Different Types of Kentucky Home Loans

When it comes to getting a mortgage loan in Kentucky, there are four agencies that will probably end doing your loan. Most mortgage loans are backed by either the government (FHA,VA,USDA) and Fannie Mae or Freddie Mac which are known as conventional mortgage loans. 

Below I explain the difference in each of those four programs and where you could possibly fit into.

Conventional Loan

• At least 3%-5% down

• Closing costs will vary on which rate you choose and the lender. Typically, the higher the rate, the lesser closing costs due to the lender giving you a lender credit back at closing for over par pricing. Also, called a no-closing costs option. You have to weigh the pros and cons to see if it makes sense to forgo the lower rate and lower monthly payment for the higher rate and less closing costs.

Fico scores needed start at 620, but most conventional lenders will want a higher score to qualify for the 3-5% minimum down payment requirements Most buyers using this loan have high credit scores (over 720) and at least 5% down.

The rates are a little higher compared to FHA, VA, or USDA loan but the mortgage insurance is not for life of loan and can be rolled off when you reach 80% equity position in home.

Conventional loans require 4-7 years removed from Bankruptcy and foreclosure.

Kentucky USDA Rural Housing Program

If you meet income eligibility requirements and are looking to settle in a rural area, you might qualify for the KY USDA Rural Housing program. The program guarantees qualifying loans, reducing lenders’ risk and encouraging them to offer buyers 100% loans. That means Kentucky home buyers don’t have to put any money down, and even the “upfront fee” (a closing cost for this type of loan) can be rolled into the financing.

Fico scores usually wanted for this program center around 620 range, with most lenders wanting a 640 score so they can obtain an automated approval through GUS. GUS stands for the Guaranteed Underwriting system, and it will dictate your max loan pre-approval based on your income, credit scores, debt to income ratio and assets.

They also allow for a manual underwrite, which states that the max house payment ratios are set at 29% and 41% respectively of your income.

They loan requires no down payment, and the current mortgage insurance is 1% upfront, called a funding fee, and .35% annually for the monthly mi payment. Since they recently reduced their mi requirements, USDA is one of the best options out there for home buyers looking to buy in an rural area.

A rural area typically will be any area outside the major cities of Louisville, Lexington, Paducah, Bowling Green, Richmond, Frankfort, and parts of Northern Kentucky.

There is a map link below to see the qualifying areas.

USDA requires 3 years removed from bankruptcy and foreclosure.

There is no max USDA loan limit.

Kentucky FHA Loan

FHA loans are good for home buyers with lower credit scores and no much down, or with down payment assistance grants. FHA will allow for grants, gifts, for their 3.5% minimum investment with a 580-credit score or higher. And will go down to a 500-credit score with 10% down payment.

The current mortgage insurance requirements are kind of steep when compared to USDA, VA, but the rates are usually good so it can counteract the high mi premiums. As I tell borrowers, you will not have the loan for 30 years, so don’t worry too much about the mi premiums.

The mi premiums are for life of loan like USDA.

FHA requires 2 years removed from bankruptcy Chapter 7 and 1 year from a Chapter 13 plan and 3 years removed from foreclosure.

Kentucky VA Loan

VA loans are for veterans and active-duty military personnel. The loan requires no down payment and no monthly mi premiums, saving you on the monthly payment. 

It does have a funding fee like USDA, but it is higher starting at 2.3% for first time use, and 3.6% for second time use. The funding fee is financed into the loan, so it is not something you have to pay upfront out of pocket.

VA loans can be made anywhere, unlike the USDA restrictions, and there is no income household limit and NO max loan limits in Kentucky 

Most VA lenders I work with will want a 580-credit score even though VA does not require a minimum credit score per se on their written guidelines.

VA requires 2 years removed from bankruptcy or foreclosure.

Kentucky Down Payment Assistance

This type of loan is administered by KHC in the state of Kentucky. They typically have $10,000 down payment assistance year around, that is in the form of a second mortgage that you pay back over 10 years.

Sometimes they will come to market with other down payment assistance and lower market rates to benefit lower income households with not a lot of money for down payment.

KHC offers FHA, VA, USDA, and Conventional loans with their minimum credit scores being set at 620 for all programs. The conventional loan requirements at KHC requires 660 credit score.

The max debt to income ratios is set at  50% respectively.

