Showing posts with label Credit Scores and Kentucky Mortgage Loans. Show all posts
Showing posts with label Credit Scores and Kentucky Mortgage Loans. Show all posts

Credit Scores FHA Loans Louisville Kentucky KHC First Time Home Buyer Credit Score

What is the minimum Credit Score Needed to Buy a House and get a Kentucky Mortgage Loan?

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Credit Scores and Kentucky Mortgage Loans, Fannie Mae, FHA, FHA Loan in Kentucky, Fico Score, Kentucky VA Home Loans, USDA, USDA Rural Housing Guidelines, VA





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


5 POPULAR PROGRAMS THAT KENTUCKY HOME BUYERS USE TO PURCHASE THEIR FIRST HOME.

• At least 3%-5% down• Closing costs will vary on which rate you choose and the lender. Typically the higher the rate, the lesser closing costs due to the lender giving you a lender credit back at closing for over par pricing. Also, called a no-closing costs option. You have to weigh the pros and cons to see if it makes sense to forgo the lower rate and lower monthly payment for the higher rate and less closing costs.

Fico scores needed start at 620, but most conventional lenders will want a higher score to qualify for the 3-5% minimum down payment requirements Most buyers using this loan have high credit scores (over 720) and at least 5% down.

The rates are a little higher compared to FHA, VA, or USDA loan but the mortgage insurance is not for life of loan and can be rolled off when you reach 80% equity position in home.Conventional loans require 4-7 years removed from Bankruptcy and foreclosure.Max Conventional loan limits are set at $510,400  for 2020 in Kentucky

If you meet income eligibility requirements and are looking to settle in a rural area, you might qualify for the KY USDA Rural Housing program. The program guarantees qualifying loans, reducing lenders’ risk and encouraging them to offer buyers 100% loans. That means Kentucky home buyers don’t have to put any money down, and even the “upfront fee” (a closing cost for this type of loan) can be rolled into the financing.
Fico scores usually wanted for this program center around 620 range, with most lenders wanting a 640 score so they can obtain an automated approval through GUS. GUS stands for the Guaranteed Underwriting system, and it will dictate your max loan pre-approval based on your income, credit scores, debt to income ratio and assets.
They also allow for a manual underwrite, which states that the max house payment ratios are set at 29% and 41% respectively of your income.

They loan requires no down payment, and the current mortgage insurance is 1% upfront, called a funding fee, and .35% annually for the monthly mi payment. Since they recently reduced their mi requirements, USDA is one of the best options out there for home buyers looking to buy in an rural area

A rural area typically will be any area outside the major cities of Louisville, Lexington, Paducah, Bowling Green, Richmond, Frankfort, and parts of Northern  Kentucky .There is a map link below to see the qualifying areas.
Thee is also a max household income limits with most cutoff starting at $86,400 for a family of four, and up to $115,000 for a family of five or more.USDA requires 3 years removed from bankruptcy and foreclosureThere is no max USDA loan limit.
FHA loans are good for home buyers with lower credit scores and no much down, or with down payment assistance grants. FHA will allow for grants, gifts, for their 3.5% minimum investment and will go down to a 580 credit score.
The current mortgage insurance requirements are kinda steep when compared to USDA, VA , but the rates are usually good so it can counteracts the high mi premiums. As I tell borrowers, you will not have the loan for 30 years, so don’t worry too much about the mi premiums.
THe mi premiums are for life of loan like USDA.
FHA requires 2 years removed from bankruptcy and 3 years removed from foreclosure.Maximum FHA loan limits in Kentucky are set around $331,600 and below.
VA loans are for veterans and active duty military personnel. The loan requires no down payment and no monthly mi premiums, saving you on the monthly payment. It does have an funding fee like USDA, but it is higher starting at 2% for first time use, and 3% for second time use. The funding fee is financed into the loan, so it is not something you have to pay upfront out of pocket.
VA loans can be made anywhere, unlike the USDA restrictions, and there is no income household limit and no max loan limits in Kentucky
Most VA lenders I work with will want a 580 credit score, even though VA says in their guidelines there is  no minimum score, good luck finding a lender
VA requires 2 years removed from bankruptcy or foreclosure
Clear Cavirs needed to for a VA loan.
This type of loan is administered  by KHC in the state of Kentucky. They typically have $4500 to $6000 down payment assistance year around, that is in the form of a second mortgage that you pay back over 10 years.
Sometimes they will come to market with other down payment assistance and lower market rates to benefit lower income households with not a lot of money for down payment.KHC offers FHA, VA, USDA, and Conventional loans with their minimum credit scores being set at 620 for all programs. The conventional loan requirements at KHC requires 660 credit score.
The max debt to income ratios are set at 40% and 50% respectively.apply online for a kentucky first time home buyer loan


