4 Things Needed to Get Approved for a Mortgage Loan In Kentucky


I wish it were that easy.  There are 4 basic things that a borrower needs to show a lender in order to get approved for a mortgage in Kentucky.  Each category has so many what ifs and sub plots that each box can read as it’s own novel.  In other words, each category has so many variables that can affect what it takes to get approved, but without further adieu here are the four categories in no particular order as each without any of these items, you’re pretty much dead in the water:

Income

You need income.  You need to be able to afford the home.  Without it, forget it!  But what is acceptable income?  Basically, it all depends on the type of loan that a borrower applies for.  Jumbo, V.A., USDA, FHA, Conventional, Super Jumbo?  Let’s just say that there are two ratios:
  1. First Ratio – The first ratio, top ratio or housing ratio.  Basically that means out of all the gross monthly income you make, that no more that X percent of it can go to your housing payment.  The housing payment consists of Principle, Interest, Taxes and Insurance.  Whether you escrow or not every one of these items are factored into your ratio.  There are a lot of exceptions to how high you can go, but let’s just say that if your ratio is 33% or less, generally, across the board, you’re safe.
  2. Second Ratio– The second ratio, bottom ratio or debt ratio includes the housing payment, but also adds all of the monthly debts that the borrower has.  So, it includes housing payment as well as every other debt that a borrower may have.  This would include, Auto loans, credit cards, student loans, personal loans, child support, alimony….basically any consistent outgoing debt that you’re paying on.  Again, if you’re paying less than 43% of your gross monthly income to all of the debts, plus your proposed housing payment, then……generally, you’re safe.  You can go a lot higher in this area, but there are a lot of caveats when increasing your back ratio.
What qualifies as income?  Basically, it’s income that has at least a proven, two year history of being received and pretty high assurances that the income is likely to continue for at least three years.  What’s not acceptable??????  Cash income, short term income and income that’s not likely to continue.

Assets

For the most part this is fairly simple.  Do you have enough assets to put the money forth to qualify for the downpayment that the particular program asks for.  USDA says that there can be no money down.  FHA, for now, has a 3.5% downpayment.  Some loans require 20% down.  These assets need to be validated through bank accounts and sometimes gifts.  Can you borrower the down payment?  Sometimes.  Generally if you’re borrowing a secured loan against a secured asset you can use that.  But rarely can cash be used as an asset.  TALK TO YOUR LOAN OFFICER FIRST when discussing what’s acceptable?

Credit

Whewwwwwwwwwwwwwwwwwwwwwwwwwwww.  This can be the bane to every borrower, every loan officer and every lender……and yes, to every realtor.  How many times has a borrower said my credit’s good, only to find out that it’s not nearly as good as a borrower thinks or nearly as good as the borrower needs.  Big stuff for sure.  620 is the bottom score (again with few exceptions) that lenders will permit.  Below a 620, then you’re in a world of hurt.  Even at 620, people consider you a higher risk that other folks and are going to penalize you or your borrower with a more expensive loan.  700 is when you really start to get in the “as a lender we love you” credit score.  720 is even better.  Watch your credit!!!!!  Check out my post:

Appraisal

In many ways this is the easiest box.  Why?????  Generally, there’s nothing you can do to affect this.  Bottom line here is…..”is the value of the house at least the value of what you’re paying for it?”  If not, then not good things start to happen.  Generally you’ll find less issues with values on purchase transactions, because, in theory, the realtor has done an accurate job of valuing the house prior to taking the listing.  The big issue comes in refinancing.  In purchase transactions, the value is determined as the

Lower of the value or the contract price!!!

That means that if you buy a $1,000,000 home for $100,000, the value is established at $100,000.  Conversely, if you buy a $200,000 home and the value comes in at $180,000 during the appraisal, then the value is established at $180,000.  Big issues….Talk to your loan officer.
For each one of these boxes, there are over 1,000 things that can effect if a borrower has reached the threshold to complete that box.  Soooooooooooo…..talk to a great loan officer.  There are so many loan officers that don’t know what they’re doing.  But, conversely, there’s a lot of great ones as well.  Your loan is so important!  Get a great lender so that you know, for sure, that the loan you want, can be closed on!

Call us today for a free preappoval and compare our rates and service to any one in Kentucky

Down Payment Assistance.  Kentucky Housing Corporation.  City of Louisville Down Payment Assistance.  KHC Home Loans.  The Housing Partnership, Inc.  Low Down Payment Home Loans.  FHA Mortgage Loans.  Homebuyer Education.  Forgiveable Down Payment Assistance.  Kentucky First Time Homebuyer Grants.  Neighborworks American.  Pre-purchase Homebuyer Counseling.  First Time Home Buyer Counseling.  Louisville Urban League.  HUD homes.  Louisville Home Loans.  Kentucky Home Loans.  Lexington Home Loans.  Bowling Green Home Loans.  Frankfort Home Loans.  Paducah Home Loans.  Northern Kentucky Home Loans.  Bowling Green Home Loans.  Richmond Home Loans.  Owensboro Home Loans.  Louisville Refinance.  Kentucky Refinance.  Louisville KY refinance.  Lexington KY Refinance.  Bowling Green KY Refinance.  Frankfort KY refinance.  Louisville KY relocation.  Louisville KY relocation mortgage.  Relocation mortgage loans KY.  Lexington Ky relocation.  Lexington KY relocation mortgage.  New home purchase louisville ky.  New home purchase ky.  Kentucky FHA loans.  KY FHA loans.  Ky Fha approved lenders.  KHC approved Lenders.  Fannie Mae DU refinance ky lenders.  Experienced mortgage lenders KY.  Low Down payment home loans ky.  Low Down Payment home loans kentucky.  Low closing costs ky.  low closing costs mortgage ky.  low closing costs refinance ky.  Jumbo loans ky.  Jumbo loans Louisville ky.  Arm loans ky.  Arm loans louisville ky.  Local mortgage companies ky.  Local mortgage companies louisville ky.  Low rate mortgage ky.  Low rate mortgage louisville ky.  FHA Loans Louisville ky.  FHA Loans Kentucky.  FHA Purchase Ky.  FHA purchase Loan ky.  FHA refinance Louisville KY.  FHA refinance ky.  FHA interest rates ky.  FHA interest rates Louisville KY.
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8 thoughts on “4 Things Needed to Get Approved for a Mortgage Loan In Kentucky

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  4. Do you guys expect the income ratios to change on February 1st, 2011 when the the condo lending guidelines are set to revert back? I really have not found a lender in Nashville who could weight in so I searched online and you guys certainly seem to be qualified to answer this opinion question. Thank you in advance.

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