Joel Lobb (NMLS#57916)

Senior Loan Officer





Text/call 502-905-3708

kentuckyloan@gmail.com


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/

NMLS Consumer Access for Joel Lobb 

Accessibility for Website 

Privacy Policy

How does consumer credit counseling effects things on a Kentucky FHA or USDA loan in Kentucky ?

 KENTUCKY FHA GUIDELINES FOR CONSUEMR CREDIT COUNSELING

(J) Credit Counseling/Payment Plan (APPROVE/ELIGIBLE)Participating in a consumer credit counseling program does not require a downgrade to a manual underwriting.No explanation or other documentation is needed.

 

(K) Credit Counseling/Payment Plan (MANUAL UW) Participating in a consumer credit counseling program does not disqualify a Borrower from obtaining an FHA-insured Mortgage, provided the Mortgagee documents that:

• one year of the payout period has elapsed under the plan;
• the Borrower’s payment performance has been satisfactory and all required payments have been made on time; and
• the Borrower has received written permission from the counseling agency to enter into the mortgage transaction.

 

 

KENTUCKY RURAL HOUSING USDA GUIDELINES FOR CONSUMER CREDIT COUNSELING 

CONSUMER CREDIT COUNSELING - DEBT MANAGEMENT PLANS

Credit counseling provides guidance and support to consumers which may include assistance to negotiate with creditors on behalf of the borrower to reduce interest rates, late fees, and agree upon a repayment plan. The credit score will reflect the degradation of credit due to participation in this plan. Credit accounts that are included in the repayment plan may continue to report as delinquent or as late pays. This is typical and will not be considered as recent adverse credit. Lenders must retain documentation to support the accounts included in the debt management plan and the applicable monthly payment. Lenders must include the monthly payment amount due for the counseling plan in the monthly liabilities. GUS Accept/Accept with Full Documentation files: No credit exception is required. GUS Refer, Refer with Caution, and manually underwritten files: The following must be documented and retained in the lender’s permanent loan file: •One year of the payment period of the debt management plan has elapsed; •All payments have been made on time; and •Written permission from the counseling agency to recommend the applicant as acandidate for a new mortgage loan debt. •No credit exception is required

--

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/

Disputes on Credit Report and Kentucky Mortgage Loan Approval?

Applying for a Kentucky Mortgage Soon?

Don't Dispute that Account

     Sounds counterintuitive, I'm sure ...

     But until you've talked to me (or your own local Mortgage Originator), don't even think about disputing an account found on your Credit Report.

     Why?  Unknowingly, you can be creating real problems for your Mortgage Application and Approval. 

     Consider this:  A creditor can refuse to change their disputed rating.  Too many disputed accounts on a Credit Report may result in your loan being denied.

     Is that a really a risk you want to run at such an important time?

     A formal dispute placed on a car loan, student loan, credit card, collection ... or even worse, a mortgage loan ... can cause havoc for your new Mortgage Application.  So ...

     Slow down.  Contact me ... and let's talk.  We'll analyze all your options and see what action is appropriate and in your best interest.  

     What is not commonly known:  Credit Bureaus and Automated Underwriting systems now reflect an evolution that has taken place over the last few years regarding credit disputes.  

     Both the Bureaus and Underwriting systems have been re-worked to recognize disputes as a negative impact and rating on a Borrower's "approvability" or "credit-worthiness".  

     But these changes have taken place without much fanfare and public recognition.  And because of that, hopeful Borrowers have all too often been contributing to the issues faced within their Mortgage Process later.     

     Prospective Mortgage Applicants (and the public in general) must be educated to this fact.  The temptation to dispute an account must be avoided, if hoping to finance a home via a Mortgage Loan soon.       

     If a Creditor offers-up a path to formally dispute your account ... just say no!  At least prior to our talking.

     There may be a better course of action available to you.  During our conversation we'll weigh your options and best course as it pertains to your Mortgage and your Approval.  

     But providing solid, written proof and evidence regarding your stance on the account in question, WITHOUT placing a formal "dispute" on said account is often the most prudent course of action ... 

     Remember:  You must have legitimate data and written proof in order to accomplish your goal successfully.  But when you have that proof, your account can be "re-rated" or the derogatory rating can be deleted from your Credit Report. 