Joel Lobb (NMLS#57916)
Senior  Loan Officer
Text/call 502-905-3708
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346

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#57916

http://www.nmlsconsumeraccess.org/




Estimated Sale Price: $110,000
• Rate - 3.75%
• APR - 4.854%
• Down payment - $3850.00
• Principal & Interest - $500.20
• Insurance (estimated) - $75
• Taxes - $47.92
• PMI - $74.56
TOTAL PAYMENT INCLUDING
TAXES + INSURANCE:
$697.68 a month!
*Rates effective 01/16/2020, based on 740 FICO score and subject to change. ARP may vary. Loan terms are fixed rate 30 year loans and payment will not rise over the life of the loan. Not all applicants will qualify for advertised terms and conditions, must meet underwriting guidelines and are subject to credit review and approval. This does not constitute a commitment to lend. The disclosed rates, payments, homeowners insurance and mortgage insurance are estimates and may vary according to lender guidelines. Property taxes based on current assessed value with homestead and mortgage exemptions in place. Equal Housing Lender.

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Credit Scores Required for Kentucky Mortgage Loan Approvals for FHA, VA,...




Most lenders will wants a middle credit score of 620 for KY First Time Home Buyers looking to go no money down. The two most used no money down home loans in Kentucky being USDA Rural Housing and KHC with their down payment assistance will want a 620 middle score on their programs.


If you have access to 3.5% down payment, you can go FHA and secure a 30 year fixed rate mortgage with some lenders with a 580 credit score. Even though FHA on paper says they will go down to 500 credit score with at least 10% down payment, you will find it hard to get the loan approved because lenders will create overlays to protect their interest and maintain a good standing with FHA and HUD.


Another popular no money down loan is VA. Most VA lenders will want a 620 middle credit score but like FHA, VA on paper says they will go down to a 500 score, but good luck finding a lender for that scenario.


A lot of times if your scores are in the high 500’s or low 600’s range, we can do a rapid rescore and get your scores improved within 30 days.
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How Do Mortgage Companies Average the Score on All 3 Credit Reports?

How Do Mortgage Companies Average the Score on All 3 Credit Reports?




ow Do Mortgage Companies Average the Score on All 3 Credit Reports?


Your credit score measures your risk of paying late or defaulting on a loan. Lenders use credit scores along with the rest of your loan information to measure your likelihood of paying back the debt on time. Credit scores allow mortgage companies to use software programs called automated underwriting systems, or AUS, to determine if the amount of risk is acceptable for the loan program requested.


Credit Bureaus



The three major credit bureaus are Equifax, Experian and TransUnion. Lenders are encouraged to report loans and payment history to the credit bureaus on a monthly basis. When companies need to examine a potential borrower's payment history, they buy a credit report using the borrower's name, address and Social Security number. Each credit bureau calculates the credit score differently. This is why the exact same information can be on all three credit reports and they all report a different credit score.


Factors that Affect Credit Scores



Many factors affect your credit score. Making your payments on time every month is one important factor. Payments made more than 30 days late will lower your credit score. Collections, judgments, tax liens, bankruptcy and foreclosure can have devastating effects on your credit score. Each time you authorize someone to look at your credit that can lower your credit score as well. 


