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.

Kentucky First Time Home Buyer Programs to Consider for 2022 Kentucky Homebuyers.

First Time Home Buyer Programs to Consider for 2022 Kentucky Homebuyers.

Zero Down Mortgage Loans in Kentucky

The Kentucky VA and the Kentucky USDA Home Loan Program both offer a zero down loan program for individuals and/or properties that meet their criteria.

If you need down payment assistance, KHC offers up to $7,500 for assistance to buy your Kentucky home if you are lacking the down payment requirements for FHA or Fannie Mae below.

Some Kentucky FHA owned HUD properties are available with as little as $100 down.

Three Percent Down Mortgage Loans in Kentucky

Fannie Mae/Freddie Mac conventional loans are available with down payments as low as 3% on single-family homes, including eligible condos, co-ops, and some manufactured homes. Fixed-rate mortgages with up to 30-year terms and ARMs are available.

Three and 1/2 Percent Down Mortgage Loans in Kentucky

The Federal Housing Administration (or FHA) loan program can allow as little as 3.5% down, and it is more lenient than most other programs on minimum credit scores and other factors. he FHA loan program allows as little as 3.5% down, and it is more lenient than most other programs on minimum credit scores.

Are you surprised at how low you may be able to go? While many believe a 20% down payment is required, you can see now that it’s far from the only option.

Whether you’ve saved a little or a lot, reach out today, and we’ll work on finding a loan that works for you.

• Kentucky Federal Housing Administration (FHA) loans: “With a 3.5% down payment, Kentucky homebuyers may be able to get an FHA loan with a 580 credit score or higher. If you can manage a 10% down payment, though, that minimum goes as low as 500.”
• Kentucky Conventional loans: “The most popular loan type typically comes with a 620 minimum credit score.”
• US. Department of Agriculture (USDA) loans: “In general, lenders require a minimum credit score of 620-640 for a USDA loan, though some may go as low as 580.”
• US. Department of Veterans Affairs (VA) loans: “VA loans don’t technically have a minimum credit score, but lenders will typically require between 580 and 620.”

 

 

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

I

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.

Kentucky VA Home Loan Requirements for Approval

Minimum credit score

Qualifying for Veteran Home Loans

The Veteran Loan program is designed for veterans who meet the minimum number of days of completed service. Some of the other eligibility requirement for the VA loan program^[5] and some specific home loan benefits include the length of service or service commitment, duty status and character of service. The program does allow for benefits to Surviving Spouses.

The VA does not have a minimum credit score used for pre-qualifying for a mortgage loan, however, most Lenders require a minimum credit score of at least 620.^[6]

A Veteran who has used their entitlement to previously purchase a home, may have entitlement left to purchase another one. If you previously purchased a home using your VA Benefits then you might still have some of that “Entitlement” available to you for the purchase a new home. To Calculate Maximum Entitlement available, consider the following:

1. If your previous home was purchased using a VA Loan, and that loan was paid off by the new owners, the full entitlement may have been restored.
2. If you sold your home to someone, and allowed them to assume your VA Loan, then you might have the full entitlement restored, if one or more of the purchasers were also Veterans.
3. If you still own the home, and you are renting it out – you might be able to purchase a new home using your partial entitlement, but there are several restrictions.

Allowable Income Sources used to qualify for a VA Loan include: Retirement Income, Social Security Income, Child Support, Alimony and Separate Maintenance, BAH, BAS and Disability Income. Dependency and Indemnity Compensation (DIC) for a Surviving Spouse can also be included. In addition, stable, documented income from employers remains the best income source for VA loans.

Requirements

VA Loan application

The VA loan application is a standardized loan application form 1003 issued by Fannie Mae also known as Freddie Mac Form 65. It is a Federal crime punishable by fine or imprisonment, or both, to knowingly make any false statements on a VA loan application under the provisions of Title 18, United States Code, Section 1001, et seq.

