Showing posts with label credit score and bankruptcy. Show all posts
Showing posts with label credit score and bankruptcy. Show all posts

Conventional Mortgage Guidelines for Kentucky in 2020


 These are called conventional because they must conform to the Freddie Mac and Fannie Mae standards set by the government, but they are not government insured. This poses a greater risk to lenders because they are not guaranteed repayment in the event the loan defaults; rather, they are forced to take a personal loss.

For these reasons, conventional mortgages are more difficult to obtain with stricter lending requirements in regards to credit score, down payment, debt to income ratio, mortgage insurance  and previous bankruptcies or foreclosure.

 Let's take a look at each subject below:๐Ÿ‘‡


Credit Scores: 


Fannie Mae and Freddie Mac Require a minimum 620 credit score.

You have three credit scores from Experian, Equifax, and Transunion, and they take the middle score, throwing out the high and low score. The higher the credit score the better pricing you will get on the rate and mortgage insurance along with your down payment.
Ideally for higher credit score buyers, say over 680, and with at least 3% down payment with a low debt to income ratio.


Down Payment:  

Conventional mortgage loans require a minimum of 3% down payment. The more you put down, the better the rate, lower the mortgage insurance, and greater chances of getting approved.

If you put down 20%, then you will not have to pay mortgage insurance, or if you refinance an existing loan that has mortgage insurance, you can potentially get rid of the mortgage insurance if your equity position is less than 20% of the home's value.


Debt to Income: 


Conventional Mortgage loans typically will not allow for a back-end ratio of over 45%. They're two ratios, the front-end and back-end ratio. The front-end ratio is a percentage of the total house payment of your total gross monthly income. The back-end ratio is the new total house payment along with the monthly payments on your credit report divided by your total gross monthly income.

For example, if you make $3,000 gross a month, your total backend ratio would me maxed out at 1,350 a month. So if you had $300 in monthly payments on the credit report, this would allow for a maximum house payment of $1,050.00

Mortgage Insurance:


 Mortgage insurance is typically cheaper and less expensive on conventional mortgage loans. They're competing private mortgage insurance companies competing for the business with the names of MGIC, Radian, Essent, Genworth and Ugcorp.

 Conversely, it is not like Government insured FHA, VA and USDA  mortgage loans where all applicants get the same premiums regardless of credit score, down payment and debt to income ratio. Mortgage insurance is usually expressed as a monthly premium, with no upfront mortgage premiums like FHA, VA, and USDA government loan programs.

The higher the credit score, lower debt to income ratio and more nd can be removed once you reach 80% equity position in the home.

Bankruptcies and Foreclosure: 

A four-year waiting period is required, measured from the discharge or dismissal date of the bankruptcy action.
Exceptions for Extenuating Circumstances
A two-year waiting period is permitted if extenuating circumstances can be documented, and is measured from the discharge or dismissal date of the bankruptcy action.
A distinction is made between Chapter 13 bankruptcies that were discharged and those that were dismissed. The waiting period required for Chapter 13 bankruptcy actions is measured as follows:
  • two years from the discharge date, or
  • four years from the dismissal date.

.Foreclosure

A seven-year waiting period is required, and is measured from the completion date of the foreclosure action as reported on the credit report or other foreclosure documents provided by the borrower.

These transaction types are completed as alternatives to foreclosure.
  • A deed-in-lieu of foreclosure is a transaction in which the deed to the real property is transferred back to the servicer. These are typically identified on the credit report through Remarks Codes such as “Forfeit deed-in-lieu of foreclosure.”
  • A preforeclosure sale or short sale is the sale of a property in lieu of a foreclosure resulting in a payoff of less than the total amount owed, which was pre-approved by the servicer. These are typically identified on the credit report through Remarks Codes such as “Settled for less than full balance.”
  • A charge-off of a mortgage account occurs when a creditor has determined that there is little (or no) likelihood that the mortgage debt will be collected. A charge-off is typically reported after an account reaches a certain delinquency status, and is identified on the credit report with a manner of payment (MOP) code of “9.”
A four-year waiting period is required from the completion date of the deed-in-lieu of foreclosure, preforeclosure sale, or charge-off as reported on the credit report or other documents provided by the borrower.
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346

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


Can you get a Kentucky Mortgage Loan with Bad Credit or less than Perfect Credit?



