Showing posts with label credit. Show all posts
Showing posts with label credit. Show all posts

Kentucky First Time Home Buyer Questions Answered:

What will my mortgage rate be?


We’ll begin with what always seems to be everyone’s number one concern, saving money. Similar to any other monthly payments you’re attempting to negotiate, it depends on a lot of factors. But we can at least clear up a few items to give you an idea of how things will go. Ultimately, the more risk you present to the mortgage lender, the higher your mortgage rate. So, if you have poor credit and come in with a low, down payment, expect a higher interest rate relative to someone with a flawless credit history and a large down payment. The higher interest rate is intended to compensate the lender for the potential of greater risk of a missed payment as data proves those with questionable credit and low down payments are more likely to fall behind on their mortgages. The property itself can also affect mortgage rate pricing – if it’s a condo or multi-unit investment property, expect a higher rate, all else being equal. Then it’s up to you to take the time to shop around, as you would any other important purchase. Two borrowers with identical loan scenarios may receive completely different rates based on shopping alone. And someone worse off on paper could actually obtain a lower rate than a so-called prime borrower simply by taking the time to gather several quotes instead of just one. For the record, a Freddie Mac study proved that home buyers who obtained more than one quote received a lower rate. There is no single answer here, but the more time you put into improving your financial position, shopping different mortgage lenders, and familiarizing yourself with the process so you can effectively negotiate, the better off you’ll be. And of course, you can keep an eye on average mortgage rates to get a ballpark estimate of what’s currently being offered.  To sum it up, compare mortgage rates as you would anything you buy, but consider the fact that you could be paying your mortgage for the next 30 years. So put in even more time!

How long is my mortgage rate good for?


Once you do find that magic mortgage rate, you’ll probably be wondering how long it’s actually good for. If you’re not asking that question, you should be because rates aren’t set in stone unless you specifically ask them to be. By that, we mean locking in the mortgage rate you negotiate or agree upon with the lender so even if rates change from one day to the next, your rate won’t. Otherwise, you’re merely floating your mortgage rate, and thereby taking your chances. Without a rate lock, it’s really just a rate quote.  Lenders will often charge a fee to lock in an interest rate. Rates can generally be locked in for anywhere from 15 to 90 days or longer, with shorter lock periods cheaper than longer ones. But pay attention to the expiration date of your lock, because you will need to close the loan before that date or you will have to renew the lock.



How do you calculate a mortgage payment?


At some point in the mortgage process, you’re going to be searching for a mortgage calculator to figure out your proposed payment.  You can see how monthly payments on mortgage loans are truly calculated using the real math, or you can simply find a payment calculator that does all the work and tells you nothing about how it comes up with the final sum.  Just make sure you use a mortgage calculator that considers the entire housing payment, including taxes, insurance, HOA dues, and so forth. Otherwise, you’re not seeing the complete picture.

What is a mortgage refinance?


As the name implies, refinancing simply means obtaining new financing for something you already own (or partially own, like real estate).  It’s kind of like a balance transfer where you move your loan from one lender to another to get better terms, except it’s a mortgage payoff.of your old mortgage loan for a new mortgage loan. If you currently have a rate of 6% on your mortgage, but see that refinance rates are now 4%, a refinance could make sense and save you a lot of money over time. You’d essentially have the lender pay off your existing loan with a brand-new loan at the lower interest rate. There is also the cash-out refinance, which allows you to tap into your home equity while also changing the rate and term of your existing mortgage. So, if you currently owe $200,000, but your home is worth $500,000, you could potentially take out $100k cash and your new loan amount would be $300,000. Your monthly payments may not even go up if interest rates are favorable, and you’d have that cash to use for whatever you wish. Be sure to use a refinance calculator or payoff calculator to help guide your decision, and consider the loan term, otherwise known as your expected tenure in the property

How much will my housing payment really be?


Like we mentioned in the related question above, be sure to factor in all the elements that go into a mortgage payment, not just the principal and interest payment that you often see advertised.  It’s not enough to look at P&I (Principal & Interest), you have to consider the PITI (Principal, Interest, Taxes and Insurance). And sometimes even the “A” (Homeowners Association Assessments).  If you don’t consider the full housing payment, including property taxes and homeowners insurance (and maybe even private mortgage insurance) you might do yourself a disservice when it comes to determining how much you can afford during the home financing process. You can check out my mortgage affordability calculator to see where you stand. Whether you have an escrow account or not, mortgage lenders will qualify you by factoring in taxes and insurance, not just your monthly mortgage payment.