You will need the following paperwork to apply:

• Copies of your W2 statements for the past two years, so your gross household income can be confirmed,
• Copies of your previous two pay stubs,
• Documentation of other assets (checking accounts, savings accounts, financial investments, trust funds, etc.),
• If self-employed, two years of consecutive tax returns will be required.
• The Veteran also needs to supply their DD 214 and Certificate of Eligibility (COE)

On June 25, 2019, the Blue Water Navy Vietnam Veterans Act of 2019 was signed into law temporarily increasing the VA funding fee for active duty service members and veterans starting January 1, 2020. The law removed VA county loan limits for homebuyers with full VA loan entitlement and made Purple Heart recipients exempt from paying the VA funding fee.^[3] Several members of Congress were displeased after the passing of the act, writing an open letter to House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy asking that future bills not be paid for by increasing VA loan fees.^[4]

Funding fees

A funding fee must be paid to VA unless the veteran is exempt from such a fee because he or she receives a minimum of 10% VA disability compensation. If a veteran is awarded disability compensation after paying a funding fee, he/she can apply for a refund of this funding fee, so long as the beginning date of the disability is prior to the closing date of the home mortgage.

In August 2012, Congress passed a bill that allows a Veteran to receive the benefits of having Veteran Disability while it is still pending. The amount paid for the funding fee can be refunded back to the Veteran when a determination is made and the paperwork is received.

The VA Funding fee may be paid in cash or included in the loan amount. Closing costs such as VA appraisal, credit report, loan processing fee, title search, title insurance, recording fees, transfer taxes, survey charges, or hazard insurance may not be included in the loan. However, the seller may pay these on behalf of the VA borrower.

Purchase and construction loans

Due to the Blue Water Navy Vietnam Veterans Act of 2019, the VA funding fee is equalized for all branches of service starting January 1, 2020. For active duty military members and veterans, this means an increase in VA funding fee costs for a period of 2 years. If you have a service-connected disability that you are compensated for by the VA or if you are a surviving spouse of veteran who died in service or from service-connected disabilities, the funding fee is waived.

Type of Veteran	Down Payment	First Time Use	Subsequent Use
Regular Military, Reserves/National Guard	None 5%-9.99% 10% or more	2.3% 1.65% 1.4%	3.6%* 1.65% 1.4%

The VA funding fee can be financed directly into the maximum loan amount for the county in which the home is located. For subsequent use VA loans, if the sales price and the financed VA funding fee total more than maximum loan amount for that county, the borrower or seller must pay for the fee out of pocket. All VA loans require an impound account for property taxes and homeowners insurance which makes the monthly payment of VA loans calculated as a PITI payment.**

Cash-out refinancing loans

Type of Veterans	Percentage for First Time Use	Percentage for Subsequent Use
Regular Military, Reserves/National Guard	2.3%	3.6%*

• The higher subsequent use fee does not apply to these types of loans if the veteran’s only
  prior use of entitlement was for a manufactured home loan.

Other types of loans

Type of Loan	Percentage for Either Type of Veteran Whether First Time or Subsequent Use
Interest Rate Reduction Refinancing Loans	.50%
Manufactured Home Loans	1.00%
Loan Assumptions	.50%

• Veterans who previously lived in a home they had to then rent out will typically qualify for a no appraisal Interest Rate Reduction Refinance. The Veteran's Administration also allows Veteran Homeowners to refinance from a Conventional loan to a VA mortgage Loan. This process, however, does require an appraisal.

0% DOWN PAYMENT

580 or Higher Credit Score with most lenders I work with even though VA does not have a minimum credit score. 

2.30% Upfront Mortgage Insurance Premium (First-Time Use)

Financed into Loan Amount

Will Vary Depending on Down Payment and Subsequent Use

No Mortgage Insurance Required

No  Maximum Loan Amount

Higher Loan Amounts Available with Down Payment

Great Option for Veterans or Active Military

Kentucky USDA Rural Housing Mortgage Lender: The Kentucky Rural Housing Program Guidelines for ...

Kentucky USDA Rural Housing Mortgage Lender: The Kentucky Rural Housing Program Guidelines for ...: The program requires a minimum of three years from the date of a bankruptcy, foreclosure, or short sale prior to the borrower being eligible...

