Thursday, November 29, 2012

KHC Loan Products


KHC Loan Products


In addition to rental assistance, the KHC provides help to both potential and current homeowners. They even make available to potential home buyers a list of real estate agents who have demonstrated a commitment to presenting their buyers with affordable mortgage products. To help potential homeowners purchase homes, the KHC partners with approved lenders and banking institutions to assist prospective homebuyers in obtaining loans. For borrowers who qualify, the KHC may also provide up to $10,000 in down payment and closing cost assistance. The Housing Corporation’s loans are subject to certain income restrictions, eligibility and purchase price guidelines. All KHC loans are made and serviced in Kentucky.  

MRB Loans
The KHC offers a fixed rate, 30-year MRB (Mortgage Revenue Bond) mortgage loan for qualifying borrowers. To qualify, the property to be purchased must be the borrower’s only residential property, and it must be occupied as the borrower’s principal residence for as long as the loan debt is outstanding. Additionally, all borrowers must:
·        meet KHC’s regular MRB income guidelines (which can be found here: http://www.kyhousing.org/page.aspx?id=299);
·        make a down payment or qualify for down payment assistance;
·        be a U.S. citizen or legal alien; and
·        have an acceptable credit history.

Some of the MRB mortgage loans offered by the KHC are subject to a federal recapture tax. However, the KHC has implemented a Recapture Tax Guarantee Program for all loans with close dates after October 1, 2006. Under the program, homeowners will be reimbursed if they are required to pay the Federal Recapture Tax on their KHC mortgage loan upon the sale of their home (KHC Loan Programs http://www.kyhousing.org/page.aspx?id=299).


federal recapture tax is a federal income tax that borrowers may be required to pay if their income grows considerably and they sell or transfer their KHC-financed home within 9 years (KHC Loan Programs http://www.kyhousing.org/page.aspx?id=299).


Conventional Loans
The KHC also offers a conventional loan program for borrowers with a credit score of 660 or better. The conventional loan features a quick turnaround time, requires a 20% down payment, and has no up-front or monthly mortgage insurance. Under the program, the loan is insured by an approved mortgage insurance company (KHC Loan Programs http://www.kyhousing.org/page.aspx?id=299).

FHA Loans
The FHA loans offered through the KHC require that borrowers have a minimum credit score of 640. The loans feature down payments of as little as 3.5% and upfront and monthly mortgage insurance. The KHC’s Regular Downpayment Assistance Program (DAP) can be used for the 3.5% down payment requirement.  All FHA loans are insured by the Federal Housing Administration (KHC Loan Programs http://www.kyhousing.org/page.aspx?id=299).

VA Loans
As with all VA loans, the VA loans offered through the KHC are guaranteed by the Veterans Administration for qualified military veterans with a minimum credit score of 640. These loans feature:
·        no down payment if the property appraises for the sale price or greater;
·        flexible credit underwriting; and
·        no monthly mortgage insurance payments .

RHS Loans
RHS loans are guaranteed by Rural Housing Services (RHS) and are available only for homes located in a rural area as defined by RHS. Like the VA loan, the RHS loan requires that borrowers have a minimum credit score of 640, and doesn’t require a down payment if the property appraises for the sale price or greater (KHC Loan Programs http://www.kyhousing.org/page.aspx?id=299).




KHC Loan Products, Continued
GNMA Secondary Market Loans
All GNMA KHC first mortgage loans have fixed interest rates and are for 30-year terms. To qualify, borrowers must:
·       meet KHC’s GNMA income guidelines, which can be found on the KHC website: http://www.kyhousing.org/uploadedFiles/Lenders/GNMA%20Income%20Limitations.pdf;
·       make a down payment, or qualify for down payment assistance;
·       be a U.S. citizen or legal alien;
·       have an acceptable credit history;
·       occupy the home purchased through the program as their principal residence while the loan debt is outstanding.
(KHC Loan Programs http://www.kyhousing.org/page.aspx?id=299)

Special First Mortgage Loan Programs
The KHC also offers a special New Construction Program for Single-Parent, Disabled and Elderly Households. This program offers loans for newly constructed homes at low interest rates (from 1 to 6 percent). However, the funds are limited and are available on a first-come, first-served basis usually in July.

In order to qualify for the program, which only applies to new homes with a purchase price of $115,000 or less, borrowers must be:
·        a single parent with at least one dependent under the age of 18 living in the home;
·        a household containing a person with a permanent disability who receives some form of disability income (SSI, SSDI, Veterans Disability, etc.); or
·        a household where at least one of the home buyers is age 62 or older.

Furthermore, there are income guidelines that must be met and which interest rate the household qualifies for depends on the family’s ability to repay the loan. The DAP loan program may be used for down payment and closing cost assistance. (KHC Loan Programs htt p://www.kyhousing.org/page.aspx?id=299)

KHC Refinance Products
In addition to helping home buyers obtain loan to purchase a property, the KHC also offers refinancing options for current homeowners. The two options offered are a FHA Credit Qualifying Streamline Refinance and a FHA Rate/Term Refinance. Both options feature:
·        a 640 minimum credit score requirement;
·        an appraisal requirement; and
·        a 30-year term.

The FHA Credit Qualifying Streamline Refinance also has a maximum LTV/CLTV of 97.75% (125% CLTV) and applies only if the borrower has an existing FHA loan.

The FHA Rate/Term Refinance also has a maximum LTV/CLTV of 97.75% (97.75% CLTV) and applies if the borrower has a conventional, RHS, VA, or FHA existing loan. (KHC Refinance Products, http://www.kyhousing.org/page.aspx?id=4254)

KHC’s Home Buyer Tax Credit

To further aid Kentucky home buyers, the KHC offers its Home Buyer Tax Credit through Mortgage Credit Certificates (MCC). This tax credit reduces the amount of federal income tax paid by borrowers, freeing up additional income to make it easier to qualify for a mortgage and make monthly payments. The MCC gives borrowers a tax credit of 25% (not to exceed $2,000) on all interest paid each year on their mortgage loan. They may still deduct the remaining 75% interest on their income taxes.

The MCC is in effect for the life of the loan as long as the borrower remains in the home. Borrowers who sell their home within the first nine years of ownership may face the Federal Recapture Tax discussed earlier (KHC Loan Programs http://www.kyhousing.org/page.aspx?id=299).

Post-Purchase Education
The KHC also offers counseling to home buyers after they have completed their property purchase. The Post-Purchase Education Program teaches homeowners how to adjust their monthly budgets for homeownership, and gives tips on how to protect their investment and avoid predatory lending.

All borrowers with a KHC loan are eligible for free post-purchase education with an approved counselor. For those who cannot meet with a counselor, a copy of the Post-Purchase Education Book (in both English and Spanish) is available on the KHC website: http://www.kyhousing.org/page.aspx?id=311.



Joel Lobb (NMLS#57916)Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.com

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*




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