Kentucky Mortgage Loan with Bad Credit



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If you are looking to get a mortgage loan in 2020 in the state of Kentucky and you have past credit problems, there maybe some hope for Kentucky Home-buyers to buy a home of their own.

 Before we look at some possible home-buying programs, let's first look at what is considered Bad Credit, or less than perfect credit. 

Most of the times when borrowers say they have bad credit, they mean one of the following:

Past or Current Bankruptcies
Low credit scores or fico scores
Collections on credit report showing unpaid or paid.
Delinquent or behind on credit cards, mortgage, car loan payments
Foreclosure or short sale where they lost a home to default
Owe back taxes to the Federal Government.
Defaulted Student Loans
Delinquent Child Support Obligations
Disputed accounts on credit report

Below I have listed one of the most popular programs Kentucky Home Buyers need to consider when buying a home in 2020 if they have experienced some of the credit issues mentioned above:


When it comes to getting a mortgage loan with past credit problems, FHA is probably going to be your best bet.

They're the most lenient on credit scores, down payment requirements and credit history when it comes to qualifying for a Kentucky Home Loan.

I have listed below some of the requirements you must overcome to get approved for a Kentucky FHA home loan.


Kentucky FHA Mortgage Loans:

The credit score requirements for Kentucky FHA home loans:

FHA says on paper in their written guidelines that they will insure a FHA loan down to 500 - 579 with a 10% down payment or 580+ with a 3.5% down payment. However, in the real world of lending in the secondary market, most lenders will not adhere to these guidelines.
Most FHA investors will want a 620 middle credit score, but they're a few that will go by the written FHA guidelines above for credit scores, but very few. Your best bet is to get with a loan officer and get your scores up to at least 580 so you can have a better shot of getting approved and access to more FHA lenders.

Be aware there are a lot of credit scores out there, but each lender must pull their own credit report and credit scores to determine your creditworthiness. I would shop around first to see what the requirements are for each FHA lender before they pulled your credit report.

Mortgage lenders use the FICO score model below for each credit bureau when they look at your credit scores.

MyFICO is now selling additional score versions to the public.  These include three scores most often used by mortgage lenders:
  • Experian FICO Score 2  (also known as EX-98 or Risk Model v2)
  • Transunion FICO Score 4  (also known as TU-04 or Transunion FICO Risk Score Classic 04)
  • Equifax FICO Score 5  (also known as EQ-04 or Beacon 5).  



Bankruptcy Requirements for Kentucky FHA Home Loans:

FHA states in their published guidelines that if you had a Chapter 7 Bankruptcy, you must wait 2 years from the discharge date to reapply for a FHA insured mortgage loan. 

If you had a Chapter 13 Bankruptcy and have a 12 month on-time payment history with the courts, you can potentially get approved for a FHA loan if you get permission from the trustee and qualify with the Chapter 13 payment plan in your debt to income ratio. If you have been in the plan for over 12 months, and have a good pay history, you can submit your paperwork for FHA approval. 

For example, let's say you have been in the Chapter 13 repayment plan for 3 years and you want to buy a home using FHA financing. You could go ahead and petition the Chapter 13 trustee for approval from the courts to get a home loan. The trustee of the Chapter 13 courts will want to know your new loan payment with the home loan, so make sure you know how much  you want to borrow before you apply ,. 