When is the first mortgage payment due?


This depends on when you close your home loan and if you pay prepaid interest at  closing.  For example, if you close late in the month, chances are your first mortgage payment will be due in just over 30 days.  Conversely, if you close early in the month, you might not make your first payment for nearly 60 days. That can be nice if you’ve got moving expenses and renovation costs to worry about, or if your checking account is a little light.

What credit score do I need to get approved?


It depends what type of mortgage you’re attempting to get, and also what down payment you have, or if it’s a purchase or a refinance.  The good news is that there are a lot of mortgage programs available for those with low credit scores, including VA loans and FHA mortgages.  For example, the FHA goes as low as 500 FICO, Fannie and Freddie 620, and the USDA and VA don’t technically have a minimum credit score, though most lenders want at least 620/640. If you’re in good shape financially, a poor credit score may not actually be a roadblock. But you can save a lot of money if you have excellent credit via the lower interest rate you receive for being a better borrower. Simply put, loan rates are lower if you’ve got a higher credit score.

How large of a mortgage can I afford?


Here you’ll need to consider home values, how much you make, what your other monthly liabilities are, what you’ve got in your savings account, and what your down payment will be in order to come up with your loan amount. From there, you can calculate your debt-to-income ratio, which is very important in terms of qualifying for a mortgage.  This is a fairly involved process, so it’s tough to just estimate what you can afford or provide some quick calculation. There’s also your comfort level to consider. How much home are you comfortable financing? And don’t forget the property taxes and insurance, as well as routine maintenance costs, which can make your total housing obligations much more expensive!

Do I even qualify for a mortgage?


This is an important question to consider. Are you actually eligible for a mortgage or are you simply wasting your time and the lender’s?  While requirements do vary, most lenders require two years of credit history or clean rental history, and steady employment, along with some assets in the bank. As mentioned, if you are looking to purchase a new home, getting that pre-qualification, or better yet, pre-approval, is a good way to find out if the real thing (a loan application) is worth your while. However, even if you are pre-qualified or pre-approved, things can and do come up that turn a conditional approval into a denial letter, such as an undisclosed credit card, personal loan, auto loan, or pesky student loans. Many lenders will also verify employment and credit and income, prior to loan closing to make sure nothing has changed.  Simply, your loan is not 100% done until it funds.

Why might I be denied a mortgage?


There are probably endless reasons why you could be denied a mortgage, and likely new ones being realized every day. It’s a complicated business, really. With so much money at stake and so much risk to lenders if they don’t do their due diligence, you can bet you’ll be vetted pretty thoroughly.  If anything doesn’t look right, with you or the property, it’s not out of the realm of possibilities to be flat out denied. Those aforementioned undisclosed student loans or credit cards can also come back to bite you, either by limiting how much you can borrow or by pushing your credit scores down below acceptable levels. That doesn’t mean give up, it just means you might have to go back to the drawing board and improve your credit score, reduce some debts, or find a new lender willing to work with you. It also highlights the importance of preparation!

What documents do I need to provide to get a home loan?


In short, a lot of them, from tax returns to pay stubs to bank statements and other financials like a brokerage account if using assets from such a source. This process is becoming less paperwork intensive thanks to new technologies like single source validation, but it’s still quite cumbersome. You’ll also have to sign lots of loan disclosures, credit authorization forms, letters of explanation, and so on.  While it can be frustrating and time consuming, do your best to get any documentation requests back to the lender ASAP to ensure that you will close your home loan on time. And make sure you always send all pages of documents to avoid re-requests.


What type of mortgage should I get?


