How the NAR Settlement Is Changing Kentucky Homebuyers Options for Mortgage Loan Approval

 On March 15th, 2024, the National Association of Realtors (NAR) agreed to pay $418 million in damages to settle some of their real estate commission lawsuits. The settlement prohibits NAR from requiring a seller's agent to engage in cooperative compensation with a buyer's agent.

The key details are:

• Date: March 15th, 2024
• Payment: NAR agreed to pay $418 million in damages
• Settlement terms: NAR prohibited from requiring seller's agent to cooperate with buyer's agent on commissions

This settlement is significant because the new terms will likely have ripple effects that both consumers and industry stakeholders will experience:

Consumers:

• Potentially lower real estate commission fees as a result of increased competition between agents
• More flexibility and control for sellers in how they compensate buyer's agents
• Possibility of buyers having to pay their agent's fees directly rather than them being bundled into the home price

Industry Stakeholders:

• Real estate brokerages and agents may need to adjust their business models and commission structures
• Reduced influence of NAR in setting industry standards and practices around commissions
• Potential for new business models and pricing approaches to emerge in the real estate market

Overall, this settlement represents a shift in the power dynamics of the real estate industry that could lead to more competition and consumer-friendly changes in the way real estate transactions are conducted. Let me know if you have any other questions!

Real Estate Commissions and Loan Types in Kentucky

The National Association of Realtors (NAR) recently reached a settlement that impacted real estate commissions for different mortgage loan types in Kentucky and across the United States. Here's a breakdown of how commissions can vary:

Conventional Loans

• For conventional mortgage loans, the typical real estate commission is 3-6% of the home's sale price.

• This commission is usually split evenly between the buyer's agent and the seller's agent.

• Buyer may pay their Agent's reasonable commissions or have the seller or agent constructio to the commission of the buyer agents' commission.  Typical fees paid by the seller are not subject to the IPC limits.  (interested party contribution)

FHA Loans

• For FHA (Federal Housing Administration) loans, the real estate commission is typically slightly lower, around 3-6% of the sale price.

• This lower commission is due to the additional requirements and paperwork involved with FHA loans.

• FHA Loans-FHA allows buyer to pay commissions of their agents, or negotiate the seller's or agent contribution to commission to the buyer's agent. – If the State and Local law or custom permits this, and if the commissions and fees are reasonable in amount, the existing policy would not treat it as an IPC. (interested party contribution)

VA Loans

• For VA (Veterans Affairs) loans, the real estate commission is usually the lowest, around 3-6% of the sale price.

• VA loans have strict guidelines, and the lower commission helps offset some of the additional costs associated with these loans.

• VA Loans-Buyer may pay their agent's commission or negotiate the seller or  agents contribution to commission to the buyer's agent.  (interested party contribution) IPC is not mentioned. A temporary variance is permitted for the Veteran buyer to pay Buyer Broker Fees.

USDA Loans

• USDA (United States Department of Agriculture) loans, which are designed for low-income homebuyers in rural areas, also typically have a real estate commission of 3-6%.

• The lower commission helps make these loans more affordable for the homebuyers.

• USDA loans-Buyer may pay their agents commission or negotiate the seller's or agent's contribute to the commission of the buyer's agent. Real Estate Commission Fees are excluded from the 6% cap for IPC concessions

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Interested Party Contributions: On April 15, Fannie Mae and Freddie Mac announced that they will not count buyer’s agent commissions as part of their allowable interested party contributions (IPCs). This is not an update to their selling guides, but a clarification on how seller-paid real estate agent fees are treated. Fannie/Freddie guidelines allow sellers to contribute 2-9% of the property value toward the borrower’s closing costs. In their announcement, Fannie and Freddie stated that “fees or costs customarily paid by the property seller according to local convention are not subject to these financing concessions limits.”

• 
  

•  The new terms outlined in this settlement will have ripple effects that both consumers and industry stakeholders will likely experience.

• The consumer impact:

  Consumers may feel more pressured to finance the broker’s commission into their loan. This could negatively impact underserved, low-to moderate-income, and first-time borrowers who may not have the necessary means to fund a buyer’s commission out of pocket.

• Higher mortgage costs:

  Financing the buyer-broker commission into the loan poses challenges to the Section 32 points & fees test, which could lead to an increase in higher-cost mortgages and non-qualified mortgage (QM) loans.

