Thursday, July 24, 2014

How does payment shock affect a Kentucky Rural Housing Loan Mortgage Approval?

Payment shock on a Rural Housing Loan?
  • Payment shock is a risk layer Kentucky Rural Housing underwriters must consider when:
    • PITI ratio exceeds 29%, and
    • Proposed mortgage payment is 100% or greater than current housing expense, or borrower has no housing expense history
  • Payment shock is not a risk layer if PITI ratio is 29% or below and the loan has an Approved/Eligible recommendation
  • Payment shock should not exceed 100%. If payment shock exceeds 100% there must be strong compensating factors documented