How to qualify for a VA Mortgage Loan in Kentucky

 VA Mortgage Loans in Kentucky

Are you a veteran or active-duty service member in Kentucky looking to buy a home? VA mortgage loans could be your key to homeownership. In this guide, we'll explore everything you need to know about VA loans in the Bluegrass State.

What Are VA Mortgage Loans?

VA loans are mortgage options backed by the U.S. Department of Veterans Affairs. These loans offer numerous benefits to eligible veterans, active-duty service members, and certain military spouses.

Benefits of VA Loans for Kentucky Veterans

1. No Down Payment: Unlike conventional loans, VA loans often require no down payment, making homeownership more accessible.
2. Competitive Interest Rates: VA loans typically offer lower interest rates compared to conventional mortgages.
3. No Private Mortgage Insurance (PMI): This can save you hundreds of dollars each month.
4. Flexible Credit Requirements: VA loans often have more lenient credit score requirements than conventional loans.

VA Loan Eligibility in Kentucky

To qualify for a VA loan in Kentucky, you must:

• Be a veteran, active-duty service member, or eligible surviving spouse
• Meet the VA's service requirements
• Have a valid Certificate of Eligibility (COE)
• Meet the lender's credit and income requirements

Key Requirements for VA Loans in Kentucky

Credit Score Requirements

While the VA doesn't set a minimum credit score, most lenders in Kentucky typically look for a score of at least 580. However, some may accept lower scores, especially if you have a strong overall financial profile.

Work History Requirements

Lenders generally prefer to see:

• 2 years of steady employment
• If self-employed, 2 years of successful business operation
• Recent college graduates or those recently discharged from military service may have more flexible requirements

VA Second Tier Entitlement Use

If you've used your VA loan benefit before, you may still be eligible for another VA loan through second-tier entitlement. This allows you to:

• Purchase another home while keeping your current VA-financed property
• Buy a more expensive home if you've already paid off a previous VA loan

Bankruptcy and Foreclosure Requirements

After a bankruptcy or foreclosure, waiting periods typically apply:

• Chapter 7 Bankruptcy: 2-year waiting period
• Chapter 13 Bankruptcy: 1 year of on-time payments in the bankruptcy
• Foreclosure: 2-year waiting period These periods may be shorter if you can prove extenuating circumstances.

Debt-to-Income (DTI) Ratio Requirements

The VA prefers a DTI of 41% or less or manually underwritten loans, but lenders may accept higher ratios with compensating factors such as excellent credit or substantial assets.

The Kentucky Housing Market and VA Loans

Kentucky's housing market offers great opportunities for VA loan users. With a mix of urban areas like Louisville and Lexington, and beautiful rural regions, there's something for everyone. The median home price in Kentucky is often below the national average, making it an attractive market for VA loan recipients.

Steps to Secure a VA Loan in Kentucky

1. Obtain Your Certificate of Eligibility (COE)
2. Find a VA-Approved Lender in Kentucky
3. Get Pre-Approved for Your Loan
4. House Hunting in Kentucky
5. VA Appraisal and Home Inspection
6. Closing on Your Kentucky Home

VA Loan Limits in Kentucky

As of 2024, there are no VA loan limits for borrowers with full entitlement. This means you can borrow as much as a lender is willing to lend without a down payment, subject to your income and credit qualifications.

Appraisal and Inspection Requirements

VA Appraisal

A VA-approved appraiser must assess the property to ensure it:

• Meets the VA's Minimum Property Requirements (MPRs)
• Is worth at least as much as you're paying for it This typically takes 7-10 days.

Termite Inspection

In Kentucky, a termite inspection is required for all VA loans unless:

The seller usually pays for the termite inspection in Kentucky.

Time Frame to Close

The average time to close a VA loan in Kentucky is 30- 45days, slightly longer than conventional loans. This extra time accounts for the VA appraisal process and additional paperwork.

Potential Pitfalls in VA Loan Closing

Several issues can delay or prevent a VA loan from closing:

1. Property Condition Issues: The home must meet VA MPRs.
2. Low Appraisal: If the appraisal comes in lower than the purchase price, you may need to renegotiate or pay the difference.
3. Change in Employment: Losing your job or changing jobs during the process can jeopardize your loan approval.
4. New Debts: Taking on new debt during the process can affect your DTI ratio.
5. Insufficient Funds: Even with no down payment, you'll need funds for closing costs and reserves.
6. Title Issues: Problems with the property's title can delay or derail the process.