     Any "correction" should come from the Creditor (Credit Card company/bank/etc.) and immediately sent to each of the 3 Credit Bureaus (Experian, TransUnion, Equifax).  

     This final step trips-up way too many, as it's assumed that the Creditor(s) will share the new updated information with the 3 Credit Bureaus.  They may or may not.  

     Bottomline:  It remains YOUR responsibility to inform each of the 3 Bureaus.  

     Play it safe and follow through with this important task, as it's in your best interest to see that it's successfully done.   

     When a correction is reported to the Bureaus, they will, in turn, update your Credit Report.  While each case is different (and I do not represent that all results will be successful or as hoped for) ... you may head off potential issues with your Mortgage Approval by acting pro-actively.  Consult with a Credit Repair Specialist if uncertain of corrective steps to be taken.

     In the modern Mortgage Process, the experience level of the Mortgage Originator you choose can't be understated.  Successful navigation through the steps of addressing credit disputes and credit analysis is just one example of this fact.

Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports

 Consumer Reporting Agencies to Remove Most Medical Debt From Credit Reports

The three nationwide credit reporting agencies, Equifax, Experian and TransUnion, announced that effective July 1, 2022, they will no longer include medical debt that was paid after it was sent to collections on consumer credit reports.

The companies’ CEOs provided a joint statement on the decision to change their approach to medical collection debt reporting:

“Medical collection debt often arises from unforeseen medical circumstances. These changes are another step we’re taking together to help people across the United States focus on their financial and personal wellbeing,” said Mark W. Begor, CEO Equifax; Brian Cassin, CEO Experian; and Chris Cartwright, CEO TransUnion. “As an industry we remain committed to helping drive fair and affordable access to credit for all consumers.”

The time period before unpaid medical collection debt would appear on a consumer’s report will be increased from 6 months to one year, according to a press release, “giving consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file.”

In the first half of 2023, Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports.

The changes will remove nearly 70% of medical debt in collections accounts from consumer credit reports.

How do collections and charge offs on the credit report affect a Kentucky VA Mortgage Loan Approval?

In order to get approved for a Kentucky VA loan with outstanding collections and charge offs listed on

the credit report, the VA underwriter will want to know the following about them:

Collections & Charge Offs are two different things.  Below is what VA saying about them:

 

Collection Accounts

Isolated collection accounts do not necessarily have to be paid off as a condition for loan approval. A credit report may show numerous satisfactory accounts and one or two unpaid medical (or other) collections. In such instances, while it would be preferable to have collections paid, it would not necessarily be a requirement for loan approval.

However, collection accounts must be considered part of the borrower's overall credit history and unpaid collection accounts should be considered open, recent credit.

Borrowers with a history of collection accounts should have re-established satisfactory credit in order to be considered a satisfactory credit risk.

While VA does not require that collection accounts be paid-off prior to closing if the borrower's overall credit is acceptable, an underwriter must address the existence of the collection account(s) with an explanation on VA Form 26-6393, Loan Analysis, for excluding the negative credit history they represent.

If the collection account is listed on the credit report with a minimum payment, then the debt should be recognized at the minimum payment amount.

Charged off Accounts

These accounts are typically collections in which the creditor is no longer pursuing collection of the account. The underwriter must address the circumstances regarding the negative credit history when reviewing the overall credit of the borrower(s).

 

 
2 different topics best if you can send me credit to review. 

 

·         Charged off accounts generally ignored

·         Collection accounts on Federal debt are a big issue so we careful there

·         Collections not required to be paid off unless they are extremely high

·         Manual Underwrite we do require an LOE from Veteran for collections

·         What happened, what they did to resolve, what are they doing in the future to either resolve or to prevent this from happening and finally if they are going to enter into a payment plan or not.  Ultimately on the resolution of the collection the UW does not care but VA requires that as part of LOE.

 

Hope this helps send me credit for full evaluation.

 

The VA underwriter will want to verify the Kentucky Mortgage Veteran has the ability to pay these items or will want to know how they were paid off before closing.

Any collection or charge off showing as a judgement or lien on the VA mortgage applicant's credit report, must be paid before closing. These affect the title and must be paid before the mortgage is recorded.

