment of Reserved Funding with supporting documentation via the Welcome Home Program link through the FHLB’s Members Only portal. Submission of a Request for Payment of Reserved Funding is not an approval of funds disbursement. Once the Request for Payment of Reserved Funding has been reviewed and approved, funds will be disbursed to the Member.

In the event the FHLB determines that funds were used for an ineligible expense, the grant will be reduced by the amount of the ineligible expense unless the household brings adequate funds to the closing to cover the amount of the ineligible expense. Under no circumstances will cash back to the homebuyer be permitted.

Please allow four to six weeks for the FHLB to review the Request for Payment of Reserved Funding and supporting documentation.

Income limits for Welcome Home and DRP for 2019

Income limits are obtained from the state housing finance agency for each state.

Use the 80% limits for the Welcome Home Program.

Use the 100% limits for the Disaster Reconstruction Program.

 

Kentucky 

County 100% limits 80% limits
1-2 Persons 3 + Persons 1-2 Persons 3 + Persons
Adair $71,040 $82,880 $56,832 $66,304
Allen $71,040 $82,880 $56,832 $66,304
Anderson $69,400 $79,810 $55,520 $63,848
Ballard $59,200 $68,080 $47,360 $54,464
Barren $59,200 $68,080 $47,360 $54,464
Bath $71,040 $82,880 $56,832 $66,304
Bell $71,040 $82,880 $56,832 $66,304
Boone $78,300 $90,045 $62,640 $72,036
Bourbon $84,120 $98,140 $67,296 $78,512
Boyd $59,200 $68,080 $47,360 $54,464
Boyle $71,040 $82,880 $56,832 $66,304
Bracken $93,960 $109,620 $75,168 $87,696
Breathitt $71,040 $82,880 $56,832 $66,304
Breckinridge $71,040 $82,880 $56,832 $66,304
Bullitt $71,500 $82,225 $57,200 $65,780
Butler $71,040 $82,880 $56,832 $66,304
Caldwell $59,200 $68,080 $47,360 $54,464
Calloway $59,200 $68,080 $47,360 $54,464
Campbell $78,300 $90,045 $62,640 $72,036
Carlisle $71,040 $82,880 $56,832 $66,304
Carroll $71,040 $82,880 $56,832 $66,304
Carter $71,040 $82,880 $56,832 $66,304
Casey $71,040 $82,880 $56,832 $66,304
Christian $59,200 $68,080 $47,360 $54,464
Clark $84,120 $98,140 $67,296 $78,512
Clay $71,040 $82,880 $56,832 $66,304
Clinton $71,040 $82,880 $56,832 $66,304
Crittenden $71,040 $82,880 $56,832 $66,304
Cumberland $71,040 $82,880 $56,832 $66,304
Daviess $62,300 $71,645 $49,840 $57,316
Edmonson $71,040 $82,880 $56,832 $66,304
Elliott $71,040 $82,880 $56,832 $66,304
Estill $71,040 $82,880 $56,832 $66,304
Fayette $70,100 $80,615 $56,080 $64,492
Fleming $71,040 $82,880 $56,832 $66,304
Floyd $71,040 $82,880 $56,832 $66,304
Franklin $65,200 $74,980 $52,160 $59,984
Fulton $71,040 $82,880 $56,832 $66,304
Gallatin $93,960 $109,620 $75,168 $87,696
Garrard $71,040 $82,880 $56,832 $66,304
Grant $71,040 $82,880 $56,832 $66,304
Graves $59,200 $68,080 $47,360 $54,464
Grayson $71,040 $82,880 $56,832 $66,304
Green $71,040 $82,880 $56,832 $66,304
Greenup $59,200 $68,080 $47,360 $54,464
Hancock $62,300 $70,725 $49,840 $56,580
Hardin $61,500 $72,220 $49,200 $57,776