Kentucky USDA Rural Housing Mortgage Lender: The Kentucky Rural Housing Program Guidelines for ...

Kentucky USDA Rural Housing Mortgage Lender: The Kentucky Rural Housing Program Guidelines for ...: The program requires a minimum of three years from the date of a bankruptcy, foreclosure, or short sale prior to the borrower being eligible...

Kentucky First Time Home Buyer Programs For Home Mortgage Loans

Kentucky first-time homebuyer programs

• KHC Regular Down Payment Assistance: Receive a loan of up to $6,000 and repay it over 10 years at a 5.5% interest rate.
• KHC Affordable Down Payment Assistance: If you have a low-to-moderate income, you can get a loan of up to $6,000 and pay it back over 10 years at a 1% rate.
• Conventional Mortgage Loan- 3% down payment credit scores should be at least 680, but preferably 720 or higher with 
• Federal Housing Administration FHA Kentucky mortgage: You can get a down payment of 3.5% with a credit score of at least 580, or get a mortgage with a credit score between 500 and 580 with 10% down using this loan, which is also called an FHA loan. 
• United States Department of Agriculture mortgage Kentucky USDA Mortgage loan: These loans, also called USDA loans, can be useful if you are a low-to-moderate income borrower looking to buy a home in a rural or suburban area.
• Veterans Affairs mortgage Kentucky VA Mortgage : These mortgages, also called VA loans, are for active-service military members or veterans, or spouses of members who have died and can provide lower interest rates than conventional mortgages.

• Am I an active or former member of the armed forces? If not, right away you can remove VA loans from consideration.
• Is my home located in a rural area? People living in more urban and suburban neighborhoods won’t qualify for a USDA loan, so you can scratch that one if that’s the case.
• How much can I afford for a down payment? FHA loans offer plenty of flexibility with their down payment options, but you will need to put up some money up front. That may not be the case with either VA or USDA loans.
• How strong is my credit score? You’ll need a 620 credit score at minimum to qualify for USDA loans. FHA and VA programs tend to be a bit more lenient on credit history.
• Which loan offers the lowest interest rate? All three government loan programs tend to offer lower interest rates than conventional mortgages, but among them, VA might have a slight edge. Mortgage rates constantly fluctuate, no matter what type of home loan you’re considering. So, be sure to take a look at the latest interest rates before making a decision.

Loan types of credit score requirements for First Time Home Buyers in Kentucky

Loans insured by the government, such as VA loans, USDA loans and FHA loans, tend to have more flexible qualification requirements than conventional mortgage loans, which are not government-backed.

To get approved for a mortgage, whether conventional or government-backed, you’ll have to meet your lender’s minimum FICO score for that particular loan type. 

Type of Loan Minimum FICO Score

Conventional 620

KHC Down Payment Assistance 620

FHA 500 with 10% down 580 3.5% down payment

VA no minimum score (depends on the lender)

USDA no minimum score (depends on the lender

Most lenders will require a DTI ratio of less than 45-50 %, but this will depend on the type of loan you’re applying for. 

To determine your DTI, lenders take into account your front-end and back-end DTI.

Front-end DTI

Your front-end ratio consists of your monthly housing expenses divided by your monthly gross income. Housing-related expenses include your future mortgage payment, taxes and mortgage insurance.

Back-end DTI

The back-end DTI is the percentage of your gross income spent on monthly debts.

The items detailed in your credit report often comprise your back-end DTI. This includes monthly obligations such as credit cards, car loans, student loans, child support and personal loans.

Private mortgage insurance (PMI)

When purchasing a property with a conventional loan, some buyers have to factor in private mortgage insurance (PMI).

PMI is generally required for homebuyers who offer less than 20% down and is designed to protect the lender if you default on your loan.

The cost of PMI is rolled into your mortgage payment as an added fee and often accounts for 0.2% to 2% of the mortgage amount. According to Freddie Mac, you can expect to pay between $30 to $70 per month for every $100,000 borrowed.

Once you build your equity to 20% of the property’s appraised value, your loan servicer is required to drop PMI. According to Freddie Mac, PMI will automatically terminate on the date your principal balance reaches 78% of the original appraised value of your home.

