How to qualify for a Kentucky FHA Home Loan ?

How to qualify for a Kentucky FHA Home Loan ?

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FHA stands for the Federal Housing Administration which is a government agency created to increase home-ownership across the United States all the way back in 1934. The agency itself doesn’t offer home loans but insures loan that are offered by private lenders (i.e. mortgage companies).

It’s important to understand the different types of loan programs available to you and what benefits and drawbacks there are to each type.

For example, if you’re looking to find a fixer upper this may not be the right loan program for you. But an FHA loan may be a better fit for you if you have little cash saved up for a down payment or if you don’t have a high credit score.

Kentucky FHA loan requirements:

  • At least 18 years old to apply
  • No age limit. just must be 18 years of age to apply.
  • Must occupy the home as a primary residence, no rental homes or investment property
  • An appraisal must be done by an FHA-approved appraiser.Typically FHA appraisal in Kentucky costs anywhere from low-end $325 to $525 with most FHA lenders in KY.
  • Home inspection is not required
  • Termite inspection not required
  • 2 years removed from Chapter 7 bankruptcy, and 1 year in Chapter 13 bankruptcy is possible to get a loan while in bankruptcy
  • Foreclosure or short sale on previous home mortgage requires 3 years removal from those dates.
  • Mortgage insurance (MIP) is required
  • Upfront Mortgage Insurance Premium is 1.75% and monthly mortgage insurance is .85% or .80% depending on loan term and loan to value.
  • Mortgage insurance is for life of loan.
  • No matter your credit scores, everyone pays the same mortgage insurance premiums.
  • Must have 2 years of employment history proving a reliable source of income
  • 500 FICO score requirement with at least 10% down payment
  • 580 FICO score requirement with at least 3.5% down payment
  • Gifts and down payment assistance programs are allowed to meet your down payment requirements. Cannot come from seller, but seller can contribute up to 6% of the sales price toward buyer’s closing costs and prepaids.
  • Student loan payments are factored into the debt-to-income ratio when applying. Typically if loans are deferred, or in an income=based repayment plan, the FHA underwriters will use 1% of the outstanding balance, which sometimes can make it difficult to qualify.
  • Your debt-to-income ratio must not be higher than 31% or total debt obligation cannot be higher than 43% of your current income. This is for a manual underwriter, meaning that if the AUS underwriting system by mortgage lenders will approve you for a higher debt to income ratio, that is fine.

 

New FHA loan limits for 2019 in Kentucky:

The Kentucky FHA has a maximum loan limit it will insure. These Kentucky FHA loan limits are updated each year and are influenced by the conventional loan limits set by Fannie Mae and Freddie Mac. Other things like the type of home (i.e. duplex or single-family) can also affect the FHA loan limits. *

For low-cost areas, the loan limit increased from $294,515 to $314,827 for all Kentucky Counties in 2019. . You can check the FHA loan limits in your area here.

 

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.

FHA vs Conventional Infograhic
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Kentucky FHA Loan Louisville Kentucky Mortgage Guidelines

How are collections treated on a Mortgage loan in Kentucky for a FHA and Conventional Loan Approval?

Collection agency, Collections Accounts, collections fha loan, Credit and Collection, credit report, Credit Scores, fha collections, fha loan

Kentucky First Time Home Buyer Loan Programs for FHA, VA, KHC, USDA, Mortgage Loans in Kentucky for 2019

Collection Account Tips for Fannie Mae and FHA Loan in Kentucky. Do they have to be paid to get approved for a Kentucky Mortgage Loan?
Collection accounts  on the credit report can sometimes hurt your chances of getting approved for a Kentucky Mortgage loan in Two ways:
First, if collections are recent, they may drag down your credit score, and secondly, if large enough, sometimes they are required to be paid before closing and final loan approval
Collections accounts for a debt that have been submitted to a collection agency by the creditor generally due to nonpayment. Below are general tips and guidance on what the FHA and Fannie Mae Underwriters will require when collection accounts are reporting on a borrower’s credit report. Accounts that are reported as past due but not yet turned over to a collection agency must be brought current. These past due accounts are not considered…

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Kentucky Private Mortgage Insurance or PMI

Credit score, Down payment, Fannie Mae, Federal Housing Administration, FHA, First-time buyer, Kentucky, Kentucky Housing Corporation, Kentucky-Louisville, louisville, Mortgage, Refinancing, USDA, VA loan

Kentucky First Time Home Buyer Loan Programs for FHA, VA, KHC, USDA, Mortgage Loans in Kentucky for 2019

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Student Loans In Collections, What Can I Do to get Approved For A Kentucky Mortgage ?