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
kentuckyloan@gmail.com
http://www.mylouisvillekentuckymortgage.com/

This website is not affiliated with any government agencies, including the VA. NMLS ID #57916 (www.nmlsconsumeraccess.org)

FHA CHANGES TO HANDLING OF COLLECTIONS, JUDGEMENTS AND DISPUTED ACCOUNTS ON CREDIT REPORT

FHA CHANGES TO HANDLING OF COLLECTIONS

AND DISPUTED ACCOUNTS

FHA recently released Mortgagee Letters 2013-24 and 2013-25, to amend guidance on collections and disputed accounts and to clarify guidance on judgments. These changes will become effective for all case numbers assigned on or after October 15, 2013. This will apply to all FHA programs, with the exception of non-credit qualifying streamline refinances and Home Equity Conversion Mortgages. The changes are found below. Should you have any questions, please contact your Account Manager.

1.           Credit Analysis of Collections and Judgments. Collections and judgments may indicate a borrower's disregard for credit obligations and must be considered in the creditworthiness analysis. The guidance below applies to loans with collection accounts and all judgments. Medical collections and charge off accounts are excluded from this guidance.

• Applicable to Manually Underwritten Loans: The lender must document reasons for approving a mortgage when the borrower has collection accounts or judgments.

Regardless of the amount of outstanding collection accounts or judgments, the lender must determine if the collection account or judgment was a result of:

• The borrower's disregard for financial obligations;
•  The borrower's inability to manage debt; or
• Extenuating circumstances.

The borrower must provide a letter of explanation with supporting documentation for each outstanding collection account and judgment. The explanation and supporting documentation must be consistent with other credit information in the file.

• Applicable to Loans Run Through TOTAL Mortgage Scorecard: TOTAL Mortgage Scorecard Accept/Approve - There are no documentation or letter of explanation requirements for loans with collection accounts or judgments run through TOTAL Mortgage Scorecard receiving an "Accept/Approve" despite the presence of collection accounts or judgments. These accounts have been already taken into consideration in the borrower's credit score. If TOTAL Mortgage Scorecard generates a"Refer," the lender must manually underwrite the loan in accordance with the guidance above applicable to manually underwritten loans with collection accounts and judgments. 

All medical collections and charge off accounts are excluded from this guidance and do not require resolution.

2.           Capacity Analysis of Collections and Judgments.

Collections - FHA does not require collection accounts to be paid off as a condition of mortgage approval. However, FHA does recognize that collection efforts by the creditor for unpaid collections could affect the borrower's ability to repay the mortgage. To mitigate this risk, FHA is requiring a capacity analysis of collection accounts with an aggregate balance equal to or greater than $2,000, as described below.

If the total outstanding balance of all collection accounts for all borrowers is equal to or greater than $2,000, the lender must perform a capacity analysis as detailed below. Unless excluded under state law, collection accounts of a non-purchasing spouse in a community property state are included in the cumulative balance.

All medical collections and charge off accounts are excluded from this guidance and do not require resolution.

Capacity analysis includes any of the following actions:

• At the time of or prior to closing, payment in full of the collection account (verification of acceptable source of funds required).
• The borrower makes payment arrangements with the creditor. If the borrower has entered into a payment arrangement with the creditor, a credit report or letter from the creditor verifying the monthly payment is required. The monthly payment must be included in the borrower's debt-to-income ratio.
• If evidence of a payment arrangement is not available, the lender must calculate the monthly payment using 5% of the outstanding balance of each collection, and include the monthly payment in the borrower's debt-to-income ratio.

TOTAL Mortgage Scorecard Accept/Approve/Refer - Regardless of the Accept/Approve/Refer recommendation by TOTAL Mortgage Scorecard, the lender must include the payment amount in the calculation of the borrower's debt-to-income ratio.

               Judgments - FHA requires judgments to be paid off before the mortgage loan is eligible for FHA insurance. An exception to the payoff of a court ordered judgment may be made if the borrower has an agreement with the creditor to make regular and timely payments. The borrower must provide a copy of the agreement and evidence that payments were made on time in accordance with the agreement, and a minimum of three months of scheduled payments have been made prior to credit approval.

Borrowers are not allowed to prepay scheduled payments in order to meet the required minimum of three months of payments. Furthermore, lenders are instructed to include the payment amount in the agreement in the calculation of the borrower's debt-to-income ratio.

FHA requires judgments of a non-purchasing spouse in a community property state to be paid in full, or meet the exception guidance for judgments above, unless excluded by state law.