Harlan $71,040 $82,880 $56,832 $66,304
Harrison $71,040 $82,880 $56,832 $66,304
Hart $71,040 $82,880 $56,832 $66,304
Henderson $65,100 $74,865 $52,080 $59,892
Henry $85,800 $100,100 $68,640 $80,080
Hickman $71,040 $82,880 $56,832 $66,304
Hopkins $71,040 $82,880 $56,832 $66,304
Jackson $71,040 $82,880 $56,832 $66,304
Jefferson $71,500 $82,225 $57,200 $65,780
Jessamine $70,100 $80,615 $56,080 $64,492
Johnson $71,040 $82,880 $56,832 $66,304
Kenton $78,300 $90,045 $62,640 $72,036
Knott $71,040 $82,880 $56,832 $66,304
Knox $71,040 $82,880 $56,832 $66,304
Larue $73,800 $86,100 $59,040 $68,880
Laurel $59,200 $68,080 $47,360 $54,464
Lawrence $71,040 $82,880 $56,832 $66,304
Lee $71,040 $82,880 $56,832 $66,304
Leslie $71,040 $82,880 $56,832 $66,304
Letcher $71,040 $82,880 $56,832 $66,304
Lewis $71,040 $82,880 $56,832 $66,304
Lincoln $71,040 $82,880 $56,832 $66,304
Livingston $59,200 $68,080 $47,360 $54,464
Logan $71,040 $82,880 $56,832 $66,304
Lyon $60,500 $69,575 $48,400 $55,660
Madison $79,080 $92,260 $63,264 $73,808
Magoffin $71,040 $82,880 $56,832 $66,304
Marion $71,040 $82,880 $56,832 $66,304
Marshall $59,600 $68,540 $47,680 $54,832
Martin $71,040 $82,880 $56,832 $66,304
Mason $71,040 $82,880 $56,832 $66,304
McCracken $60,800 $69,920 $48,640 $55,936
McCreary $71,040 $82,880 $56,832 $66,304
McLean $74,760 $87,220 $59,808 $69,776
Meade $60,500 $69,575 $48,400 $55,660
Menifee $71,040 $82,880 $56,832 $66,304
Mercer $59,200 $68,080 $47,360 $54,464
Metcalfe $71,040 $82,880 $56,832 $66,304
Monroe $71,040 $82,880 $56,832 $66,304
Montgomery $71,040 $82,880 $56,832 $66,304
Morgan $71,040 $82,880 $56,832 $66,304
Muhlenberg $59,200 $68,080 $47,360 $54,464
Nelson $74,520 $86,940 $59,616 $69,552
Nicholas $71,040 $82,880 $56,832 $66,304
Ohio $71,040 $82,880 $56,832 $66,304
Oldham $71,500 $82,225 $57,200 $65,780
Owen $71,040 $82,880 $56,832 $66,304
Owsley $71,040 $82,880 $56,832 $66,304
Pendleton $93,960 $109,620 $75,168 $87,696
Perry $71,040 $82,880 $56,832 $66,304
Pike $71,040 $82,880 $56,832 $66,304
Powell $71,040 $82,880 $56,832 $66,304
Pulaski $71,040 $82,880 $56,832 $66,304
Robertson $71,040 $82,880 $56,832 $66,304
Rockcastle $71,040 $82,880 $56,832 $66,304
Rowan $71,040 $82,880 $56,832 $66,304
Russell $71,040 $82,880 $56,832 $66,304
Scott $84,120 $98,140 $67,296 $78,512
Shelby $75,200 $86,480 $60,160 $69,184
Simpson $59,200 $68,080 $47,360 $54,464
Spencer $85,800 $100,100 $68,640 $80,080
Taylor $59,200 $68,080 $47,360 $54,464
Todd $71,040 $82,880 $56,832 $66,304
Trigg $59,200 $68,080 $47,360 $54,464
Trimble $85,800 $100,100 $68,640 $80,080
Union $59,200 $68,080 $47,360 $54,464
Warren $59,200 $68,080 $47,360 $54,464
Washington $71,040 $82,880 $56,832 $66,304
Wayne $71,040 $82,880 $56,832 $66,304
Webster $71,040 $82,880 $56,832 $66,304
Whitley $71,040 $82,880 $56,832 $66,304
Wolfe $71,040 $82,880 $56,832 $66,304
Woodford $70,100 $80,615 $56,080 $64,492
 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

http://www.nmlsconsumeraccess.org/
If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/

— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

 

Frequently asked questions about the lending process

Frequently asked questions about the lending process


 

Source: Frequently asked questions about the lending process

Where do buyers begin?

Haley Newton, a loan officer with Starkey Mortgage in Sherman, said the first step in the buying process is not finding a house, rather it’s getting qualified for a home loan. Buyers need to first find out how much house they can afford and if they can actually purchase a home.

“A lot them want to know what the first step is, and many people believe that the first step is finding a house, but that’s actually the second step,” Newton said. “You want to get qualified with a local lender to know what you’re pre qualified for, and then go out and find a house, which is the hard part.”

What documents do buyers need to provide to get qualified and pre approved?

qualification is typically the quick and easy initial step and approval is a more involved process. The qualification process starts with an application, which most lenders have available online, though Newton said buyers can call a lender or meet them in person to fill it out. After buyers fill out an application, which covers the buyers’ finances and history, the lenders will verify the information for preapproval and that requires the supporting documents.

“Once they’re prequalified, we’ll give them a list of documents they need depending on their application,” Newton said.

The list typically calls for pay stubs from the last 30 days, tax returns for the last two years, bank statements for the last two months, W-2s, IDs and Social Security cards.

Jeremy Lewis, branch manager of Grayson Home Loans, said sometimes the lender may require divorce decrees and documentation to indicate other income depending on the buyers’ situation. After approval, Lewis said he usually gives the buyers a call, and they figure out a loan program that best fits the buyers.

How much do buyers need for a down payment?

Short answer: It depends on the loan.

Lewis said the down payment is often the main concern for buyers, and it’s not a set amount. Depending on the loan type and what programs the buyers are eligible for, the down payment can be as little as zero down. Loans from the Federal Housing Administration, Veteran Affairs and the U.S. Department of Agriculture each have a set of stipulations that include the percentage required for the down payment.

“It depends on the loan type they’re going with — whether it be a conventional loan, an FHA loan, a VA loan or a USDA loan, it will determine what they’re going to have to place down — what their initial investment is going to be,” Lewis said. “There are still those out there out there that think they have to put 10 to 20 percent down, which is not correct. They can, in certain programs, put as little as zero down.”

Newton said there are down payment assistance programs in the state that can help cover the amount needed. These programs are income based and are capped anywhere from $55,000 to $75,000 depending on the program.

What’s the deal with closing costs?

In addition to a down payment, buyers also need funds to cover the closing costs. Lewis said the closing costs depend on the loan amount as a higher loan amount is going to cost more. About half the closing costs are directed to building the buyers’ escrow account, and the other half is a combination of fees for items such as the title and appraisal.

“Closing costs are another piece of the puzzle they’re going to have to come up with,” Lewis said. “However, in a Texas residential contract, you can ask the sellers to pay a certain percentage, depending on the loan type, for your closing costs.”

Buyers can negotiate with the sellers and ask that the seller pays a portion of the closing costs, which if the buyers qualify for a down payment assistance program, the initial costs can be very low.

“If you’re able to use the down payment assistance programs in addition to requesting the seller to pay some of their closing costs, they can actually get into a home with little to nothing down,” Newton said.

What is an escrow account?

“It kind of works like a separate checking account, and the purpose of that account is to pay the yearly tax bill that comes due every January, and their insurance premium that’s due once a year depending on when they closed on their home,” Newton said.

The initial money put into the escrow account is part of the closing costs, and Lewis said homeowners then add to it monthly when they make their house payments. The account is for buyers to put back money so property taxes and insurance are covered.

