Tag: Credit history

New Credit Requirements for Kentucky USDA Rural Development Loans Starting 12/1/2014

TRADELINE REQUIREMENT:

One borrower must have 3 tradelines that have existed for 12 months. If this requirement cannot be met, an accept decision must be downgraded to a refer and treated as a manual underwrite.

VERIFICATION OF RENT:

Scores 680 and above OR GUS accept = No VOR required.

Scores 679 and below = VOR required.

COLLECTIONS:

Determine if the total outstanding balance of all collections accounts and charge offs of all applicants is equal to or greater than $2,000. Unless excluded by state law, collection accounts and charge offs of a non-purchasing spouse in a community property state are included in the cumulative balance of all collections and charge offs.

Remove all medical collections and medical charge off accounts from the total balance. Medical collections and medical charge off accounts must be clearly identifiable on the credit report.

If the remaining outstanding balance of collection accounts and charge offs are equal to or greater than $2,000, any of the following actions will apply:

Payment in full of all collection accounts and charge offs at or prior to closing.

Payment arrangements are made with each creditor for each collection account and charge offs remaining outstanding. A letter from the creditor or evidence on the credit report is required to validate the payment arrangements. The agreed upon monthly payment for each outstanding collection account and charge off will be included in the borrower’s debt-to-income ratio.

In the absence of a payment arrangement, the lender will utilize in the debt-to-income ratio a calculated monthly payment. For each collection and charge off utilize 5% of the outstanding balance to represent the monthly payment.

USDA-Home-Loan

Joel Lobb
Senior  Loan Officer

(NMLS#57916)
American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223
 Fax:     (502) 327-9119
 
 Company ID #1364 | MB73346

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USDA Lending Tip; Eligible Homes Locator Map

USDA Lending Tip; Eligible Homes Locator Map.

via USDA Lending Tip; Eligible Homes Locator Map.

 

Type of Mortgage Conventional Loan FHA Loans Conventional Financed MI Conventional Lender Paid MI
Purchase Price $300,000 $300,000 $300,000 $300,000
Mortgage Amount W/5% Down $285,000 $289,987 $289,547 $285,000
Interest Rate W/1.75 points 5.25% 4.50% 5.25% 5.75%
Principal Interest Payment $1,573.78 $1,469.90 $1,626.50 $1,663.11
Mortgage Insurace Payment $185.25 $118.75 Built into MTG Built into MTG
Total Mortgage Payment-P&I and Mortgage Insurance $1,759.03 $1,588.67 $1,626.50 $1,663.11
Monthly Saving Winner against all 3 read below

 

 

10 Tips for a Top Credit Score

10 Tips for a Top Credit Score.

via 10 Tips for a Top Credit Score.

What is a Good Credit Score to qualify for a Kentucky Mortgage Loan for USDA, RHS, VA, FHA, and Fannie Mae

What is a Good Credit Score.

via What is a Good Credit Score.

What is a Good Credit Score to qualify for a Kentucky Mortgage Loan for USDA, RHS, VA, FHA, and Fannie Mae

 

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What is a Good Credit Score?

An established credit history and credit score often stands between potential home or car buyers and their dream. But What is a good credit score? What exactly is a credit score? What makes a credit score “good?” How to improve your credit score? If you’re new to building credit there are a few things you need to know in order to keep your credit looking stellar.
What is a credit score?
Your credit score is a numerical representation of your credit report. This three-digit number is like a badge that predicts risk, credit responsibility and determines your interest rates if you borrow money from lenders much like your CLUE Report. While you will be able to get a copy of your credit report you may not find this numerical key listed. Think of your credit score like the cliff notes version of your credit report. There are a few different measures of credit scores between divisions. Based on their own systems different scorers might view certain numbers in many ways.

