Kentucky Mortgage Loan Info in regards to Credit Score, Down payments and debt to income ratios.


Loan Info in regards to Credit Score, Down payments and debt to income ratios.

 

Here are a few Kentucky mortgage misconceptions in regards to qualifying for a Mortgage loan in 2020

Credit Score Myth For Kentucky Mortgage Loans

53% of people surveyed believe they need a minimum credit score of 650 to qualify for a mortgage.

 

Credit Score Facts For Kentucky Mortgage Loans

There are many loan programs available for credit scores as low as 580 for government backed loans like FHA, VA, and USDA.

Down Payment Myths for Kentucky Mortgage Loans

The minimum down payment required is 3% (or even 20%).

 

Down Payment Fact

Many loan programs, including conventional loans, are available with down payments as low as 3%. USDA, VA, and Kentucky Housing Corp with their down payment assistance offer zero down payment options. 

Debt-to-Income Myths for Kentucky Mortgage Loans

Most people think 40 to 45%% (percent of your monthly income that goes to debt payments) is the max.

 

Debt-to-Income Fact

Lenders may accept higher ratios depending on things like credit score and down payment amount. FHA and VA will allow over 50% debt to income ratios on the back-end, but Conventional and USDA restrict their back-end debt to income ratios to 45% or less.

 

Think back to the last time you financed a purchase — be it a home, automobile, or what have you… You may remember having heard the term “debt-to-income ratio.” Today I want to spend some time going over exactly what this ratio is, and to also touch on how it can effect your personal finances.

What is your debt-to-income ratio?

Commonly referred to as your “DTI,” your debt-to-income ratio is a personal finance benchmark that relates your monthly debt payments to your monthly gross income.
As an example… Let’s say that your gross monthly salary is $5,000 and you are spending $2,800 of it toward monthly debt payments. In that case, your DTI would be an unhealthy 56%.
This version of your DTI is sometimes referred to as your “back-end” DTI. This is often broken down further to give a front-end debt-to-income ratio, which is a component of your back-end DTI.

How to calculate your front-end DTI for a Kentucky Mortgage Loan Approval

Your front-end DTI is calculated by dividing your monthly housing costs by your monthly gross income. Front-end DTI for renters is simply the amount paid in rent, whereas for homeowners it is the sum of mortgage principal, interest, property taxes, and home insurance (i.e., your PITI) divided by gross monthly income.
From above, if that $2,800 in debt payments is attributable to $1,500 in housing costs and $1,300 in non-housing costs, then your front-end DTI is $1,500/$5,000 = 30% (and your back-end ratio is still 56%, as calculated above).

How lenders use your DTI for a Kentucky Mortgage Loan Approval

Kentucky Mortgage lenders typically use DTI (along with other variables) to determine whether or not you qualify for a loan, and to help determine your Kentucky mortgage rate. A high front-end DTI raises red flags with lenders because it is commonly associated with borrower default. In fact, reducing front-end DTI to reduce the risk of homeowner default was one of the main objectives of the loan modification programs introduced by the government in 2009.
There are specific limits for DTI that are used as cut-off points when evaluating borrowers. Current DTI limits for conventional conforming mortgage loans are typically 28% on the front end and 36% on the back end, though these limits are slightly higher for government subsidized Kentucky FHA loans.
While there are certainly other factors to consider
Acceptable Ratios
Housing Debt to Income
Conventional 28% 41-50%
FHA 29% 41-56.5%
VA
USDA/RHS
KHC 
29%
29%
40%
41-65%
41-45%
50%
Higher ratios may be accepted with compensating factors: low loan value, large cash reserves after closing, high credit scores, etc,

 

The bottom line: When it comes to home loans, one size definitely does not fit all, and it can be hard to determine what’s best for your situation on your own. Speaking to a mortgage professional about your unique circumstances is usually your best bet.

Ready to get started? Contact us at 502-905-3708.

 

 

 

Credit Score Information For Kentucky Home buyers

Credit Scores are important for getting approved for a Mortgage in Kentucky.


Credit Scores are important for getting approved for a Mortgage in Kentucky.