Student Loans In Collections, What Can I Do?
If you have public student loans in collections, you really have three options to resolve it so it is not a CAIVRS issue.
1.      Pay it off in full – Not typically an option because very rarely do the clients have the funds to do so.
2.      Consolidation – Only takes about 90 days to consolidate and resolve CAIVRS issues. However, you push forward the last activity dates, DLA, and also introduce a new credit trade line that dilutes the length of the credit history. So you will normally see a drop in credit score.
3.      Rehabilitation – It is the slowest of all the options, but is the best thing for the clients’ credit scores. It is a 9 month commitment and once the client makes 9 consecutive payments, they will change the collection status to a good standing status. This will typically net a 40-100 point boost in the score depending on how many other collections are on the credit report.
If your client does not know who is servicing the student loan, they can contact the Student Loan Default Resolution Team at 1-800-621-3115 or visit the website at myeddebt.ed.gov
Bonus Tip: Private student loans do not adhere to consolidation or rehabilitation rules. If the client has private student loans in collections they will need to pay them off in full, or they will need to set up a payment plan on them. They will still remain in collections with a payment, but if you can get a qualified credit score you can push forward the loan including the liability payment towards the debt to income ratio.
As always, we bring you the best content so you can do what you do best, CLOSE LOANS! If you aren’t already sending us every credit challenged borrower you have, what is stopping you?
Guidelines for KY FHA, VA, USDA and VA Mortgage loans with Student Loans on A Credit Report:
Kentucky Fannie Mae or Conventional Guidelines for Student Loans:
  • If a monthly payment is on the credit report, the lender may use that amount for qualifying purposes.
  • If a monthly payment is on the credit report is incorrect, the lender may use the monthly payment on the most recent student loan statement
  • If the monthly payment on the credit report is zero, the lender must use one of the following options to calculate the payment for qualifying purposes
  1. Document the borrower is on an income driven payment plan and the actual monthly payment is zero
  2.  Use 1% of the outstanding student loan balance as the monthly payment
  3. Calculate a fully amortized payment using documented loan repayment terms
Kentucky FHA Mortgage Loans Guidelines:
Regardless of the payment status (currently in payment or deferred), the lender must use either:
  • The greater of:
  1. 1% of the outstanding balance; or
  2. The monthly payment reported on the credit; or
  •  Calculate a fully amortized payment using documented loan repayment terms
Kentucky USDA or Rural Housing Guidelines:
 
 
Regardless of the payment amount reporting on the credit, the lender must include the payment as follows:
  • A permanent amortized, fixed payment may be used in the debt ratio when the lender retains documentation to verify the payment is fixed, the interest rate is fixed, and the repayment term is fixed.
  • Payments for deferred loans, Income Based Repayment (IBR), Graduated, Adjustable, and other types of repayment agreements which are not fixed cannot be used in the total debt ratio calculation. One percent of the loan balance reflected on the credit report must be used as the monthly payment. No additional documentation is required.
Kentucky  VA Mortgage Guidelines for Student Loan:
  • If the borrower can document the student loan will be deferred 12 months from the closing date, the monthly payment does not need to be considered
  • If a student loan is in repayment or scheduled to begin repayment within 12 months from the closing date, the threshold payment amount must be calculated by  using 5% of the loan balance divided by 12 months
  • If the payment reporting on the credit report is greater than the threshold payment calculation amount, then the credit report payment must be used for ratios.
  • If the payment reporting on the credit report is less than the threshold payment calculation and the lender is using the lower payment to qualify the borrower then:
  1. A statement from the student loan servicer reflecting the actual loan terms and payment information must be included in the file.
  2. The statement must be dated within 60 days of closing
  3. It is the underwriter’s discretion to use the lower payment

As you can see, Fannie Mae or Conventional loans is the most lenient when it comes to qualifying for a mortgage loan with someone that has a lot of student loans on their credit report.

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

click here for directions to our office

Text/call:      502-905-3708
fax:            502-327-9119
email:          kentuckyloan@gmail.com

https://www.mylouisvillekentuckymortgage.com/

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#57916 http://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.

Credit Scores on your mind ?