Raising Your Credit Score



One misconception is the belief that paying off credit cards will raise your credit score. The credit bureaus want to see your ability to manage ongoing credit without missing payments or using the entire credit line. Pay down your credit cards so the balances are between 30 to 45 percent of the total available credit line. The older the credit line, the better. If you close a credit card, close the newest ones first and keep the older ones.


Finding the Middle Score



Mortgage lenders require access to all three credit bureaus for each borrower. They use the mid-credit score. If your three scores were 780, 776 and 790 they would use the middle of the three scores, in this case 780. They would not average the scores by adding the three numbers together and dividing the sum by three.


Minimum Credit Score Requirement



In January 2010, the Federal Housing Authority, or FHA, began requiring a minimum 580 credit score for any FHA loan with less than a 10 percent down payment or equity if the loan is a refinance. Conventional loans require a minimum credit score of 620. Lenders are allowed to require their own minimum credit score requirements beyond what the mortgage investors and insurers require. Having the required score does not guarantee loan approval; it is only one factor that lenders consider when approving a loan.


References
Consumer Federation of America: Your Credit Scores
Credit Report.com: Credit Scores
Consumer Credit Help: Do They Add All Three Credit Score Points Together?

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Kentucky USDA credit score and mortgage requirements

 Credit Scores and the Kentucky USDA Rural Development Loan Program 

The Kentucky USDA Rural Development Loan Program is by far the most credit score friendly loan program currently available. While USDA is willing to work with scores lower than 640 most lenders won't. Thus, pragmatically the minimum credit score required by USDA is 581.


For Kentucky homebuyers with a minimum credit score of 640 lenders may streamline the credit approval process normally required as part of the underwriting process. This means that a borrower:
With a lack of credit "depth" will not have to document non-traditional credit items such as utility or insurance payments
A negative past credit history may allow the Underwriter to not request letters of explanation for the cause of the past challenges
Collection accounts can remain open provided the Underwriter believes it unlikely that the account will eventually turn into a judgment
However, USDA is not willing to overlook certain overtly negative credit items even when the credit scores are over 640. For instance borrowers with any of the following adverse past credit should not expect to obtain credit approval using the USDA loan program:


Foreclosure or short sale within the last 3 years
Chapter 7 bankruptcy discharged within the past 3 years
Chapter 13 bankruptcy debt restricting plan completed within the last 12 months
Late mortgage payments within the last 12 months
Applicant or co-applicant delinquent on a federal debt; such as taxes, student loans, or previous agency loan (i.e. VA loan in which the eligibility was forfeited due to a foreclosure)

USDA may be willing to give a borrower an exception to a past bankruptcy or foreclosure prior to the three year period provided the borrower can document the cause of the past negative credit experience as being related to an illness or job loss and unlikely to reoccur.

Once the credit score exceeds 640, USDA allows this score to be considered as justification for allowing the borrowers debt-to-income-ratio to exceed the target ratios of 29% for the housing costs and 41% for the total debt ratio. Frequently USDA will approve loans where the housing ratios are in the high 30% range and total debt ratios are in the high 40% range.

Bottom line the Kentucky USDA Rural Development Loan Program is more flexible in approving a perspective borrower than any other loan program. But like any loan program today, the Loan Officer shouldn't assume that this level of credit flexibility will result in an automatic positive underwriting decision if the Underwriter doesn't feel strongly that the borrowers chance of success at homeownership is strong.

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Why you don't need an 800 credit score for a Kentucky Mortgage Loan Approval







Your credit score — that sometimes mysterious number that reflects how responsible you are with your credit — plays a gigantic role in your overall financial life.
Pretty much any time you apply for credit, someone (or in some cases, a computer) will be looking at that number to determine if they are willing to extend that credit to you and, if so, at what rate. That applies whether you’re applying for a new credit card, a car loan or a mortgage.
Hopefully you know what your credit score is (if not, we’ll help you find out), but do you know if your credit score is good?
In this article, we’ll cover what money expert Clark Howard and others consider a good credit score, where your can track yourscore, and how to improve it if it needs work!



