Lenders continue to lower FICO requirements for new homebuyers


Fico Score Requirements for Mortgage Lenders in Kentucky

 

The average agency FICO score for banks is high at 745, compared to 713 at nonbank lending institutions.  Both show FICO requirements are on the way down, but it’s more pronounced at the nonbanks. Here’s why.

Source: Lenders continue to lower FICO requirements for new homebuyers

 

The nation’s major banks are continuing to walk away from FHA-backed mortgages, according to the Urban Institute’s Housing Finance Policy Center February Chartbook.

And not only are nonbanks stepping in to take over the space, overall, they are continuing to ease access to credit.

“Bank and nonbank FICO scores reveal that nonbanks brought the Agency median FICO down four points to 726 between November 2018 and January 2019,” the Urban Institute said in an email.

The average agency FICO score for banks is high at 745, compared to 713 at nonbank lending institutions.  Both show FICO requirements on the way down, but it’s more pronounced at the nonbanks. Why?

Nonbanks are also more accommodating for increasing debt-to-income ratios, even as mortgage rates overall inch upward, driving up monthly mortgage payments for borrowers.

“The median LTV for nonbank and bank originations are comparable, while the median DTIs for nonbank loans are higher,” the report states.

Kentucky Fannie Mae Mortgage Guideline Changes for 2015


Fannie Mae Kentucky Conforming Guideline Changes

updates

The following guideline changes are effective immediately for all Kentucky Fannie MaeF Conventional loans; however DU will not be updated to reflect these changes until August 15th 2015

Conversion of Currently Primary Residence

Requirements for conversion of a borrower’s current primary residence to secondary or investment have been removed. The converted residence will be treated like a normal second home or investment part with regards to Reserve requirements and use of Rental Income.

This removes all requirements related to the requirement of 30% equity in the converted property.

Stocks, Bonds, & Mutual Funds

  • 100% of the value can now be used. No reduction in value is required.
  • Documentation that the funds have been liquidated is no longer required when the value of the asset is at least 20% greater than the required borrower funds for down payment and closing costs.

Unreimbursed Employee Expenses

If a borrower qualifies using commission income which accounts for less than 25% of borrower’s annual income, base pay, bonus income, or overtime income:

  • Unreimbursed expenses do not have to be analyzed, deducted from qualifying income, or added to monthly liabilities
  • Voluntary deductions (e.g. union dues) do not have to be deducted from income or treated as a liability

If a borrower qualifies using commission income which accounts for 25% or more of their annual income, general unreimbursed business expenses must be deducted from the gross commission income.

If the borrower reports an automobile allowance as part of monthly income, the related expense must always be considered. The underwriter will determine whether automobile expenses will be deducted from income or included in the debt calculation.

Tip Income

In cases where a borrower reports additional “Unreported Tip Income” to the IRS beyond what is reported by their employer, this higher amount of tip income can be used as long as it can be verified with the last 2 years tax returns and filed Forms 4137 (Social Security and Medicare Tax on Unreported Tip Income).

Obtaining new financing after a Short Sale or Foreclosure for a Kentucky USDA, FHA, VA, and Fannie Mae Loan


credit scores will fare after a short sale or foreclosure
Obtaining new financing after a Short Sale or Foreclosure for a Kentucky USDA, FHA, VA, and Fannie Mae Loan

 

Kentucky Mortgage Short Sale:
Conventional Loans Require:
Minimum 2 years with restrictions up to 7 years
2 to 4 years – 80% maximum LTV
4 to 7 years – 90% maximum LTV
7 years and after allow for maximum standard financing
Kentucky FHA and Kentucky VA Loans Require:
3 years, with exceptions possible for less time if borrower’s credit and mortgage payments were in good standing prior and up to date of Short Sale
  Kentucky Mortgage Foreclosure:
Conventional Loans Require:
7 years, with exceptions considered between 3 to 7 years if significant extenuating circumstances exist
Kentucky FHA and Kentucky VA Loans Require:
FHA: 3 years, with exceptions possible for less time if significant extenuating circumstances exist
VA: 3 years, with exceptions possible for less time if significant extenuating circumstances exist
Please contact me for a free mortgage pre-approval or with questions!

 

Joel Lobb
Senior  Loan Officer
(NMLS#57916)
 
American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223

text  or call phone: (502) 905-3708
 Fax:     (502) 327-9119
 Company ID #1364 | MB73344

 

Fill out my form!

 

 

 

 

For short-sellers, good news: Your wait to buy could be cut | Business & Technology | The Seattle Times


For short-sellers, good news: Your wait to buy could be cut | Business & Technology | The Seattle Times.