VA mortgage loans offer an excellent opportunity for Kentucky's veterans and active-duty service members to achieve homeownership. With benefits like no down payment, competitive rates, and no PMI, these loans can make your dream of owning a home in the Bluegrass State a reality. Understanding the requirements and potential pitfalls can help ensure a smooth loan process.

Take the Next Step with a Trusted VA Loan Expert

Are you ready to start your VA loan journey in Kentucky? Look no further than Joel Lobb, your local VA loan specialist.

Meet Joel Lobb: Your Kentucky VA Loan Expert

Joel Lobb brings a unique blend of military experience and mortgage expertise to serve Kentucky's veterans:

• Army Veteran: Joel understands firsthand the challenges and needs of military service members.
• 20 Years of Mortgage Experience: With two decades in the industry, Joel has the knowledge to navigate even the most complex VA loan scenarios.
• Dedicated to Serving Veterans: Joel's mission is to help fellow veterans achieve their dream of homeownership in Kentucky.

What Veterans Say About Joel

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John Junkin

My wife and I have struggled most of our lives with poor choices in marriage or in what I will call lifestyle choices but the one thing that we had to do on our own, and that was to just pay my bills on time and believe it or not that wasn't as easy as one might think. I went through a lot of different banks and/or loan officers,or bank reps. Then thru my researching came across Joel,Jeana and I still believe that God the Father lead us to Joel. You see I'm on a fixed income and was barely able to get from month to month. W ith no money down and on a very short time limit Joel was to get us into home that more than met our needs. It met our wants as well needs and our is more than 2X the size of the house we were renting, And 4X the size of the outside of the house we were renting. And for only $160.oo more a month than what we were paying in rent. A lot of people said it couldn't be done even people in tha thefield . What I know is that Joel Lobb worked extra hard and longer hours to achieve my wife and I's dreams even though we had a lifetime of adverseties I don't think of myself as being special. I do however believe that Mr.Lobb worked as hard for me as he does for any of his other clients. He was always transparent and tanaitous in his work ethics. So in my experiences with people in general I think it would be a good idea to give Joel and the mortgage company he represents a serious try.

 

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dennis jackson

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Joel did an outstanding job. I am a 100% disabled retired Army Soldier. My wife and I have never bought a house. Joel made this process seem so easy it was scary. We found our 23acre ranch and put a bid on it and Joel did the rest. He made this process easier than buying our truck. We were even out of state at the time of closing and it was still no problem for Joel. My wife and I both highly recommend Joel for your home buying, whether it is your first or retirement. Thank you Joel, we Love our first and retirement home. Dennis and Shannon Jackson

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Jeffrey Kim

Joel is the best mortgage guru in town. My wife and I were first time homebuyers via VA loan moving from NY to KY. He made the process of buying a home smooth and streamlined. We had no worries and everything went flawless. Thank you Joel!

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Cee Bell

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Absolutely Amazing!! I emailed Joel after I had just got a denial from a bank and just thought i would try to get some advice on what my next steps would be to get a house. I honestly didn't expect to even get a reply because my credit is not great. That was about a week and a half ago. I just signed a contract on a house last night. ONLY because of Joel Lobb. He even worked with us throughout the weekend, which shocked me. Best decision I have ever made. THANK YOU SO MUCH FOR WORKING WITH US THROUGHOUT THE ENTIRE PROCESS.

Contact Joel Lobb Today Army Veteran with 20 years Mortgage Loans in KY

Don't wait to start your journey to homeownership with a VA Mortgage. Contact Joel Lobb now:

👇

1 -  Email - kentuckyloan@gmail.com 

2.   Call/Text - 502-905-3708

Joel is ready to answer your questions, address your concerns, and guide you through the entire VA loan process. With his expertise, you can confidently take the next step towards owning your home in Kentucky.

Schedule your free VA loan consultation with Joel Lobb today and take the first step towards your new home!

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Joel Lobb: A Guide for First-Time Home Buyers in Kentucky

 First-time home buyers in Kentucky Joel Lobb

Joel Lobb is a prominent figure in the Kentucky mortgage landscape, especially for those embarking on the journey of homeownership for the first time. With a focus on personalized service and a wealth of loan options, Lobb has become a go-to resource for many aspiring homeowners in the Bluegrass State.