Credit Score Requirements for FHA, VA, USDA and Conventional Loans in Kentucky
Credit Score Requirements for FHA, VA, USDA and Conventional Loans in Kentucky

 

Below I have spelled out some info that will help you out when you look at your credit scores and what affects them and what you can do to help your credit scores in order to prepare for a mortgage loan approval when it comes to your credit scores.

  1. Opting out will help a credit score.
    No it won’t. The bureaus don’t know if someone has opted out or not and it’s not factored into the credit scores. If someone’s score improves after they have opted out it’s because something else has changed on the report but not because they opted out.
  2. Paying off old delinquencies will remove them from your credit report.
    No a collection account or an account with late payments will stay on a credit report for 7 years. That being said, the credit bureaus will occasionally go in and remove old collections that have not reported for a while. But that’s at their discretion. Just because you paid if off doesn’t mean it will be removed. Also paying off an older collection with then brings the reporting date current which could actually hurt the credit scores.
  3. All rate shopping inquiries are the same.
    If you are rate shopping for a mortgage or auto, all inquiries with Trans Union and Equifax have a 45 day window. For Experian however it’s only 15 days. For revolving inquiries there is no “shopping” period. All those inquiries are counted no matter what the time frame is.
  4. Opening new accounts will help your credit score.
    This will help only if the borrower has no established credit yet. Once you have several accounts, opening new ones will actually have a negative affect on a credit score until substantial history is accumulated on the account.
  5. Paying off all your revolving balances is a good thing!
    Actually no it’s not. The credit bureaus models like to see at least one revolving balance, even if it’s small. Having no revolving balances can actually have a negative impact on a credit score. So always keeping one account with a small balance is a very good idea.
  6. Your credit is affected by how much money you have in your savings or checking accounts.
    Neither of these are factored into a credit score.
  7. Closing old accounts will help a credit score.
    The credit scoring models like to see several open accounts that have zero balances and are not used often. When an account is closed you lose that history. If it’s an account you’ve had for a long time and has no late payments, closing it can actual hurt the credit score. Having several open accounts, even if they are not used much, makes it look like a person has good financial responsibility.
  8. When I check my own credit score it’s the same one used by lenders.
    Unfortunately no it’s not. A person actually has 69+ different credit scores. The ones that lenders use are completely different than what a borrower sees when they get their own scores. Those are personal scores and are not used by any industry for any reason.
  9. Checking my own credit report will hurt my score.
    When a consumer checks their own credit report it’s a “soft” inquiry and will not impact the scores. Only “hard” inquiries done by creditors when a consumer applies for a loan or credit card will possibly have a negative affect on a credit score.

It’s  possible to avoid paying for your credit score or at least an estimate. Here is a list of all of the well-known ways to get a FICO score or score estimate for free:

Free FICO credit scores:

For free estimates of your credit score estimates and credit monitoring:

Also see the Wikipedia page on free credit report websites.

Credit cards (no annual fee) that offer a free FICO score with their monthly statement or online:

  • Amazon Synchrony Store Card (TransUnion, FICO-08)
  • American Express (Experian, FICO-08)
  • Bank of America Cards (TransUnion, FICO-08)
  • Barclaycards including the Sallie Mae Mastercard (TransUnion, FICO)
  • Branded Citibank cards (Equifax, FICO-08)
  • Chase Slate (Experian, FICO)
  • Discover cards (Transunion, FICO-08)
  • FNBO Cards (Experian, FICO-08 Bankcard)
  • Walmart Store Card (TransUnion, FICO)
  • Wells Fargo Cards (FICO)

Deposit accounts that offer a free FICO score with their monthly statement:

  • Digital Credit Union (EQ-05: Mortgage Score)

Credit cards (no annual fee) that offer a free estimated credit score online:

  • Capital One credit cards (TransUnion, VantageScore 3.0)

Note that score ranges vary between FICO scores and other scores:

  • FICO: 300 to 850 (used in 85-90% of credit decisions)
  • VantageScore (used in 10-15% of credit decisions)
    • VantageScore pre-3.0: 501 to 990
    • VantageScore 3.0: 300 to 850
  • TransUnion New Account Score: 300 to 850 (score estimate)
  • Equifax: 280 to 850 (score estimate)
  • Experian: 330 to 830 (score estimate)

Image result for credit scores and mortgage loans

 

 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

http://www.nmlsconsumeraccess.org/
If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/

— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

— 

How are collections treated on a Mortgage loan in Kentucky for a FHA and Conventional Loan Approval?