There are a lot of loan options, including fixed-rate mortgages and adjustable-rate mortgages, along with conventional loans and government loans, such as FHA and VA. While most borrowers just default to the 30-year fixed-rate mortgage loan, there are plenty of other loan programs available, and some may result in significant savings depending on your plans. For example, a 5/1 ARM might come with an interest rate 0.75% below a 30-year fixed, and it’s still fixed for the first five years, adjusting every year thereafter. You might want to start with the fixed-rate versus ARM comparison, then go from there. If you’re comfortable with an ARM, you can explore the many options available. If you know a fixed rate is the only way to go with a home loan, you can determine whether a shorter-term option like the 15-year fixed is in your budget and best interest. Also consider the FHA vs. conventional pros and cons to ensure you’ve covered all your bases if trying to decide between those two loan types.


How big of a down payment do I need?


That depends on a lot of factors, including the purchase price of the home, the type of loan you choose, the property type, the occupancy type, your credit score, and so on. There are still zero down mortgage options available in certain situations, including for USDA and VA loans, and widely available 3% and 3.5% down options as well.  In short, you can still get a mortgage with a relatively small down payment, assuming it’s owner-occupied and not a vacation home or investment property. Just make sure you can afford the higher monthly payments!

Do I need to pay mortgage insurance?


Good question. The answer coincides with down payment and/or existing home equity, along with loan type. Basically, you want to be at or below 80% loan-to-value to avoid mortgage insurance entirely, at least when it comes to a home loan backed by Fannie Mae or Freddie Mac. That means a 20% down payment or greater when purchasing a home, or 20%+ equity when refinancing a mortgage. However, for a FHA loan, mortgage insurance is unavoidable, regardless of the loan to value.


What are mortgage points? Do I need to pay them?


The choice is yours when it comes to points, though it does depend on how the lender. Are they discount points or a loan origination fee?  Points paid by you, that are for a lender origination fee do not reduce the interest rate. They are a fee to compensate the lender for their cost to originate the mortgage loan. Discount points will reduce the loan interest rate. For every point paid, there is a corresponding reduction in interest rate charged.  Of course, these points can be paid directly and out-of-pocket, or indirectly via a higher mortgage rate and/or rolled into the loan. This is part of the negotiation process, and also your preference.

What closing costs are negotiable?


Closing costs will be fees assessed by and paid to your lender and fees assessed by your lender but paid to a third-party. Many closing costs may be negotiable, including some third-party fees that you can shop for like title insurance. Closing costs refer to fees both paid to the lender as well as fees assessed and paid to a third-party provider.  If you look at your Loan Estimate (LE), and provided settlement Service Provider list, you’ll actually see which services identified which you can shop for. Then there are the loan costs, which you may be able to negotiate with some lenders. In some instances, you may not be charged an outright fee, because it will be built into the rate, which also may be negotiated at times. You have every right to go through each and every fee and ask what it is and why it’s being charged. And the lender should have a reasonable response.


How quickly can I get a mortgage?


This is an easier mortgage question to answer, though it can still vary quite a bit. In general, you might be looking at anywhere from 30 to 45 days for a typical residential mortgage transaction, whether it’s a mortgage refinance or home purchase. Of course, stuff happens, a lot, so it’s not out of the ordinary for the process to take up to 60 days or even longer. At the same time, there are companies (and related technologies) that are trying to whittle the process down to a couple weeks, if not less. So, look forward to that in the future!


Do I really need a 20% down payment to purchase a home?


A. No. There are several other loan options available that allow you to put as little as 5%, 3%, or even 0% down. Just keep in mind that a conventional home loan with less than a 20% down payment typically requires Private Mortgage Insurance (PMI). FHA loans will require mortgage insurance premiums regardless of the down payment. Mortgage Insurance protects the lender from losing money if you end up not being able to pay the loan.

When should I lock in my interest rate?


A. This answer differs depending on whether you’re purchasing or refinancing a home. But of course, either way, you want to obtain the lowest rate possible on such a large amount of money.  If you’re refinancing, your application has to be credit-approved before you can lock in your rate. If you’re shopping for a home, your application has to be credit-approved and the seller has accepted your offer before you can lock in your rate.  Then, you’ll need to decide if you want to lock in today’s rate or keep an eye on rates in the days that follow.  Be sure to understand any fees associated with the rates you see advertised — not all are created equal, so you want to pay attention to the Annual Percentage Rate (APR), not just the interest rate.


How long does my pre-approval last?


