Showing posts with label time on the job. Show all posts
Showing posts with label time on the job. Show all posts

The reasons you will get turn down for a mortgage loan in Kentucky.

 There are several reasons why people in Kentucky might get turned down for a mortgage loan. These reasons can be broadly categorized into issues with the borrower or the property:

Borrower-related reasons:

  • Credit score: Low credit scores (generally below 620) are a major factor in loan denials. Having a history of late payments, delinquencies, or collections can negatively impact your score.
  • Debt-to-income ratio (DTI): This ratio compares your monthly debt payments to your gross income. A high DTI (generally above 50%) indicates you have a lot of debt compared to your income, making it harder to afford a mortgage payment.
  • Employment history: Lenders prefer borrowers with stable employment and income. Recent job changes, gaps in employment, or insufficient income documentation can raise concerns.
  • Down payment: A smaller down payment increases the loan amount and loan-to-value ratio (LTV), making the loan riskier for lenders. In Kentucky, FHA loans require a minimum 3.5% down payment, while conventional loans typically require 20%.
  • Insufficient assets: While not always a disqualifier, having limited savings or assets can weaken your application by reducing your financial cushion.

Property-related reasons:

  • Appraisal value: If the appraised value of the property is lower than the purchase price, it creates a high LTV, making the loan riskier for lenders.
  • Property condition: Major repairs or structural issues with the property could require significant investment before closing, which lenders may not be comfortable with.
  • Location: Properties in floodplains or other high-risk areas may be ineligible for certain loan types or require additional insurance.
turndown for mortgage,bad credit,credit,Credit Score,Debt to Income Ratio,fha income,job gaps,job loss,new job,time on the job,down payment assistance and first time home buyer grants,appraisal,



Here are some resources that can help:

Joel Lobb  Mortgage Loan Officer

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

http://www.mylouisvillekentuckymortgage.com/

Kentucky FHA Loans Are Offering New Flexibilities for Borrowers Previously Affected by Covid-19


FHA Offering New Flexibilities for Borrowers Previously Affected by Covid-19

FHA has announced that the guidelines are being updated when calculating effective income after a reduction or loss of income for borrowers affected by the COVID-19 pandemic. These changes are effective for all case numbers on or after 09/05/2022, but may be implemented immediately.


ML 2022-09 reflects policies that will be incorporated into the 4000.1, providing updates for the following:


Additional Required Analysis of Stability of Employment Income
Additionally, flexibility when calculating income for borrowers who experienced a gap in employment and/or a reduction of loss of income due to the COVID-19 pandemic has been updated allowing a borrower to be employed in the same line of work for at least six months at the time of case assignment.

https://www.hud.gov/press/press_releases_media_advisories/HUD_No_22_129

Kentucky Mortgage Underwriting Guidelines For Deposits, Job Gaps, Credit Inquiries


Kentucky Mortgage Underwriting Guidelines 


Applying for a Kentucky Mortgage

 Most Kentucky home buyers will need to gather and document the information upfront so you will have minimal problems once the underwriter issues your final mortgage loan approval .  Let’s look at some common underwriting issues that arises on the final mortgage approval.
Job Gap—The application will call for you to document your last two years of employment history. If you have had several jobs, or job gaps of more than 6 months, you will need to document why you were off work and why you made the changes in your job. The underwriter is looking for stability in your pay and job. If you were in school recently, then the underwrite may want to see transcripts to verify this.
Credit Inquiries- Are there credit inquiries producing a red flag? • Does the applicant have excessive verified assets that could cover the dollar amount of the large deposit to, in essence, negate the effect of the large deposit?
The asset documentation must present sufficient funds of an acceptable source for down payment, closing costs and reserves. If you have had a lot of recent inquiries on your credit report, the underwriter will want an explanation on why the inquiries were made and see if any new debts has opened since the credit report has been issued.
Large Deposits in Checking and Savings Accounts–  this is a biggie for most people  what constitutes a large deposit requiring additional explanation and documentation. For Kentucky Mortgage Conforming loans:  considers a large deposit to be any deposit greater than 25% of the borrower’s qualified monthly income. A letter of explanation and sufficient documentation to support the source of the funds will be required.  For FHA/VA loans:  will require a letter of explanation on any large deposit, as determined by the underwriter. Additionally, any deposit of an amount equivalent to 2% or greater of the loan sales price must have its source of funds documented and verified.
Most Kentucky Mortgage underwriters now days  considers a large deposit to be any deposit greater than 25% of the borrower’s qualified monthly income. Any such deposit not consistent with the borrower’s employment, earnings and/or savings profile must be fully explained and sourced with acceptable documentation in order to be eligible for down payment, closing costs, earnest money deposit and reserves. All funds used for down payment, closing costs, earnest money deposit and reserves must be from an acceptable source and clearly not be a result of undisclosed borrowed funds or incentive from an interested party such as a seller, real estate agent or developer.