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On March 15th, 2024, the National Association of Realtors (NAR) agreed to pay $418 million in damages to settle some of their real estate commission lawsuits. The settlement prohibits NAR from requiring a seller's agent to engage in cooperative compensation with a buyer's agent.

The key details are:

• Date: March 15th, 2024
• Payment: NAR agreed to pay $418 million in damages
• Settlement terms: NAR prohibited from requiring seller's agent to cooperate with buyer's agent on commissions

This settlement is significant because the new terms will likely have ripple effects that both consumers and industry stakeholders will experience:

Consumers:

• Potentially lower real estate commission fees as a result of increased competition between agents
• More flexibility and control for sellers in how they compensate buyer's agents
• Possibility of buyers having to pay their agent's fees directly rather than them being bundled into the home price

Industry Stakeholders:

• Real estate brokerages and agents may need to adjust their business models and commission structures
• Reduced influence of NAR in setting industry standards and practices around commissions
• Potential for new business models and pricing approaches to emerge in the real estate market

Overall, this settlement represents a shift in the power dynamics of the real estate industry that could lead to more competition and consumer-friendly changes in the way real estate transactions are conducted. Let me know if you have any other questions!

• 
  

Reach out to me anytime on my cell --  Always happy to help!

Joel Lobb  Mortgage Loan Officer NMLS 57916

EVO Mortgage
 911 Barret Ave, Louisville, KY 40204
Company NMLS ID # 173846

Text/call: 502-905-3708

email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

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NMLS 57916  | Company NMLS #173846

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).

Kentucky first-time homebuyers with a focus on FHA, VA, USDA Home loans in Kentucky

Here's a summary of different loan programs for Kentucky first-time homebuyers with a focus on

FHA, VA, USDA Home loans in Kentucky  

FHA Loan:

Credit Score: Typically requires a minimum credit score of 580; borrowers with lower scores may still qualify but may need a larger down payment.
Down Payment: Minimum down payment of 3.5%.
Income Ratio: Front-end ratio (housing expenses to income) should not exceed 31%; back-end ratio (total debt to income) should not exceed 43%.
Work History: Generally requires at least two years of steady employment, though exceptions can be made.
Credit, Bankruptcy, and Foreclosure: More forgiving than conventional loans; may consider borrowers with past bankruptcy or foreclosure.
Employment and Work History: Stable employment and income are essential.
Time to Close: Typically around 30-45 days. Appraisal and property requirements follow FHA guidelines.

VA Loan:

Credit Score:VA doesn't set a minimum score; lenders may have their requirements, often around 620 or higher.

Down Payment: No down payment required for most borrowers.
Income Ratio: Flexible debt-to-income ratios, often up to 41% or higher in certain cases.
Work History: Stable employment history is preferred.
Credit, Bankruptcy, and Foreclosure: More lenient on past credit issues; may consider borrowers with past bankruptcy or foreclosure.
Employment and Work History: Consistent income from stable employment is crucial.
Time to Close: VA loans can take 45-60 days to close. Appraisal and property requirements must meet VA standards.

USDA Loan:

Credit Score: Typically requires a minimum credit score of 640; exceptions may be possible with compensating factors.
Down Payment: No down payment required for eligible borrowers.
Income Ratio: Maximum debt-to-income ratio of 41%, though exceptions may be made with strong compensating factors.
Work History: Stable employment history is preferred, typically two years or more.
Credit, Bankruptcy, and Foreclosure: Consideration for borrowers with past credit issues, bankruptcy, or foreclosure.
Employment and Work History: Consistent income from stable employment is important.
Time to Close: USDA loans may take 30-60 days to close. Appraisal and property requirements must meet USDA guidelines.

Each loan program has specific eligibility criteria and requirements, so it's essential for first-time homebuyers to consult with lenders or mortgage experts to determine the best fit based on their financial situation and goals.

 Appraisal requirements and income documentation

 

FHA Loan:Appraisal Requirements:

The property must meet FHA guidelines, including minimum property standards and safety requirements. An FHA-approved appraiser assesses the property's value and condition.
Income Documentation: Generally requires recent pay stubs, W-2 forms, tax returns for the past two years, and proof of additional income sources (if applicable).