Here are tips for improving your credit score

Pay your bills on time. Late payments can hurt your score significantly. If you have missed payments, get current and stay current. The more you pay your bills on time, the better your score.
Open a secured credit card ( 2 of them) for the both of you.

Keep credit card balances low relative to credit limits (30 percent or lower is recommended). “Maxing out” your credit cards means you have a very high utilization rate, which significantly lowers your credit score.

Here are NerdWallet’s picks for the best secured credit cards.

Lowest deposit for people with no credit: Capital One® Secured MasterCard®
For a deposit of $49, $99 or $200, depending on your credit history, you’ll get a limit of $200;
the annual fee is $0.

Capital One Secured MasterCard Credit Card
(86)
Apply Now
on Capital One’s
secure website

Benefits of the Capital One® Secured MasterCard®:

Unlike most secured cards, it’s possible to get a credit limit on this card that’s higher than the security deposit you put down. You can get a limit of $200 for a $49, $99 or $200 deposit.
You can make partial payments on your deposit, as long as you provide the full amount within 80 days of being approved. You’ll get access to your full credit line before that time.
There’s no penalty APR.
This card reports to the three major consumer credit bureaus, which is somewhat rare among secured cards.
You can track your credit-building with Capital One’s Credit Tracker.

Best for bad credit or no checking account: OpenSky® Secured Visa® Credit Card

Capital Bank Open Sky Secured Credit Card
(3)
Apply Now
on Capital Bank’s
secure website

Benefits of the OpenSky® Secured Visa® Credit Card:

You can qualify for this card within minutes. The bank doesn’t run a credit check and doesn’t require a checking account, unlike other major issuers.
Since the annual fee is $35, this card is a relatively affordable way to improve a severely damaged credit score.
The card reports to the three major consumer credit bureaus.

Credit Score

While the items on your credit report matter, you’ll also need to watch your FICO score. There are many different types of credit scores out there. You have the individual credit bureaus scores (Experian, Trans Union, and Equifax), FICO scores, Vantage Scores, and industry specific scores. However when looking to purchase a home you will want to watch your FICO as it is used in an overwhelming majority of mortgage related credit evaluations.

Also it’s important to note that FICO changes the way they evaluate creditworthiness based on new information and changes in the market. They have recently release FICO version 9. Since the majority of mortgage lenders still use an older FICO scoring model, when evaluating and monitoring your score, FICO recommends you use one calculated from a scoring model previous to Version 8.

When evaluating your FICO score it’s good to know that a score above 700 is considered excellent while a score under 620 is considered poor. You may secure a mortgage with a low FICO score but your interest rates will be subprime. In the case of a mortgage, it may be beneficial to wait until you’ve raised your credit score.

FICO has a great calculator on their web site to help you plan on when is a good time to get a mortgage loan depending on your credit score. It will help you determine if the savings you will receive with a higher score are worth the wait and energy required to increase your credit score.

Here are six tips for improving your credit score for a fresh financial start in 2017.

1. Pay Your Monthly Bills on Time
Paying monthly bills is a necessary chore that has a definite effect on your credit score. According to the FICO scoring model, your payments account for as much as 35 percent of your total score. Create reminders for due dates or establish a calendar for yourself to ensure you get everything paid on time.

2. Reduce Your Debts
Got credit card debt? Start paying it off now. Part of your credit score is based on the amount of available credit you have, known as your credit utilization ratio. So if you’re carrying high balances, you’ll want to lower them as soon as possible. Create a personal budget with a goal of reducing your spending so that it’s lower than your income. Then, use any monthly surplus for your credit card debts until they’re gone for good.

3. Limit Credit Inquiries
Looking for a new apartment? What about a mortgage? In either situation, try and group your applications together as much as possible. Applications for new lines of credit will generate a “hard pull” on your credit, and having too many of them in a short period of time can lower your score. However, credit reporting agencies usually consider a group of applications within a short period of time as one pull, as long as they’re in the same category.

Similarly, limit yourself to opening up no more than one or two credit cards per year, which also generate hard pulls. Even if you get a ton of offers in the mail for stellar sign-up bonuses, they’re likely to be offset by the damage to your credit. FICO reports that new credit and credit inquiries account for 10 percent of your total score.

4. Don’t Cancel Old Cards
Have a card you don’t use anymore? Don’t close it. This can negatively affect your score as it lowers your amount of available credit. Instead, use it about once per month and don’t forget to pay the bills in full, and on time.