A large deposit could be a single deposit or multiple deposits over a period of time that in aggregate, result in a large deposit. A review of the borrower’s financial profile must be conducted in order to draw a conclusion that a deposit must be sourced. Items to take into consideration when identifying deposits to be sourced are as follows: • Are the deposits within the normal deposit pattern from an identifiable
income source?

• Are total monthly deposits consistent with income?
 • Is the ratio of deposits to income reasonable?
• Is the borrower’s income direct deposited?
• Are there multiple deposits over a period of time that in aggregate, result in a large deposit?
• Was the account recently opened?


All large deposits must be addressed. Regardless of how long ago the earnest money was deposited, it must be verified. A signed letter of explanation from the borrower is required in all circumstances. If the borrower is able to provide a reasonable explanation and sufficient documentation to support the deposit is of an acceptable source, the large deposit may be included in the funds to close.

There may be an occasion, when the borrower is able to provide a reasonable explanation, but unable or unwilling to sufficiently document the source of a large deposit and has assets exclusive of the large deposit that are sufficient for closing and reserves. An underwriter, after exercising due diligence to ensure funds are not from an unacceptable source, may deduct the large deposit from the balance of the account, and allow the remaining balance in the account to be used as funds to qualify. In the course of due diligence, the underwriter must be confident the deposit was not as a result of an undisclosed debt or as a result of incentives from a seller, real estate agent or developer. In the event that an asset balance is reduced by the amount of a deposit, the system must be corrected, the reason for the change in the asset amount documented and the AUS decision must be updated.

Any deposit that cannot be adequately explained could potentially raise a red flag and result in a declination. Items for consideration when excluding a deposit from the asset balance:
• Do the overall assets seem reasonable given the borrower’s financial profile?
• Is there other documentation in the file (such as tax returns) that may support additional income or asset sources?
• Is the deposit possibly a loan?
GIFT FUNDS —- Gift funds are acceptable from a close relative, a close friend with a clearly defined interest in the borrower, the borrower’s employer or a non-profit organization.  Entire cash investment can be gifted by relative, church municipality, non-profit agency.  Transfer of funds must be documented (no exceptions).  Underwriters  will require the donor’s account statement and proof of withdrawal.   Provide copy of fully executed gift letter (FHA applicant must also sign).  Provide copy of cancelled check from donor or copy of donor’s withdrawal slip and matching deposit into applicant’s bank account or deposit slip; or  Provide copy of cashier/treasurer/certified check to be given to closing agent.  Amount must be denoted on HUD-1.  If funds wired at closing, provide copy of wire transfer or copy of the check.  This will need to take place prior to the funding of the loan.  Only family members may provide a gift of equity.
CASH ON HAND—Money must be deposited and verified either through VOD or title company escrow letter AND the applicant must provide satisfactory evidence of the ability to have saved this money. If a VOD is used, a 1 month bank statement supporting the VOD is required. (The applicant must also provide a letter explaining how the money was saved and the length of time it took to save it.) May not be used as a source of assets for gift transactions.
Note: All other factors being equal, those individuals with checking and/or savings accounts are less likely to save money at home than an individual with no history of such accounts.
If you would like more information or just have questions about qualifying for a Kentucky Mortgage in 2013, be it FHA, VA, Fannie Mae, USDA,  just contact me below for your mortgage needs.


Earnest Money Deposit (EMD)
A deposit made by the buyer when the purchase offer is accepted. The funds are held by the escrow company and credited towards the cost of down payment and closing costs.

Earnest Money Deposit– If you put down a deposit on the home you are buying, you will need to get a copy of the bank statement or cancelled check to show the check has cleared your bank account and it will need to show your updated balance after the cancelled check has cleared.

earnest money deposit for a Kentucky mortgage loan




Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.

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

 




Kentucky First Time Home Buyer Programs For Home Mortgage Loans: Job History Requirements for a Kentucky Convention...

