Wednesday, May 15, 2019

Kentucky First Time Home Buyer Programs for 2019

How are collections on credit report handled for a Kentucky USDA Rural Housing Loan Approval?

Collections on Credit Report and USDA Loan Pre-Approvals



 Underwriting must follow GUS to determine if a collection account must be paid. Typically GUS will require the following:

  • If the credit report show a cumulative balance of $2,000 or more for collection accounts: 
  1. The debt(s) must be paid in full prior to or at closing, or 
  2. Payment arrangements must be made with the creditor and the monthly payment included in the DTI, or 
  3. A monthly payment of 5% of the outstanding balances of each collection must be included in the borrower’s DTI.
  • While all collections required by GUS must be paid, RHS grants the lender/underwriter the authority to require any collection (whether GUS recommended or not) to be paid prior to or at close. 






Kentucky Rural Housing Lender








Can you get a Kentucky USDA Loan when the borrower has experienced a major negative credit occurrence such as a bankruptcy, foreclosure, or short sale.

The Kentucky USDA Rural Loan program requires a minimum of three years from the date of a bankruptcy, foreclosure, or short sale to the borrower being eligible for a USDA Loan.  For both Chapter 7 and Chapter 13 bankruptcies the borrower must allow three years from the discharge date prior to submitting a new loan request.  If the bankruptcy included a property, whether a primary residence or investment property, the earliest a new loan can be obtained is based on Kentucky USDA Loan short sale and foreclosure guidelines.

When the borrower experienced either a short sale, foreclosure, or surrenders the property through the bankruptcy process, there will be a three year waiting period between the date of property transfer from the borrower to a new entity, and the date the new loan application can be processed.  The most conservative stance by a Kentucky USDA Loan Underwriter for defining the date of the negative occurrence is the legal recorded transfer date, which is the date the property has been transferred out of the borrowers name and either back to the bank that holds the mortgage note or a subsequent home buyer. From this date the borrower will not be eligible for a USDA Loan for a period of time no less than three years.

However, one of my investors will allow a Chapter 7 bankruptcy discharge date to be considered the date of foreclosure, provided the borrower didn't re-affirm the mortgage liability.  This differs from when the property transfer date is recorded at the County Clerks Office. This is especially helpful in circumstances where the home owner legally removed their ownership rights to a property, through a Chapter 7 bankruptcy, but the mortgage lien holder was slow to transfer the mortgage back into the name of the bank or sell the property.

If the foreclosed property was secured by a government backed mortgage loan such as a Kentucky FHA or Kentucky VA Loan, the property transfer date is no longer considered relevant.  The date that now becomes important is the date when the mortgage lender that held the mortgage note received compensation for their mortgage insurance claim through either The Department of Housing and Urban Development for a FHA Loan or The Veterans Administration for a VA Loan.  The date of the mortgage insurance claim is identified through a CAIVRS search, which is required on all Kentucky USDA Loans. We can obtain the CAIVRS number through GUS when we run your loan for pre-approval through the automated underwriting system at USDA .


-- 
Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

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





Cell:      502-905-3708
Fax:      502-327-9119


Company NMLS ID #1364  MB73346


 

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Saturday, May 4, 2019

100% Financing Home Loans in Kentucky




Potential homeowners in rural areas often struggle to accumulate enough funds for down payments and closing costs, but there are several programs to help.
Krista Mettscher, a single family housing specialist for USDA Rural Development promoted a few of those programs last week during a visit to Chadron, noting that communities need a successful housing market to thrive.
USDA Rural Development offers two programs for individuals looking to purchase single family homes, both of which offer 100 % financing, thereby making a large down payment unnecessary. In conjunction with a lack of available housing, a down payment and the availability of financing are the largest barriers to home ownership, Mettscher said.
Her agency works to provide financing and find ways for homeowners to be successful by staying in their homes long-term.
“We do give our homeowners a lot of different options to stay in their homes,” she said.
USDA Rural Development’s Direct Loan Program offers 100% financing with no down payment and a current interest rate of 3.5%. Subsidies for low-income levels can make the interest rates as low as 1%.
“This program works really well for people on a fixed income,” she said.
There are income qualifications, but many people in rural areas fall within the guidelines. A household of up to four people can earn $54,400, while a household of five to eight individuals can earn up to $71,800 to qualify for the Direct Loan.
The maximum mortgage allowed under the Direct program is $195,000, and home buyers are encouraged to keep their mortgage at no more than 30% of their income. The payment assistance subsidy, which can decrease the interest rate down to as low as 1%, can help home buyers who may struggle with their payments, but the goal is to remove the subsidy as soon as possible, Mettscher said. A portion of the subsidy – generally 20%- must be repaid to USDA Rural Development as soon as the home buyer sells the house, pays off the loan or no longer occupies the home.
The Direct program is a 33-year loan term and requires a whole-home inspection. Home buyers who qualify can use the loan for any modest (2,000 square feet), residential home in good condition, of either existing or new construction.
USDA Rural Development’s other program is its Guaranteed Loan Program, which does require some fees but is still cheaper than most traditional financing options. It’s not available for first-time home buyers, but still provides 100% financing with no maximum mortgage limits. Income guidelines are in place for this program as well. A family of up to four individuals can earn up to $82,700, while a family of five to eight individuals can earn up to $100,150. This program, however, requires a minimum credit score of 580, Mettscher said, but a whole-home inspection of the to-be-purchased property is not necessary. Instead, an appraiser must certify that it meets HUD standards.
The Guaranteed Loan Program also allows potential purchasers to consider buying acreages, but they must be residential, non-income producing properties.
Finally, USDA Rural Development can also help elderly homeowners (age 62 and above) with its Repair Loan Program and Repair Grant Program. The loan program allows homeowners to secure up to $20,000 in financing at 1% interest to make any repairs and improvements to their home. The income guidelines for this program are lower than those for the loans, set at $34,000 and $44,900. The grant program has the same income requirements, but is targeted to repair health and safety issues only by providing up to $7,500 in forgivable financial assistance.
“(The repair/grant programs) are very low-income categories,” Mettscher said.
Other assistance is available in Dawes, Sheridan, Sioux, Box Butte and Morrill counties through the High Plains Community Development Corporation, which is located in Chadron. Rita Horse said home buyers in those counties who meet certain eligibility requirements may qualify for closing cost assistance and down payment assistance. Horse also serves as a loan packager for USDA Rural Development, assisting prospective buyers with all of the paperwork to determine if they are eligible for the Direct or Guaranteed loans through the agency.