what is a good credit score

what is a good credit score
Deciphering your three-digit credit score is quite easy if you know the levels. The range usually runs from 300-850. Good to excellent credit is considered anything from 700 to 850. If your credit score falls in this range you’re going great! Fair credit runs from 625-699, poor runs from 550-624, and anything below 550 is bad. Some finance experts would classify anything over 720 a good credit rating. Experts will disagree depending on their preferred credit rating systems, and in most cases the criteria you use to determine whether or not your credit score is good will not be far off.
What Does a Good Credit Score Mean?
Having a good credit score is great, but if you don’t know how to use it you could be missing out on some crucial credit building. Credit scores are used in varying ways by lenders and banks. One thing your credit score implies is how likely you are to pay back debt. Basically it announces how reliable you are as a borrower. People with good credit scores are more likely to pay back funds that they borrow while those with lower scores aren’t so reliable. Lenders like reliable borrowers, and good credit points them out.
But a credit score does much more than predict whether or not you’ll pay a loan back. When it comes to buying a house or car, there is an interest charge. Higher credit scores usually have a lower interest rate than those with bad to fair credit. Lenders not only base whether or not they’ll approve a loan by your credit score, but also how much interest to charge. If your credit is in good standing your interest rate won’t be as high as someone with bad credit. Your credit score saves you money with lower interest rates.
How is a Credit Score Calculated?
In order to build and maintain good credit you must first know how your score is determined. Once you know what goes into a credit score you can begin building your credit or nursing your score towards higher digits. Credit scores are based on your financial history only, and laws prevent your score being affected by things like race, gender, age and where you live. What is included are items such as your payment history, your current credit debts, age of your credit history, new credit items added to your accounts and types of credit used.
These five basic areas are where the bulk of your credit score is formed. All criteria have varying degrees of involvement in your score. For example:
  • Payment history (35%) – How many on-time payments you’ve made, missed, defaulted and past due items
  • Current amount owed (30%) – How much you currently owe – if you owe a large amount this could negatively affect your score
  • Age of credit history (15%) – The average length of your credit accounts and time since last activity
  • New credit (10%) – The number of new credit items on your accounts
  • Types of credit (10%) – The kinds of credit accounts are you currently maintain
How to Improve Your Credit Score?
Many people avoid credit based on all the negatives they’ve heard against it, but neglecting your credit score hurts your chances of being able to make major purchases in the future. The best way to build credit is to use credit, and forming the following good credit habits early will pull your low score to higher ground.
  • Pay bills on time – This is the easiest and best way to boost your credit score. Since the bulk of your credit score comes from your payment history, paying bills on time will pull you up quickly. Not only will that help, but a recent and consistent history of paying bills on time overshadow a period long in the past where you may have missed payments.
  • Budget – Setting up a budget and staying within its parameters will keep you from overspending and using credit for frivolous things. Although using credit builds credit not being able to pay it off hurts more in the future.
  • Use all your credit cards regularly – If you have a few credit cards try to use them from time to time in order to show that you use all of your accounts. Remember that the last usage of an account is 15% of your score.
If you want to start repairing a bad credit history or start building yours, find out what your credit score is. I use Credit Karma to check mine, you can check out my review of Credit Karma or if want just apply here –www.creditkarma.com.
Making your way to a good credit score and keeping your score high won’t be a financial nightmare when you know how to build it and what it means financially.


Posted By Blogger to Louisville Ky Mortgage Lender FHA/VA

Joel Lobb (NMLS#57916)
Senior  Loan Officer

4 Ways You Might Be Hurting Your Credit Score (And What You Can Do About It)

Factors contributing to someone's credit score...
Factors contributing to someone’s credit score, for Credit score (United States). (Photo credit: Wikipedia)

4 Ways You Might Be Hurting Your Credit Score (And What You Can Do About It).

Kentucky FHA, VA, KHC, Rural Housing and Fannie Mae Loan Free Pre-Approvals for Mortgage Loans

via 4 Ways You Might Be Hurting Your Credit Score (And What You Can Do About It).

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Credit Requirements for A Kentucky Rural Housing RHS Mortgage Loan

2013 Credit Requirements for A Kentucky Rural Housing RHS Mortgage Loan  Kentucky First Time Home Buyers---Zero Down Loans Still Exist
REQUIREMENTS
  • · Credit report must match GUS Findings.
  • · Must not be older than 120 days on the date of closing for existing properties and 180 days for proposed and new construction.
  • · Must contain complete information provided by all three repositories.
  • · The credit report must show the following three required FICO scoring models for the report to be valid with Platinum Mortgage, Inc.:

1. Equifax Beacon 5.0

2. Transunion FICO Risk Score, Classic 04

3. Experian/Fair Isaac Risk Model V2.

  • · Must reflect a minimum of 1 score per borrower.

TRADELINE REQUIREMENTS:

GUS Approved: Each credit report must contain 2 acceptable tradelines with at least 12 month history and last active within the last 24 months (see below regarding acceptable tradelines).

Manual Underwrite: As determined acceptable by the underwriter.

CREDIT SCORE
  • · If more than one score is supplied by the same repository, the lesser of the scores will be used.
  • · Determining Qualifying Credit Score:

o Middle of 3

o Lower of 2

o If only one score is provided, that score is the qualifying credit score for that borrower.

Minimum credit score for:

  • · Manual Underwrite = 660
  • · GUS Approval = 660

LIABILITIES & CREDIT HISTORY

(INDEX)

H
OPEN CHARGE ACCOUNTS
ALIMONY, CHILD SUPPORT, OR SEPARATE MAINTENANCE
  • · Court-ordered payments should be documented by a copy of the court order.
  • · Borrower(s) must have an acceptable existing repayment plan for any arrearages and proof of 12 months on time payments, and/or be required to pay account in full prior to, or at closing.
  • · See Collections/Chargeoffs for additional requirements if there are arrearages.
CONTINGENT LIABILITIES
  • · If the borrower is a co-signer on an account paid by a 3rd party, the liability may only be excluded from the borrower debt ratios if evidence the primary obligor has been making the payments on time on the debt for a minimum of 12 months can be obtained.
  • · Court-ordered assignment of debt should be documented by a copy of the court order. Must have 12 months cancelled checks from the payer of the court ordered debt in order to exclude from the debt ratio.