Joel Lobb: A Guide for First-Time Home Buyers in Kentucky

Navigating the Mortgage Maze

For Kentucky first-time home buyers, the path to purchasing a home can seem labyrinthine. Joel Lobb simplifies this process by offering a variety of loan options tailored to individual needs. His expertise covers:

- FHA Loans: Ideal for buyers with lower credit scores or smaller down payments.
- VA Loans: Providing excellent terms for veterans and active military personnel.
- USDA Loans: Catering to buyers in rural areas with 100% financing options.
- KHC Loans: Partnering with the Kentucky Housing Corporation to offer down payment assistance.

Personalized Approach

Lobb's approach is highly personalized. He understands that buying a home is one of the most significant financial decisions in a person's life and treats each client with the respect and attention they deserve. His commitment to personal service ensures that clients are not just numbers but valued individuals throughout the entire mortgage process.

Advantages Over Big Banks

One of Lobb's key advantages is his ability to broker loans through various mortgage companies, ensuring clients receive the best deal possible. Unlike larger banks that may offer a limited set of loan products, Lobb's access to a broader range of options means he can accommodate unique financial situations and find the right fit for each buyer.

Educational Resources

Education is a cornerstone of Lobb's service. He provides resources to help first-time buyers understand the complexities of mortgages and homeownership. This includes guidance on:

- Credit score requirements.
- Down payment sources.
- Loan types and their benefits.
- Steps to pre-qualification and approval.

Community Impact

Lobb's impact extends beyond individual homebuyers to the community at large. By assisting new homeowners, he contributes to the economic vitality and stability of neighborhoods across Kentucky.

Conclusion

For those looking to navigate the world of mortgages in Kentucky, Joel Lobb offers a guiding hand. His expertise, personalized service, and commitment to education make him a valuable ally for first-time home buyers aiming to lay down roots in Kentucky²³⁴.

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This article is for informational purposes only and does not constitute financial advice. For personalized guidance, it's recommended to consult directly with a mortgage professional like Joel Lobb.

Source: Conversation with Bing, 3/9/2024
(1) Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA. https://www.mylouisvillekentuckymortgage.com/2010/10/get-approved-for-mortgage-or-home-loan.html.
(2) Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural .... https://www.mylouisvillekentuckymortgage.com/.
(3) Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA. https://business.google.com/v/joel-lobb-mortgage-broker-fha-va-khc-usda/04361775572510182499/a291/_.
(4) . https://bing.com/search?q=Joel+Lobb+mortgage+loans+Kentucky+first+time+home+buyers.
(5) Joel Lobb - Louisville, Kentucky, Key Financial Mortgage, University of .... https://about.me/joel.lobb. 

Can you have 2 Kentucky VA Loans?

A Kentucky Veteran Can Have Multiple VA Loans:

In the most basic of terms, VA Second-Tier Entitlement gives a qualified military person the ability to have two KY VA mortgages out simultaneously.

VA will allow a Kentucky Veteran to have multiple Kentucky  VA loans provided they meet the required GNMA 25 percent guaranty. Are you unsure of how to calculate the maximum loan amount for a Veteran based on their used entitlement? I am Kentucky Veteran myself and have done over 50 VA loans for past customers in Kentucky. I am here to help with your Kentucky VA mortgage questions!

Click here and download an interactive, Kentucky Mortgage VA Entitlement and Loan Amount worksheet to help you determine their Kentucky VA Home loan maximum loan amount. This worksheet also works great to determine the maximum loan amount for a Veteran when they are buying a home over their county loan limit.

First let’s explain the difference between entitlement and maximum loan amount.

Each borrower using a VA Loan has a $36,000 entitlement that the VA guarantees to the lender in the unfortunate event that a borrower would default on the loan. The VA's formula dictates whether or not all that entitlement is used with the initial loan, and thus, additional entitlement can be available. And even if the entitlement is $0 after the purchase of the first house, then the Veteran or active duty member can still use their second-tier entitlement, but there will be a standard minimum and maximum loan limits on what the borrower can use to buy that second house.

Where does the $36,000 come from? This is 25% of 144,000, the "old" maximum loan amount for VA loans.

The VA now has County maximum loan limits as high as 768,750 in the DC Metro Area. With that loan amount, your 25% guarantee is 192,187.50 in entitlement.