Collections on Credit Report Requirements for Kentucky FHA Home Loans:
  • 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
  • Medical collections and charge offs are excluded from this
    guidance.B. Judgments – Loans for borrowers with outstanding judgments are
    generally not acceptable unless the following documentation is obtained.
    a. Judgment must be on the credit report that is linked to the TOTAL
    Scorecard findings and the findings must be “approve/eligible” or
    “accept/accept.”
    b. If the judgment will not be paid off and released prior to the
    closing, evidence of a payment agreement may be considered. The
    payment agreement must be in writing and provided at the time of
    underwriting. Crescent will require evidence that 12 months
    satisfactory payments have been made as scheduled. Borrowers
    may not pre-pay scheduled payments in order to meet this
    requirement. The monthly payment must be considered in the
    borrower’s debt-to-income ratio for qualifying.
    c. Any judgments that are discovered in the processing of the loan
    that ARE NOT on the credit report linked to the TOTAL findings
    require the loan to be manually downgraded to “refer” status.
    Crescent does not approve loans that must be manually
    downgraded.
    d. A subordination agreement will be required for any judgment that
    is also a lien against the borrower and/or the subject property.
    C. Disputed Accounts – Because disputed accounts are not generally
    considered in the borrower’s credit report FHA will now require loans of
    borrowers who have derogatory disputed accounts with cumulative
    balances of $1000 or more (excluding medical) to be downgraded to
    “refer” findings and manually underwritten. As you are aware, Crescent
    does not approve loans that require manual underwriting.
    NOTE 1: Disputed derogatory credit account of a non-purchasing spouse
    in a community property state are not included in the cumulative balance
    for purposes of determining if the mortgage application must be
    downgraded to a “refer.”
    NOTE 2: Disputed medical collections are excluded from the $1000 limit
    as are derogatory credit accounts resulting from identity theft, credit theft
    unauthorized use, etc. However, documentation must be provided to
    conclusively support the disputed status. Documentation might entail
    police reports, letters from the creditor, etc.
    II. ML 2013-26 – Back to Work-Extenuating Circumstances
    The guidance provided in ML 13-26 requires loans to be manually
    underwritten. For this reason Crescent cannot approve loans that need these
    credit underwriting leniencies. III. ML 2013-29 – Application of Unused Funds from

Short-sale or Foreclosure Guidelines for a Kentucky FHA Loan:

If you have experienced a short-sale or foreclosure, FHA states that you must wait 3 years from the date of the sale to obtain FHA financing again. And important note is this: The waiting period starts not when you were discharged from the home or bankruptcy, the waiting period starts when the home is sold and the deed transferred at the courthouse. 

This is important to remember because a lot of people think it starts when they vacate the home or when there bankruptcy is discharged if the mortgage was in the bankruptcy, but it does not!!! The date used to end the waiting period starts when the deed is transferred at the courthouse from the owner to back to bank or whomever buys the home in the default. 

Delinquent Federal Debt (Taxes, Student Loans) Kentucky FHA Loan Requirements:

If you have a delinquency with the Federal Government, this could hurt your chances of getting approved for a FHA backed Mortgage Loan. Here is why:

All FHA participants are ran through the CAVIRS Alert System administered by HUD to check to see if the mortgage applicant is delinquent  to the Federal Government. This usually arises from an IRS income tax lien, over-payment on a social security claim, or lastly, a defaulted student loan. 
A lot of the times FHA borrower don't realize that if they don't pay there Federal backed student loans, they go into default and this will hold you up from getting a FHA loan or possibly they will hold your tax refund. 

If you have been delinquent on your student loans, you have to call and get on a 9 month repayment plan with them and they will clear you of your CAVIRS Alert. The payment plan can be as little as 5 or $10 a month, but the important thing is to get started so this will improve your credit rating too along with releasing the liens against you for other federal assistance like tax refunds, social security payments and benefits to name just a few. 

I have done many FHA loans in Kentucky where they have rehabbed their Student loans if they are backed by Federal government and got them loan after 9 months. 
If you happen to have an agreement already worked-out with the IRS or student loan creditors, sometimes we can take that arrangement and get you approved sometime with FHA depending on the lender. 

Child Support Obligations Kentucky FHA Loan Requirements:

If the credit report shows a delinquent child support agreement, the FHA Government Underwriter will want to see the current child support agreement and what the monthly payment is so as to make sure they have your debt to income ratio figured correctly. You can have a delinquency report of child support on your credit report and still get an FHA loan. 

 It is okay to be paying child support ,a lot of times it shows on a borrower's pay stubs, and if so, we simply use that child support obligation to use for debt to income ratio qualifying. 