PREVIOUS MORTGAGE:

  • · Section 1980.345(c)(1)(ii) requires all previous mortgage liabilities disposed of through a sale, trade, or transfer without a release of liability, to be included in the debt ratio calculation unless evidence can be obtained to confirm the remaining party has made payments over the last 12 months.
  • · In divorce settlements when one person retains ownership of a residence as a result of the proceedings, it does not imply that the person relinquishing ownership is automatically released of the financial liability associated with an existing mortgage debt. The divorce decree along with a release of liability from the mortgage creditor must be presented as evidence that an applicant is no longer legally responsible for the mortgage payment. If no release of liability is granted by the creditor then the applicant remains legally obligated for the debt. Quit claim deeds do not remove liability for mortgage debts.
DEFERRED INSTALLMENT DEBT May not be omitted from debt ratio. If the credit report does not reflect a monthly payment due at the end of the deferment period, the lender may request a copy of the applicant’s payment letter, or utilize the industry standard of estimating student loan payments as 1% of the loan balance.
NON-REIMBURSED EMPLOYEE EXPENSES If the borrower claims any non-reimbursed employee expenses (IRS Form 2106 or 1040 Schedule A), the borrowers monthly income should be reduced by the annualized monthly average.
BUSINESS DEBT IN BORROWER’S NAME When the account in question does not have a history of delinquency, the debt may be excluded with satisfactory evidence the obligation was paid out of company funds (such as 12 months cancelled company checks). If the account in question has a history of delinquency, the full debt obligation must be included in the borrower’s debt ratio.
FINANCED PROPERTIES Additional financed properties are generally not permitted as borrower may not own any other suitable housing at time of closing.
DEBTS WITH <6 REMAINING PAYMENTS The total debt ratio should include revolving debt regardless of when the debt will be retired. Installment loans will only be considered if the debt will be retired in more than six months. However, if the monthly payment on the debt is substantial, the payment will also be included in long term debt. The GUS system will automatically exclude debt that is eligible to be excluded. If not excluded by GUS the debt must be included in the debt ratio.
“PAYING DOWN” ACCOUNTS Not permitted. Settlement offers will not be considered as proof of balance
SETTLEMENT OFFERS Are acceptable on accounts that will be paid in full at closing as long as the offer is in writing from the creditor reporting on the credit report.
PAST DUE ACCOUNTS (NOT A COLLECTION OR CHARGE OFF) Recent derogatory credit >1×30 within the previous 12 months is not permitted unless approved by GUS. All past due accounts must be current at time of closing.
COLLECTIONS/ CHARGE OFFS
  • · No accounts converted to Collection/Charge off in previous 12 months allowed, unless approved by GUS.

GUS Approved:

  • · Medical Collections/Charge offs are not required to be paid.
  • · Other Collections/Charge offs, if >24 months, not required to be paid, otherwise accounts must be paid in full prior to, or at, closing.

Manual Underwrite:

  • · Medical Collections/Charge offs are not required to be paid.
  • · Other Collections/Charge offs must be paid in full prior to, or at closing.

Any unpaid Collections/Charge offs will require a satisfactory letter of explanation from the borrower.

OUTSTANDING FEDERALLY INSURED OR GUARANTEED DEBT Borrower(s) must have an acceptable existing repayment plan (minimum of 12 months), and/or be required to pay account in full prior to, or at closing. Borrower must also be cleared through CAIVRS.
JUDGMENTS/LIENS
  • · Must be paid at, or prior to, closing.
  • · Borrower(s) may not have any new Judgments/Liens within the previous 12 months, unless approved by GUS.
BANKRUPTCY (ALL) 3 years seasoning required from Discharge or Dismissal date.
FORECLOSURE 3 years seasoning required.
DEED-IN-LIEU OF FORECLOSURE 3 years seasoning required.
SHORT SALES 3 years seasoning required.
COMPENSATING FACTORS Some compensating factors include:

  • · Conservative use of credit
  • · Minimal increase in borrower’s housing expense
  • · Substantial cash reserves after closing
  • · Credit score >660
  • · Low total debt ratio (does not compensate for high housing ratio)
MULTIPLE RISK LAYERING Multiple risk layering is not allowed on manually underwritten loans:

  • · Payment Shock (>100%)
  • · Ratio Waiver
  • · Credit Waiver
  • · Credit Score <660
  • · Short Duration of Employment (less than 12 months employment with current employer)
Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.comKey Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*

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