5. Request Credit Limit Increase
If you only have one card and you’re constantly approaching your spending limit, call the bank and ask for an increase in your credit line. This will raise the amount of available credit, which will eventually improve your score.

6. Take Care of Late Payments Before They Hit Your Score
If you do happen to miss a payment, contact the card issuer immediately. If you have good history built up, the company may agree to not report your late payment. Even if you can’t avoid a late-payment fee, be sure to get your account up to date as soon as possible so you can limit the damage.
Your credit score is yours to own. It reflects your financial history and helps lenders predict how you will manage your finances in the future. Due to the lingering effects of credit, you don’t want to waste any time to improve your credit.

Joel Lobb
Senior Loan Officer
(NMLS#57916)

American Mortgage Solutions, Inc.
10602 Timberwood Circle, Suite 3
Louisville, KY 40223

phone: (502) 905-3708
Fax: (502) 327-9119
kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

CONFIDENTIALITY NOTICE: This message is covered by the Electronic Communications Privacy Act, Title 18, United States Code, §§ 2510-2521. This e-mail and any attached files are deemed privileged and confidential, and are intended solely for the use of the individual(s) or entity to whom this e-mail is addressed. If you are not one of the named recipient(s) or believe that you have received this message in error, please delete this e-mail and any attached files from all locations in your computer, server, network, etc., and notify the sender IMMEDIATELY at 502-327-9770. Any other use, re-creation, dissemination, forwarding, or copying of this e-mail and any attached files is strictly prohibited and may be unlawful. Receipt by anyone other than the named recipient(s) is not a waiver of any attorney-client, work product, or other applicable privilege. E-mail is an informal method of communication and is subject to possible data corruption, either accidentally or intentionally. Therefore, it is normally inappropriate to rely on legal advice contained in an e-mail without obtaining further confirmation of said advice.

Kerry Vasquez on Oregon Home Loans

While it is an American dream to be debt free- we always wonder how does it affect my credit score?

This may weigh on your mind so take a quick read…

Believe it or not, being completely debt free can actually hurt your credit scores.

It may feel wonderful to be debt free, you could be damaging your credit score. The credit bureaus’ scoring models like to see some balances. A good mix would be: one mortgage, one auto loan and at least one revolving debt with a balance, even if that balance is only $10.

The scoring models also favor consumers that have several open revolving debts with no balances. Closing accounts can actually hurt your credit scores. This is especially true of accounts with long
histories.
Note- when you close accounts, the history also goes away, the good history will no longer be there!

Pairing down to only…

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HUD announces new rules for down payment assistance on Kentucky FHA mortgages

Kentucky FHA Down payment Assistance Changes for 2019

 

 

The Department of Housing and Urban Development announced this week that it is issuing new rules for down payment assistance on mortgages insured by the Federal Housing Administration. Click the headline for a full breakdown of which rules are changing and why.

Source: HUD announces new rules for down payment assistance on FHA mortgages

The new rules are laid out in an FHA mortgagee letter titled “Downpayment Assistance and Operating in a Governmental Capacity.”

According to HUD, this “clarification” of the current documentation rules “should assist mortgagees in determining whether governmental entities providing gifts or secondary financing, or both, towards borrowers’ MRI are doing so consistent with FHA requirements.”

As the FHA states in its mortgagee letter, the current FHA handbook requires mortgagees to confirm that a “governmental entity is operating in its governmental capacity but, except for requiring a source of funds letter, does not specify the necessary documentation that demonstrates support for such a conclusion.”

According to HUD, that lack of “necessary documentation” is leading to some unnamed “entities” skirting the rules.

“It has come to FHA’s attention that certain Governmental Entities may be acting beyond the scope of any inherent or granted governmental authority in providing funds towards the Borrower’s MRI in circumstances that would violate Handbook 4000.1, the National Housing Act, and is contrary to established law,” the FHA said in the mortgagee letter.

In order to remedy this situation, the FHA is now stating that its current documentation requirements need to be “clarified to provide Mortgagees with specific guidance regarding documentation that will give greater assurances that the standards for providing the MRI have been satisfied by the Governmental Entity.”

According to HUD and the FHA, the new rules took effect on April 18, 2019.

To read HUD’s announcement of the rule change, click here.

And for a full look at how the rules are actually changing and what documentation will now be required, click here.

 

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
 
American Mortgage Solutions, Inc.
 

Text/call:      502-905-3708

fax:            502-327-9119
email:
          kentuckyloan@gmail.com