What is a good credit score?

First, it’s important to know that your FICO credit score (by far the score used by most lenders) is a three-digit number that can range from 300 to 850, with 850 being the absolute highest score you can achieve.
So, how do things break out along that range when it comes to “good” and “poor” scores? Here’s how credit reporting agency Experian sees it:




Credit score chart
Experian

As you can see, according to this chart, the majority of Americans have “Good,” “Very Good,” or “Exceptional” scores.

In fact, according to Credit.com, as of 2016 (the latest numbers available), the average FICO score nationally was 699. That was an all-time high!

But different creditors have different ideas about what makes a “good” credit score, and for that reason your ability to get credit and the rate you’re offered can vary from lender to lender. This is why some people aim for a score of 850 — something Clark says “you’re crazy if you obsess with.”

You don’t need to aim nearly that high.

“If you can get up to around a 760, you’re going to get the same benefits, the same offers, that someone who has an 840 score is going to get,” says Beverly Harzog, Credit Card Expert and Consumer Finance Analyst for U.S. News & World Report.

That said, if your credit score is currently in, say, the low 600s, 760 might seem a long way away. That’s still no reason to be discouraged!
There are other numbers that can make a huge difference in the offers you receive and the rates you can get on loans, Clark says:
“There are certain breakpoints where things get easier for you. One that’s really important is being around a 680. That’s a point at which people look at you differently than when you’re below that.”

You can also get free credit reports (which are more comprehensive than what you get with Credit Karma or Credit Sesame) from all three major credit reporting bureaus once a year at AnnualCreditReport.com.

How can you improve your credit score?

To improve your credit score, you should address each one of the factors that goes into calculating your score individually. According to MyFICO.com, those factors are:




Credit score factors
MyFICO.com

Payment History

As you can see from the graphic, the single most important factor is your payment history. That means that not paying your bills on time can do serious damage to your credit score. Even if you’ve had some late payments in the past, you can improve your score going forward by paying each and every bill on time.

Amounts Owed

The second most important factor is the amount you owe on your credit lines. This is calculated as a percentage: the amount you owe divided by the total amount of credit you have available. It’s best to keep this under 30% — even better if you can keep it under 10%.
So, if your total credit line (between all of your credit cards and other loans) is $10,000, it’s good to owe less than $3,000 and great if you owe less than $1,000.
Length of Credit History
The next most important factor is your length of credit history. This is determined by the date you opened your earliest credit account that remains open today. Since you can’t go back in time and open an account any earlier, the most important thing you can do in this area is make sure you don’t close any of your oldest accounts.

New Credit and Credit Mix
Finally, accounting for 10% each of your credit score are New Credit and Credit Mix.
New Credit means accounts that you either open or apply for that result in what’s called an “inquiry” to your account. Almost any time you apply for credit (whether you are approved or not) your score will drop a bit. It usually doesn’t take long to recover, but the important thing to remember here is to only apply for credit you really need. If you apply for every card offer you receive, your score will suffer.
Credit mix refers to the different types of credit you have. Again, this one is not a huge deal, but someone with credit cards, a mortgage, and a car loan will general be judged more favorably than someone who just holds credit cards


Full article link below


https://clark.com/credit/good-credit-score/





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.

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Credit Inquiries--How much do they effect my score?