As you can see, it is quite possible to buy a home in Kentucky with past bad credit. I work with a lot of mortgage applicants that has experienced credit issues in the past, but with the right direction and guidance, I can possibly get you into a home in 2020. 

Put my 20 years of Kentucky Mortgage Experience to work for you . 




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


Options for Getting a Home Loan After Bankruptcy - myHorizon

Options for Getting a Home Loan After Bankruptcy


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Rebuild Your Credit
If you want to get a mortgage after bankruptcy, you’ll need to get busy rebuilding your credit right away. If you make sure your credit report accurately reflects your bankruptcy, all zero balance credit accounts are closed at the time of your discharge, and pay your credit bills on time you will begin to see some improvement in your credit score within 12 months of your discharge.
Here are some key tasks in rebuilding your credit:
  • Get a secured credit card right after your bankruptcy discharge.
  • Get installment loans (for example an auto-loan) six to twelve months after your bankruptcy discharge.
  • Use your credit lines and make timely payments.
  • Remove any inaccurate information from your credit report.
  • Make payment arrangements for any debts that were not discharged in bankruptcy.
  • Continuously check your credit report to check for inaccuracies, and identity fraud.
Credit Score
While the items on your credit report matter, you’ll also need to watch your FICO score. There are many different types of credit scores out there.  You have the individual credit bureaus scores (Experian, Trans Union, and Equifax), FICO scores, Vantage Scores, and industry specific scores. However when looking to purchase a home you will want to watch your FICO as it is used in an overwhelming majority of mortgage related credit evaluations.
Also it’s important to note that FICO changes the way they evaluate creditworthiness based on new information and changes in the market.  They have recently release FICO version 9. Since the majority of mortgage lenders still use an older FICO scoring model, when evaluating and monitoring your score, FICO recommends you use one calculated from a scoring model previous to Version 8.
When evaluating your FICO score it’s good to know that a score above 700 is considered excellent while a score under 620 is considered poor. You may secure a mortgage with a low FICO score but your interest rates will be subprime. In the case of a mortgage, it may be beneficial to wait until you’ve raised your credit score.
FICO has a great calculator on their web site to help you plan on when is a good time to get a mortgage loan depending on your credit score.  It will help you determine if the savings you will receive with a higher score are worth the wait and energy required to increase your credit score.
Timing
clock-timeTypically speaking, if you want to get a mortgage after bankruptcy you’ll need to allow time to pass. For conventional mortgages you’ll need to wait four years after Chapter 7 bankruptcy or two years after Chapter 13 bankruptcy. But there are some other mortgage options that require a shorter waits.
FHA Mortgage
Two years after your Chapter 7 bankruptcy discharge you may apply for an FHA loan. If you filed Chapter 13 bankruptcy, then you’ll only need to wait until you’ve made twelve months of satisfactory payments, and you’ll need to get the approval of the bankruptcy trustee. But if you want to be given serious consideration, you’ll need to provide a clear explanation for why you filed bankruptcy. For example, maybe you filed Chapter 13 bankruptcy because you had a medical emergency and was unable to pay your medical bills.
VA Mortgage
If you’re a veteran, you can get a VA mortgage two years after your bankruptcy discharge. This VA application process can be challenging, but in some ways it’s more lenient since post-bankruptcy credit issues such as a foreclosure won’t restart the 2-year waiting period. However, credit issues after bankruptcy might affect your interest rate, so take care to keep your credit as clean as possible.
USDA Mortgage
If you live in a rural area, you may qualify for a USDA mortgage three years after your bankruptcy discharge. It’s important to note that while the USDA provides loans to rural residents it’s only for property that will serve as the borrower’s primary residence. The USDA will not finance the purchase of income property or a vacation home.
As you prepare to apply for a mortgage after bankruptcy, keep in mind that the mortgage lender will take into account the totality of your financial situation—your finances, credit history, credit score, and any extenuating circumstances.


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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
email:          kentuckyloan@gmail.com











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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/

-- 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.







Options for Getting a Home Loan After Bankruptcy - myHorizon: Many debtors fear that a bankruptcy will close off any chance of getting a mortgage. But that’s simply not true, with a little time and proper planning you can get a mortgage with good interest... Read More