    3.           Handling of Disputed Accounts - The existence of potentially inaccurate information on a borrower's credit report resulting in a dispute must be reviewed by an underwriter. Accounts that appear as disputed on the borrower's credit report are not considered in the credit score utilized by TOTAL Mortgage Scorecard in rating the application. Therefore, FHA requires the lender to consider them in the underwriting analysis as described below.

With this ML, FHA is revising policy on manual downgrades for applications with disputed accounts to reflect the risk associated with derogatory and non-derogatory disputed accounts for factors such as age and size of outstanding balance.

Disputed Derogatory Accounts Indicated on the Credit Report - If the credit report utilized by TOTAL Mortgage Scorecard indicates that the borrower is disputing derogatory credit accounts, the borrower must provide a letter of explanation and documentation supporting the basis of the dispute. The lender must analyze the documentation provided for consistency with other credit information in the file to determine if the derogatory credit account should be considered in the underwriting analysis.

Guidance for TOTAL Mortgage Scorecard Accept/Approve loans with disputed accounts.

Disputed Derogatory Credit Accounts greater than or equal to $1,000	If the cumulative outstanding balance of disputed derogatory credit accounts of all borrowers is equal to or greater than $1,000, the mortgage application must be downgraded to a"Refer" and a Direct Endorsement underwriter is required to manually underwrite the loan as described above.
Disputed Derogatory Credit Accounts less than $1,000	If the cumulative outstanding balance of disputed derogatory credit accounts of all borrowers is less than $1,000, a downgrade is not required.
Excluded Accounts	Disputed medical accounts are excluded from the $1,000 limit and do not require documentation. Disputed derogatory credit accounts resulting from identity theft, credit card theft, or unauthorized use are also excluded from the $1,000 limit. However, the lender must provide in the case binder a credit report, letter from the creditor, or other appropriate documentation to support the dispute, such as a police report disputing the fraudulent charges.

Disputed derogatory credit accounts are defined as follows:

• disputed charge-off accounts,
• disputed collection accounts, and
• disputed accounts with late payments in the last 24 months.

Disputed derogatory credit accounts of a non-purchasing spouse in a community property state are not included in the cumulative balance for determining if the mortgage application is downgraded to a "Refer".

Non-derogatory disputed accounts are excluded from the $1,000 cumulative total.

Non-Derogatory Disputed Accounts and Disputed Accounts Not Indicated on the Credit Report - Non-derogatory disputed accounts include the following types of accounts:

• disputed accounts with zero balance,
• disputed accounts with late payments aged 24 months or greater, and
• disputed accounts that are current and paid as agreed.

 If a borrower is disputing non-derogatory accounts, or is disputing accounts which are not indicated on the credit report as being disputed, the lender is not required to downgrade the application to a "Refer." However, the lender must analyze the effect of the disputed accounts on the borrower's ability to repay the loan. If the dispute results in the borrower's monthly debt payments utilized in computing the debt-to-income ratio being less than the amount indicated on the credit report, the borrower must provide documentation of the lower payments.

If you have loans pending that these changes will affect, be sure to order the FHA case number prior to October 15, 2013.

-- 

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
kentuckyloan@gmail.com

Fill out my form for mortgage pre-approval by clicking this link!

Can you get a Kentucky Mortgage Loan with Bad Credit or less than Perfect Credit?

Kentucky Mortgage Loan with Bad Credit

If you are looking to get a mortgage loan in 2020 in the state of Kentucky and you have past credit problems, there maybe some hope for Kentucky Home-buyers to buy a home of their own.

 Before we look at some possible home-buying programs, let's first look at what is considered Bad Credit, or less than perfect credit. 

Most of the times when borrowers say they have bad credit, they mean one of the following:

Past or Current Bankruptcies

Low credit scores or fico scores

Collections on credit report showing unpaid or paid.

Delinquent or behind on credit cards, mortgage, car loan payments

Foreclosure or short sale where they lost a home to default

Owe back taxes to the Federal Government.

Defaulted Student Loans

Delinquent Child Support Obligations
Disputed accounts on credit report

Below I have listed one of the most popular programs Kentucky Home Buyers need to consider when buying a home in 2020 if they have experienced some of the credit issues mentioned above:


When it comes to getting a mortgage loan with past credit problems, FHA is probably going to be your best bet.