Credit Inquiries Are A Formal Process



A "credit inquiry" is a formal request to review a person's credit report.
Credit inquires are grouped with other traits into a credit-scoring category called "New Credit". New Credit represents 10 percent a person's complete credit score.  On the scale of 300-850, therefore, credit inquiries represent a tiny portion of a maximum of 85 points to a FICO.
There are many times of credit inquiries, but really only 4 of the set can impact a person's credit score:
1.    A credit check for a mortgage loan
2.    A credit check for an auto loan
3.    A credit check for a credit card application
4.    A credit check for a store credit card, or consumer loan
These 4 types are singled out because, in each case, the inquiry is made by the applicant in order to get access to more debt.  Because extra debt increases the probability of default, credit inquiries can sometimes foreshadow trouble.
Even then, however, the risk of default varies by application type.
For example, credit card applications can be more damaging to a credit score than a mortgage application.  This is because credit card debts tend to revolve higher over time versus a mortgage which eventually pays down to $0.
So, all things equal, a credit card application will harm your credit score more than an application for a home loan.

A Credit Inquiry Lowers Your FICO By 5 Points

When compared to the other credit scoring elements, Credit Inquiries is a relative nothing.
In the official FICO scoring model, Payment History and Credit Utilization account for 65% of a score, combined, and the amount of time during which you've had credit to your name accounts for 15%.  These three areas are over-weighted because the bureaus are more concerned with what you've already done with your credit versus what you might do with more of it.
Your credit past is the best clue to your credit future and it's one of two reasons why it's okay to give your social security number to as many lenders as you want. The impact of a credit inquiry is tiny next to the value of being a Model Credit Citizen.
A mortgage credit inquiry is estimated to lower a credit score by just 5 points.
Unfortunately, we'll never know for sure because the very act of examining the credit score causes it to move. In Chemistry, this is called the Heisenberg Principle.  On MTV, it's called The Jersey Shore Syndrome.  Put a camera on something, and it changes.

The Credit Bureaus Don't Hit Your FICO Twice

The second reason you should shop around with lenders is that -- unlike applying for multiple credit cards -- applying for multiple mortgages won't count as multiple, consumer-initiated inquiries. This is a common thing.
You might apply for 5 credit cards and use them all. You're not going to be approved for 5 mortgages.
As such, the credit bureaus have made it formal policy to permit "rate shopping".  Talk to as many lenders as you want in a 14-day time frame; have your credit checked as often as you'd like; compare rates and fees.  All of the inquiries will be lumped into a single application.
It's good for you and it's good for the bureaus. Your credit scores stay high and TransUnion, Equifax and Experian collect more fees from the banks.

Advice From The Credit Bureaus On Getting Low Rates

To promote rate shopping and to lessen The Fear of Credit Inquiry, the people behind the FICO brand spell out for you the best way to get the best mortgage rates possible:
1.    If you want the best rate, you should "shop around"
2.    Limit rate shopping to 14-day timespan to keep your credit scores high
3.    Mortgage lenders can't give accurate rate quotes without a credit score so give up your social security number
Metaphorically, not letting your lender see your FICO is like not letting your doctor check your blood pressure. You'll get a diagnosis when the appointment is over -- it just might not be the right one.


Joel Lobb
Senior Mortgage Loan Officer




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CREDIT RULE CHANGES FOR KENTUCKY HOME BUYERS FOR GETTING A MORTGAGE LOAN WITH COLLECTIONS ON CREDIT REPORT







CREDIT RULE CHANGES FOR KENTUCKY HOME BUYERS FOR GETTING A MORTGAGE LOAN WITH PREVIOUS COLLECTIONS ON CREDIT REPORT


On the 8th of June, there will be changes on how your credit is reported to the main credit bureaus for experian, equifax and transunion.
Changes include:

**Collections that aren’t at least 180 days old will be rejected by the 3 major credit bureaus. You will now have time to pay them off before it is even reported.
**Medical collections will no longer show on credit reports as long as it is being paid (through either you or insurance).
**Collection accounts that have not been updated in six months or more will not be factored into scores.
**Any collection that did not result from a contract or agreement to pay by the consumer, will be removed.



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http://www.emailmeform.com/builder/form/0bfJs9b6bK8TGoc6mQk9hIu








Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.
10602 Timberwood Circle 
Louisville, KY 40223
Company NMLS ID #1364


Text/call:      502-905-3708
fax:            502-327-9119
email:          kentuckyloan@gmail.com












Fill out my form!
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