The Advantages of Home Ownership


The Advantages of Home Ownership.

via The Advantages of Home Ownership.

Qualifying for a mortgage while you’re self-employed


Qualifying for a mortgage while you’re self-employed.

via Qualifying for a mortgage while you’re self-employed.

 
  

There is no denying that the mortgage borrowing landscape is changing. One of the product lines that saw repeated revisions was the self-employed mortgage niche.  In the mortgage world, you are self-employed if you own a portion or all of the business you derive your income from. Self-employed status can also include contract employees who don’t have their taxes and benefits deducted by the employer they are under contract with for their services. There is a marked difference between now and three years ago when it comes to qualifying for a mortgage if you are self-employed. If your mortgage is up for renewal you can avoid re-qualifying altogether by simply renewing your mortgage with your current lender though if you’re purchasing and obtaining a new mortgage or refinancing by adding more funds to your existing mortgage, you can expect the mortgage process to go as outlined below:

Income Confirmation

When looking for a mortgage, the majority of lenders are able to look at self-employment income in two very different ways:  “stated income” or “verifiable income”. If you’ve been self-employed for longer than 2 years and your income taxes with the government are current, we can verify your income amount via your most recent 2 years personal earnings history which is documented by your Notice of Assessments or Income Tax Returns. If you have been self-employed for less than 2 years or cannot verify your income via traditional methods, you are now a “stated income” borrower.  This simply means we can “state” a qualifying income that is reasonable for your line of work. By viewing your   income this way, you may be able to qualify for a higher mortgage amount than if we had to use your actual paper income that you declared to the government and paid personal taxes on.  The requested documentation to support your self-employment varies depending on your income type and the lender you are applying with. For instance, different documentation is required if you have an incorporated company versus if you are a sole proprietor.  When you are applying for a mortgage under a “stated income” mortgage program, don’t be surprised if your approval is accompanied by higher rate, extra fees or even a larger downpayment.

Downpayment

In order to qualify to purchase a property with the minimum 5% downpayment, you cannot state your income as you need to have verifiable and documentable income along with a good credit history in order to meet the minimum downpayment requirement of the 5%. If you have no choice but to “state” your income in order to qualify for a mortgage, you have to provide a minimum 10% downpayment and also have good credit to get best rates. If you have or have had any credit issues and your income cannot be verified the traditional way, expect to provide 15% – 25% downpayment in order to qualify for a mortgage.  And depending on the lender, some require your downpayment be from your own resources as it cannot be borrowed or gifted. This is when I strongly recommend you speak to a mortgage professional who is experienced in self employed borrowings about the options available to you.

Document Requirements

When you are applying for a mortgage while self-employed, your income confirmation  requirements vary depending on your specific employment details as follows:

  • Notice of Assessment: This Canada Revenue Agency document confirms your personally declared income; it is predominantly used to determine if you owe outstanding personal taxes. For some lenders this is a mandatory requirement for all self-employed borrowers though other lenders may allow alternative income tax confirmation.
  • Business Financial Statements: These would be required if you earn your income from an incorporated company you own all or a portion of. The business financials allow us to determine most importantly if the business is sustainable going forward.  They also allow us to see if you have any non-cash expenses we may be able to “add-back” into your verifiable income which will help you to qualify for a higher mortgage amount.
  • Proof of Self-Employment: You will be asked to confirm your self-employment status and there are numerous acceptable documents to do so, including:

–       Articles of incorporation for your business

–       Business license

–       GST return

–       Talk to your favorite mortgage professional about alternative self-employed status confirmation   documents

  • Tax Returns or T1 Generals: These detailed personal income tax documents can be used to confirm the self-employment earnings and expenses of a sole proprietor as well as to determine what other types of income you earn and pay taxes on in addition to employment income.
  • Personal and/or business bank statements: Some lenders request 3, 6 or even 12 months bank statements to confirm reasonability of the income stated on the application as they want to see the deposits going into your accounts.

Qualifying for a mortgage when you’re self-employed can be tough though you can make the process a bit easier on yourself by working with a mortgage professional who has experience in obtaining mortgage approvals for self-employed borrowers. Since these types of products have guidelines that vary depending on your type of self-employment and how long you’ve been in the business, it is imperative that the person you choose to work with knows what options you are eligible for. Stay on top by picking a mortgage solution that is affordable for you!

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
kentuckyloan@gmail.comKey Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*

Louisville, KY 40222*

Qualifying for a mortgage while you’re self-employed

What is a Good Credit Score


What is a Good Credit Score.