Collection Account Tips for Fannie Mae and FHA Loan in Kentucky. Do they have to be paid to get approved for a Kentucky Mortgage Loan?
Collection accounts  on the credit report can sometimes hurt your chances of getting approved for a Kentucky Mortgage loan in Two ways:
First, if collections are recent, they may drag down your credit score, and secondly, if large enough, sometimes they are required to be paid before closing and final loan approval
Collections accounts for a debt that have been submitted to a collection agency by the creditor generally due to nonpayment. Below are general tips and guidance on what the FHA and Fannie Mae Underwriters will require when collection accounts are reporting on a borrower’s credit report. Accounts that are reported as past due but not yet turned over to a collection agency must be brought current. These past due accounts are not considered collection accounts.
Kentucky Fannie Mae or Conventional loans  – Underwriting must follow AUS or Automated Underwriting findings through DU  to determine if a collection account must be paid. Typically DU will require the following:
  • One Unit Principal Residence loans will not require pay off of collections or non-mortgage charge offs regardless of the amount. 
  • Two – Four Unit Owner Occupied and Second Home loans will require collections and non-mortgage charge offs totaling more than $5,000 to be paid in full prior to or at closing. 
  • Investment property loans will require any individual collection or non-mortgage charge off equal to or greater than $250 and all accounts that total more than $1000 to be paid in full prior to or at closing.
Kentucky FHA Mortgage Loans and Collections–
Underwriting must follow DU to determine if a collection account must be paid, even on a manual underwrite. Typically DU will require the following:
  • If the credit report shows a cumulative balance of $2,000 or more for collection accounts: 
  • The debt(s) must be paid in full prior to or at closing, or 
  • Payment arrangements must be made with the creditor and the monthly payment included in the DTI, or 
  • A monthly payment of 5% of the outstanding balances of each collection must be included in the borrower’s DTI. 
  • Collection accounts of non-borrowing spouses in a community property state must be included in the $2,000 cumulative balance and analyzed as part of the Borrower’s ability to pay all collection accounts. Community property states are Arizona, California, Texas, Washington, and Wisconsin.
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346


Text/call 502-905-3708
kentuckyloan@gmail.com

http://www.nmlsconsumeraccess.org/
If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.
Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/

— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

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.

Does bad debt, collections, or charge offs on credit report have to be paid off to get a VA loan approval in Kentucky


Collections on Credit Report and How They affect a Kentucky VA Mortgage Loan Approval
 
Collection accounts are accounts for a debt that have been submitted to a collection agency by the creditor generally due to nonpayment. Below are general tips and guidance on what DU will require when collection accounts are reporting on a borrower’s credit report.
 
Accounts that are reported as past due but not yet turned over to a collection agency must be brought current. These past due accounts are not considered collection accounts.
 
Kentucky VA Mortgage Loan Guidelines Below for Credit and Collections:
 
 
Any collection account required by DU (Automated  Underwriting System used by Mortgage Lenders) to be paid must be paid prior to or at closing.
Isolated collection account do not necessarily have to be paid off for loan approval.
Borrowers with a history of collection accounts should have re-established satisfactory credit in order to be considered a satisfactory credit risk.
Lenders/underwriters should review the complete credit history and use sound judgment to determine if collection account pose a credit risk to the borrower’s ability to repay the loan.

Use These Findings to Boost Your Credit Score for a VA Mortgage Loan Approval

Here are 3 tips on improving a low credit score for a VA mortgage Loan Approval:

Step 1: Get a line of credit

In order to establish credit history, you need to have a form of credit. The simplest way for you to begin will be to open a credit card. If your score is low or non-existent, then you’ll need to apply for a secured card or a store card.