Mortgage insurance premiums (MIP)

Government-backed loans don’t have PMI. Instead, you’ll have to factor in mortgage insurance premiums, which are paid both at closing and as part of your monthly payment.

Both FHA and USDA loans require mortgage insurance.

FHA loans require an upfront premium of 1.75% of the loan amount. FHA borrowers also pay an annual premium of 0.45% to 1.05% of the loan amount — unless they put 10% down. Some FHA borrowers can remove MIP, but that will depend on their loan’s origination date.

On the other hand, USDA loans require an upfront mortgage premium of 1% and an annual premium of 0.35%. The drawback of USDA loans is that there’s no way to eliminate your mortgage insurance premium.

If you have a VA loan, the VA guarantee replaces mortgage insurance. However, you’ll still have to pay an upfront funding fee of 1.4% to 3.6% of the loan amount at closing.

If you don’t have the money upfront, VA, FHA and USDA loans allow you to roll the fee into your mortgage, but your loan amount and overall loan cost will increase

Conventional Loans 3%-20%

620

45%

PMI required for down payments of less than 20%. Depends on loan type, credit score and down payment.

KHC Down payment Assistance

      zero down $6k dap assistance in form of second mortgage

620 and above score 

50% maximum debt to income ratio

VA Loans

Not required for down payment

Varies by lender, no minimum credit score

no max debt ratio but residual income is important.

No mortgage insurance but a one-time funding fee (1.25%-3.3% of the loan amount).

FHA Loans

3.5% to 580 credit score and 10% down with a 500 credit score.

56.9% max debt to income ratio but lower required on manual underwrites.

Mortgage insurance required. MIP can be removed after 11 years if you put down 10%.

USDA Loans

No required down payment

no minimum score varies by lender

45%

No mortgage insurance, but a one-time guarantee fee (1% of loan amount) and an annual fee (0.35% of loan amount).

Kentucky First Time Home Buyer Programs

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.

 

Max Conventional loan limits are set at $647,200 for 2022 in Kentucky

 

 

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 Kentucky 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  see the qualifying areas.

 

New Income limits for most counties (*) in Kentucky are $91,900 for a  4 unit household and household families of five or more + can make up to  $121,300.

The Northern Kentucky Counties (***) of Boon, Kenton, Campbell, Bracken, Gallatin, and Pendleton are $99,250 for a household of four or less and up to $130,000 for a family of five or more.

Remember,  Jefferson County Kentucky, Fayette County Kentucky are not eligible for USDA loans.

 

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 and will go down to a 500 credit score.

 

The current mortgage insurance requirements are kind of steep when compared to USDA, VA , but the rates are usually good so it can counteracts 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 and 3 years removed from foreclosure.

 

Maximum FHA loan limits in Kentucky are set at $420,680 for 2022…If you are looking at a larger loan amount, then you would need to look at doing a conventional loan which has a max loan amount of $647,200.00

Kentucky VA Loan

 

 

VA loans are for veterans and active duty military personnel. The loan requires no down payment and no monthly mi premiums, and no minimum credit score , saving you on the monthly payment. It does have an funding fee like USDA, but it is higher starting at 2% for first time use, and 3% 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 there is no max loan in Kentucky for 2022, but it does now carry higher mortgage insurance premiums in the form of New

Kentucky Down Payment Assistance

• Regular DAP

  • Purchase price up to $346,644 with Secondary Market.
  • Assistance in the form of a loan up to $6,000 in $100 increments.
  • Repayable over a ten-year term at 5.50 percent.
  • Available to all KHC first-mortgage loan recipients.

  Affordable DAP

  • Purchase price up to $346,644​ with Secondary Market.
  • Assistance up to $6,000.
  • Repayable over a ten-year term at 1.00 percent.
  • Borrowers must meet Affordable D​AP income limits.

  ​MORE ABOUT DOWN PAYMENT AND CLOSING COSTS

  • No liquid asset review and no limit on borrower reserves.
  • Specific credit underwriting standards may apply to down payment programs
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