Kentucky Conventional Mortgage

Two year is standard but shorter employment histories may be permitted for applicants with stable jobs and incomes or other positive factors
Explainable employment gaps of six months or more are also permitted as long as the applicant has been back to work for at least six months and has a two year employment history prior to the work gap

Self-employed borrowers are typically required to demonstrate a two year job history
A self-employed job history of between one and two years is permitted if the applicant was previously employed in a similar field and earns a similar or greater income as evidenced by the borrower's tax returns
Self-employed applicants are also required to provide business tax returns for two years unless the business is at least five years old

A continuous two year history of part-time employment is typically required although part-time work history of one-to-two years may be permitted for stronger applicants
A two year history of seasonal work in the same job or line of work is required
Lenders are also required to verify with the applicant's employer that the applicant will be rehired for the next employment season
Borrowers with seasonal employment are permitted to use unemployment compensation as income as long as the compensation is due to regular, seasonal employment breaks

A two year employment history is recommended for bonus, commission or overtime income to be considered but guidelines permit an income history of one-to-two years for borrowers with strong employment, financial and credit profiles

Kentucky FHA Mortgage Program

The FHA Program does not technically have an minimum employment history requirement but lenders are required to verify applicants' employment history for the prior two years
Applicants are required to explain any employment gaps of at least one month
Explainable employment gaps of six months or more are also permitted

Self-employed borrowers are typically required to demonstrate a two year job history
A self-employed job history of between one and two years is permitted if the applicant was previously employed in a similar line of work for at least two years
A combination of one year of employment in a similar field plus one year of education or training in that field is also permitted for self-employed borrowers

An uninterrupted two year history of part-time employment is typically required although part-time work history of less than two years may be considered as long as the lender determines that the work is likely to continue
Income from seasonal employment is also permitted as long as the applicant has a two year work history and expects to be rehired for future seasons

A two year employment history is required for bonus, commission or overtime income to be considered
An employment history of less than two years is allowed if the lender justifies and documents the reason for including the income
Lenders are also required to explain any significant declines in bonus, commission or overtime income
Significant fluctuations in bonus, commission or overtime income may require the lender to use an average period of longer than two years to calculate the applicant's income

Kentucky USDA Mortgage Program


The USDA Home Loan Program does not technically have an minimum employment history requirement but lenders are required to verify applicants' employment history for the prior two years and confirm that the applicant's income is stable

Applicants are required to explain any employment gaps of at least one month
Explainable employment gaps of six months or more are also permitted as long as the applicant can document the reason for the gap, has been back to work for at least six months and has a two year employment history prior to the work gap

Self-employed borrowers are typically required to demonstrate a two year job history as documented by the applicant's tax returns

A self-employed job history of between one and two years is permitted if the applicant was previously employed in a similar line of work for at least two years or one year of work plus one year of formal education or training

The lender is required to confirm that the self-employment income is expected to continue for at least three years

A self-employed history of less than one year is not permitted

An uninterrupted two year history in the same position is typically required for part-time employment although a part-time work history of less than two years may be considered if the lender verifies with the employer that the work is likely to continue at the same compensation level

Income from seasonal employment is permitted as long as the applicant has a two year work history and expects to be rehired for future seasons

The lender is required to determine that part-time and seasonal income is expected to continue for the next three years

Income from part-time or seasonal work must be reported on the borrower's tax returns to be considered by a lender

A consecutive two year payment history and determination by the lender that the income is expected to continue for the next three years is required for bonus, commission or overtime income to be considered
Bonus, commission or overtime income earned for less than a year is not permitted without significant compensating factors such as a change in the applicant's compensation structure

Lenders are required to explain any significant declines in bonus, commission or overtime income
Significant variations in bonus, commission or overtime income may require the lender to use an average period of more than two years to calculate the applicant's income

Kentucky VA Mortgage Program


The VA Program requires lenders to verify an applicant's employment history for the prior two years although there is no minimum employment history guideline

Applicants with an employment history of less than a year may be considered if the lender determines and documents that the applicant has a high probability of continuing his or her job
The applicant's employment history is evaluated on a case-by-case basis

Active military personal who are within 12 months of their release date are required to reenlist or provide verification of a job offer after their release from the military

Self-employed borrowers are typically required to demonstrate a two year job history unless the applicant was previously employed in a similar line of work or received specialized training in that field

A self-employed history of less than one year is highly uncommon

A continuous and verified two year history of part-time employment is generally required
The applicant's income from part-time work should be steady and predictable and the lender is required to determine that the work will continue in the future

The lender is also required to confirm that applicants can handle the part-time job along with the demands of their primary job

A two year work history is required for bonus, commission and overtime income to be considered by the lender unless the borrower has extensive experience or training in their field of work

The lender must determine that the income is predictable and likely to continue in the future
Bonus, commission and overtime income with less than a two year work history is rarely permitted and requires extensive documentation by the lender






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

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/