“Say when their tax bill comes due in January, there will be plenty of money in the account for them to pay their taxes, so that way they’re not coming up $2 to 3 to 5,000 all at once to pay their tax bill,” Newton said.

Can buyers purchase a home with a bad credit score?

Newton said buyers don’t necessarily need the best credit in order to get a home loan, and she noted that first-time home buyer programs have recently lowered their credit score requirements.

“A lot people around here they don’t necessarily have bad credit, they just don’t have a lot,” Newton said. “They don’t use their credit.”

Newton said lenders will work with buyers and give them steps to take over 60 to 90 days to boost their credit score to where they can buy a home.

“It can be intimidating but we can walk them through it,” Newton said.

Buyers should consult with local lenders, and Lewis said he guides buyers through the process so they know what to expect.

“There’s so many different moving parts to a loan anymore,” Lewis said. “I try to keep everyone versed and ready for what’s to come in the process and what to expect.”

Joel Lobb
Senior Loan Officer
(NMLS#57916)American Mortgage Solutions, Inc.
10602 Timberwood Circle, Suite 3
Louisville, KY 40223

text or call my phone: (502) 905-3708
email me at kentuckyloan@gmail.com

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.

Joel E Lobb
American Mortgage
5029053708
email us here

Kentucky FHA, VA, USDA & Rural Housing, KHC and Fannie Mae mortgage loans.

Five strategies for first time home buyers Kentucky 2017


 

Source: Five strategies for first time home buyers Kentucky 2017

 

 

 

 

 

2017 Welcome Home Program for Kentucky Home Buyers.


 

 

10933976_744045655691636_1650736921471049254_n

2017 Welcome Home Program for Kentucky Home Buyers.

 

Photo post by @kentuckyloan.

Source: 2015 Welcome Home Program for Kentucky Home Buyers.

 

 

Kentucky General Mortgage Guide for Underwriting Approval

Kentucky Mortgage Underwriting Guidelines

Understanding  Mortgage mortgage underwriting guidelines will help you understand your loan options when purchasing or refinancing 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 Guidelines set in place when reviewing a borrower’s financial history to determine the likelihood of receiving on-time payments. The primary items reviewed are the following 5 areas below:


1. Income

2. Debt

3. Credit History

4. Savings

5. Debt vs Income Ratio



1.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.


2. 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.

3. 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.

4. Savings

Lenders evaluate savings for three reasons.

The more money a borrower has after closing, the greater the probability of on-time payments.

Most loan programs require a minimum borrower contribution.

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.

5. 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.

When your down payment is less than 20% you usually have to pay for Private Mortgage Insurance (PMI). This protects the lender in case you don’t make your house payments. This doesn’t mean you can blow off making your house payments — if you fail to pay, the bank will still repossess your house. The insurance company will pay the bank the difference between 20% and the amount you actually put down. If you put down 5% and default, the insurance company pays the bank the other 15% that you didn’t pay.

So the bank gets protected and you get to pay for their protection.What’s in it for you? What’s in it for you is that you get to buy a home for less than 20% down! Used to be that banks wouldn’t give you a loan under any circumstances unless you made a large down payment because they felt it was too risky. But now with PMI, banks will take loans with very low down payments, sometimes even 0% down. That makes it much easier for you to get into a home.
There’s no PMI on VA (veterans) loans, which is a nice bonus if you qualify for one of these.
You don’t shop for PMI.  If your lender requires it, they’ll choose it and add it automatically.
The PMI premium is paid monthly as part of your mortgage payment.  The smaller your down payment, the more expensive the PMI is.  My PMI Calculator will give you a good estimate.
PMI Calculator  (for 30-year loan)
Sale price
$
Down Payment
3% 
4% 
5% 
10% 
15% 
Interest Rate
%
Monthly payment (without PMI, taxes, or ins.) $
Monthly PMI cost (est.)
$
Total PMI costs over the life of the loan
$
Another way to do it is to divide the loan amount by 1300, 1500, 2300, or 3700 for loans with down payments of 3%, 5%, 10%, or 15% respectively. For example, let’s say you buy a $200,000 home and put 5% down. Your down payment is $10,000 and the morgtage is $190,000. Divide the $190,000 mortgage by 1500 and you get your monthly PMI cost, $127.