VA Loan:Appraisal Requirements:

 VA loans require a VA appraisal conducted by a VA-assigned appraiser. The appraisal assesses the property's value and ensures it meets VA's Minimum Property Requirements (MPRs).
Income Documentation: Typically includes pay stubs, W-2 forms, tax returns for the past two years, and proof of any additional income (e.g., bonuses, alimony, rental income).

USDA Loan:Appraisal Requirements:

USDA loans require a USDA appraisal to determine the property's value and ensure it meets USDA's standards for safety and livability.

Income Documentation: 

Similar to FHA and VA loans, USDA loans require pay stubs, W-2 forms, tax returns for the past two years, and documentation of other income sources.

These appraisal requirements and income documentation are crucial parts of the loan application process. Lenders use this information to assess the property's value, ensure it meets safety standards, and verify the borrower's income stability and ability to repay the loan.

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).

How to Qualify for a Kentucky FHA, VA, USDA and Conventional Home Loan

How to qualify for a mortgage

The type of mortgage you’re applying for determines the minimum requirements you’ll have to meet for your down payment, credit score, and debt-to-income ratio.

Find out what type of loan you might qualify for or what aspects of your finances you’ll need to improve to get a better shot at qualifying for a mortgage.

Loan Type	Min. Down Payment	Min. Credit Score	Max DTI	Property Type
Conventional	3%	620	45%	Primary, secondary, investment
VA	0%	none	none	Primary
FHA	3.5%	500	50%	Primary
USDA	0%	none	41%	Primary

Keep in mind: The minimum down payment, minimum credit score, and maximum DTI shown in the table apply to mortgages used to purchase a primary residence. While you can use a conventional loan or a jumbo loan to purchase a home for another purpose, you might need a larger down payment, a higher credit score, more cash reserves, or all three.

Credit score needed to buy a house

Mortgage lending is risky, and lenders want a way to quantify that risk. They use your three-digit credit score to gauge the risk of loaning you money since your credit score helps predict your likelihood of paying back a loan on time. Lenders also consider other data, such as your income, employment, debts and assets to decide whether to offer you a loan.

Different lenders and loan types have different borrower requirements, loan terms and minimum credit scores. Here are the requirements for some of the most common types of mortgages.

Conventional loan

Minimum credit score: 620

A conventional loan is a mortgage that isn’t backed by a federal agency. Most mortgage lenders offer conventional loans, and many lenders sell these loans to Fannie Mae or Freddie Mac — two government-sponsored enterprises. Conventional loans can have either fixed or adjustable rates, and terms ranging from 10 to 30 years.

You can get a conventional loan with a down payment as low as 3% of the home’s purchase price, so this type of loan makes sense if you don’t have enough for a traditional down payment. However, if your down payment is less than 20%, you’re required to pay for private mortgage insurance (PMI), which is an insurance policy designed to protect the lender if you stop making payments. You can ask your servicer to cancel PMI once the principal balance of your mortgage falls below 80% of the original value of your home.

FHA loan

Minimum credit score (10% down): 500

Minimum credit score (3.5% down): 580

FHA loans are backed by the Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD). The FHA incentivizes lenders to make mortgage loans available to borrowers who might not otherwise qualify by guaranteeing the federal government will repay the mortgage if the borrower stops making payments. This makes an FHA loan a good option if you have a lower credit score.

FHA loans come in 15- or 30-year terms with fixed interest rates. Unlike conventional mortgages, which only require PMI for borrowers with less than 20% down, all FHA borrowers must pay an up-front mortgage insurance premium (MIP) and an annual MIP, as long as the loan is outstanding.

VA loan

Minimum credit score: N/A

VA loans are mortgages backed by the U.S. Department of Veterans Affairs (VA). The VA guarantees loans made by VA-approved lenders to qualifying veterans or service members of the U.S. armed forces, or their spouses. This type of loan is a great option for veterans and their spouses, especially if they don’t have the best credit and don’t have enough for a down payment.

VA loans are fixed-rate mortgages with 10-, 15-, 20- or 30-year terms.

Most VA loans don’t require a down payment or monthly mortgage insurance premiums. However, they do require a one-time VA funding fee, that ranges from 1.4% to 3.6% of the loan amount.