  • Secured Card:  You’ll use your own money as collateral by putting down a deposit of a few hundred dollars with the bank. Typically, that amount will then be your credit limit. Once you prove you’re responsible, you can get back your deposit and upgrade to a regular credit card. [Read more here]

  • Store Card: People with a low credit score can often still get store cards because banks are more likely to approve users who apply through the store. The catch is that the interest rates are often very high if you can’t make your payments. [Read more here]

Step 2: Keep your utilization rate low

Utilization is the amount of your credit limit you spend each month. For example, if you have a $500 credit limit and spend $50 in a month, you’re utilization will be 10%. Your utilization is part of what determines your credit score.

Your goal should be to never exceed 30% of your credit limit. Ideally, you should be even lower than 30% because the lower your utilization rate, the better your score will be.

We recommend you make one small purchase (hello, pack of gum) a month to keep your utilization low and help increase your credit score at a faster rate.

Step 3: Pay in full, and on time, each month

The easiest way to prove you’re responsible is to only charge what you can afford. Never use your credit card to buy an item you won’t be able to pay off on time and in full each month.

Being late on your payments has a huge, negative impact on your credit score.

There is also no advantage to only paying the minimum amount due on your card. That will only result in you paying interest and does nothing to help your credit score. So just save yourself money and pay your entire bill.

Customer Reviews below:
👀👀👀👀😍😍😍😍👇👇👇👇👇
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.

 

 

 

Cee Bellisle August 2018
😃
Contacted him about buying a home and he was great to work with. I was moving to Louisville Ky to take a new job and he walked me through the entire process. He explained to me all the different options for FHA, VA, USDA mortgage loans and credit score requirements versus Fannie Mae. Since I was a first time home buyer I needed alot of help and guidance. I would definitely recommend him. Fast to respond and available to answer questions that I or my realtor had after hours.
Anderson Johnson April, 2018
We moved from Michigan to Northern Kentucky area and we were really impressed. We got a USDA loan no money down and closed in less than 3.5 weeks. We shopped around online with other lenders but Joel was always first to respond and his rates were just a little better than other lenders. He kept us informed through the process along with our realtor and there was absolutely no surprises like we heard from other co-workers and friends that they experienced in their loan process. We have already referred another co-worker to Joel . He’s AWESOME!
Patty Kingston July 2018
😍
betty parsons
Wow,  what a great loan officer. I was referred to him by our agent and he was great to work with. We used him for a USDA no money down loan in  Shelby County and we were really impressed. We  were afraid we could not buy a home since we did not have money saved for a down payment, but Joe l was able to get us a zero down loan and we even got our appraisal fee and good faith deposit back at closing. We actually got money back at closing!!! I Can’t think him enough. Our family moved from our apartment in the south end  of town to get our own home with 5 acres  for our kids and 2 dogs, at a payment that is equal to our rent payment also. .Thanks Again Joel. May god bless you
Patty Locker
We contacted Joel about buying a house on our move from Ohio for my husband’s job transfer with Ford. We put a lot of trust in him since we were new to the area and first time home buyers in the Louisville KY market, and he always delivered on what he said. It took us a while to find a home due to the lack of homes,  but once we got one, he was always quick to respond our questions via text or email ,and kept us informed through the process. We got to meet him at the closing and he was super nice and even got us a closing gift for our home which we didn’t expect at all. Super nice guy 😀!!! I would definitely recommend him for a local Home loan in the Louisville area.
Like
pam dolby
I got a VA loan with Joel and he was great. He is an ex-army guy so he could relate to my past experiences of being a veteran and moving around the country a lot. I had some credit issues that required a little extra work but Joel was able to find A VA lender to approve my situation as far as having past bad credit problems and a lower credit score. We closed yesterday on our home here in Louisville and we could not be happier. We finally have a home of our own thanks to Joel . I would definitely recommend him for a mortgage loan. Great experience and closed 8 days before expected close date so we were able to move in early.
I contacted Joel about the $10,000 KY Housing Grant last month and we were able to get it and I just closed on my home. He was great to work with and if you are a first time home buyer here in Louisville, I would definitely contact him. I met him at his office and he was very nice and knowledgeable and kept me informed through the process. No surprises either so I was very happy. I am new homeowner thanks to Joel .