Canceling PMI

PMI is usually (but not always) canceled automatically once you own 22% of your home. It used to be that the insurance company would keep happily charging you the premium forever, since many homeowners didn’t know they could cancel. This was obviously taking advantage of the uninformed homeowner, so now insurance companies are required by law to automatically cancel your PMI as soon as you own at least 22% of your home, based on the original purchase price, although in some cases they’re not required to automatically cancel (which we’ll cover in a minute). Assuming you qualify for automatic cancellation, here’s how long it will take to reach 22% equity, depending on the length of the loan and the interest rate, ignoring any possible appreciation:

Time it takes to own 22% of your home
(for 5% / 10% and 15% down payments)
Interest Rate 15-year Mortgage 30-year Mortgage
6% 4 / 3 / 2 years 10.5 / 8.5 / 5.5 years
7% 4 / 3.5 / 2 years 11.5 / 9.0 / 6.5 years
8% 4.5 / 3.5 / 2.5 years 12.0 / 10.0 / 7.0 years
9% 4.5 / 3.5 / 2.5 years 13.5 / 11.0 / 8.0 years
10% 5 / 3.5 / 2.5 years 14.5 / 12.0 / 9.0 years

From this table you might think “Wait a minute — on a 30-year loan I should own about half of my house after about 15 years, but with a 10% interest rate and a 5% down payment you’re saying I’d own only 22%?! What gives?”
The answer is that because of how mortgage interest works, most of your payments in the early years goes to interest, not paying down your loan. On a 30-year loan of $100k at 7%, the payment is $665/mo., but when you make the first payment, a whopping $583 goes to interest, and a mere $82 goes towards owning the home. On 15-year loans a much higher percentage goes towards the home itself, which is why 15-year mortgages are a better deal if you can get them — and why you should try to pay off your loan in 15 years anyway if you can’t. There’s more on this in our section about paying off a loan early.
But let’s get back to PMI and canceling it. Of course, you don’t have to wait for the automatic cancellation at 22%. You can write to the insurance company and ask them to cancel your PMI coverage as soon as you hit 20% equity.
And here’s one more thing you can do: If your house has increased in value then you suddenly own a lot more of it, and you can cancel your PMI even earlier. For example, let’s say you put $5,000 down on a $100,000 home, and in a couple of years the value shoots up to $119,000 because it’s a hot real estate market. You own the $5000 you put into the house, plus the $19,000 it increased, for a total of $24,000. (You also own the equity you built from making mortgage payments, but because of how mortgage interest works, most of your payments for the first few years goes to interest and not principal, so we’ll ignore paid equity for our example.) So the $24,000 you own divided by the $119,000 value of the home means you own over 20% of your home. So you don’t need PMI any more. But to cancel the PMI you’ll need to convince the lender that your home is really worth $119,000 now, so you’ll have to pay for an appraisal which might run $400 or so. You’ll have to weigh the cost of the appraisal against the amount you’ll save by canceling PMI early to see if it’s a good deal for you.

When PMI is canceled automatically and when it isn’t

Don’t assume your PMI will be canceled automatically. Check this table.

Canceled Automaticallyif ALL are true Not Canceled Automaticallyif ANY are true
Conventional loans FHA loans
Loan signed on or after July 29, 1999 Loan signed earlier than that
All mortgage payments have been made on time in the year prior to PMI cancellation Any mortgage payments have been late
Buyer is not considered high risk Buyer is considered high risk
References
  • Article examining the overall advantage of PMI to homeowners, Auburn University, 1997
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