"Second-Tier entitlement is nice because for those people using it, it means they don't have to sell their (first) property right off the bat when obtaining the second VA Loan. However, they still have to qualify for the VA Loan. While Second Tier Entitlement is not widely used because of its complexity and the fact that plenty of lenders are not well versed in calculating it, does not mean that interested borrowers should wave the white flag and look elsewhere for a different home loan.

An Example of calculating second-tier entitlement:

Veteran has used $104,250 of entitlement on a prior loan, which may not be restored because the loan is still active and is now a rental due to orders to transfer. The Veteran is now purchasing a home for $350,000 where the county loan limit is $768,750.

$768,750 (County Loan Limit) X 25% (your VA guaranty) = $192,187.50 Maximum Guaranty

$192,187.50 - $104,250 (entitlement already used for active VA loan) = $87,937.50 Entitlement Available

$87,937.50 X 4 = $351,750 Maximum Loan Amount with 25% Guaranty – Since the proposed purchased price is less than the max loan amount, no down payment would be required.

If the Veteran would like to purchase a home for 400,000 using the same numbers above, they would be required to bring $12,062.50 as a down payment to meet the 25% guaranty.

400,000 x 25% = 100,000 needed entitlement/guaranty – 87,937.50 available = 12,062.50 difference needed by Veteran to meet lender requirement.

For a list of county loan limits, please email me or go to http://benefits.va.gov/homeloans/do...limits.pdf

If you would like to discuss your options for second tier availability to you, please do not hesitate to contact me!

Joel Lobb  Mortgage Loan Officer 

EVO Mortgage
 911 Barret Ave, Louisville, KY 40204


Text/call: 502-905-3708

email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #173846

FHA loans in Kentucky After A Bankruptcy

Kentucky FHA Loan Guidelines for Bankruptcy and Foreclosure

Chapter 7

Chapter 7 bankruptcy discharged more than 24 months prior to the application date may be allowed.

Chapter 7 bankruptcy discharged between 12 and 24 months prior to the application date requires satisfactorily established credit and documentation showing the circumstances which caused the bankruptcy were beyond the borrower's control (i.e. unemployment, medical bills not covered by insurance). In these instances, the file must be manually downgraded to a refer and manually underwritten. It falls upon the underwriter to make a final determination as to the overall quality of the file.

Chapter 7 bankruptcy discharged less than 12 months prior to the application date is not allowed.

Chapter 13

Loans where the borrower is currently in a Chapter 13 bankruptcy or had a Chapter 13 bankruptcy which was discharged within the previous 2 years require manual downgrade and must be underwritten manually. Note that manual underwrites require Underwriting Management approval.


A borrower who is currently in a Chapter 13 bankruptcy may be eligible for FHA financing provided all of the following conditions are met in addition to standard manual underwriting requirements:

Foreclosure / Short Sale

A foreclosure less than 3 years ago is not allowed.

In all instances, the “date of foreclosure” is considered the date of the foreclosure deed. The end date of the time frame is determined by the application date.

You can obtain a copy of your bankruptcy paperwork from the website below:


Bankruptcy Courts 👉    http://www.pacer.psc.uscourts.gov/

First-Time Home Buyer's Guide to Mortgage Approval in Kentucky

Are you a first-time home buyer in Kentucky dreaming of owning your own piece of the Bluegrass State? The path to homeownership starts with getting approved for a mortgage loan. While the process might seem daunting, we're here to break it down into manageable steps. Let's walk through the journey of securing your first mortgage in Kentucky.

Step 1: Check Your Credit Score

Your credit score is an important factor in getting approved for a mortgage and the interest rate you'll pay. In Kentucky, most lenders require a minimum credit score of 620 for conventional loans. However, some government-backed loans, such as FHA, VA, and USDA loans, may accept lower credit scores.

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Step 2: Save for a Down Payment and Closing Costs

While some loans offer low down payment options, having a substantial down payment can improve your chances of approval and potentially lower your interest rate.

• Aim for at least 3.5% to 20% of the home's purchase price
• Don't forget about closing costs, which typically range from 2% to 5% of the loan amount
• Look into Kentucky-specific programs like the Kentucky Housing Corporation's Down Payment Assistance Program, which offers up to $10,000 for eligible first-time buyers

 There are indeed several programs available that can help potential homebuyers achieve this goal. Let's go through some of the main options:

1. Kentucky Housing Corporation (KHC) Programs: KHC offers several down payment assistance programs, including:

• Regular Down Payment Assistance Program
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These programs can provide up to 10,000 in down payment assistance, which can effectively result in a zero down payment for some buyers.