A. Pre-approvals on average are good from 60 to 90 days, at which time, if you haven’t put an offer on a home and submitted a loan application, you’ll need to get pre-approved again.

When I purchase a new home, what exactly, are closing costs, and how much should I expect to pay?


A. When you decide to buy a home, you’ll spend more than just your down payment. You’ll also pay for things like recording fees, wire fees, or escrow account, origination fees, upfront insurance premiums and any “points” you buy to lower your interest rate. These expenses are collectively called closing costs, and you can expect them to run you anywhere from 2% to 5% of the purchase price of your home.

What type of mortgage should I choose?


A. This is entirely unique to your financial situation, what you want to buy, how long you plan to live in the home, and more. With options that range from a standard 30-year fixed-rate home loan to an adjustable-rate mortgage that lets you pay less in interest for the first few years, your best bet at finding the right loan is to speak with an expert. Our mortgage loan advisors can spend time understanding your needs and goals to assist you in determining the best loan program for you




Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916



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

 





How to get a Kentucky mortgage loan with bad credit through FHA, VA, USDA, or the Kentucky Housing Corporation (KHC)

 To get a Kentucky mortgage loan with bad credit through FHA, VA, USDA, or the Kentucky Housing Corporation (KHC), you'll need to take specific steps tailored to each program:

  1. Kentucky FHA Loan with Bad Credit:

    • Credit Score Requirement: FHA loans typically accept lower credit scores than conventional loans. While the minimum credit score can vary, aiming for at least a 580 score can increase your chances.
    • Down Payment: With a credit score below 580, a 10% down payment may be required. If your score is 580 or above, you can qualify with a 3.5% down payment.
    • Work on Your Credit: Prioritize improving your credit score by paying bills on time, reducing debt, and disputing any errors on your credit report.
  2. Kentucky VA Loan with Bad Credit:

    • Credit Score Requirement: VA loans are known for being flexible with credit requirements. While there's no set minimum score, lenders often look for scores around 620 or higher.
    • VA Loan Guaranty: The VA doesn't directly issue loans but guarantees a portion of the loan, making lenders more willing to approve applicants with lower credit scores.
    • Proof of Financial Stability: Highlight stable income and employment history to strengthen your application.

  3. Kentucky USDA Loan with Bad Credit:

    • Credit Score Requirement: USDA loans typically require a minimum credit score of 640. However, some lenders may consider scores as low as 580 with compensating factors.
    • Income Limits: Ensure your income falls within USDA's income limits for the area where you're buying.
    • Compensating Factors: Emphasize factors like a steady job, low debt-to-income ratio, and a history of making timely payments to offset a lower credit score.
  4. Kentucky Housing Corporation (KHC) Loan with Bad Credit:

    • Credit Score Requirement: KHC loans may have varying credit score requirements depending on the specific program. Aim for a score of at least 620 for better chances of approval.
    • Down Payment Assistance: KHC offers down payment assistance programs that can help lower-income and first-time homebuyers. Check eligibility and requirements for these programs.
    • Prequalification: Consider getting prequalified to understand your options and improve your negotiating position.

How to get a Kentucky mortgage loan with bad credit through FHA, VA, USDA, or the Kentucky Housing Corporation (KHC)


Hope your day is full of sunshine😊

Joel Lobb  Mortgage Loan Officer

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

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

http://www.mylouisvillekentuckymortgage.com/


NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574


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).


For all these loans, working with a knowledgeable mortgage broker like Joel Lobb can be beneficial. They can guide you through the specific requirements, help you understand your options, and assist in improving your chances of approval despite bad credit.

Kentucky Mortgage Loan Programs




 
FHA Pricing Improvements
  • Any FICO (down to 550)
Conventional Pricing Improvements
  • Any FICO ( down to 580)
Non-Traditional Credit/ No Score Options
  • Available on FHA, VA and USDA

FreddieMac ChoiceRenovation

  • Down to 580 Fico
  • EasyPath
FHA 203K
  • Limited and standard
  • Down to 620 FICO
  • Purchase and Refinance options