They're the most lenient on credit scores, down payment requirements and credit history when it comes to qualifying for a Kentucky Home Loan.

I have listed below some of the requirements you must overcome to get approved for a Kentucky FHA home loan.

Kentucky FHA Mortgage Loans:

The credit score requirements for Kentucky FHA home loans:

FHA says on paper in their written guidelines that they will insure a FHA loan down to 500 - 579 with a 10% down payment or 580+ with a 3.5% down payment. However, in the real world of lending in the secondary market, most lenders will not adhere to these guidelines.

Most FHA investors will want a 620 middle credit score, but they're a few that will go by the written FHA guidelines above for credit scores, but very few. Your best bet is to get with a loan officer and get your scores up to at least 580 so you can have a better shot of getting approved and access to more FHA lenders.

Be aware there are a lot of credit scores out there, but each lender must pull their own credit report and credit scores to determine your creditworthiness. I would shop around first to see what the requirements are for each FHA lender before they pulled your credit report.

Mortgage lenders use the FICO score model below for each credit bureau when they look at your credit scores.

MyFICO is now selling additional score versions to the public.  These include three scores most often used by mortgage lenders:

• Experian FICO Score 2  (also known as EX-98 or Risk Model v2)
• Transunion FICO Score 4  (also known as TU-04 or Transunion FICO Risk Score Classic 04)
• Equifax FICO Score 5  (also known as EQ-04 or Beacon 5).  

Bankruptcy Requirements for Kentucky FHA Home Loans:

FHA states in their published guidelines that if you had a Chapter 7 Bankruptcy, you must wait 2 years from the discharge date to reapply for a FHA insured mortgage loan. 

If you had a Chapter 13 Bankruptcy and have a 12 month on-time payment history with the courts, you can potentially get approved for a FHA loan if you get permission from the trustee and qualify with the Chapter 13 payment plan in your debt to income ratio. If you have been in the plan for over 12 months, and have a good pay history, you can submit your paperwork for FHA approval. 

For example, let's say you have been in the Chapter 13 repayment plan for 3 years and you want to buy a home using FHA financing. You could go ahead and petition the Chapter 13 trustee for approval from the courts to get a home loan. The trustee of the Chapter 13 courts will want to know your new loan payment with the home loan, so make sure you know how much  you want to borrow before you apply ,. 

Collections on Credit Report Requirements for Kentucky FHA Home Loans:

: 

• If the credit report shows a cumulative balance of $2,000 or more for collection accounts: 
• The debt(s) must be paid in full prior to or at closing, or 
• Payment arrangements must be made with the creditor and the monthly payment included in the DTI, or 
• A monthly payment of 5% of the outstanding balances of each collection must be included in the borrower’s DTI. 
• Collection accounts of non-borrowing spouses in a community property state must be included in the $2,000 cumulative balance and analyzed as part of the Borrower’s ability to pay all collection accounts. Community property states are Arizona, California, Texas, Washington, and Wisconsin
• Medical collections and charge offs are excluded from this
  guidance.B. Judgments – Loans for borrowers with outstanding judgments are
  generally not acceptable unless the following documentation is obtained.
  a. Judgment must be on the credit report that is linked to the TOTAL
  Scorecard findings and the findings must be “approve/eligible” or
  “accept/accept.”
  b. If the judgment will not be paid off and released prior to the
  closing, evidence of a payment agreement may be considered. The
  payment agreement must be in writing and provided at the time of
  underwriting. Crescent will require evidence that 12 months
  satisfactory payments have been made as scheduled. Borrowers
  may not pre-pay scheduled payments in order to meet this
  requirement. The monthly payment must be considered in the
  borrower’s debt-to-income ratio for qualifying.
  c. Any judgments that are discovered in the processing of the loan
  that ARE NOT on the credit report linked to the TOTAL findings
  require the loan to be manually downgraded to “refer” status.
  Crescent does not approve loans that must be manually
  downgraded.
  d. A subordination agreement will be required for any judgment that
  is also a lien against the borrower and/or the subject property.
  C. Disputed Accounts – Because disputed accounts are not generally
  considered in the borrower’s credit report FHA will now require loans of
  borrowers who have derogatory disputed accounts with cumulative
  balances of $1000 or more (excluding medical) to be downgraded to
  “refer” findings and manually underwritten. As you are aware, Crescent
  does not approve loans that require manual underwriting.
  NOTE 1: Disputed derogatory credit account of a non-purchasing spouse
  in a community property state are not included in the cumulative balance
  for purposes of determining if the mortgage application must be
  downgraded to a “refer.”
  NOTE 2: Disputed medical collections are excluded from the $1000 limit
  as are derogatory credit accounts resulting from identity theft, credit theft
  unauthorized use, etc. However, documentation must be provided to
  conclusively support the disputed status. Documentation might entail
  police reports, letters from the creditor, etc.
  II. ML 2013-26 – Back to Work-Extenuating Circumstances
  The guidance provided in ML 13-26 requires loans to be manually
  underwritten. For this reason Crescent cannot approve loans that need these
  credit underwriting leniencies. III. ML 2013-29 – Application of Unused Funds from