2. FHA Loans: While FHA loans typically require a 3.5% down payment, this can be covered by down payment assistance programs, effectively resulting in zero down payment for the buyer.
3. VA Loans: For eligible veterans, active-duty service members, and certain military spouses, VA loans offer 100% financing with no down payment required.
4. USDA Rural Development Loans: These loans are available for homes in eligible rural areas and offer 100% financing with no down payment.
5. UWM's $15,000 Welcome Home Grant: This grant program can provide up to $15,000 in down payment assistance for first-time homebuyers.
6. $25,000 Kentucky Welcome Home Grant: This grant can provide up to $25,000 in down payment assistance for eligible homebuyers.
7. 5% Grant: Some lenders offer a 5% grant that can be used towards down payment and closing costs.

Qualifying criteria for these programs generally include:

• Credit Score: Typically, a minimum score of 620 is required, but some programs may accept lower scores.
• Income: Many programs have income limits based on the area's median income.
• Work History: Most lenders prefer a stable work history of at least two years.
• Assets: While these programs aim to help with down payments, having some savings for closing costs and reserves is often beneficial.

It's important to note that qualifying criteria can vary significantly between programs and lenders. Additionally, while these programs can help achieve a zero down payment, buyers should be aware that this often results in higher monthly payments and potentially higher interest rates.

Step 3: Determine Your Budget

Before applying for a mortgage, it's crucial to know how much home you can afford.

• Use the 28/36 rule: Your mortgage payment shouldn't exceed 28% of your gross monthly income, and total debts shouldn't exceed 36%
• Factor in property taxes, homeowners insurance, and potential HOA fees
• Consider future expenses like home maintenance and repairs

Step 4: Gather Necessary Documents

Lenders will require various documents to verify your financial situation. Typically, you'll need:

• Proof of income (W-2 forms, pay stubs, tax returns for the past two years)
• Bank statements for the past few months
• Proof of assets (retirement accounts, investments)
• Identification (driver's license, Social Security number)
• Rental history for the past two years

Step 5: Get Pre-Approved

Pre-approval gives you a clear idea of how much you can borrow and shows sellers you're a serious buyer.

• Shop around with multiple lenders to compare rates and terms
• Submit your financial documents for review
• Receive a pre-approval letter, typically valid for 120 days

Step 6: Choose a Mortgage Type

Kentucky offers various mortgage options for first-time buyers:

• Conventional loans: Typically require higher credit scores but offer competitive rates
• FHA loans: Lower down payment and credit score requirements, but require mortgage insurance
• VA loans: For eligible veterans and service members, offering no down payment options
• USDA loans: For rural home buyers, with no down payment required
• Kentucky Housing Corporation loans: State-specific programs with competitive rates and down payment assistance

Step 7: Find a Home and Make an Offer

With pre-approval in hand, you're ready to house hunt!

• Work with a local real estate agent familiar with Kentucky's market
• Once you find a home, make an offer and negotiate terms
• If accepted, proceed to the final loan application

Step 8: Complete the Full Mortgage Application

Once your offer is accepted, it's time to finalize your mortgage application.

• Choose your lender and loan program
• Provide any additional documentation requested
• Pay for an appraisal to determine the home's value

Step 9: Underwriting Process

The lender's underwriting team will review your application and supporting documents.

• They may request additional information or clarification
• Be prompt in responding to avoid delays
• Avoid making major purchases or changing jobs during this time

Step 10: Closing

If approved, you'll receive a Closing Disclosure detailing your loan terms and closing costs.

• Review this document carefully
• Attend the closing to sign final paperwork
• Bring a cashier's check or arrange a wire transfer for your down payment and closing costs

Congratulations! Once you've completed these steps, you'll be a proud homeowner in the beautiful state of Kentucky.

Remember, the process can vary depending on your specific situation and chosen lender. Don't hesitate to ask questions along the way.

Joel Lobb  Mortgage Loan Officer

Text/call: 502-905-3708

email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

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

click here for directions to our office

Text/call:      502-905-3708

         
email:          kentuckyloan@gmail.com

https://www.mylouisvillekentuckymortgage.com/