LOWER FICO OPTIONS

  • Down to 550 FICO on FHA and VA
  • Down to 580 FICO on USDA and Conventional
MANUAL UW OPTIONS
  • FHA, VA & USDA
CASH OUT REFINANCES
  • FHA and VA down to 550 FICO
  • VA cash-out up to 100 LTV
  • Manual Underwrite options
  • Manufactured housing options
MANUFACTURED HOMES
  • Single and multi-wide options
  • Available for FHA, VA, USDA and conventional
  • Options for manufactured homes built after June 15th 1976
USDA
  • 97% of the USA is eligible
  • 100% LTV available
  • USDA Streamline NO FICO allowed
  • Escrow holdbacks allowed
  • DACA and EAD allowed
  • FICOs down to 580
Temporary Buydowns
  • Currently available on FHA, VA and Conventional loans

 

Understanding Credit Score Requirements for Mortgage Loans in Kentucky

Credit Score Requirements in Kentucky

Securing a mortgage loan is a crucial step in the homebuying process, and one of the key factors lenders evaluate is your credit score. Understanding the credit score requirements for mortgage loan approval in Kentucky can help you prepare and improve your chances of securing financing for your dream home.

Importance of Credit Scores for a Kentucky Mortgage Loan Approval.

Your credit score is a numerical representation of your creditworthiness based on your credit history. Lenders use this score to assess the risk of lending to you. A higher credit score typically indicates lower risk to lenders, making you more likely to qualify for a mortgage loan and secure better terms and interest rates.



Credit Score Requirements in Kentucky

While specific credit score requirements can vary among lenders and mortgage programs, there are some general guidelines to consider when applying for a mortgage loan in Kentucky.

  1. Conventional Loans: Conventional mortgage loans are not insured or guaranteed by the government. Many lenders prefer borrowers to have a credit score of at least 620 to qualify for a conventional loan. However, some lenders may require higher scores, especially for competitive interest rates.

  2. FHA Loans: The Federal Housing Administration (FHA) offers loans with more lenient credit score requirements compared to conventional loans. In Kentucky, borrowers may be eligible for an FHA loan with a credit score as low as 500, provided they can make a 10% down payment. A credit score of 580 or higher may qualify for a lower down payment option of 3.5%.

  3. VA Loans: If you're a veteran, active-duty service member, or eligible spouse, you may qualify for a VA loan guaranteed by the Department of Veterans Affairs. VA loans typically have more flexible credit score requirements, and some lenders may consider borrowers with lower credit score. VA does not have a minimum credit score, but most lenders will want a 620 credit score...

  4. USDA Loans: The U.S. Department of Agriculture (USDA) offers loans to eligible rural and suburban homebuyers with low to moderate incomes. Credit score requirements for USDA loans in Kentucky can vary, but many lenders prefer scores of 640 or higher, however, on paper they don't have a minimum credit score requirement

Credit Score Requirements in Kentucky




Tips for Improving Your Credit Score for a Kentucky Mortgage Loan

If your credit score is below the desired threshold for a mortgage loan, don't despair. There are steps you can take to improve your creditworthiness over time:

  • Check Your Credit Report: Obtain a free copy of your credit report from each of the three major credit bureaus—Equifax, Experian, and TransUnion—and review them for errors or discrepancies.
  • Pay Bills on Time: Your payment history is one of the most significant factors affecting your credit score. Make sure to pay all your bills, including credit cards, loans, and utilities, on time.
  • Reduce Credit Card Balances: Aim to keep your credit card balances low relative to your credit limits. High credit utilization can negatively impact your credit score.
  • Avoid Opening New Credit Accounts: While having a mix of credit accounts can be beneficial, opening multiple new accounts within a short period can lower your credit score.


Conclusion

In Kentucky, credit score requirements for mortgage loans can vary depending on the type of loan and lender you choose. While higher credit scores generally improve your chances of loan approval and favorable terms, there are loan programs available for borrowers with less-than-perfect credit.

Before applying for a mortgage loan, it's essential to review your credit report, understand your credit score, and take steps to improve it if necessary. By demonstrating responsible financial behavior and maintaining a good credit history, you can increase your likelihood of securing a mortgage loan and achieving your homeownership goals in Kentucky.


Joel Lobb  Mortgage Loan Officer

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

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

http://www.mylouisvillekentuckymortgage.com/



NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574

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).