USDA loan

Minimum credit score: N/A

The U.S. Department of Agriculture guarantees loans for borrowers interested in buying homes in certain rural areas. USDA loans don’t require a minimum down payment, but you have to meet the USDA’s income eligibility limits, which vary by location.

All USDA mortgages have fixed interest rates and 30-year repayment terms.

USDA-approved lenders must pay an up-front guarantee fee of up to 3.5% of the purchase price to the USDA. That fee can be passed on to borrowers and financed into the home loan. If the home you want to buy is within an eligible rural area (defined by the USDA) and you meet the other requirements, this could be a great loan option for you.

What else do mortgage lenders consider?

Your credit score isn’t the only factor lenders consider when reviewing your loan application. Here are some of the other factors lenders use when deciding whether to give you a mortgage.

• Debt-to-income ratio — Your debt-to-income (DTI) ratio is the amount of debt payments you make each month (including your mortgage payments) relative to your gross monthly income. For example, if your mortgage payments, car loan and credit card payments add up to $1,800 per month and you have a $6,000 monthly income, your debt-to-income ratio would be $1,800/$6,000, or 30%. Most conventional mortgages require a DTI ratio no greater than 36%. However, you may be approved with a DTI up to 45% if you meet other requirements.
• Employment history — When you apply for a mortgage, lenders will ask for proof of employment — typically two years’ worth of W-2s and tax returns, as well as your two most recent pay stubs. Lenders prefer to work with people who have stable employment and consistent income.
• Down payment — Putting money down to buy a home gives you immediate equity in the home and helps to ensure the lender recoups their loss if you stop making payments and they need to foreclose on the home. Most loans — other than VA and USDA loans — require a down payment of at least 3%, although a higher down payment could help you qualify for a lower interest rate or make up for other less-than-ideal aspects of your mortgage application.
• The home’s value and condition — Lenders want to ensure the home collateralizing the loan is in good condition and worth what you’re paying for it. Typically, they’ll require an appraisal to determine the home’s value and may also require a home inspection to ensure there aren’t any unknown issues with the property.

How is your credit score calculated?

Most talk of credit scores makes it sound as if you have only one score. In fact, you have several credit scores, and they may be used by different lenders and for different purposes.

The three national credit bureaus — Experian, Equifax and TransUnion — collect information from banks, credit unions, lenders and public records to formulate your credit score. The most common and well-known scoring model is the FICO Score, which is based on the following five factors:

• Payment history (35%) — A history of late payments will drag your score down, as will negative information from bankruptcies, foreclosures, repossessions or accounts referred to collections.
• How much you owe (30%) — Your credit utilization ratio is the amount of revolving credit you’re using compared to your total available credit. For example, if you have one credit card with a $2,000 balance and a $4,000 credit limit, your credit utilization ratio is 50%. Credit scoring models view using a larger percentage of your available credit as risky behavior, so high balances and maxed-out credit cards will negatively impact your score.
• Length of credit history (15%) — This factor considers the age of your oldest account, newest account and the average age of all your credit accounts. In general, the longer you’ve been using credit responsibly, the higher your score will be.
• Types of accounts (10%) — Credit scoring models favor people who use a mix of credit cards, installment loans, mortgages and other types of credit.
• Recent credit history (10%) — Lenders view applying for and opening several new credit accounts within a short period as a sign of financial trouble and it’ll negatively impact your score.

Ready to shop around for a mortgage?

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916


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



Text/call: 502-905-3708

email: kentuckyloan@gmail.com

https://kentuckyloan.blogspot.com/

2023 Loan Limits for Kentucky VA and Kentucky FHA Loans

 

New 2023 Loan Limits for Kentucky VA and Kentucky FHA Loans

Kentucky VA loan limits received a massive increase for 2023. The standard Kentucky VA loan limit in 2023 is $726,200 for most U.S. counties, increasing from $647,200 in 2022. Kentucky VA loan limits also increased for high-cost counties to $1,089,300 for a single-family home.   Kentucky VA loan limits do not represent a cap or max loan amount. Veterans with their full entitlement can get as much as a lender is willing to give them without needing a down payment. However, Veterans with one or more active VA loans or who have defaulted on a previous VA loan will encounter the limits, which will in part determine their zero-down buying power.   For Kentucky FHA loan limits, please click here to consult this page on the Hud.gov website as Loan Limits for FHA loans vary by county in Kentucky each 120 counties.

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

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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/