Short-sale or Foreclosure Guidelines for a Kentucky FHA Loan:

If you have experienced a short-sale or foreclosure, FHA states that you must wait 3 years from the date of the sale to obtain FHA financing again. And important note is this: The waiting period starts not when you were discharged from the home or bankruptcy, the waiting period starts when the home is sold and the deed transferred at the courthouse. 

This is important to remember because a lot of people think it starts when they vacate the home or when there bankruptcy is discharged if the mortgage was in the bankruptcy, but it does not!!! The date used to end the waiting period starts when the deed is transferred at the courthouse from the owner to back to bank or whomever buys the home in the default. 

Delinquent Federal Debt (Taxes, Student Loans) Kentucky FHA Loan Requirements:

If you have a delinquency with the Federal Government, this could hurt your chances of getting approved for a FHA backed Mortgage Loan. Here is why:

All FHA participants are ran through the CAVIRS Alert System administered by HUD to check to see if the mortgage applicant is delinquent  to the Federal Government. This usually arises from an IRS income tax lien, over-payment on a social security claim, or lastly, a defaulted student loan. 

A lot of the times FHA borrower don't realize that if they don't pay there Federal backed student loans, they go into default and this will hold you up from getting a FHA loan or possibly they will hold your tax refund. 

If you have been delinquent on your student loans, you have to call and get on a 9 month repayment plan with them and they will clear you of your CAVIRS Alert. The payment plan can be as little as 5 or $10 a month, but the important thing is to get started so this will improve your credit rating too along with releasing the liens against you for other federal assistance like tax refunds, social security payments and benefits to name just a few. 

I have done many FHA loans in Kentucky where they have rehabbed their Student loans if they are backed by Federal government and got them loan after 9 months. 

If you happen to have an agreement already worked-out with the IRS or student loan creditors, sometimes we can take that arrangement and get you approved sometime with FHA depending on the lender. 

Child Support Obligations Kentucky FHA Loan Requirements:

If the credit report shows a delinquent child support agreement, the FHA Government Underwriter will want to see the current child support agreement and what the monthly payment is so as to make sure they have your debt to income ratio figured correctly. You can have a delinquency report of child support on your credit report and still get an FHA loan. 

 It is okay to be paying child support ,a lot of times it shows on a borrower's pay stubs, and if so, we simply use that child support obligation to use for debt to income ratio qualifying. 

As you can see, it is quite possible to buy a home in Kentucky with past bad credit. I work with a lot of mortgage applicants that has experienced credit issues in the past, but with the right direction and guidance, I can possibly get you into a home in 2020. 

Put my 20 years of Kentucky Mortgage Experience to work for you . 

Joel Lobb (NMLS#57916)
Senior  Loan Officer

American Mortgage Solutions, Inc.

10602 Timberwood Circle Suite 3

Louisville, KY 40223

Company ID #1364 | MB73346

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

Labels: bad credit, Bankruptcy, child support, collections, credit, Credit Score, credit score and bankruptcy, Disputed Accounts, Fico Score, foreclosure, Judgements, kentucky mortgage bad credit, student loans

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.

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.  

Louisville Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Zero Down Payment Home Loans | October 9, 2018 at 3:33 pm | Tags: deeds-in-lieu of foreclosure, fha foreclosure, fha mortgage, Foreclosure, foreclosure hud ky, foreclosures, housing, kentucky fha mortgage, Short Sale or Deed-in-Lieu | Categories: foreclosure, HUD Foreclosure, KY FHA LOANS | URL: https://wp.me/p1gxai-3iE