I can answer your questions and usually get you pre-approved the same day. 


Call or Text me at 502-905-3708 with your mortgage questions.
Email Kentuckyloan@gmail.com












 
 

 

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


 
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). I lend in the following states: Kentucky

How to boost your credit score for A Mortgage Loan Approval in Kentucky!


 

Want to increase your credit score before buying a home? It might be easier than you think. Focus on these 6 steps and watch your score climb.

Source: How to boost your credit score

What Can Improve a Credit Score

Keep Your Balances Low

It’s important that you try to keep your balances at 40 percent or lower. Generally speaking, the less you owe, the less you’ll need to pay off. Not to mention, the less you owe to your lenders, the better you look as a borrower, and the higher your credit score will be.

Pay Your Bills on Time (Or Early)

The last thing you want is to get behind on your credit card bills, this is where your balances will start getting out of control, and you’ll be spending more than you like. It’s crucial to your credit score that you make payments on time if not early, to improve your overall score.

Sort Out Accounts in Collection

You can keep on trying to transfer it to new accounts, but we suggest that you simply pay off your balances to avoid the hassle. Once you know who your debt collection agency is, contact them and see what you have to do to pay off the balance and report it as “paid off” on your credit score.

However, if the debt seems inaccurate, you should dispute it immediately with the three credit bureaus. The sooner you get your accounts in collection sorted out and paid off, the quicker your credit score will improve.

Get a Secured Credit Card

A secured credit card is a form of credit card that makes you deposit money into the card itself as the line of credit. However, it’s single-handedly the best type of credit card to help your credit grow because you can get one with even the worst credit.

Don’t Delete Old Debt from Your Credit Report

Old debt that is handled correctly is actually a good thing. It shows creditors that you are responsible with your credit. Many people make the mistake of trying to remove an account from their report as soon as it is all paid off. Leaving good debt on your account will lengthen your credit history and boost your score.

Pay your bills on time, every time

Your payment history on credit cards, car loans, utilities, etc. is the single biggest factor in your credit score, weighted at about 35 percent. Even a single 30-day-late payment could knock 100 points off your score — and that can really hurt. FICO considers how late you were, how many times, how much was owed, and how recently it happened.

You can’t erase the fact that you were late — that will stay on your credit report for up to seven years – but you can get back on track and move on. The farther slip-ups recede into the past, the less they affect your current score. If your credit history doesn’t have a lot of other problems in it, your score will recover pretty quickly.

So if you’ve missed any recent payments, get current and stay current. We recommend setting up automatic payments or reminders for those times when life gets out of hand.

Pay down debt, especially on credit cards

The size of your debt accounts for about 30 percent of your credit score, so shrinking it is another priority. Your credit cards are the best place to start, especially if you’ve overdone it. Stop using them and start paying more than the minimum monthly payment on the one with the highest interest rate.

Once you pay off an account, you don’t necessarily want to close it. Having unused credit is actually very good, you’re building credit history and demonstrating that you have your financial act together. In mortgage terms, you’re a low risk. But lenders don’t want to see high balances or too much of your income going to monthly debt payments.

The last debt to pay off is medical debt. Even FICO recognizes that medical debt is the pits, so it hurts your credit score less than other kinds. Next-to-last is student loan debt, partly because it’s an installment loan that’s expected to be long-term: paying it off early won’t help your score (although it will help your debt-to-income ratio). It’s also understood as an investment in your future income.

 

Control your credit utilization ratio (wait, what?)

 

Your credit utilization ratio reflects how much of your credit you’re using within a monthly billing cycle. Basically, you don’t want the balance on your monthly statement to be more than 30 percent of your limit. Even if you pay it off in full by the due date, your score is getting dinged. The statement balance is what’s being reported to the credit bureaus, and a high one makes it look like you’re “utilizing” the plastic a lot. So try to keep the balance that shows up on your monthly statement under 20 or even 10 percent of your limit.

if you have questions about qualifying as first time home buyer in Kentucky, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.
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Thanks, but No Thanks – Stacy Kaper – NationalJournal.com


Thanks, but No Thanks – Stacy Kaper – NationalJournal.com.